On this point, unfortunately, the Directors and Proprietors differed. While the Directors, as managers of the general stock, and intimately acquainted with the difficulties amidst which they were placed, looked to the clearing off of their burdens, and, the better to effect this object, had, not very wisely, attempted to conceal the expected extent of the new revenues, the Proprietors, who, by various channels, had gained information, probably exaggerated, of the recent addition to the Company's means, clamoured for an instant rise of dividend. The Directors saw that the change which had taken place in the Company's affairs in Bengal, however favourable, could not at once operate in Europe. The immediate demands on the Company were great, while a considerable period of time was requisite to allow the capital sent from Bengal to China, and elsewhere to be invested in goods, returned to England, sold, and the proceeds realised. The Company might be in great affluence abroad, and bankrupt at home. Demands to the amount of 2,600,000l. became payable between Michaelmas and Midsummer (1766), while only 2,000,000l. were available to discharge them. It was therefore necessary to borrow in order to pay even the ordinary dividends.
The Court of Directors did not show much ability in extricating themselves from the dilemma in which they were placed. Had they fully weighed the difficulties of their situation, and the necessity there was, even for the sake of the prosperous management of the Company's funds, and the payment of its lawful creditors, that the Court of Proprietors should be conciliated and unanimity preserved, they would themselves, without concealing their difficulties, have proposed some moderate increase of the annual dividend, and have held out the prospect of a farther rise at some future and not very distant period. Instead of acting on some such plan of politic conciliation, they shunned meeting the Proprietors, and exerted every endeavour to continue the low dividend then payable, so very disproportioned to the price to which stock had now risen. Their situation was delicate, but their conduct was injudicious, as they were liable to be overruled by the Court of Proprietors in any contest with whom they must inevitably fail.
A party of considerable strength had lately sprung up in the Court of Proprietors. We have seen that when, on Lord Clive's arrival in Bengal, an investigation had been commenced into the transactions that attended the death of Meer Jaffier and the accession of Nujm-u-Dowla, and particularly as to the large sums of money paid to the members of Council on that occasion. Mr. John Johnstone, the most active agent in these proceedings, had resigned the service, and so placed himself, for the time, beyond the reach of the Company; and that some other members of the Council had afterwards been dismissed. They, with many of lower rank in the civil and military services who had resigned or been discharged, in consequence of Lord Clive's inquiries and reforms, had, as already mentioned, purchased a large amount of India stock, the better to enable them to wreak their revenge on the man who had obstructed their plans of wealth.
The Court of Directors, desirous of punishing the infraction of their orders, and of supporting Lord Clive in his exertions to fulfil their instructions, directed a case to be laid before the Attorney and Solicitor-General, and the Company's law-officers, who gave an unanimous opinion, that the orders of the Company for the execution of the covenants against accepting presents, having been received and laid before the board, prior to the death of Meer Jaffier, the delay in the execution, for purposes the object of which was so evident, could form no justification; that the covenants were binding in equity, and that suits ought to be brought for restitution of the pretended presents. In consequence of this opinion, bills were filed at the instance of the East India Company against Mr. Johnstone, and the other members of Council in England; and orders were sent to India to adopt corresponding measures against such as were still in that country.
Mr. Johnstone, who was not only a man of family, but of uncommon resolution and considerable talent, was strongly supported by several large proprietors of stock. When the time approached that his answers were to be given in, his brother, Mr. William Johnstone, afterwards Sir William Pulteney, waited on the Chairman, Mr. Dudley, and delivered a copy of a motion intended to be made at the General Court to be held the next day, recommending to the Court of Directors to confirm the presents received by the Company's servants in Bengal, before the 9th of May, 1765, when the covenants were presented to them to be signed, and to countermand all prosecutions against them. The Chairman was at the same time informed, that, if this motion was rejected, the conduct of Lord Clive should be called in question. Mr. Dudley replied, that they were welcome to exhibit any charge against Lord Clive, but that the prosecutions could not be withdrawn. Next day, however, the opposition, probably finding that they had not strength enough to carry their motion, did not bring it forward; and Mr. Pulteney himself seconded a motion for adjournment.
But the determined resistance of the Directors to any increase of dividend gave their enemies great advantages over them in the Court of Proprietors. The Directors had themselves caused a motion for an increase of 2 per cent. to be brought forward in June, 1766, when they succeeded in getting it negatived; and thus, in consequence of particular rules, which regulated the Court's proceedings, gained some time. But this delay did not check the determination of the party in opposition, which daily gained strength. Lord Holland, and several other great proprietors, joined it, and Mr. Johnstone and his friends threw all their weight into the scale. Only two days before the Quarterly Court, in September[135], the party split 125,000l. stock into shares, and, by their exertions, succeeded in carrying the dividend to 10 per cent., in opposition to the expressed wish and advice of the Court of Directors. But a consequence of this difference of opinion between the Courts was, that this declared increase of dividend had no influence in raising the price of their stock.
At this period, party animosity ran very high, and produced its usual effects of mutual abuse and recrimination. The opposition started a paper, called the India Examiner, which the Directors answered in the India Observer.
Although it was on occasion of the vote for this increase of dividend that the Government began to intermeddle in the affairs of the Company, it may be most convenient, before attending to the proceedings of the Ministry, to conclude the narrative of the contest of the Directors with the Court of Proprietors.[136]