laying it in some measure open, the East India
company, in opposition to this proposal,
represented, in very strong terms, what had
been, at this time, the miserable effects, as
they thought them, of this competition. In
India, they said, it raised the price of goods
so high, that they were not worth the buying;
and in England, by overstocking the market,
it sunk their price so low, that no profit could
be made by them. That by a more plentiful
supply, to the great advantage and conveniency
of the public, it must have reduced very
much the price of India goods in the English
market, cannot well be doubted; but that it
should have raised very much their price in
the Indian market, seems not very probable,
as all the extraordinary demand which that
competition could occasion must have been
but as a drop of water in the immense ocean
of Indian commerce. The increase of demand,
besides, though in the beginning it may
sometimes raise the price of goods, never fails
to lower it in the long-run. It encourages
production, and thereby increases the competition
of the producers, who, in order to undersell
one another, have recourse to new divisions
of labour and new improvements of
art, which might never otherwise have been
thought of. The miserable effects of which
the company complained, were the cheapness
of consumption, and the encouragement given
to production; precisely the two effects which
it is the great business of political economy to
promote. The competition, however, of which
they gave this doleful account, had not been
allowed to be of long continuance. In 1702,
the two companies were, in some measure,
united by an indenture tripartite, to which the
queen was the third party; and in 1708, they
were by act of parliament, perfectly consolidated
into one company, by their present
name of the United Company of Merchants
trading to the East Indies. Into this act it
was thought worth while to insert a clause,
allowing the separate traders to continue their
trade till Michaelmas 1711; but at the same
time empowering the directors, upon three
years notice, to redeem their little capital of
seven thousand two hundred pounds, and
thereby to convert the whole stock of the company
into a joint stock. By the same act, the
capital of the company, in consequence of a
new loan to government, was augmented from
two millions to three millions two hundred
thousand pounds. In 1743, the company advanced
another million to government. But
this million being raised, not by a call upon
the proprietors, but by selling annuities and
contracting bond-debts, it did not augment
the stock upon which the proprietors could
claim a dividend. It augmented, however,
their trading stock, it being equally liable
with the other three millions two hundred
thousand pounds, to the losses sustained, and
debts contracted by the company in prosecution
of their mercantile projects. From 1708,
or at least from 1711, this company, being
delivered from all competitors, and fully established
in the monopoly of the English
commerce to the East Indies, carried on a
successful trade, and from their profits, made
annually a moderate dividend to their proprietors.
During the French war, which began
in 1741, the ambition of Mr. Dupleix, the
French governor of Pondicherry, involved
them in the wars of the Carnatic, and in the
politics of the Indian princes. After many
signal successes, and equally signal losses,
they at last lost Madras, at that time their
principal settlement in India. It was restored
to them by the treaty of Aix-la-Chapelle;
and, about this time the spirit of war and
conquest seems to have taken possession of
their servants in India, and never since to
have left them. During the French war,
which began in 1755, their arms partook of
the general good fortune of those of Great
Britain. They defended Madras, took Pondicherry,
recovered Calcutta, and acquired the
revenues of a rich and extensive territory, amounting,
it was then said, to upwards of
three millions a-year. They remained for
several years in quiet possession of this revenue;
but in 1767, administration laid claim
to their territorial acquisitions, and the revenue
arising from them, as of right belonging
to the crown; and the company, in compensation
for this claim, agreed to pay to government
four hundred thousand pounds a-year.
They had, before this, gradually augmented
their dividend from about six to ten per cent.;
that is, upon their capital of three millions
two hundred thousand pounds, they had increased
it by a hundred and twenty-eight
thousand pounds, or had raised it from one
hundred and ninety-two thousand to three
hundred and twenty thousand pounds a-year.
They were attempting about this time to raise
it still further, to twelve and a-half per cent.,
which would have made their annual payments
to their proprietors equal to what they
had agreed to pay annually to government, or
to four hundred thousand pounds a-year.
But during the two years in which their agreement
with government was to take place,
they were restrained from any further increase
of dividend by two successive acts of parliament,
of which the object was to enable them
to make a speedier progress in the payment
of their debts, which were at this time estimated
at upwards of six or seven millions
sterling. In 1769, they renewed their agreement
with government for five years more,
and stipulated, that during the course of that
period, they should be allowed gradually to
increase their dividend to twelve and a-half
per cent; never increasing it, however, more
than one per cent. in one year. This increase
of dividend, therefore, when it had risen to its
utmost height, could augment their annual