DIVIDENDS.

PREVIOUSLY to the union of the two Companies much irregularity existed in declaring dividends on the capital stock of the East-India Company; it appears to have been the practice to make dividends upon general computations, without any particular or recorded account of the state of the Company's affairs.

After the union of the two Companies in 1708, six per cent. per annum was allowed to the proprietors upon sums paid in on account of their subscriptions; and, in addition to this, they were allowed dividends, which were made two or three times in the year, of six, eight, and ten shillings per cent. The real dividend may be computed to have amounted from five to ten per cent.

In the year 1722, the dividend was fixed at eight per cent. per annum; and, in 1732, it was reduced to seven per cent.

per annum.

In 1733, an ineffectual attempt was made to institute a by-law to place the regulation of all future dividends in the hands of a committee, composed partly of Directors and partly of Proprietors.

A by-law was subsequently adopted in 1734, which prescribed "that no alteration should be made in the dividend on the capital stock of the Company without first giving six months' public notice."

In the year 1743, six months' notice having been given, the dividend was increased to eight per cent. per annum, upon the ground of the prosperous state of the Company's affairs; in 1755, it was found necessary to reduce the dividend to six per cent. per annum.

When information was received of the grant of the Dewanny,

great

great desire was manifested for an increase of dividend; and on the 18th of June 1766, the day on which the despatches containing that important intelligence were read to the General Court, a motion was made to increase the dividend to eight per cent. per annum.

The Court of Directors, however, were not prepared to sanction such a measure: they admitted that great advantages had been gained by the Company in the East; but at the same time stated that the extensive military operations had entailed a large and heavy expense, that their profits were remote and precarious, their debts urgent and certain, and that justice and good policy concurred in recommending in the first place a discharge of their incumbrances, before they thought of participating in supposed profits. This impression of the Court's unanimous opinion against any increase led to the motion being withdrawn. The expectation of many of the proprietors, however, was not to be disappointed. The subject came again under the consideration of the general court on the 24th September 1766. The Court of Directors, anticipating a renewal of the proposition for an increase of dividend, had prepared a report, containing their unanimous opinion, "that it would not be for the interest of the Company, nor prudent at that time, to declare any addition to the dividend."

Notwithstanding this declaration on the part of the executive, it was determined by a ballot, taken on the 26th of September 1766, that the half-year's dividend, from Christmas to Midsummer 1767, should be five per cent., being at the rate of ten per cent. per annum. The numbers were three hundred and forty votes for the question, and two hundred and thirtyone votes against the question, and on the 6th of May 1767 the General Court came to a resolution to divide six and a quarter per cent, for the half year, ending at Christmas 1767.

At this time Parliament was directing its attention to the affairs of the Company; on the day following the declaration of six and a quarter per cent. by the General Court, the House of Commons called for a copy of the proceedings of that Court, and of other proceedings connected with the former declaration of a half yearly dividend of five per cent.

When the House of Commons called for the papers upon this

subject,

subject, the Directors entreated the General Court to reconsider their resolution; after much discussion, it was agreed to endeavour, in a general arrangement then pending with his Majesty's ministers for settling the Company's affairs, to secure the annual sum of £400,000 as a dividend to the proprietors, which would have been at the rate of twelve and a half Parliament, however, determined, previously to adopting a plan for the general administration of the affairs of India, to pass a law for regulating the dividends; and, on the 11th of May 1767, a bill for that purpose was accordingly introduced.

per cent.

The object of this bill was to restrain the declaration of dividends, except by ballot, and after seven days' notice; and also to limit the dividend, from the last declaration to the beginning of the then session of Parliament, to ten per

cent.

On the 18th of May 1767, it was proposed in the General Court to petition against the bill. This proposition led to a long and warm debate, which was terminated by a demand of a ballot to be taken instanter. The Directors disapproved of this course, and strong protests were entered against the adoption of it. It was, however, persisted in; and the ballot was taken between the hours of nine and eleven o'clock at night. The decision was in the affirmative.

The extraordinary circumstances under which the ballot upon this petition was taken, attracted the particular notice of the House of Commons, who, having called for a copy of the proceedings of the General Court, determined to reject the petition.

