Chapter I: Front Matter

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A

SHORT VIEW

OF THE

LAWS

Now subsisting with Respect to the Powers of the

EAST INDIA COMPANY

To borrow Money under their Seal, and to incur Debts in the
Course of their Trade, by the Purchase of Goods on Credit,
and by freighting Ships or other Mercantile Transactions.

LONDON:

Printed for W. NICOLL, in St. Paul's Church-Yard.
MDCCLXVII.

A short View, _&c._

As many erroneous opinions have been industriously propagated with respect to the powers of the East India Company to contract debts, I think it a duty to the Company and to the public, to give a fair state of the laws now subsisting with respect to these matters, by which the prejudiced may be set to rights, the ignorant informed, and the malevolent deceivers of the public exposed and detected.

By act 9 and 10 William III. c. 44. Sec. 75. the Company is allowed to borrow on the credit of the two millions lent to Government, but is restrained from borrowing any greater sums than shall be employed in their trade, without, however, any restriction as to the amount of such borrowing, only such borrowing must be under common seal.

By Sec. 86 of the same statute, the Company is directed to take care that the sum total of its debts do not exceed the amount of its funds and effects, and if they shall reduce their funds and effects by dividends, so as not to leave sufficient to answer their debts, the persons who receive the dividends are each made answerable to pay the debts, to the amount of the dividend respectively received.

By act 9 Ann, c. 17. Sec. 2. The Company having lent to the public 1,200,000_l._ more, they are allowed to borrow under their common seal, to the amount of 1,500,000_l._ above what they might lawfully borrow by the preceding act.

By act 7 Geo. I. c. 5. Sec. 32, the Company is allowed to borrow under their common seal for carrying on their trade or lending on bottomry, to the amount of the sum due from the publick, _or five millions_.

By act 17 Geo. II. c. 17. Sec. 8. the company having advanced _one million_ more to government, the power of borrowing under their common seal, is extended to one million above what they might borrow before that act.

In consequence of these acts, the Company has always considered itself entitled to borrow to the amount of six millions under its common seal.

By act 23 Geo. II. c. 22. Sec. 5 and 6. the Company was authorized to convert part of its bond debts into annuities, to the amount of 4,200,000_l._ but it is declared that its power of borrowing granted by former acts should continue in force, but that the amount of the annuity should be computed as part of what they were empowered to borrow.

In consequence of this last act, the Company did convert 2,992,440_l._ or near _three millions_ of their bonds into annuities, and they owe besides, by bonds under their common seal, 2,898,124_l._ so that the total amount of their bonds and annuities is 5,890,564_l._ which is 109,436_l._ under the six millions which they are entitled to borrow by bonds and annuities.

In the course of the Company's trade, they have been in the practice, like all other merchants, of purchasing goods upon credit, and of contracting for ships upon freight, and only advancing a part of that freight 'till after the voyage was compleated. It was impossible for them to carry on their trade in a proper manner in any other way, for if they had paid ready money for all their goods, and advanced the whole freights, they would have been exposed to imposition in the quality of the goods, and to misconduct in the freighters of the ships, without retaining in their hands a proper sum to repay such damage as the Company might suffer by the hands of the freighters or merchants.

It never therefore was supposed that the Company transgressed the statutes which restrained their power of borrowing under their seal to six millions, by carrying on their trade in the way of purchasing goods on credit; and indeed if this had been meant, the law would and ought to have allowed them a more extensive power of borrowing; for it is certain the Company's fortifications in India have cost more than _three millions_, and the nature of their trade in India requires that they should always have to the value of at least _three millions_, in goods and cash, or what is called quick stock, employed in India for making their investments, (including the cargoes afloat going out and coming home) so that here is the whole sum which they are allowed to borrow, disposed of in India, besides the value of the goods which they must always have in their warehouses at home, to the amount of more than _two millions_.

If it had been therefore the intention of the Legislature to restrain the Company from purchasing goods on credit, or from incurring freights or other such debts, and that their whole debts of every kind should not exceed six millions, it is very plain to those who are versant in mercantile transactions, and who know the state of this company's trade, that they could not have carried on their affairs in such a manner as they have done, nor have rendered the trade of India so great an object as it is, to this commercial kingdom.

It has sometimes happened to this Company, as it frequently happens to other merchants, that its returns have not arrived at the time expected, and that their investments during some particular years have fallen short; in such cases they have not been able to pay, with the strictest punctuality, the price of the goods bought on credit, nor the freights due for shipping or other articles of the same kind; and in such cases the furnishers of these goods or ships have indulged the Company with a delay of payment; and in order to indemnify themselves for that delay, these creditors have either taken a higher price for their next goods, or sometimes have been allowed interest from the Company, but in no instance have these debts, so contracted, been converted into debts under the Company's seal, nor were ever considered as money borrowed.

The purpose of restraining the Company as to their power of borrowing under their common seal, was merely to prevent their interfering in the market with government loans, exactly upon the same principle that private lotteries, &c. are prohibited by law; but in all other respects the Company is unlimited, as every private merchant is, as to the exercise it may chuse to make of its credit in the purchase of goods, or incurring debts in any other mode except coming into the market to borrow under their seal, by which alone the Company can interfere with the loans required by Government for the purposes of the state.

So long as the Company carries on its trade with advantage to itself and the nation, and preserves entire, an ample sufficiency of funds to pay all its debts, and repay its capital, there can be no reason in common sense for preventing its employing its credit in the purchase of as great a quantity as possible of our own commodities to send to India, and employing as great a number of shipping as the trade will possibly allow.

The Company's trade is so much extended of late years beyond its former limits, that its power of borrowing on annuities and bonds ought also to have been increased; for if six millions was thought reasonable forty or fifty years ago, the publick ought now by the same parity of reason to allow at least eight or ten millions to be borrowed under seal, especially as the wealth of the nation, and of consequence the market for borrowing has so greatly increased during that period. The expensive wars which the Company carried on for many years, obliged them, for want of cash, or a power of borrowing, to diminish both their exports and imports to the great prejudice of the nation; so that the kingdom in general has no reason to applaud the wisdom of that law which retrained the Company to six millions. Besides, we have of late years extended our China trade beyond any thing that was ever attempted in former times, insomuch that above _three millions_ sterling is now invested in teas alone. It is impossible that we could either have carried on these wars which have ended with so much success, or have extended our commerce and the exportation of home commodities to the amazing degree we have done, if the statutes restricting our borrowing under seal had been understood to prohibit the using our credit in the purchase of goods.

The debts due by the Company at present, exclusive of its bonds and annuities, are particularly set forth in an account delivered in by order of the House of Commons, the particulars of which debts are these:

For customs on goods, sold and unsold,
now in England, L 1,200,605

The customs are not payable till the goods are sold, and even as to those sold, a long delay of payment is always allowed. The arrear of customs on goods sold, is at present about 300,000_l._ or 400,000_l._