As to the internal or carrying trade of the country, to engage in it never entered into the plans of the Company or its servants, which were confined to the valuable and profitable traffic between Europe and India; and, had they thought of it, it is clear that it could not have been profitably conducted by foreigners under a native government, which had the power of enforcing justice in the transactions between them and its own subjects.
But after the deposition of Suraj-u-Dowlah, and the elevation of Meer Jaffier, the influence of the English in Bengal became paramount; and, as they were all traders, some of them extended their views, and availed themselves of their political superiority to enter into the internal trade also; and, applying their partial freedom from duties on foreign trade to circumstances totally different, employed it to exempt themselves from duties even on their illegal internal commerce; an indulgence which, of course, had never been intended.
As long as Clive remained in Bengal, he checked these pretensions by his characteristic firmness and spirit; but no sooner had he left the country, than there was a general rush of the Company's servants, and of Europeans of all classes, towards the interior trade of the three provinces. In the foreign trade, the Company and its officers had, indeed, the advantage of trading free of duties, but the returns were tardy, and in some instances uncertain; whereas in the internal trade the return was rapid and certain; and, as they most unjustly claimed for this trade the same exemption from duties which they had enjoyed for the articles of their foreign export trade, it is clear that they had it in their power to undersell the native merchant in his own market; that, to the extent of their capital, they had all the advantages of a monopoly; and that, as their trade increased, the revenues of the sovereign must decay. By this assumption they, in fact, made themselves participators in the benefit of the taxes imposed for the public service.
Of all the articles of inland trade, that of salt was by much the most important. Its manufacture and trade had always, to a certain extent, been a monopoly, and was generally farmed or granted for a price, as a boon, to some favourite of the prince. Being a necessary of life, the demand was great and steady; and the capital employed in the trade being limited, the return on it was very large. It seems, under the frugal management of the natives, to have amounted to 200 per cent. After the deposition of Meer Jaffier in favour of Cossim Ali, planned, as we have seen, by Mr. Holwell, and imprudently executed by Mr. Vansittart in 1760, not long after Lord Clive's departure, the abuses of the English private trade in this and all its other branches, no longer sufficiently checked by the Governor, increased daily. Fortunes were amassed with singular rapidity; and such was the certainty of gain, that native capital flowed plentifully into the hands of the English merchant, who employed it himself, or permitted the trade of natives to be carried on covertly under his name. It could not be otherwise; for, while the native purchased the commodity at a high rate, paid an enormous duty, and was subject to all the expense and annoyance of frequent tolls, exactions, and stoppages, the English had become possessed of the principal salt works, paid no duty, and carried their wares at pleasure about the country for sale free from all demand or exaction whatever.
Cossim Ali, a prince of great sagacity, and no mean financier, remonstrated with Mr. Vansittart on the abuses exercised by the English, and still more under their name, all over the country, to the oppression of his subjects, and the ruin of the public revenues; for not only did the Gomashtahs, and others in the service of the English, refuse payment of customs, but they insulted, and sometimes even insolently punished, on their own authority, the officers of the native Government. Mr. Vansittart, quite aware of the justice of the complaints, and not unwilling to remedy them, as far as the little power left in his hands by the rapacity of his Council, and his own want of vigour, would allow, at length entered into a treaty with the Subah[70], by which, among other stipulations, it was agreed, that the English should be allowed to engage in the inland trade, but subject to duties; and, in particular, were to be allowed to purchase salt, subject to a low duty of 9 per cent. only, and might transport it about the country, free from all the transit duties paid by the Subah's own subjects.[71]
This arrangement, such as it was, afforded but a feeble redress to Meer Cossim: but the Council, themselves the principal traders, were indignant, even at this moderate deduction from their commercial gains, and disavowed the act of the Governor. The consequence was what we have seen: Meer Cossim, seeing his subjects deprived of their trade, and himself of his revenues, proclaimed a general exemption from customs and duties for two years, to his subjects and to all others.
The rage of the Council of Calcutta at this step, rendered necessary by their own conduct, led to a bloody war, the massacre of Patna, the deposition of Meer Cossim, and the restoration of Meer Jaffier. It was not without reason that the Court of Directors regarded "the inland trade as the foundation of all the bloodshed, massacres, and confusion which have happened of late years in Bengal."
By the treaty[72] with the restored prince, the English got a right of trading by their own dustuck, free of all taxes, duties, and impositions, excepting one of two and a half per cent. on salt. This was, in effect, giving them a monopoly of that profitable trade; and it appears that even this duty, trifling as it was, was never levied. The arrangement threw the whole inland trade of the country into the hands of the English and their agents, whose violence totally paralysed the native Government.
These proceedings, and their fatal consequences, were viewed by the Court of Directors with indignation and alarm. The new assumptions had not even the air of being for their benefit, but were exclusively for the advantage of their servants. They therefore, in order to repress the evil, on the 8th of February, 1764, sent out an order to put an end to the inland trade in salt, betle-nut, and tobacco, and all other articles produced and consumed in the country.