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

I know it is commonly imagined to have been the intention of parliament, to rescind the resolution of the 6th of May about the 6l. and 1-4th. per cent. but this imagination is contrary to fact, for that resolution is unrepealed, unrescinded, and unless the parliament, at the next meeting, shall make some law to prevent it, you may divide 6l. 1-4th per cent. at Christmas next—No single word, in either act of parliament, mentions the resolution of the 6th of May, and the act which restrains the dividing between the 8th of May, and the beginning of the next session, manifestly avoided mentioning the 6th of May, and made the interval of restraint commence on the 8th, to shew it did not mean to rescind the resolution of the 6th of May. Had the parliament designed to restrain the dividing according to that resolution at Christmas next, the interval of restraint would have gone beyond the 5th of January—as that clause, which restrains the present dividend, the manifest object of the parliament, stopt short of the 5th of July, and would not have stopt, as it has done, at the beginning of the next session of parliament.

The preamble of the act professes nothing for its object, but "to secure as well the permanent interest of the company, as the state of credit both private and public, from the mischiefs which must ensue, from an improper, and improvident increase of the dividends of the said company." Thus the parliament had in view only improper and improvident dividends, dividends made without a due regard to the circumstances of the company, whether the same should be 12l. 1-half per cent. 10l. per cent. or 6l. per cent. And I may appeal to yourselves, Gentlemen, whether you had any objection to the dividend of 12l. 1-half taking place at Christmas, that did not arise from a consideration of these circumstances, from your apprehension that your finances would not be such at Christmas, as to enable you to pay off the company's debts, to pay the 200,000l. the first half yearly payment to government, and to make a dividend of 6l. 1-4th to the proprietors. And I would ask, Whether any other consideration weighed with the legislature? You will confess, as the undoubted truth is, that this alone made you wish, that parliament would interpose to prevent the dividing 6l. 1-4th at Christmas. And I affirm this alone determined the wisdom of the legislature to interpose for that purpose. They have interposed, and what have they done? They have stopped your making any dividend till the meeting of parliament. But they have determined nothing with respect to the 6l. 1-4th per cent. The resolution of the 6th of May stands unrepealed; and if it shall then appear, such an increase will not be improper, and improvident, at Christmas next, if, I say, Gentlemen, after the arrival of the homeward-bound ships, after the examination of the annual account, which has never yet been produced, if after hearing the opinion of Lord Clive, concerning the real situation of your affairs in India, the flourishing state of your trade, the regular payment of your revenue, and the stability of your possessions, you shall think that the 6l. 1-4th per cent. may be paid without giving any cause of complaint to the creditors of the company, and join with the general court in a representation to the ministry, that such an encrease will not be improper, or improvident, at Christmas, there can be no reason to suppose, that parliament will again interpose, by a new act, to restrain your making such a dividend; and if they do not interpose by a new act, you may divide 6l. 1-4th per cent. by a due exercise of your present powers, as will be shewn in another place. But should there, on the contrary, be any room, at the meeting of the parliament, to believe such a dividend at Christmas will be improper and improvident, it is no doubt the intention of parliament to make a new act, the next session, to restrain your dividing 12l. 1-half per cent. 10l. per cent. 6l. per cent. or any per cent. at all, if it shall be so necessary, in order to prevent the mischiefs recited in the preamble before mentioned.

The remedy provided by the wisdom of the legislature, is, according to this construction, adequate to the mischiefs apprehended; as at the time of making the act, the dividend even of five per cent. was proved by you, and nothing can be clearer than that you did prove it, to be improper and improvident, they have restrained it till the meeting of parliament, and as it may then be represented by you, that such a dividend will not be improper, or improvident, they have made the time of restriction stop at that period, to give you a future power of dividing that sum, or 6l. 1-4th agreeable to the resolution of the 6th of May, if they see no reason for interposing against it. But if the legislature had not restrained you from making any dividend, between the 24th of June, and the beginning of the next session of parliament, if they had left you to divide the 5l. per cent. dividend for the 5th of July, they would have provided no present remedy at all.

It is well known, you opposed the encrease of dividend to 10l. per cent. in September last, and that you opposed it, upon the principle of it's being improper and improvident, from the state of the account, then produced by you to the general court. You have frequently declared since, you thought this measure of raising the dividend to 10l. per cent. inexpedient and unwarrantable, as the company have not discharged their debts—you opposed the resolution of increasing it to 12l. 1-half on the 6th of May, in no other manner, but by producing in court the same state of the company's affairs, upon which you opposed the increasing it to 10l. per cent. in the month of September, and declaring the state of affairs was not altered since that time; from whence it was to be understood that there was, in your opinion, no better reason for dividing 6l. 1-4th in May, than there had been, for dividing 5l. per cent. in September. On this principle, and on this principle alone, you called in the aid of the legislature, to assist you in preventing the mischief, that must be produced by such improper and improvident dividends, and on this principle alone the parliament interposed to support you—you proved to them you could not divide 6l. 1-4th, you proved too, by the same arguments, that you could not divide 5l. nay, that you could not divide at all; for I may with confidence affirm, that not a single argument was advanced to prove the dividend of 6l. 1-4th to be improper and improvident, that did not extend to prove the dividend of 5l. per cent. or any dividend at all, equally so.

