Part 1
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A
CAUTION
TO THE
DIRECTORS
OF THE
EAST-INDIA COMPANY,
With regard to their making the
Midsummer Dividend of Five per Cent.
WITHOUT
Due Attention to a late ACT of PARLIAMENT, and a BY-LAW of their own.
"Upon the Whole, I will beg Leave to tell what is really my Opinion: It is, that it be repealed absolutely, totally, and immediately."
_A late celebrated Speech._
LONDON:
Printed for GEORGE KEARSLY, in Ludgate-Street.
MDCCLXVII.
A
CAUTION
TO THE
DIRECTORS, &c.
GENTLEMEN,
Perhaps there never was such a necessity, for an address to you upon the subject of _caution_, since the East-India company was established, as at present.--Your great successes in India, have drawn upon you the envy of your own countrymen, as well as the other European powers; the great increase of your dividend, has alarmed the proprietors of other funds for their own property; the differences among yourselves, and your fellow-proprietors, have furnished this envy, and these fears, with the means perhaps of overturning your constitution.
Tho' I will not presume to determine, whence these differences arose, or who have been to blame, that not being part of the present design, you will agree with me they have drawn upon you the notice of the legislature, and have produced an act of parliament, that affords either party but little cause for rejoicing, however grateful it may be to the public. I must suppose you would wish to keep your _golden fleece_ to yourselves--union among yourselves would have secured it--but your differences have exasperated the watchful dragon, the _guardian_ of this _treasure_, and you now only hold it in _participation_--A strange _participation_ too, where the public is to receive four hundred thousand pounds, while you are to receive _nothing_--I say _nothing_--for I shall endeavour to prove you cannot make your dividend of 5l. _per cent._ due the 5th of last July, nor will you be able, as things now stand, to declare the dividend of 5l. _per cent._ at Christmas next.
I am satisfied that such a consequence as this, will not be admitted without some proof; but I should conceive very little proof necessary, to awaken your _caution_, at the time you are going to pay the 5l. _per cent._ dividend, if it is but hinted, that it cannot be done without incurring a danger of the censure of parliament. I presume only to recommend _caution_, but I will submit to your better judgments, the reasons which convince me, that while the late act of parliament, for regulating your dividends, remains in force, you cannot divide the 5l. _per cent._ which you have declared payable the 5th of July last, nor can you declare, or make the like dividend of 5l. _per cent._ at Christmas next.
I will set down the proper clauses in the several acts of parliament, with a letter of the alphabet before each, for the convenience of referring to them, as occasion may offer.
CAP. 49. A.
"That no dividend shall be made by the said company, for, or in respect of any time, subsequent to the 24th day of June, 1767, otherwise than in pursuance of a vote, or resolution, passed by way of ballotting, in a general court of the said company, which shall have been summoned for the purpose of declaring a dividend, and of the meeting of which general court, seven days notice at the least, shall have been given in writing, fixed upon the Royal Exchange in London."
IBID.--B.
"That it shall not be lawful, for any general court of the said company, at any time between the eighth day of May, 1767, and the beginning of the next session of parliament, to declare, or resolve upon, any encrease of dividend, beyond the rate of 10l. _per cent. per ann._ being the rate at which the dividend for the half year ending the 24th day of June, 1767, is made payable."
CAP. 48. C.
"That, from and after the 10th day of July, 1767, no declaration of a dividend shall be made, by any general court, of any of the said company's, other than one of the half yearly, or quarterly general courts, at the distance of five calendar months, at the least, from the last preceding declaration, of a dividend, and that no declaration of more than one half yearly dividend, shall be made by one general court."
29. BY-LAW. D.
"That no _alteration_ be made in the dividend, on the capital stock of this company, without first giving six months publick notice."
By clause A, it appears that no dividend can be made, after the 24th of June, without the vote of a general court, (and by clause C, that must be a quarterly court) called for the purpose of declaring the intended dividend, with seven days previous notice thereof, in writing fixed upon the Royal Exchange--by the resolution, of your court of directors, of the 22d of May last, as well as by your uniform practice in making dividends, the half year's dividend of 5l. _per cent._ declared in September last, and now in course of payment, was due the 5th of July last, and that day, and not the 24th of June, is the day on which this dividend must be understood to be made, in consequence of the September declaration. Now as this dividend declared to be made on the 5th of July, is made for and in respect of time subsequent to the 24th of June, and is made not in pursuance of a vote, carried by ballot, in a general quarterly court, summoned for the purpose of declaring a dividend, with seven days notice of such a meeting, given in writing and fixed upon the Royal Exchange, it is not warranted by the act, but is, according to the plain and obvious construction of the act, _illegal_.
