A History of India, Third Edition

THE PERIOD OF COLONIAL RULE

raise a hand against it. More and more of these private traders became
company directors and thus gained considerable influence over the conduct
of its affairs. Many of these people were actually former servants of the
company, and had gone on to establish their own agencies in India. Their
interests were opposed to those of the shipowners who leased craft to the
company and had also managed to obtain seats on the board of directors.
Following the rise of the tea trade these shipowners supplied
increasingly specialised and expensive ships to the company; they could not
have used these vessels for private trade and were therefore deeply
concerned about the rights and privileges of the company. In fact, they
would have been satisfied if the trade monopoly had been changed into a
transport monopoly, thus protecting their income from high freight
charges. But this, of course, would have appeared absurd and so the
monopoly of trade had to be maintained in order to protect the shipping
interests. The private trading interests were accommodated by getting
quotas for private shipments on the company’s ships. This partial abolition
of the monopoly was also absurd; it was, however, in keeping with the
normal absurdities prevailing at that time.

The Regulating Acts

Apart from the shipping interests, there were further reasons for a post-
ponement of the transition from the trading monopoly to the monopoly of
territorial rule. In the final decades of the eighteenth century the latter
monopoly would not have been a lucrative business. The struggle for
supremacy in India did cost a good deal of money. The company was
heavily indebted and yet the directors insisted on getting their dividend.
The government could not prevent this without at the same time risking
that the directors might abdicate responsibility for territorial rule, thus
enmeshing Westminster at a most inopportune moment. The endeavours of
Parliament to pass Regulating Acts without abolishing the privileges of the
company must be seen in this context.
The company was supposed to act as a buffer which would shield the
British political system from being directly affected by the course of events
in India. For this purpose some changes in the management of the
company’s affairs were required. There should be a centralised command
in India, but this command should be checked by people who enjoyed the
confidence of politicians in Britain. This is why the first Regulating Act of
1773 made provision for the appointment of a governor general and for
the establishment of a council composed of four people sent from London
who could advise and outvote the governor general. Warren Hastings had
to suffer the consequences of this structure. Lord Cornwallis, his successor,
accordingly insisted on an amendment of the 1773 Act, as he did not want
to share the same fate.