Chapter 13

We have taken into our consideration the several advices and papers received from India, relative to the assignment of the revenues of the Carnatic, from the conclusion of the Bengal treaty to the date of your letter in October, 1783, together with the representations of the Nabob of the Carnatic upon that subject; and although we might contend that the agreement should subsist till we are fully reimbursed his Highness's proportion of the expenses of the war, yet, from a principle of moderation, and personal attachment to our old ally, his Highness the Nabob of the Carnatic, for whose dignity and happiness we are ever solicitous, and to cement more strongly, if possible, that mutual harmony and confidence which our connection makes so essentially necessary for our reciprocal safety and welfare, _and for removing from his mind every idea of secret design on our part to lessen his authority over the internal government of the Carnatic_, and the collection and administration of its revenues, we have resolved that the assignment shall be surrendered; and we do accordingly direct our President, in whose name the assignment was taken, _without delay_, to surrender the same to his Highness. But while we have adopted this resolution, we repose entire confidence in his Highness, that, actuated by the same motives of liberality, and feelings of old friendship and alliance, he will cheerfully and instantly accede to such arrangements as are necessary to be adopted for our common safety, and for preserving the respect, rights, and interests we enjoy in the Carnatic. The following are the heads and principles of such an arrangement as we are decisively of opinion must be adopted for these purposes, viz.

That, for making a provision for discharging the Nabob's just debts to the Company and individuals, (for the payment of which his Highness has so frequently expressed the greatest solicitude,) _the Nabob shall give soucar security for the punctual payment, by instalments_, into the Company's treasury, of twelve lacs of pagodas per annum, (as voluntarily proposed by his Highness,) until those debts, with interest, shall be discharged; and shall also consent that the equitable provision lately made by the British legislature for the liquidation of those debts, _and such resolutions and determinations as we shall hereafter make_, under the authority of that provision for the liquidation and adjustment of the said debts, _bonâ fide_ incurred, shall be carried into full force and effect.

Should any difficulty arise between his Highness and our government of Fort St. George, in respect to _the responsibility of the soucar security_, or the times and terms of the instalments, it is our pleasure that you pay obedience to the orders and resolutions of our Governor-General and Council of Bengal in respect thereto, not doubting but the Nabob will in such case consent to abide by the determination of our said supreme government.

Although, from the great confidence we repose in the honor and integrity of the Nabob, and from an earnest desire not to subject him to any embarrassment on this occasion, we have not proposed any specific assignment of territory or revenue for securing the payments aforesaid, we nevertheless think it our duty, as well to the private creditors, whose interests in this respect have been so solemnly intrusted to us by the late act of Parliament, as from regard to the debt due to the Company, to insist on a declaration, that, in the event of the failure of the security proposed, or in default of payment at the stipulated periods, we reserve to ourselves full right to demand of the Nabob such _additional security_, by assignment on his country, as shall be effectual for answering the purposes of the agreement.

After having conciliated the mind of the Nabob to this measure, and adjusted the particulars, you are to carry the same into execution by a formal deed between his Highness and the Company, according to the tenor of these instructions.

As the administration of the British interests and connections in India has in some respects assumed a new shape by the late act of Parliament, and a general peace in India has been happily accomplished, the present appears to us to be the proper period, and which cannot without great imprudence be omitted, to settle and arrange, by a just and equitable treaty, a plan for the future defence and protection of the Carnatic, both in time of peace and war, on a solid and lasting foundation.

For the accomplishment of this great and necessary object, we direct you, in the name of the Company, to use your utmost endeavors to impress the expediency of, and the good effects to be derived from this measure, so strongly upon the minds of the Nabob and the Rajah of Tanjore, as to prevail upon them, jointly or separately, to enter into one or more treaty or treaties with the Company, grounded on this principle of equity: That all the contracting parties shall be bound to contribute jointly to the support of the military force and garrisons, as well in peace as in war.

That the military peace establishment shall be forthwith settled and adjusted by the Company, in pursuance of the authority and directions given to them by the late act of Parliament.