Much discussion took place in the General Court in consequence, and a petition was ultimately adopted upon a ballot regularly taken. This petition was presented to, and received by the House; but it failed to produce the desired effect; for, on the 28th of May 1767, the bill passed the House of Commons. The General Court proceeded to petition the House of Lords against the bill, and offered to compromise the matter, if Parliament would consent to fix the limit at twelve and a half, instead of ten per cent. The Lords, notwithstanding the representations of the Company, passed the

bill as approved by the Commons, though not without great opposition, the numbers for the bill being fifty-nine, and fortyfour against it. Nineteen peers signed a protest. The grounds of dissent were, "because the inability of the Company to make the dividends rescinded by this bill, had been argued on a supposition, that the right of the territorial acquisitions of the Company in the East-Indies was not in that Company, but in the public; which method of arguing, if admitted as one of the grounds of the bill, was conceived to be inconclusive as to the subject matter, and highly dangerous as to the precedent; for, the Company being in possession, and no claim against them being so much as made, much less established, their Lordships held it highly dangerous to the property of the subject, and extremely unbecoming the justice and dignity of the House, by extra judicial opinions, to call into question the legality of such a possession, and to act without hearing, as if the House had decided against it." On the 29th of June 1767 it received the royal assent.

Early in the following session another bill was introduced, to continue the limitation of the dividend to ten per cent. per annum until the 1st of February 1769; this bill, though opposed by the Company, was passed into a law on the 21st of February 1768. On this occasion, eleven peers entered their protest, "Because this annual restraint tends to establish a perpetual interposition of Parliament in declaring dividends for the Company, and indeed all companies whatsoever, to the increase of that most dangerous and infamous part of stock jobbing which is carried on by clandestine intelligence, and to the vesting it in the worst of all hands, those of administration : for a minister, who shall hereafter acquire in Parliament (by whatever means) sufficient influence for the purpose, may, by his power of increasing, diminishing, or withholding dividends at his pleasure, have all the stockholders in these Companies (a body extremely considerable for wealth and numbers) entirely at his mercy, and probably at his disposal, to the infinite increase of the already overgrown and almost incredible influence of the crown."

In 1769, the period of the last arrangement with the public having expired, a negotiation was commenced for a prospective

arrangement,

arrangement, in which the Proprietors contemplated, as a principal object, the removal of the existing restriction on the declaration of dividend.

annum.

The General Court had several meetings respecting it, and discussions took place between the Court of Directors and the Lords of the Treasury. It was at length mutually agreed that the Company should pay to the crown £400,000 per annum for five years, subject to a proportionate deduction in the event of the dividend being reduced, and that the Company should be allowed to increase the dividend at a rate not exceeding one per cent. per annum, until it reached twelve and a half per cent. per annum. It was further agreed that the payment to the crown should cease altogether, in the event of the dividend being reduced to six per cent. per This arrangement was sanctioned by the Legislature in the act 9th Geo. III, cap. 24. Under the authority of that act, the dividend was augmented at the rate of one per cent. per annum, until it reached twelve and a half per cent. per annum, the maximum fixed by the act. In the year 1771, Mr. Manship, then a member of the Court of Directors, dissented from a resolution of that court, authorizing a declaration of the half yearly dividend of six and a quarter per cent. The General Court fixed such dividend without being aware of Mr. Manship's dissent; but after it had been fixed, several proprietors hearing of the dissent, convened a general court upon special affairs, at which the subject was introduced, and Mr. Manship was heard in his place. Evidence was given of the ability of the Company to make the dividend in question; and it was resolved by the ballot (in which the numbers were three hundred and seventy-four votes for the question, and thirty votes against the question) that the Court of Directors, in recommending the continuance of the dividend, had acted consistently with their duty.

In 1772, the Company's affairs became greatly embarrassed, and they were under the necessity not only of borrowing large sums of the Bank of England to meet existing demands, but also of making application to the public for a loan.

In such a state of things, the Court of Directors did not feel themselves at liberty to recommend the declaration of any

dividend;