I have heard two objections, and two only, made to this construction; one, that the legislature was mistaken as to the time, in which the dividends are always made by this company, supposing them payable the 24th of June, instead of the 5th of July, and that they did not intend to prevent your dividing 5l. _per cent._ at Midsummer. The other, that if they were not mistaken, and if they did intend to prevent your dividing the 5l. _per cent._ at Midsummer, the act itself fails in this intention, since it only prevents your dividing for eleven days, being the interval between the 24th of June and the 5th of July, and you are, on this account, left at liberty to pay the 5l. _per cent._ after deducting the proportional part for those eleven days.
As to the first, I think nothing can be more absurd, than to suppose that the wisdom of the legislature, should be capable of such a blunder. In order to this, we must suppose, that they who, in the same session, made a law with respect to the publick funds, in which the dividends are fixed for payment on the 5th of July, and the 5th of January, could take it for granted that the India dividends were fixed for the 24th of June and the 24th of December; and we must suppose too that they could take this for granted, which is so contrary to the general practice in other funds, without making any enquiry of the directors, who daily attended, and were examined while the bill was passing: for if they did make enquiry, they must have heard that this company observed the same days of payment with the government, and have done so invariably from the original institution; and in such a case, the blunder can hardly be called the effect of oversight, but a wilful blindness.
This absurdity is too gross to pass current, but the clause (C) in cap. 48 of the said act, will shew that the parliament were not ignorant, that the dividends would become due on the 5th of July, but have proceeded on the consideration of it's being due on that day. In this clause, they say, that no _declaration_, &c. shall be after the 10th of July. Now when they had in contemplation the _making_ of a dividend, they mentioned the 24th of June, a time preceding the 5th of July, in order to prevent it; when they had in contemplation the _declaring_ of a dividend, they say the 10th of July subsequent to the 5th, to distinguish between the terms _making_ and _declaring_, which have been so often confounded.
It must appear highly improbable to every impartial mind, that the legislature should enact a law, to regulate the making of dividends, without knowing the time, when they are made payable; or if they were ignorant, that they would not enquire, when the directors attended to answer all enquiries, and were actually examined from day to day, while the bill was framing; and very few will be hardy enough to affirm, that if the parliament were aware, that the dividends would be due the 5th of July, such a blunder could creep into the act of parliament. The most natural construction, upon reading the said act, is, that the 24th of June was not inserted by mistake, but by design, and that the legislature plainly intended, in the restraining clauses, that the India company should make no dividend at all from Christmas last, which was before the encrease of the dividend, to the beginning of the next session of parliament; in which time, all your homeward-bound ships would arrive, the Midsummer annual account would be made up, and the ministry would have an opportunity of learning from Lord Clive, what was the real situation of the affairs in India.
I know it is commonly imagined to have been the intention of parliament, to rescind the resolution of the 6th of May about the 6l. and 1-4th. _per cent._ but this imagination is contrary to fact, for that resolution is unrepealed, unrescinded, and unless the parliament, at the next meeting, shall make some law to prevent it, you may divide 6l. 1-4th _per cent._ at Christmas next--No single word, in either act of parliament, mentions the resolution of the 6th of May, and the act which restrains the dividing between the 8th of May, and the beginning of the next session, manifestly avoided mentioning the 6th of May, and made the interval of restraint commence on the 8th, to shew it did not mean to rescind the resolution of the 6th of May. Had the parliament designed to restrain the dividing according to that resolution at Christmas next, the interval of restraint would have gone beyond the 5th of January--as that clause, which restrains the present dividend, the manifest object of the parliament, stopt short of the 5th of July, and would not have stopt, as it has done, at the beginning of the next session of parliament.
