The Works of the Right Honourable Edmund Burke, Vol. 08 (of 12)

The contract to this first bidder, Mr. Griffiths, was prolonged from year to year; and as during that time frequent complaints were made by him to the Council Board, on the principle that the years answered very differently, and that the business of one year ran into the other, reasons or excuses were furnished for giving the next contract to Mr. Mackenzie for three years. This third contract was not put up to auction, as the second had been, and as this ought to have been. The terms were, indeed, something better for the Company; and the engagement was subject to qualifications, which, though they did not remove the objection to the breach of the Company's orders, prevented the hands of the Directors from being tied up. A proviso was inserted in the contract, that it should not be anyways binding, if the Company by orders from home should alter the existing practice with regard to such dealing.

Whilst these things were going on, the evils which this monopoly was in show and pretence formed to prevent still existed, and those which were naturally to be expected from a monopoly existed too. Complaints were made of the bad quality of the opium; trials were made, and on those trials the opium was found faulty. An office of inspection at Calcutta, to ascertain its goodness, was established, and directions given to the Provincial Councils at the places of growth to certify the quantity and quality of the commodity transmitted to the Presidency.

In 1776, notwithstanding an engagement in the contract strictly prohibiting all compulsory culture of the poppy, information was given to a member of the Council-General, that fields green with rice had been forcibly ploughed up to make way for that plant,—and that this was done in the presence of several English gentlemen, who beheld the spectacle with a just and natural indignation. The board, struck with this representation, ordered the Council of Patna to make an inquiry into the fact; but your Committee can find no return whatsoever to this order. The complaints were not solely on the part of the cultivators against the contractor. The contractor for opium made loud complaints against the inferior collectors of the landed revenue, stating their undue and vexatious exactions from the cultivators of opium,—their throwing these unfortunate people into prison upon frivolous pretences, by which the tenants were ruined, and the contractor's advances lost. He stated, that, if the contractor should interfere in favor of the cultivator, then a deficiency would be caused to appear in the landed revenues, and that deficiency would be charged on his interposition; he desired, therefore, that the cultivators of opium should be taken out of the general system of the landed revenue, and put under "his protection." Here the effect naturally to be expected from the clashing of inconsistent revenues appeared in its full light, as well as the state of the unfortunate peasants of Bengal between such rival protectors, where the ploughman, flying from the tax-gatherer, is obliged to take refuge under the wings of the monopolist. No dispute arises amongst the English subjects which does not divulge the misery of the natives; when the former are in harmony, all is well with the latter.

This monopoly continuing and gathering strength through a succession of contractors, and being probably a most lucrative dealing, it grew to be every day a greater object of competition. The Council of Patna endeavored to recover the contract, or at least the agency, by the most inviting terms; and in this eager state of mutual complaint and competition between private men and public bodies things continued until the arrival in Bengal of Mr. Stephen Sulivan, son of Mr. Sulivan, Chairman of the East India Company, which soon put an end to all strife and emulation.

To form a clear judgment on the decisive step taken at this period, it is proper to keep in view the opinion of the Court of Directors concerning monopolies, against which they had uniformly declared in the most precise terms. They never submitted to them, but as to a present necessity; it was therefore not necessary for them to express any particular approbation of a clause in Mr. Mackenzie's contract which was made in favor of their own liberty. Every motive led them to preserve it. On the security of that clause they could alone have suffered to pass over in silence (for they never approved) the grant of the contract which contained it for three years. It must also be remembered that they had from the beginning positively directed that the contract should be put up to public auction; and this not having been done in Mr. Mackenzie's case, they severely reprimanded the Governor-General and Council in their letter of the 23rd December, 1778.

The Court of Directors were perfectly right in showing themselves tenacious of this regulation,—not so much to secure the best practicable revenue from their monopoly whilst it existed, but for a much more essential reason, that is, from the corrective which this method administered to that monopoly itself: it prevented the British contractor from becoming doubly terrible to the natives, when they should see that his contract was in effect a grant, and therefore indicated particular favor and private influence with the ruling members of an absolute government.