As the payment of the troops and garrisons, occasional expenses in the repairs and improvements of fortifications, and other services incidental to a military establishment, must of necessity be punctual and accurate, no latitude of personal assurance or reciprocal confidence of either of the parties on the other must be accepted or required; but the Nabob and Rajah must of necessity specify particular districts and revenues for securing the due and regular payment of their contributions into the treasury of the Company, with whom the charge of the defence of the coast, and of course the power of the sword, must be exclusively intrusted, with power for the Company, in case of failure or default of such payments at the stipulated times and seasons, to enter upon and possess such districts, and to let the same to renters, to be confirmed by the Nabob and the Rajah respectively; but, trusting that in the execution of this part of the arrangement no undue obstruction will be given by either of those powers, we direct that this part of the treaty be coupled with a most positive assurance, on our part, of our determination to support the dignity and authority of the Nabob and Rajah in the exclusive administration of the civil government and revenues of their respective countries;--and further, that, in case of _any_ hostility committed against the territories of either of the contracting parties on the coast of Coromandel, the whole revenues of their respective territories shall be considered as one common stock, to be appropriated in the common cause of their defence; that the Company, on their part, shall engage to refrain, _during the war_, from the application of any part of their revenues to any commercial purposes whatsoever, but apply the whole, save only the ordinary charges of their civil government, to the purposes of the war; that the Nabob and the Rajah shall in like manner engage, on their parts, to refrain, during the war, from the application of any part of their revenues, save only what shall be actually necessary for the support of themselves and the civil government of their respective countries, to any other purposes than that of defraying the expenses of such military operations as the Company may find it necessary to carry on for the common safety of their interests on the coast of Coromandel.

And to obviate any difficulties or misunderstanding which might arise from leaving indeterminate the sum necessary to be appropriated for the civil establishment of each of the respective powers, that the sum be now ascertained which is indispensably necessary to be applied to those purposes, and which is to be held sacred under every emergency, and set apart previous to the application of the rest of the revenues, as hereby stipulated, for the purposes of mutual or common defence against any enemy, for _clearing_ the incumbrance which may have become necessarily incurred in addition to the expenditure of those revenues _which must be always deemed part of the war establishment_. This we think absolutely necessary; as nothing can tend so much to the preservation of peace, and to prevent the renewal of hostilities, as the early putting the finances of the several powers upon a clear footing, and the showing to all other powers that the Company, the Nabob, and the Rajah are firmly united in one common cause, and combined in one system of permanent and vigorous defence, for the preservation of their respective territories and the general tranquillity.

That the whole aggregate revenue of the contracting parties shall, during the war, be under the application of the Company, and shall continue as long after the war _as shall be necessary, to discharge the burdens contracted by it_; but it must be declared that this provision shall in no respect extend to deprive either the Nabob or the Rajah of the substantial authority necessary to the collection of the revenues of their respective countries. But it is meant that they shall faithfully perform the conditions of this arrangement; and if a division of any part of the revenues to any other than the stipulated purposes shall take place, the Company shall be entitled to take upon themselves the collection of the revenue.

The Company are to engage, during the time they shall administer the revenues, to produce to the other contracting parties regular accounts of the application thereof to the purposes stipulated by the treaty, and faithfully apply them in support of the war.

And, lastly, as the defence of the Carnatic is thus to rest with the Company, the Nabob shall be satisfied of the propriety of avoiding all unnecessary expense, and will therefore agree not to maintain a greater number of troops than shall be necessary for the support of his dignity and the splendor of the durbar, which number shall be specified in the treaty; and if any military aid is requisite for the security and collection of his revenues, other than the fixed establishment employed to enforce the ordinary collections and preserve the police of the country, the Company must be bound to furnish him with such aid: the Rajah of Tanjore must likewise become bound by similar engagements, and be entitled to similar aid.

As, in virtue of the powers vested in Lord Macartney by the agreement of December, 1781, sundry leases, of various periods, have been granted to renters, we direct that you apply to the Nabob, in our name, for his consent that they may be _permitted_ to hold their leases to the end of the stipulated term; and we have great reliance[70] on the liberality and spirit of accommodation manifested by the Nabob on so many occasions, that he will be disposed to acquiesce in a proposition so _just and reasonable_. But if, contrary to our expectations, his Highness should be impressed with any particular aversion to comply with this proposition, we do not desire you to insist upon it as an essential part of the arrangement to take place between us; but, in that event, you must take especial care to give such indemnification to the renters for any loss they may sustain as you judge to be reasonable.

It equally concerns the honor of our government, that such natives as may have been put in any degree of authority over the collections, in consequence of the deed of assignment, and who have proved faithful to their trust, shall not suffer inconvenience on account of their fidelity.