The preamble of the act professes nothing for its object, but "to secure as well the permanent interest of the company, as the state of credit both private and public, from the mischiefs which must ensue, from an improper, and improvident increase of the dividends of the said company." Thus the parliament had in view only improper and improvident dividends, dividends made without a due regard to the circumstances of the company, whether the same should be 12l. 1-half _per cent._ 10l. _per cent._ or 6l. _per cent._ And I may appeal to yourselves, Gentlemen, whether you had any objection to the dividend of 12l. 1-half taking place at Christmas, that did not arise from a consideration of these circumstances, from your apprehension that your finances would not be such at Christmas, as to enable you to pay off the company's debts, to pay the 200,000l. the first half yearly payment to government, and to make a dividend of 6l. 1-4th to the proprietors. And I would ask, Whether any other consideration weighed with the legislature? You will confess, as the undoubted truth is, that this alone made you wish, that parliament would interpose to prevent the dividing 6l. 1-4th at Christmas. And I affirm this alone determined the wisdom of the legislature to interpose for that purpose. They have interposed, and what have they done? They have stopped your making any dividend till the meeting of parliament. But they have determined nothing with respect to the 6l. 1-4th _per cent._ The resolution of the 6th of May stands unrepealed; and if it shall then appear, such an increase will not be improper, and improvident, at Christmas next, if, I say, Gentlemen, after the arrival of the homeward-bound ships, after the examination of the annual account, which has never yet been produced, if after hearing the opinion of Lord Clive, concerning the real situation of your affairs in India, the flourishing state of your trade, the regular payment of your revenue, and the stability of your possessions, you shall think that the 6l. 1-4th _per cent._ may be paid without giving any cause of complaint to the creditors of the company, and join with the general court in a representation to the ministry, that such an encrease will not be improper, or improvident, at Christmas, there can be no reason to suppose, that parliament will again interpose, by a new act, to restrain your making such a dividend; and if they do not interpose by a new act, you may divide 6l. 1-4th _per cent._ by a due exercise of your present powers, as will be shewn in another place. But should there, on the contrary, be any room, at the meeting of the parliament, to believe such a dividend at Christmas will be improper and improvident, it is no doubt the intention of parliament to make a new act, the next session, to restrain your dividing 12l. 1-half _per cent._ 10l. _per cent._ 6l. _per cent._ or any _per cent._ at all, if it shall be so necessary, in order to prevent the mischiefs recited in the preamble before mentioned.
The remedy provided by the wisdom of the legislature, is, according to this construction, adequate to the mischiefs apprehended; as at the time of making the act, the dividend even of five _per cent._ was proved by you, and nothing can be clearer than that you did prove it, to be improper and improvident, they have restrained it till the meeting of parliament, and as it may then be represented by you, that such a dividend will not be improper, or improvident, they have made the time of restriction stop at that period, to give you a future power of dividing that sum, or 6l. 1-4th agreeable to the resolution of the 6th of May, if they see no reason for interposing against it. But if the legislature had not restrained you from making any dividend, between the 24th of June, and the beginning of the next session of parliament, if they had left you to divide the 5l. _per cent._ dividend for the 5th of July, they would have provided no present remedy at all.
It is well known, you opposed the encrease of dividend to 10l. _per cent._ in September last, and that you opposed it, upon the principle of it's being improper and improvident, from the state of the account, then produced by you to the general court. You have frequently declared since, you thought this measure of raising the dividend to 10l. _per cent. inexpedient_ and unwarrantable, as the company have not discharged their debts--you opposed the resolution of increasing it to 12l. 1-half on the 6th of May, in no other manner, but by producing in court the same state of the company's affairs, upon which you opposed the increasing it to 10l. _per cent._ in the month of September, and declaring the state of affairs was not altered since that time; from whence it was to be understood that there was, in your opinion, no better reason for dividing 6l. 1-4th in May, than there had been, for dividing 5l. _per cent._ in September. On this principle, and on this principle alone, you called in the aid of the legislature, to assist you in preventing the mischief, that must be produced by such improper and improvident dividends, and on this principle alone the parliament interposed to support you--you proved to them you could not divide 6l. 1-4th, you proved too, by the same arguments, that you could not divide 5l. nay, that you could not divide at all; for I may with confidence affirm, that not a single argument was advanced to prove the dividend of 6l. 1-4th to be improper and improvident, that did not extend to prove the dividend of 5l. _per cent._ or any dividend at all, equally so.
I am warranted to go farther. If the company would not, in your opinion, be in a condition at Christmas to divide 6l. 1-4th, when the homeward-bound ships should have arrived, there was much less reason for suffering you to divide 5l. _per cent._ at Midsummer, while the ships were still upon the seas, the annual account unsettled, and the state of your affairs in India unknown. And yet, after this it seems, we are to suppose the legislature did not intend to prevent you making the 5l. _per cent._ dividend declared to be due the 5th of July. We are to suppose, that they did not intend to hinder your dividing after the rate of 10l. _per cent._ at Midsummer, when any dividend at all was proved improper and improvident, but that they intended to hinder your making a dividend after the rate of 12l. 1-half _per cent._ at Christmas, when future arrivals, and future accounts, might make such a dividend proper and expedient.