On the expiration of Mr. Mackenzie's term, and but a few months after Mr. Sulivan's arrival, the Governor-General, as if the contract was a matter of patronage, and not of dealing, pitched upon Mr. Sulivan as the most proper person for the management of this critical concern. Mr. Sulivan, though a perfect stranger to Bengal, and to that sort and to all sorts of local commerce, made no difficulty of accepting it. The Governor-General was so fearful that his true motives in this business should be mistaken, or that the smallest suspicion should arise of his attending to the Company's orders, that, far from putting up the contract (which, on account of its known profits, had become the object of such pursuit) to public auction, he did not wait for receiving so much as a private proposal from Mr. Sulivan. The Secretary perceived that in the rough draught of the contract the old recital of a proposal to the board was inserted as a matter of course, but was contrary to the fact; he therefore remarked it to Mr. Hastings. Mr. Hastings, with great indifference, ordered that recital to be omitted; and the omission, with the remark that led to it, has, with the same easy indifference, been sent over to his masters.

The Governor-General and Council declare themselves apprehensive that Mr. Sulivan might be a loser by his bargain, upon account of troubles which they supposed existing in the country which was the object of it. This was the more indulgent, because the contractor was tolerably secured against all losses. He received a certain price for his commodity; but he was not obliged to pay any certain price to the cultivator, who, having no other market than his, must sell it to him at his own terms. He was to receive half the yearly payment by advance, and he was not obliged to advance to the cultivator more than what he thought expedient; but if this should not be enough, he might, if he pleased, draw the whole payment before the total delivery: such were the terms of the engagement with him. He is a contractor of a new species, who employs no capital whatsoever of his own, and has the market of compulsion at his entire command. But all these securities were not sufficient for the anxious attention of the Supreme Council to Mr. Sulivan's welfare: Mr. Hastings had before given him the contract without any proposal on his part; and to make their gift perfect, in a second instance they proceed a step beyond their former ill precedent, and they contract with Mr. Sulivan for four years.

Nothing appears to have been considered but the benefit of the contractor, and for this purpose the solicitude shown in all the provisions could not be exceeded. One of the first things that struck Mr. Hastings as a blemish on his gift was the largeness of the penalty which he had on former occasions settled as the sanction of the contract: this he now discovered to be so great as to be likely to frustrate its end by the impossibility of recovering so large a sum. How a large penalty can prevent the recovery of any, even the smallest part of it, is not quite apparent. In so vast a concern as that of opium, a fraud which at first view may not appear of much importance, and which may be very difficult in the discovery, may easily counterbalance the reduced penalty in this contract, which was settled in favor of Mr. Sulivan at about 20,000l.

Monopolies were (as the House has observed) only tolerated evils, and at best upon trial; a clause, therefore, was inserted in the contracts to Mackenzie, annulling the obligation, if the Court of Directors should resolve to abolish the monopoly; but at the request of Mr. Sulivan the contract was without difficulty purged of this obnoxious clause. The term was made absolute, the monopoly rendered irrevocable, and the discretion of the Directors wholly excluded. Mr. Hastings declared the reserved condition to be no longer necessary, "because the Directors had approved the monopoly."

The Chiefs and Councils at the principal factories had been obliged to certify the quantity and quality of the opium before its transport to Calcutta; and their control over the contractor had been assigned as the reason for not leaving to those factories the management of this monopoly. Now things were changed. Orders were sent to discontinue this measure of invidious precaution, and the opium was sent to Calcutta without anything done to ascertain its quality or even its quantity.

An office of inspection had been also appointed to examine the quality of the opium on its delivery at the capital settlement. In order to ease Mr. Sulivan from this troublesome formality, Mr. Hastings abolished the office; so that Mr. Sulivan was then totally freed from all examination, or control whatsoever, either first or last.

These extraordinary changes in favor of Mr. Sulivan were attended with losses to others, and seem to have excited much discontent. This discontent it was necessary in some manner to appease. The vendue-master, who was deprived of his accustomed dues on the public sales of the opium by the private dealing, made a formal complaint to the board against this, as well as other proceedings relative to the same business. He attributed the private sale to "reasons of state"; and this strong reflection both on the Board of Trade and the Council Board was passed over without observation. He was quieted by appointing him to the duty of these very inspectors whose office had been just abolished as useless. The House will judge of the efficacy of the revival of this office by the motives to it, and by Mr. Hastings giving that to one as a compensation which had been executed by several as a duty. However, the orders for taking away the precautionary inspection at Patna still remained in force.

