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FROM THE ESTABLISHMENT, ON LEGISLATIVE AUTHORITY, OF ONE EXCLUSIVE COMPANY,
The Constitution of the East India Company, its practical Arrangements for the Conduct of Business, and Transactions till the Conclusion of the War with France by the Treaty of ALr-la-Chapelle.
By the union of the competitors for Indian commerce into one corporate body, Chap. and by the privilege of exclusive trade, founded on legislative authority, the business of the East India Company became regular and uniform. Their capital, 1 °8'composed of the shares of the subscribers, was a fixed and definite sum: Of the modes of dealing, adapted to the nature of the business, little information remained to be acquired: Their proceedings were reduced to an established routine, or a series of operations periodically recurring: A general description, therefore, of the plan upon which the Company conducted themselves, and a statement of its principal results, appear to comprehend every thing which falls within the design of a history of that commercial body, during a period of several years.
VOL. II. B
Book IV. When a number of individuals unite for the management of a common |^q^~~"/ interest, common reason suggests, that they themselves should manage as much as it is convenient for them to manage; and that they should make choice of persons to execute for them such parts of the business as cannot be conveniently transacted by themselves. Constitution It was upon this principle that the adventurers in the trade to India originally Ind^Com- framed the constitution of their Company. They met in assemblies, which pany. were called Courts of Proprietors, and transacted certain parts of the common business: And they chose a certain number of persons, belonging to their own body, and who were called Committees,* to manage for them other parts of the business, which they could not so well perform themselves. The whole of the managing business, therefore; or the whole of the government, was in the hands of,
1st. The Proprietors, assembled in general court;
2dly. The Committees, called afterwards the Directors, assembled in their special courts.
At the time of the award of the Earl of Godolphin, power was distributed between these assemblies, according to the following plan:
To have a vote in the Court of Proprietors, that is, any share in its power, it was necessary to be the owner of 500/. of the Company's stock: and no additional share, contrary to a more early regulation, gave any advantage, or more to any single proprietor than a single vote.
The Directors were twenty-four in number: No person was competent to be chosen as a Director who possessed less than 2,000/. of the Company's stock: And of these Directors one was Chairman, and another Deputy-Chairman, for presiding in the Courts.
The Directors were chosen annually by the Proprietors in their General Court; and no Director could serve for more than a year, except by re-election.
Four Courts of Proprietors, or General Courts, were held regularly in each year, in the months of December, March, June, and September, respectively; the Directors might summon Courts at other times, as often as they saw cause, and were bound to summon Courts within ten days, upon a requisition signed by any nine of the Proprietors, qualified to vote.
The Courts of Directors, of whom thirteen were requisite to constitute a Court, were held by appointment of the Directors themselves, as often, and
* Committees } i. e. Persons to whom something is committed, entrusted. at such times and places, as they might deem expedient for the dispatch of affairs.*
According to this constitution, the supreme power was vested in the Court of Proprietors. In the first place it was vested, by means of the legislative power which the Court of Proprietors possessed entire: All laws and regulations, all determinations of dividend, all grants of money, were made by the Court of Proprietors; to act under these ordinances, and manage the business of routine, was the department reserved for the Court of Directors. In the second place, the supreme power was secured to the Court of Proprietors, by the important power of displacing annually the persons whom they chose to act in their behalf.
If, in this constitution, the Court of Proprietors be regarded as representing the general body of the people, the Court of Directors as representing an aristocratical senate, and the Chairman as representing the sovereign, we have an image of the British constitution; a system in which the different species of government, the monarchical, aristocratical, and democratical, are mixed and combined. In the constitution, however, of the East India Company, so much power was allotted to the democratical part, that a small portion appears to have been reservedto the other two. Not only were the sovereignty and the aristocracy both elective, but they were elected from year to year; that is, were in a state of complete dependence upon the democratical branch. Nor was this all: no decrees, but those of the democracy, were binding, at least in the last resort; the aristocracy, therefore, and monarchy, were subordinate and subject. Under the common impression of democratic ambition, irregularity, and violence, it might be concluded that the democratic assembly would grasp at the whole of the power, would constrain and disturb the proceedings of the Chairmen and Directors, would deliberate with violence and animosity, and exhibit all the confusion, precipitation, and imprudence, which are so commonly ascribed to the exercise of popular power. The actual result is extremely different from what the common modes of reasoning would prompt common minds to infer. Notwithstanding the power which, by the theory of the constitution, is thus reserved to the popular part of the system, all power has centered in the Court of Directors, and the government of the Company has been an oligarchy in point of fact. So far from meddling too much, the Court of Proprietorshas not attendedto the common * Letters Patent, 10 Will. III., Collection of Charters, &c. Book IV. affairs even sufficiently for the business of inspection: And the known principles ^8 of human nature abundantly secured that particular result. To watch, to scrutinize, to inquire, is labour; and labour is pain. To confide, to take for granted that all is well, is easy, is exempt from labour, and, to the great mass of mankind, comparatively delightful. On all ordinary occasions, on all occasions which present not a powerful motive to action, the great mass of mankind are sure to be led by the soft and agreeable feeling. And if they who transact have only sufficient prudence to avoid those occurrences which are calculated to rouse the people for whom they transact, the people will allow them abundant scope to manage the common concerns in a way conformable to their own liking and advantage. It is thus that all constitutions, however democratically formed, have a tendency to become oligarchical in practice. The more numerous body, who constitute the democracy, see the objects of ambition at so great a distance; and the competition for them is shared with so great a number, that in general they make but a feeble impression upon their minds: The small number, on the other hand, entrusted with the management, feel so immediately the advantages, and their affections are so powerfully engaged by the presence of their object, that they easily concentrate their views, and pour their energies with perfect constancy in the selfish direction. The apathy and inattention of the people, on the one hand, and the interested activity of the rulers on the other, are in politics two powers, the action of which may always be counted upon; nor has the art of government as yet exemplified, however the science may or may not have discovered, any certain means by which the unhappy effects of that action may be prevented.* Plan of Di- For conducting the affairs of the Company the Directors divided themselves conductof intoparties, called Committees; and the business into as many separate shares.f affairs. The first Committee was the Committee of Correspondence, of which the
• Not in the East India Company alone; in the Company of the Bank of England, the constitution of which is similar, oligarchy has always prevailed. Nor will the circumstances be found to differ in any joint stock association which the history of the British commerce presents to our view. So little does experience countenance the dangerous maxim, of the people's being always eager to grasp at too much power, that the great difficulty, in regard to good government, is, to get them really to exercise that degree of power, their own exercise of which is necessary for their protection.
f The following account is derived from an official report on the business of the Committees, called for by the Board of Control, and transmitted officially by the Court of Directors, of which the substance is given in Mr. Bruce's Historical View of Plans for the Government of British India, p. 600.