We all saw with concern, that the members of both houses were detained in town, to lend the wished-for interposition; had the Christmas dividend been the sole object of their attention, the business might have been postponed till the next session, as that is expected to take place before this dividend can be made; and the rather, as those lights may then be had, which could not be expected, though much wished for, at the end of the last session. But as preventing the dividend of 5l. _per cent._ declared for the 5th of July, was the principal object, it was necessary to settle that business before the session was closed; and I believe you are satisfied, Gentlemen, there was sufficient evidence laid by you before both houses, to prove a dividend of 5l. _per cent._ improper and improvident at that time, whether you agree to determine a dividend with the deputy-chairman upon a cash account, or with the chairman upon a general account. The wisdom of the legislature has stopt your dividing at Midsummer, while your ability is doubtful, and has left it in your power, after the beginning of the next session, to make a dividend of 6l. 1-4th at Christmas, if your ability is no longer doubtful at that time.
I presume, the first objection is by this time sufficiently answered, that it is clear the legislature made no mistake when they inserted the 24th of June; and that they meant to prevent any dividing between that day and the meeting of parliament.
I shall now proceed to the second objection, _viz._ That whether the legislature meant to prevent the dividend of 5l. _per cent._ taking place the 5th of July or not, the act will not have the effect contended for--it is insisted, that the clause (A) which restrains the company from making "any dividend, for, or in respect of, any time subsequent to the 24th of June, 1767," includes no more than the eleven days, between that day and the 5th of July, and will not affect the rest of the half year, but a proportionable dividend may be made up to the 24th of June.
By a resolution of a general court, held in September last, the company declared, that they would make a dividend on the 5th of July, then next following, of 5l. for every hundred, for the half year between the 5th of January and the 5th of July following. The sum to be divided, is 5l. for every hundred pounds. The time for which it is declared, is half a year. The day of payment 5 July. If the eleven days are deducted, you will divide only 4l. 13s. 10d. halfpenny, and not 5l. for every hundred. The dividend will not be for half a year. Nor will it be due the 5th of July, but the 24th of June.--This, and the September resolution, will be as different as any two proportions can possibly be, in which no single term is common to both. And such a dividend as this, can no more be said to be made by virtue of the resolution of September, than it can be said to be made by virtue of the preceding resolution, for dividing only 3l. _per cent._ or that of the 6th of May for 6l. 1-4th.
The dividends on the India company's property, are different from those on the government stock. The latter are intended by parliament, to continue a certain, or uncertain number of years, and the rate of interest is fixed unalterably, during the continuance of such stock, to be paid half yearly, on the 5th of January and the 5th of July; the India dividends have been declared by the company, when, how, for what time, and for what sum, they please. They might, before the 29th by-law was made, divide monthly, weekly, or on a distant day that cannot be called either a weekly, monthly, or half yearly payment; and before the appointed day, they might vary the dividend, might increase, decrease, or annul it.--Their usual practice has been, to declare a certain specific sum to be paid on a certain day, for the half year between such a day and such a day, and not as the government does, an annual sum payable half yearly.--They have not declared by the resolution of September an annual dividend of 10l. _per cent._ payable half yearly, in which case, perhaps, an apportionment might be admitted, but they have declared, the specific sum of 5l. for every hundred, to be paid on the 5th of July; in like manner as on the 6th of May, they did not declare an annual dividend of 12l. 1-half _per cent._ but the specific sum of 6l. 5s. to be paid for the half yearly dividend on the 5th of January next.
The general court in September had only in contemplation the apportionment of the dividend to the quantity of stock possessed by each proprietor; the division of time was never under consideration; the time was given, _viz._ half a year between the 5th of January and the 5th of July; had the quantity of stock been given, _viz._ had every proprietor held 100l. and no more or less, the court would then have declared, that every proprietor should receive 5l. on the 5th day of July. If the time is altered, the original proportion is changed; the proprietor of 100l. stock, will not receive the 5l. _per cent._ that was declared. And what is offered in lieu of it, is not to be found in any part of the resolution, under which it is pre-to be made.
Again, if any case can be supposed to have happened, before the passing of these acts, that might have made it necessary, or prudent, for the India company to make a dividend for four months, instead of six, would you, Gentlemen, have presumed to make a proportionable dividend for four months, under the resolution, that declared a dividend for six, or would not you rather have called together the proprietors to get this new resolution made by a general court? you undoubtedly would, you certainly must; such a change in the time of making dividends payable, must have been stiled an alteration in your dividend; and the 29th by-law would have made it necessary for you to give six months notice of such an alteration. I would ask, where the difference is, whether the alteration be from six months, to four months, or from 182 days, to 171, which is the present alteration? the one is an alteration of months, the other of days, but they are equally alterations, the alterations equally demand a new declaration, and are equally objects of the 29th by-law. And you can no more divide for 171 days, ending the 24th of June, under a declaration that orders you to divide for 182, ending the 5th of July, than you could make three payments of four months in a year, under a declaration of two half yearly one's.