Some benefits, which had been given to former contractors at the discretion of the board, were no longer held under that loose indulgence, but were secured to Mr. Sulivan by his contract. Other indulgences, of a lesser nature, and to which no considerable objection could be made, were on the application of a Mr. Benn, calling himself his attorney, granted.

Your Committee, examining Mr. Higginson, late a member of the Board of Trade, on that subject, were informed, that this contract, very soon after the making, was generally understood at Calcutta to have been sold to this Mr. Benn, but he could not particularize the sum for which it had been assigned,—and that Mr. Benn had afterwards sold it to a Mr. Young. By this transaction it appears clearly that the contract was given to Mr. Sulivan for no other purpose than to supply him with a sum of money; and the sale and re-sale seem strongly to indicate that the reduction of the penalty, and the other favorable conditions, were not granted for his ease in a business which he never was to execute, but to heighten the value of the object which he was to sell. Mr. Sulivan was at the time in Mr. Hastings's family, accompanied him in his progresses, and held the office of Judge-Advocate.

The monopoly given for these purposes thus permanently secured, all power of reformation cut off, and almost every precaution against fraud and oppression removed, the Supreme Council found, or pretended to find, that the commodity for which they had just made such a contract was not a salable article,—and in consequence of this opinion, or pretence, entered upon a daring speculation hitherto unthought of, that of sending the commodity on the Company's account to the market of Canton. The Council alleged, that, the Dutch being driven from Bengal, and the seas being infested with privateers, this commodity had none, or a very dull and depreciated demand.

Had this been true, Mr. Hastings's conduct could admit of no excuse. He ought not to burden a falling market by long and heavy engagements. He ought studiously to have kept in his power the means of proportioning the supply to the demand. But his arguments, and those of the Council on that occasion, do not deserve the smallest attention. Facts, to which there is no testimony but the assertion of those who produce them in apology for the ill consequences of their own irregular actions, cannot be admitted. Mr. Hastings and the Council had nothing at all to do with that business: the Court of Directors had wholly taken the management of opium out of his and their hands, and by a solemn adjudication fixed it in the Board of Trade. But after it had continued there some years, Mr. Hastings, a little before his grant of the monopoly to Mr. Sulivan, thought proper to reverse the decree of his masters, and by his own authority to recall it to the Council. By this step he became responsible for all the consequences.

The Board of Trade appear, indeed, to merit reprehension for disposing of the opium by private contract, as by that means the unerring standard of the public market cannot be applied to it. But they justified themselves by their success; and one of their members informed your Committee that their last sale had been a good one: and though he apprehended a fall in the next, it was not such as in the opinion of your Committee could justify the Council-General in having recourse to untried and hazardous speculations of commerce. It appears that there must have been a market, and one sufficiently lively. They assign as a reason of this assigned [alleged?] dulness of demand, that the Dutch had been expelled from Bengal, and could not carry the usual quantity to Batavia. But the Danes were not expelled from Bengal, and Portuguese ships traded there: neither of them were interdicted at Batavia, and the trade to the eastern ports was free to them. The Danes actually applied for and obtained an increase of the quantity to which their purchases had been limited; and as they asked, so they received this indulgence as a great favor. It does not appear that they were not very ready to supply the place of the Dutch. On the other hand, there is no doubt that the Dutch would most gladly receive an article, convenient, if not necessary, to the circulation of their commerce, from the Danes, or under any name; nor was it fit that the Company should use an extreme strictness in any inquiry concerning the necessary disposal of one of their own staple commodities.

