1730.

trading capital, the investment of the money, in this case, resembling the invest- CHAP. I. ment in government stock, the advantage, considering the low rate of interest at the time, was deemed sufficient to accomplish the end. Had the pernicious example, of lending the stock of trading companies to government, been rejected, a very small capital would have sufficed to fulfil the engagements of such a company; and either the gains upon it would have been uncommonly high, or the rate of duties upon the trade might have been greatly reduced.

The friends of this proposition urged; that, as the change which had taken place in the African trade, from monopoly to freedom, was allowed to have produced great national advantages, it was not to be disputed that a similar change in the Indian trade would be attended with benefits so much the greater, as the trade was more valuable; that it would produce a larger exportation of our own produce and manufactures to India, and create employment for a much greater number of ships and seamen; that it would greatly reduce the price of all Indian commodities to the people at home; that it would enable the nation to supply foreign markets with Indian commodities at a cheaper rate, and, by consequence, to a larger amount; that new channels of traffic would thence be opened, in Asia and America, as well as in some ports of Europe; that a free trade to India would increase the produce of the customs and excise, and thereby lessen the national debt;" that it would introduce a much more extensive employment of British shipping from one part of India to another, from which great profit would arise; and that it would prevent the nation from being deprived of the resources of those who, for want of permission or opportunity at home, were driven to employ their skill and capital in the Indian trade of other countries.

66

excited.

The attention of the nation seems to have been highly excited. Three The nation petitions were presented to the House of Commons, from the merchants, traders, &c. of the three chief places of foreign trade in England, London, Bristol, and Liverpool, in behalf of themselves and all other his Majesty's subjects; praying, that the trade to India might be laid open to the nation at large, and that they might be heard by their counsel at the bar of the House. The press, too, yielded a variety of productions, which compared with one another the systems of monopoly and freedom, and showed, or pretended to show, the preference due to the last. Though competition might appear to reduce the gains of individuals, it would, by its exploring sagacity, its vigilance, address, and economy, even with an equal capital, undoubtedly increase the mass of business; in other words, the annual produce, that is to say, the

1730.

Book IV. riches and prosperity of the country: The superior economy, the superior dispatch, the superior intelligence and skill of private adventure, while they enabled the dealers to traffic on cheaper terms, were found by experience to yield a profit on the capital employed, not inferior to what was yielded by monopoly; by the business, for example, of the East India company, whose dividends exceeded not eight per cent: Whatever was gained by the monopolizing company, in the high prices at which it was enabled to sell, or the low prices at which it was enabled to buy, was all lost by its dilatory, negligent, and wasteful management: This was not production, but the reverse; it was not enriching a nation, but preventing its being enriched.*

Efforts of the The Company manifested their usual ardour in defence of the monopoly. Company in support of the They magnified the importance of the trade; and asked if it was wise to risk monopoly. the loss of known advantages, of the greatest magnitude, in pursuit of others which were only supposed: They alleged that it was envy which stimulated the exertions of their opponents; coveting the gains of the Company, but unable to produce any instance of misconduct, without going forty years back for the materials of their interested accusations: The Company employed an immense stock in trade, their sales amounting to about three millions yearly: The customs, about 300,000l. per annum, for the service of government, ought not to be sacrificed for less than a certainty of an equal supply: The maintenance of the forts and factories cost 300,000l. a year: Where, they asked, was the security that an open trade, subject to all the fluctuation of individual fancy, one year liable to be great, another to be small, would afford regularly an annual revenue of 600,000l. for customs and forts? By the competition of so many buyers in India, and of so many sellers in Europe, the goods would be so much enhanced in price in the one place, and so much reduced in the other, that all profit would be destroyed, and the competitors, as had happened in the case of the rival companies, would end with a scene of general ruin.

Under the increased experience of succeeding times, and the progress of the science of national wealth, the arguments of the Company's opponents have gained, those of the Company have lost, a portion of strength. To exaggerate the importance of the Indian trade; and, because it is important, assume that the monopoly ought to remain, is merely to say, that when a thing is important,

* It was asserted by the merchants, and, as far as appears, without contradiction, that foreigners possessed at least a third part of the stock of the East India Company; and one third of their gain was thus made for the benefit of other countries. Political State, A. D. 1730, xxxix. 240.

1730.

it ought never to be improved; in things of no moment society may be allowed CHAP. I. to make progress; in things of magnitude that progress ought ever to be strenuously and unbendingly opposed. This argument is, unhappily, not confined to the use of the East India Company: Whoever has attentively traced the progress of government, will find that it has been employed by the enemies of improvement, at every stage of its progress; and only in so far as it has been disregarded and contemned, has the condition of man ascended above the miseries of savage life. Instead of the maxim, A thing is important, therefore it ought not to be improved; reason would doubtless suggest, that the more any thing is important, the more its improvement should be studied and pursued. When a thing is of small importance, a small inconvenience may suffice to dissuade the pursuit of its improvement. When it is of great importance, a great inconvenience alone can be allowed to produce that unhappy effect. If it be said, that where much is enjoyed, care should be taken to avoid its loss; this is merely to say that men ought to be prudent; which is very true, but surely authorizes no such inference, as that improvement, in matters of importance, should be always opposed.