I am warranted to go farther. If the company would not, in your opinion, be in a condition at Christmas to divide 6l. 1-4th, when the homeward-bound ships should have arrived, there was much less reason for suffering you to divide 5l. per cent. at Midsummer, while the ships were still upon the seas, the annual account unsettled, and the state of your affairs in India unknown. And yet, after this it seems, we are to suppose the legislature did not intend to prevent you making the 5l. per cent. dividend declared to be due the 5th of July. We are to suppose, that they did not intend to hinder your dividing after the rate of 10l. per cent. at Midsummer, when any dividend at all was proved improper and improvident, but that they intended to hinder your making a dividend after the rate of 12l. 1-half per cent. at Christmas, when future arrivals, and future accounts, might make such a dividend proper and expedient.

We all saw with concern, that the members of both houses were detained in town, to lend the wished-for interposition; had the Christmas dividend been the sole object of their attention, the business might have been postponed till the next session, as that is expected to take place before this dividend can be made; and the rather, as those lights may then be had, which could not be expected, though much wished for, at the end of the last session. But as preventing the dividend of 5l. per cent. declared for the 5th of July, was the principal object, it was necessary to settle that business before the session was closed; and I believe you are satisfied, Gentlemen, there was sufficient evidence laid by you before both houses, to prove a dividend of 5l. per cent. improper and improvident at that time, whether you agree to determine a dividend with the deputy-chairman upon a cash account, or with the chairman upon a general account. The wisdom of the legislature has stopt your dividing at Midsummer, while your ability is doubtful, and has left it in your power, after the beginning of the next session, to make a dividend of 6l. 1-4th at Christmas, if your ability is no longer doubtful at that time.

I presume, the first objection is by this time sufficiently answered, that it is clear the legislature made no mistake when they inserted the 24th of June; and that they meant to prevent any dividing between that day and the meeting of parliament.

I shall now proceed to the second objection, viz. That whether the legislature meant to prevent the dividend of 5l. per cent. taking place the 5th of July or not, the act will not have the effect contended for—it is insisted, that the clause (A) which restrains the company from making "any dividend, for, or in respect of, any time subsequent to the 24th of June, 1767," includes no more than the eleven days, between that day and the 5th of July, and will not affect the rest of the half year, but a proportionable dividend may be made up to the 24th of June.

By a resolution of a general court, held in September last, the company declared, that they would make a dividend on the 5th of July, then next following, of 5l. for every hundred, for the half year between the 5th of January and the 5th of July following. The sum to be divided, is 5l. for every hundred pounds. The time for which it is declared, is half a year. The day of payment 5 July. If the eleven days are deducted, you will divide only 4l. 13s. 10d. halfpenny, and not 5l. for every hundred. The dividend will not be for half a year. Nor will it be due the 5th of July, but the 24th of June.—This, and the September resolution, will be as different as any two proportions can possibly be, in which no single term is common to both. And such a dividend as this, can no more be said to be made by virtue of the resolution of September, than it can be said to be made by virtue of the preceding resolution, for dividing only 3l. per cent. or that of the 6th of May for 6l. 1-4th.

The dividends on the India company's property, are different from those on the government stock. The latter are intended by parliament, to continue a certain, or uncertain number of years, and the rate of interest is fixed unalterably, during the continuance of such stock, to be paid half yearly, on the 5th of January and the 5th of July; the India dividends have been declared by the company, when, how, for what time, and for what sum, they please. They might, before the 29th by-law was made, divide monthly, weekly, or on a distant day that cannot be called either a weekly, monthly, or half yearly payment; and before the appointed day, they might vary the dividend, might increase, decrease, or annul it.—Their usual practice has been, to declare a certain specific sum to be paid on a certain day, for the half year between such a day and such a day, and not as the government does, an annual sum payable half yearly.—They have not declared by the resolution of September an annual dividend of 10l. per cent. payable half yearly, in which case, perhaps, an apportionment might be admitted, but they have declared, the specific sum of 5l. for every hundred, to be paid on the 5th of July; in like manner as on the 6th of May, they did not declare an annual dividend of 12l. 1-half per cent. but the specific sum of 6l. 5s. to be paid for the half yearly dividend on the 5th of January next.