He landed in India in May, 1765. During his administration of about eighteen months he secured for the company the virtual sovereignty over its conquests without dispossessing the nominal rulers, and he took measures for the reformation of the company's service. Averse from a forward policy of conquest, he restored Oudh to the nawáb wazír on payment of £500,000. Allahábád and Kora were assigned to the emperor, together with a tribute from Bengal, and in return Sháh Alam granted to the company the right of levying and administering the revenues of Bengal, Behar, and Orissa, together with jurisdiction in the Northern Circars. The nawáb of Bengal received an annual pension of £600,000, and surrendered all his power to the company, except the right of criminal jurisdiction. Clive reorganised the army, and stopped the double batta, or allowance, granted by Mír Jafar after the battle of Plassey. He forbade illicit trade and the receipt of presents, and secured the company's servants increased salaries. These reforms were effected in the face of violent opposition, both in civil and military quarters. Two hundred officers conspired to resign their commissions on the same day. Clive faced the mutiny successfully; he cashiered the leaders and accepted the submission of the younger men. Ill-health obliged him to return to England in January, 1767.
AFFAIRS OF THE EAST INDIA COMPANY.
The enormous private fortunes made in India led people to believe that the company was far richer than it really was. During the late wars the dividend was 6 per cent. In 1766 the proprietors urged an increase. To this the directors objected that the debts of the company were heavy, and that a premature increase would raise the price of stock to a point at which it could not be maintained, and might end in a disaster like that of the South Sea Company. The ministers sent a message of warning, announcing that the affairs of the company would probably be considered in parliament. They concerned the public, for the company enjoyed protection and privileges granted by the nation. Nevertheless the proprietors carried their point, and a dividend of 10 per cent. was declared. Chatham held that the time had come for parliament to inquire by what right the company administered its territorial revenues. He considered that it had no right to its new position of a virtually sovereign power, that the sovereignty of the crown should be asserted, and that in return for the privileges which it enjoyed it should contribute a portion of its revenues to the national treasury. The company should apply to parliament to make good its defective title, and parliament should then settle what portion of its revenues should be assigned to it by way of favour. His ideas were based on an imperial policy. As early as 1759 he held that the territorial acquisitions of the company should be claimed for the nation. With him it was a matter not merely of revenue but of government, and though his ideas are indistinctly indicated, and were perhaps vaguely formed, it is probable that he had in his mind some idea of making the government of India an imperial matter. Yet, sharing as he did the general belief as to the wealth of the company, he certainly attached much importance to the possibility of obtaining from it an increase of the public revenue.
A special reason may be discerned for his desire to obtain such an increase at the end of 1766. The government wanted money; there was a heavy debt on the civil list, and the navy needed a large grant. An increase of taxation was inadvisable, for corn was dear. Various schemes for the increase of revenue were in the air. Many members of parliament, the court party, the country interest, and the Grenville and Bedford connexions were regretting the repeal of the stamp act. "We must look to the East and not to the West," wrote Beckford to Chatham,[75] and he spoke the mind of his leader. The cabinet was divided. Grafton and Shelburne agreed with Chatham that the question of the company's rights should be decided by parliament. Townshend declared that it would be "absurd" to force the company to share its power with the crown, and both he and Conway desired that the question of right should be waived and that its relations with the government should be settled by amicable arrangement. In May, 1767, the proprietors insisted on a dividend at the rate of 12½ per cent. A motion was carried to bring the affairs of the company before parliament. Townshend, as Chatham said, "marred the business"; he managed to open the door for negotiation, and to make it a mere matter of money. In June, 1767, a bill was passed, based on an agreement with the company, which in return for the confirmation of its territorial revenues, bound itself to pay the government £400,000 a year for two years; and parliament prohibited a higher dividend than 10 per cent. The bill was violently opposed, specially by the Rockingham party, on the ground that it was an unjustifiable interference with the rights of property. In 1769 the agreement with the company was renewed, and permission was given for a dividend of 12½ per cent, on certain conditions. The company was then in debt over £6,000,000.
HAIDAR ALÍ.
A new and formidable enemy had arisen in Southern India. In 1767 Haidar (Hyder) Alí, the ruler of Mysore, made war upon the English in conjunction with the Nizám of Haidarábád. The allies were defeated, and the nizám made peace. Haidar, however, continued the war. He had a large force of cavalry which he brought to great perfection, and, as the English were deficient in that arm, he was able to do much mischief in the Karnatic. In April, 1769, having previously drawn the English army away from Madras by skilful manœuvres, he suddenly appeared in the immediate neighbourhood of the town. The English were forced to make a treaty with him on his own terms. The news sent the company's stock down 60 per cent. The same year the crops failed in Bengal, and in 1770 there was a grievous famine which is said to have carried off a third of the inhabitants. Yet in spite of the decreasing revenue and the heavy debts of the company, the proprietors were receiving dividends of 12 and 12½ per cent.
FOOTNOTES:
[68] Newcastle's Narrative, p. 11.
[69] Annual Register, viii. (1765), 92.
[70] Bedford Correspondence, iii., 281; Walpole, Letters, iv., 365-66.