Having thus given our sentiments at large, as well for the surrender of the assignment as with regard to those arrangements which we think necessary to adopt in consequence thereof, we cannot dismiss this subject without expressing our highest approbation of _the ability, moderation, and command of temper_ with which our President at Madras has conducted himself in the management of a very delicate and embarrassing situation. His conduct, and that of the Select Committee of Fort St. George, in the execution of the trust delegated to Lord Macartney by the Nabob Mahomed Ali, has been vigorous and effectual, for the purpose of realizing as great a revenue, at a crisis of necessity, as the nature of the case admitted; and the imputation of corruption, suggested in some of the Proceedings, appears to be totally groundless and unwarranted.

While we find so much to applaud, it is with regret we are induced to advert to anything which may appear worthy of blame: as the step of issuing the Torana Chits in Lord Macartney's own name can only be justified upon the ground of absolute necessity;[71] and as his Lordship had every reason to believe that the demand, when made, would be irksome and disagreeable to the feelings of Mahomed Ali, every precaution ought to have been used and more time allowed for proving that necessity, by previous acts of address, civility, and conciliation, applied for the purposes of obtaining his authority to such a measure. It appears to us that more of this might have been used; and therefore we cannot consider the omission of it as blameless, consistent with our wishes of sanctifying no act contrary to the spirit of the agreement, or derogatory to the authority of the Nabob of the Carnatic, in the exercise of any of his just rights in the government of the people under his authority.

We likewise observe, the Nabob has complained that no official communication was made to him of the peace, for near a month after the cessation of arms took place. This, and every other mark of disrespect to the Nabob, will ever appear highly reprehensible in our eyes; and we direct that you do, upon all occasions, pay the highest attention to him and his family.

Lord Macartney, in his Minute of the 9th of September last, has been fully under our consideration. We shall ever applaud the prudence and foresight of our servants which induces them to collect and communicate to us every opinion, or even ground of suspicion they may entertain, relative to any of the powers in India with whose conduct our interest and the safety of our settlements is essentially connected. At the same time we earnestly recommend that those opinions and speculations be communicated to us with prudence, discretion, and all possible secrecy, _and the terms in which they are conveyed be expressed in a manner as little offensive as possible to the powers whom they may concern and into whose hands they may fall._[72]

We next proceed to give you our sentiments respecting the private debts of the Nabob; _and we cannot but acknowledge_ that the origin and justice, both of the loan of 1767, and the loan of 1777, commonly called the Cavalry Loan, appear to us clear and indisputable, agreeable to the true sense and spirit of the late act of Parliament.

In speaking of the loan of 1767, we are to be understood as speaking of the debt as constituted by the original bonds of that year, bearing interest at 10_l._ per cent; and therefore, if any of the Nabob's creditors, under a pretence that their debts made part of the consolidated debt of 1767, although secured by bonds of a subsequent date, carrying an interest exceeding 10_l._ per cent, shall claim the benefit of the following orders, we direct that you pay no regard to such claims, without further especial instructions for that purpose.

With respect to the consolidated debt of 1777, it certainly stands upon a less favorable footing. So early as the 27th March, 1769, it was ordered by our then President and Council of Fort St. George, that, for the preventing all persons living under the Company's protection from having any dealings with any of the country powers or their ministers without the knowledge or consent of the Board, an advertisement should be published, by fixing it up at the sea-gate, and sending round a copy to the Company's servants and inhabitants, and to the different subordinates, and our garrisons, and giving it out in general orders, stating therein that the President and Council did consider the irreversible order of the Court of Directors of the year 1714 (whereby their people were prohibited from having any dealings with the country governments in money matters) to be in full force and vigor, and thereby expressly forbidding all servants of the Company, and other Europeans under their jurisdiction, to make loans or have any money transactions with any of the princes or states in India, without special license and permission of the President and Council for the time being, except only in the particular cases there mentioned, and declaring that any wilful deviation therefrom should be deemed a breach of orders, and treated as such. And on the 4th of March, 1778, it was resolved by our President and Council of Fort St George, that the consolidated debt of 1777 was not, on any respect whatever, conducted under the auspices or protection of that government; and on the circumstance of the consolidation of the said debt being made known to us, we did, on the 28rd of December, 1778, write to you in the following terms: "Your account of the Nabob's private debts is very alarming; but from whatever cause or causes those debts have been contracted or increased, we hereby repeat our orders, that the sanction of the Company be on no account given to any kind of security for the payment or liquidation of any part thereof, (except by the express authority of the Court of Directors,) on any account or pretence whatever."

