A Caution to the Directors of the East-India Company / With Regard to Their Making the Midsummer Dividend of Five Per Cent. Without Due Attention to a Late Act of Parliament, and a By-law of Their Own

by Anonymous

"That it shall not be lawful, for any general court of the said company, at any time between the eighth day of May, 1767, and the beginning of the next session of parliament, to declare, or resolve upon, any encrease of dividend, beyond the rate of 10l. per cent. per ann. being the rate at which the dividend for the half year ending the 24th day of June, 1767, is made payable."

Cap. 48. C.

"That, from and after the 10th day of July, 1767, no declaration of a dividend shall be made, by any general court, of any of the said company's, other than one of the half yearly, or quarterly general courts, at the distance of five calendar months, at the least, from the last preceding declaration, of a dividend, and that no declaration of more than one half yearly dividend, shall be made by one general court."

29. By-law. D.

"That no alteration be made in the dividend, on the capital stock of this company, without first giving six months publick notice."

By clause A, it appears that no dividend can be made, after the 24th of June, without the vote of a general court, (and by clause C, that must be a quarterly court) called for the purpose of declaring the intended dividend, with seven days previous notice thereof, in writing fixed upon the Royal Exchange—by the resolution, of your court of directors, of the 22d of May last, as well as by your uniform practice in making dividends, the half year's dividend of 5l. per cent. declared in September last, and now in course of payment, was due the 5th of July last, and that day, and not the 24th of June, is the day on which this dividend must be understood to be made, in consequence of the September declaration. Now as this dividend declared to be made on the 5th of July, is made for and in respect of time subsequent to the 24th of June, and is made not in pursuance of a vote, carried by ballot, in a general quarterly court, summoned for the purpose of declaring a dividend, with seven days notice of such a meeting, given in writing and fixed upon the Royal Exchange, it is not warranted by the act, but is, according to the plain and obvious construction of the act, illegal.

I have heard two objections, and two only, made to this construction; one, that the legislature was mistaken as to the time, in which the dividends are always made by this company, supposing them payable the 24th of June, instead of the 5th of July, and that they did not intend to prevent your dividing 5l. per cent. at Midsummer. The other, that if they were not mistaken, and if they did intend to prevent your dividing the 5l. per cent. at Midsummer, the act itself fails in this intention, since it only prevents your dividing for eleven days, being the interval between the 24th of June and the 5th of July, and you are, on this account, left at liberty to pay the 5l. per cent. after deducting the proportional part for those eleven days.

As to the first, I think nothing can be more absurd, than to suppose that the wisdom of the legislature, should be capable of such a blunder. In order to this, we must suppose, that they who, in the same session, made a law with respect to the publick funds, in which the dividends are fixed for payment on the 5th of July, and the 5th of January, could take it for granted that the India dividends were fixed for the 24th of June and the 24th of December; and we must suppose too that they could take this for granted, which is so contrary to the general practice in other funds, without making any enquiry of the directors, who daily attended, and were examined while the bill was passing: for if they did make enquiry, they must have heard that this company observed the same days of payment with the government, and have done so invariably from the original institution; and in such a case, the blunder can hardly be called the effect of oversight, but a wilful blindness.

This absurdity is too gross to pass current, but the clause (C) in cap. 48 of the said act, will shew that the parliament were not ignorant, that the dividends would become due on the 5th of July, but have proceeded on the consideration of it's being due on that day. In this clause, they say, that no declaration, &c. shall be after the 10th of July. Now when they had in contemplation the making of a dividend, they mentioned the 24th of June, a time preceding the 5th of July, in order to prevent it; when they had in contemplation the declaring of a dividend, they say the 10th of July subsequent to the 5th, to distinguish between the terms making and declaring, which have been so often confounded.

It must appear highly improbable to every impartial mind, that the legislature should enact a law, to regulate the making of dividends, without knowing the time, when they are made payable; or if they were ignorant, that they would not enquire, when the directors attended to answer all enquiries, and were actually examined from day to day, while the bill was framing; and very few will be hardy enough to affirm, that if the parliament were aware, that the dividends would be due the 5th of July, such a blunder could creep into the act of parliament. The most natural construction, upon reading the said act, is, that the 24th of June was not inserted by mistake, but by design, and that the legislature plainly intended, in the restraining clauses, that the India company should make no dividend at all from Christmas last, which was before the encrease of the dividend, to the beginning of the next session of parliament; in which time, all your homeward-bound ships would arrive, the Midsummer annual account would be made up, and the ministry would have an opportunity of learning from Lord Clive, what was the real situation of the affairs in India.