This very instructive paragraph lays open the true origin of the internal decay of Bengal. The trade and revenues of that country were (as the then system must necessarily have been) of secondary consideration at best. Present supplies were to be obtained, and present demands in England were to be avoided, at every expense to Bengal.
The spirit of increasing the investment from revenue at any rate, and the resolution of driving all competitors, Europeans or natives, out of the market, prevailed at a period still more early, and prevailed not only in Bengal, but seems, more or less, to have diffused itself through the whole sphere of the Company's influence. In 1768 they gave to the Presidency of Madras the following memorable instruction, strongly declaratory of their general system of policy.
"We shall depend upon your prudence," say they, "to discourage foreigners; and being intent, as you have been repeatedly acquainted, on bringing home as great a part of the revenues as possible in your manufactures, the outbidding them in those parts where they interfere with you would certainly prove an effectual step for answering that end. We therefore recommend it to you to offer such increase of price as you shall deem may be consistently given,—that, by beating them out of the market, the quantities by you to be provided may be proportionally enlarged; and if you take this method, it is to be so cautiously practised as not to enhance the prices in the places immediately under your control. On this subject we must not omit the approval of your prohibiting the weavers of Cuddalore from making up any cloth of the same sortments that are provided for us; and if such prohibition is not now, it should by all means be in future, made general, and strictly maintained."
This system must have an immediate tendency towards disordering the trade of India, and must finally end in great detriment to the Company itself. The effect of the restrictive system on the weaver is evident. The authority given to the servants to buy at an advanced price did of necessity furnish means and excuses for every sort of fraud in their purchases. The instant the servant of a merchant is admitted on his own judgment to overbid the market, or to send goods to his master which shall sell at loss, there is no longer any standard upon which his unfair practices can be estimated, or any effectual means by which they can be restrained. The hope entertained by the Directors, of confining this destructive practice of giving an enhanced price to a particular spot, must ever be found totally delusive. Speculations will be affected by this artificial price in every quarter in which markets can have the least communication with each other.
In a very few years the Court of Directors began to feel, even in Leadenhall Street, the effects of trading to loss upon the revenues, especially on those of Bengal. In the letter of February, 1774, they observe, that, "looking back to their accounts for the four preceding years, on several of the descriptions of silk there has been an increasing loss, instead of any alteration for the better in the last year's productions. This," they say, "threatens the destruction of that valuable branch of national commerce." And then they recommend such regulations (as if regulations in that state of things could be of any service) as may obtain "a profit in future, instead of so considerable a loss, which we can no longer sustain."
Your Committee thought it necessary to inquire into the losses which had actually been suffered by this unnatural forced trade, and find the loss so early as the season of 1776 to be 77,650l., that in the year 1777 it arose to 168,205l. This was so great that worse could hardly be apprehended: however, in the season of 1778 it amounted to 255,070l. In 1779 it was not so ruinously great, because the whole import was not so considerable; but it still stood enormously high,—so high as 141,800l. In the whole four years it came to 642,725l. The observations of the Directors were found to be fully verified. It is remarkable that the same article in the China trade produced a considerable and uniform profit. On this circumstance little observation is necessary.
During the time of their struggles for enlarging this losing trade, which they considered as a national object,—what in one point of view it was, and, if it had not been grossly mismanaged, might have been in more than one,—in this part it is impossible to refuse to the Directors a very great share of merit. No degree of thought, of trouble, or of reasonable expense was spared by them for the improvement of the commodity. They framed with diligence, and apparently on very good information, a code of manufacturing regulations for that purpose; and several persons were sent out, conversant in the Italian method of preparing and winding silk, aided by proper machines for facilitating and perfecting the work. This, under proper care, and in course of time, might have produced a real improvement to Bengal; but in the first instance it naturally drew the business from native management, and it caused a revulsion from the trade and manufactures of India which led as naturally and inevitably to an European monopoly, in some hands or other, as any of the modes of coercion which were or could be employed. The evil was present and inherent in the act. The means of letting the natives into the benefit of the improved system of produce was likely to be counteracted by the general ill conduct of the Company's concerns abroad. For a while, at least, it had an effect still worse: for the Company purchasing the raw cocoon or silk-pod at a fixed rate, the first producer, who, whilst he could wind at his own house, employed his family in this labor, and could procure a reasonable livelihood by buying up the cocoons for the Italian filature, now incurred the enormous and ruinous loss of fifty per cent. This appears in a letter to the Presidency, written by Mr. Boughton Rouse, now a member of your Committee. But for a long time a considerable quantity of that in the old Bengal mode of winding was bought for the Company from contractors, and it continues to be so bought to the present time: but the Directors complain, in their letter of the 12th of May, 1780, that both species, and particularly the latter, had risen so extravagantly that it was become more than forty per cent dearer than it had been fifteen years ago. In that state of price, they condemn their servants, very justly, for entering into contracts for three years,—and that for several kinds of silk, of very different goodness, upon averages unfairly formed, where the commodities averaged at an equal price differed from twenty to thirty per cent on the sale. Soon after, they formed a regular scale of fixed prices, above which they found they could not trade without loss.
Whilst they were continuing these methods to secure themselves against future losses, the Bengal ships which arrived in that year announced nothing but their continuance. Some articles by the high price, and others from their ill quality, were such "as never could answer to be sent to Europe at any price." The Directors renew their prohibition of making fresh contracts, the present being generally to expire in the year 1781. But this trade, whose fundamental policy might have admitted of a doubt, as applied to Bengal, (whatever it might have been with regard to England,) was now itself expiring in the hands of the Company, so that they were obliged to apply to government for power to enlarge their capacity of receiving bills upon Europe. The purchase by these bills they entirely divert from raw silk, and order to be laid out wholly in piece-goods.
Thus, having found by experience that this trade, whilst carried on upon the old principles, of whatever advantage it might have been to the British manufacturers, or to the individuals who were concerned in it in Bengal, had proved highly detrimental to the Company, the Directors resolved to expunge the raw silk from their investment. They gave up the whole to private traders, on condition of paying the freight, charges, and duties,—permitting them to send it to Europe in the Company's ships upon their own account.
The whole of this history will serve to demonstrate that all attempts, which in their original system or in their necessary consequences tend to the distress of India, must, and in a very short time will, make themselves felt even by those in whose favor such attempts have been made. India may possibly in some future time bear and support itself under an