The loan of 1777, therefore, has no sanction or authority from us; and in considering the situation and circumstances of this loan, we cannot omit to observe, that the creditors could not be ignorant how greatly the affairs of the Nabob were at that time deranged, and that his debt to the Company was then very considerable,--the payment of which the parties took the most effectual means to postpone, by procuring an assignment of such specific revenues for the discharge of their own debts as alone could have enabled the Nabob to have discharged that of the Company.

Under all these circumstances, we should be warranted to refuse our aid or protection in the recovery of this loan. But when we consider the inexpediency of keeping the subject of the Nabob's debts longer afloat than is absolutely necessary,--when we consider how much the final conclusion of this business will tend to promote tranquillity, credit, and circulation of property in the Carnatic,--and when we consider that the debtor concurs with the creditor in establishing the justice of those debts consolidated in 1777 into gross sums, for which bonds were given, liable to be transferred to persons different from the original creditors, and having no share or knowledge of the transactions in which the debts originated, and of course how little ground there is to expect any substantial good to result from an unlimited investigation into them, we have resolved so far to recognize the justice of those debts as to extend to them that protection which, upon _more_ forcible grounds, we have seen cause to allow to the other two classes of debts. But although we so far adopt the general presumption in their favor as to admit them to a participation in the manner hereafter directed, we do not mean to debar you from receiving any complaints against those debts of 1777, at the instance either of the Nabob himself, or of other creditors injured by their being so admitted, or by any other persons having a proper interest, or stating reasonable grounds of objection; and if any complaints are offered, we order that the grounds of all such be attentively examined by you, and be transmitted to us, together with the evidence adduced in support of them, for our final decision; and as we have before directed that the sum of twelve lacs of pagodas, to be received annually from the Nabob, should be paid into our treasury, it is our order that the same be distributed according to the following arrangement.

That the debt be made up in the following manner, viz.

The debt consolidated in 1767 to be made up to the end of the year 1784, with the current interest at ten per cent.

The Cavalry Loan to be made up to the same period, with the current interest at twelve per cent.

The debt consolidated in 1777 to be made up to the same period, with the current interest at twelve per cent, to November, 1781, and from thence with the current interest at six per cent.

The twelve lacs annually to be received are then to be applied,--

1. To the growing interest on the Cavalry Loan, at twelve per cent.

2. To the growing interest on the debt of 1777, at six per cent.

The remainder to be equally divided: one half to be applied to the extinction of the Company's debt; the other half to be applied to the payment of growing interest at 10_l._ per cent, and towards the discharge of the principal of the debt of 1767.

This arrangement to continue till the principal of the debt 1767 is discharged.

The application of the twelve lacs is, then, to be,--

1. To the interest of the debt of 1777, as above. The remainder to be then equally divided,--one half towards the discharge of the current interest and principal of the Cavalry Loan, and the other half towards the discharge of the Company's debt.

When the Cavalry Loan shall be thus discharged, there shall then be paid towards the discharge of the Company's debt seven lacs.

To the growing interest and capital of the 1777 loan, five lacs.

When the Company's debt shall be discharged, the whole is then to be applied in discharge of the debt 1777.

If the Nabob shall be prevailed upon to apply the arrears and growing payments of the Tanjore peshcush in further discharge of his debts, over and above the twelve lacs of pagodas, we direct that the whole of that payment, when made, shall be applied towards the reduction of the Company's debt.

We have laid down these general rules of distribution, as appearing to us founded on justice, and the relative circumstances of the different debts; and therefore we give our authority and protection to them only on the supposition that they who ask our protection acquiesce in the condition upon which it is given; and therefore we expressly order, that, if any creditor of the Nabob, a servant of the Company, or being under our protection, shall refuse to express his acquiescence in these arrangements, he shall not only be excluded from receiving any share of the fund under your distribution, but shall be prohibited from taking any separate measures to recover his debt from the Nabob: it being one great inducement to our adopting this arrangement, that the Nabob shall be relieved from all further disquietude by the importunities of his individual creditors, and be left at liberty to pursue those measures for the prosperity of his country which the embarrassments of his situation have hitherto deprived him of the means of exerting. And we further direct, that, if any creditor shall be found refractory, or disposed to disturb the arrangement we have suggested, he shall be dismissed the service, and sent home to England.

The directions we have given only apply to the three classes of debts which have come under our observation. It has been surmised that the Nabob has of late contracted further debts: if any of these are due to British subjects, we forbid any countenance or protection whatever to be given to them, until the debt is fully investigated, the nature of it reported home, and our special instructions upon it received.