The Company quitted the argument to criminate the arguers: The objections to the monopoly were the impure and odious offspring of avaricious envy. But, if the monopoly, as the opponents said, was a bad thing, and free trade a good thing; from whatever motive they spoke, the good thing was to be adopted, the evil to be shunned. The question of their motives was one thing: the truth or falsehood of their positions, another. When truth is spoken from a bad motive, it is no less truth; nor is it less entitled to its command over human action, than when it is spoken from the finest motive which can enter the human breast; if otherwise, an ill-designing man would enjoy the wonderful power, by recommending a good course of action, to render a bad one obligatory upon the human race.

Because the East India Company had a large stock in trade, that was no reason why the monopoly should remain. If a large capital was necessary, the capital of the mercantile interest of Great Britain was much greater than the capital of the East India Company; and of that capital, whatever proportion could find a more profitable employment in the India trade, than in any other branch of the national industry, that the Indian trade would be sure to receive.

With regard to the annual expense of the forts and factories, it was asserted by the opponents of the Company; and, as far as appears, without contradiction, that they defrayed their own expense, and supported themselves.

Book IV.

1730.

In parliament

the advocates

of the mono

As to the customs paid by the East India Company; all trade paid customs, and if the Indian trade increased under the system of freedom, it would pay a greater amount of customs than it paid before; if it decreased, the capital now employed in it would seek another destination, and pay customs and taxes in the second channel as well as the first. To lay any stress upon the customs paid by the Company, unless to take advantage of the gross ignorance of a minister or a parliament, was singularly absurd.

But of all the arguments of the Company, none more strongly displayed the power of self-delusion, than their endeavour to create a belief, that the competition of free trade would make the merchants buy so dear in India, and sell so cheap in England, as to ruin themselves. What was it that hindered this effect from taking place, in trading with France, in trading with Holland, or any other country, with which the commerce was free? Or what hindered it in every branch of business within the kingdom itself? If the two East India Companies ruined themselves by competition, what folly was it to reason from a case, which bore no analogy whatsoever to the case which was under contemplation; at the same time that all the cases which exactly corresponded, those of free trade, and boundless competition, led to a conclusion directly the reverse? If two East India Companies ruined one another, it was only an additional proof that they were ineligible instruments of commerce. The ruin proceeded not from the nature of competition, but the circumstances of the competitors. Where two corporate bodies contended against one another, and the ruin of the one left the field to the other, their contention might very well be ruinous; because each might hope, that, by exhausting its antagonist in a competition of loss, it would deliver itself from its only rival. Where every merchant had not one, but a multitude of competitors, the hope was clearly vain of wearing all of them out by a contest of loss. Every merchant would deal therefore on such terms alone, as allowed him the usual, or more than the usual rate of profit; and he would find it his interest to observe an obliging, rather than a hostile deportment toward others, that they might use an obliging, rather than a hostile deportment toward him.

As it is this principle which

produces the harmony and prosperity of all other cases of trade, in which freedom prevails, it remained to be shown why it would not produce them in the Indian trade.

The subject was introduced into parliament, and discussed. But the advocates for the freedom of the trade were there overruled, and those of monopoly

poly prevailed. triumphed.

which the

renewed.

In order to aid the parliament in coming to such a decision as the Company CHAP. I. desired, and to counteract in some degree the impression likely to be made by 1732. the proposal of their antagonists to accept of two per cent. for the whole of Terms upon the loan to government, they offered to reduce the interest from five to four per charter was cent., and, as a premium for the renewal of their charter, to contribute a sum of 200,000l. to the public service. On these conditions it was enacted that the exclusive privileges should be prolonged to Lady Day in the year 1766, which, with the usual addition of three years' notice, carried the term of the monopoly to 1769; with a proviso that nothing in this arrangement should be construed to limit their power of continuing a body corporate, and of trading to India on their joint stock with other of their fellow subjects, even after their exclusive privileges should expire.*

On the ground on which the affairs of the East India Company were now State of the Company's established, they remained till the year 1744. From 1730 to that year, the trade. trade of the Company underwent but little variation. Of goods exported, the amount indeed was considerably increased; but as in this stores were included, and as the demand for stores, by the extension of their forts, and the increase of military apparatus, was augmented, the greater part of the increase of exports may be justly set down to this account. The official value of the goods imported had kept rather below a million annually; sometimes indeed exceeding that sum, but commonly falling below it, and some years to a considerable amount; with little or no progressive improvement from the beginning of the period to the end. The exports had increased from 135,4847. the exportation of the first year, to 476,2741. that of the last; and they had been still greater in the preceding year. But the greater part of the increase had taken place after the prospect of wars and the necessity of military preparations; when a great addition was demanded in the article of stores.t

In the year 1732, the Company first began to make up annual accounts; and In 1732, the Company first from that period we have regular statements of the actual purchase of their ex- made up annual accounts. ports, and the actual sale of their imports. In the year 1732, the sales of the Company amounted to 1,940,9967. In 1744, they amounted to 1,997,506.;

* As a corporate body is seldom hurt by its modesty, the Company alleged that they had a right, by a preceding act of parliament, to the monopoly in perpetuity: but, to avoid disputes, they consented to wave this claim, for a certainty of thirty-six years. 3 Geo. II. c. 14. Collection of Statutes, p. 73. Anderson, ad an. 1730. Political State, xxxix. 258.

+ Sir Charles Whitworth's Tables, part ii. p. 9.