Commercial Profits of the Company.

The commercial profits of the Company are chiefly derived from their monopoly of the trade in tea. The following statement shows the difference between the prime cost of tea at Canton and its price at the East-India sales in London, from which an estimate may be formed of the profit on this article:

It thus appears the Company charge considerably more than 100 per cent. additional to the prime cost on all the teas consumed in the kingdom. It is almost the only article of traffic in which they realize a profit. Their exports to China consist principally of woollens, by which branch of trade they sustain an annual loss, though, as we shall show presently, this loss, by an evasion of the Commutation Act, is thrown upon the British public.

The Company has lately sent little merchandize to India, except military stores, which, being charged to the territorial account, do not enter into a statement of commercial profits. It imports, however, to a considerable amount, from that country, raw silk, indigo, and other articles. Whether there is profit or loss in the trade it is difficult to determine from the accounts submitted to parliament.

In addition to the profits on its trade, the Company is entitled to a certain duty upon goods imported by the private and privileged trade, warehoused and sold through its medium. From the gross profits arising from this trade, a large deduction is to be made for the expense of freight and demurrage, amounting, in 1829, to £662,964. After paying all the other expenses of the commercial establishment, interest on the bond-debt, &c. the dividend remains to be provided. The capital stock of the Company is £6,000,000; so that at 101/2 per cent. it requires a net profit of £620,000 per annum to pay the dividend.

Now these preliminaries bring us to the consideration of a very important issue between the public and the East-India Company. The Company, we have seen, has not realized a surplus revenue from their territorial acquisitions; that has been all expended in the charges of war and government. Commercial profits, then, are the only source from which the Company has a surplus-revenue to pay the dividends and support their home-establishments. But, it appears, the profits of the Company on the several branches of trade, are either none at all, or very unimportant, except in the single article of tea. So that, in fact, it is the people of England who pay the dividends of the proprietors, and other outgoings, in the monopoly price of their teas. Let us inquire whether this is conformable to the agreement between the Company and the public.

The Commutation Act, the 24th Geo. III. c. 38, provides that there shall be at least four sales in every year, at which there shall be put up such quantities of tea as shall be judged equal to the demand; that the tea so put up shall be sold, without reserve, to the highest bidder, provided an advance of one penny per pound shall be bid upon the prices at which the same shall be put up; and that it shall not be lawful for the Company “to put up their tea for sale at any prices which shall, upon the whole of the teas so put up, at any one sale, exceed the prime cost thereof, with the freight and charges of importation, together with lawful interest from the time of the arrival of such tea in Great Britain and the common premium of insurance, as a compensation for the sea-risk incurred therein.”

Here are the terms of the contract between the community and the merchants of Leadenhall: the latter are to supply the former with a quantity of tea adequate to their demand, and, to prevent extortion in the price, all the items of charge which the Company, in addition to the prime cost, are allowed to include in the put-up price, are distinctly specified; but there is no item for the Company’s dividends, and it was certainly never intended they should be paid out of the profits of the tea-trade. All the legislature contemplated was to reimburse the Company the prime cost of their teas and reasonable charges, but never that they should be enabled to realize an exorbitant profit applicable to their general expenditure. That this profit has been realized is proved from a statement submitted to the Committee of the House of Commons, which shows that the profits on the China trade for the last fifteen years amounted to £16,971,316. Had the trade with China been open, the Company must have been satisfied with the ordinary mercantile profit; they could not have taxed the public to the amount of upwards of one million per annum, to provide a fund not only for the payment of the dividend upon India Stock and the interest of their bond debt, but also materially to aid their wasteful Indian expenditure.

There is another transaction, though not so important as the preceding, on which the principle of the Commutation Act has been contravened. The Company have long taken credit for having persisted in the export trade to China at a considerable loss; and this their advocates would have the community to believe has been done for the sake of promoting the sale of British manufactures. From the statements of Mr. Marjoribanks (Report on the China Trade, page 32) it appears the losses on the Company’s exports, from 1820 to 1829, averaged about £17,000 per annum, and that for the twenty-six preceding years they amounted to £64,000 per annum. But at whose expense does the reader imagine these losses have been incurred? Why, at the expense of the people of the United Kingdom. The way this has been effected is by adding the losses on exports to the price of the tea in China; thus if the Company export goods to the value of £1000, which, when sold in China, produce only £800, the quantity of tea purchased with this sum is valued by them at £1000, and this amount is charged in the upset price; although, as we have ssen above, that they are restricted by Act of Parliament from putting up their tea at more than “prime cost.” There cannot be a more direct violation of the statute, which seems to have been framed with the express view of guarding against such practices. The servants of the Company endeavour to justify these proceedings on the ground of the exports being made for the express purpose of providing funds in China for the purchase of tea; but this is no apology for the infringement of a positive contract. Besides, there can be little doubt that the loss on the export trade results from the wasteful and injudicious manner in which it is conducted; otherwise how does it happen that the Americans carry on the same trade in the same commodities with a profit?

In 1813 the trade to India was thrown open to private merchants, but was still, in some measure, impeded by enactments which required that all ships passing to the eastward of the Cape of Good Hope should exceed 350 tons of burthen, and which rendered it necessary to procure a license to trade from the Court of Directors, or, upon their refusal, from the Board of Control. They also provided that certain articles of Indian produce should be brought to the port of London alone. British ships were still prevented from trading between ports without the kingdom, and places within the limits of the East-India Company’s charter. These restrictions were much relaxed in 1823. The export of military stores to India is reserved to the Company, but ships, without limitation to burthen, may clear out, unlicensed, for any place eastward of the Cape of Good Hope, except for minor ports between the Indus and Malacca. A license is still necessary to proceed to any other except the four principal settlements—Calcutta, Madras, Bombay, and Prince of Wales’s Island, within these limits. Vessels returning from India may now be admitted to entry in any of the warehousing ports of Great Britain, and trade is permitted between foreign ports and places within the limits of the Company’s charter.

The Company reserve to themselves all the trade between the United Kingdom and China, excepting only a small portion allowed by way of privilege to the commanders and officers of their ships. Licenses are granted by the Company to all Indian ships, denominated “Country Ships,” to trade between India and China, and to export from China a limited quantity of tea, with permission to dispose of it to any intermediate port between China and the port in India to which the ship may be destined. These licenses do not include the Cape of Good Hope, the Company themselves supplying that settlement with tea at high prices, notwithstanding the agreement they made some years since to put up their teas for sale at the Cape at an advance not exceeding six per cent. on the costs and charges of importation.

Let us now advert to the different results arising from the different principles on which the trade to India and China has been conducted.

The effect of opening the trade to India has been greatly to increase its amount. The highest value of goods exported to India in any year between 1792 and 1811 did not exceed £2,475,987 (the exports of 1808). It will be seen, hereafter, that this amount is less than one half of the value of the present exports. The increase has chiefly taken place in the export of cotton-manufactured goods. Previous to 1813 the amount of cotton goods exported to India was very trifling. They now fall very little short of £2,000,000 in value annually. This augmentation may partly be attributed to the extraordinary improvement which has taken place in our manufactures, attended by a great reduction of prices, and to the extension and consolidation of the British power in India.

The following statements show at once the comparative exports and imports of the Company and the free and privileged trade in their transactions with India and China.

These statements show clearly the benefits which have resulted to the community from the opening of the trade to India, and the outlet it has afforded to British industry and manufactures. From the first, it appears, the exports by the private trade to the East nearly doubled in four years; while from the second it appears the exports of the Company, during the same period, and under similar favourable circumstances, have declined rather than augmented. What more can be required to establish the advantages of free trade, and the greater results which may be anticipated from the frugality, activity, and enterprise of individuals than from the expensive, negligent, and drowsy proceedings of chartered monopolies?

It is worthy of observation that the most enlightened servants of the Company doubted whether the natives of India would ever be brought to consume largely European manufactures. Experience has falsified their representations. Similar results may be confidently expected from the opening of the trade to China.