The supply of the Canton treasury with funds for the provision of the next year's China investment was the ground of this plan. But the Council-General appear still to have the particular advantage of Mr. Sulivan in view,—and, not satisfied with breaking so many of the Company's orders for that purpose, to make the contract an object salable to the greatest advantage, were obliged to transfer their personal partiality from Mr. Sulivan to the contract itself, and to hand it over to the assignees through all their successions. When the opium was delivered, the duties and emoluments of the contractor ended; but (it appears from Mr. Williamson's letter, 18th October, 1781, and it is not denied by the Council-General) this new scheme furnished them with a pretext of making him broker for the China investment, with the profit of a new commission,—to what amount does not appear. But here their constant and vigilant observer, the vendue-master, met them again:—they seemed to live in no small terror of this gentleman. To satisfy him for the loss of his fee to which he was entitled upon the public sale, they gave him also a commission of one per cent on the investment. Thus was this object loaded with a double commission; and every act of partiality to one person produced a chargeable compensation to some other for the injustice that such partiality produced. Nor was this the whole. The discontent and envy excited by this act went infinitely further than to those immediately affected, and something or other was to be found out to satisfy as many as possible.

As soon as it was discovered that the Council entertained a design of opening a trade on those principles, it immediately engaged the attention of such as had an interest in speculations of freight.

A memorial seems to have been drawn early, as it is dated on the 29th of March, though it was not the first publicly presented to the board. This memorial was presented on the 17th of September, 1781, by Mr. Wheler, conformably (as he says) to the desire of the Governor-General; and it contained a long and elaborate dissertation on the trade to China, tending to prove the advantage of extending the sale of English manufactures and other goods to the North of that country, beyond the usual emporium of European nations. This ample and not ill-reasoned theoretical performance (though not altogether new either in speculation or attempt) ended by a practical proposition, very short, indeed, of the ideas opened in the preliminary discourse, but better adapted to the immediate effect. It was, that the Company should undertake the sale of its own opium in China, and commit the management of the business to the memorialist, who offered to furnish them with a strong armed ship for that purpose. The offer was accepted, and the agreement made with him for the transport of two thousand chests.

A proposal by another person was made the July following the date of this project: it appears to have been early in the formal delivery at the board: this was for the export of one thousand four hundred and eighty chests. This, too, was accepted, but with new conditions and restrictions: for in so vast and so new an undertaking great difficulties occurred. In the first place, all importation of that commodity is rigorously forbidden by the laws of China. The impropriety of a political trader, who is lord over a great empire, being concerned in a contraband trade upon his own account, did not seem in the least to affect them; but they were struck with the obvious danger of subjecting their goods to seizure by the vastness of the prohibited import. To secure the larger adventure, they require of the China factory that Colonel Watson's ship should enter the port of Canton as an armed ship, (they would not say a ship of war, though that must be meant,) that her cargo should not be reported; they also ordered that other measures should be adopted to secure this prohibited article from seizure. If the cargo should get in safe, another danger was in view,—the overloading the Chinese market by a supply beyond the demand; for it is obvious that contraband trade must exist by small quantities of goods poured in by intervals, and not by great importations at one time. To guard against this inconvenience, they divide their second, though the smaller adventure, into two parts; one of which was to go to the markets of the barbarous natives which inhabit the coast of Malacca, where the chances of its being disposed of by robbery or sale were at least equal. If the opium should be disposed of there, the produce was to be invested in merchandise salable in China, or in dollars, if to be had. The other part (about one half) was to go in kind directly to the port of Canton.

The dealing at this time seemed closed; but the gentlemen who chartered the ships, always recollecting something, applied anew to the board to be furnished with cannon from the Company's ordnance. Some was delivered to them; but the Office of Ordnance (so heavily expensive to the Company) was not sufficient to spare a few iron guns for a merchant ship. Orders were given to cast a few cannon, and an application made to Madras, at a thousand miles' distance, for the rest. Madras answers, that they cannot exactly comply with the requisition; but still the board at Bengal hopes better things from them than they promise, and flatter themselves that with their assistance they shall properly arm a ship of thirty-two guns.

Whilst these dispositions were making, the first proposer, perceiving advantages from the circuitous voyage of the second which had escaped his observation, to make amends for his first omission, improved both on his own proposal and on that of the person who had improved on him. He therefore applied for leave to take two hundred and fifty chests on his own account, which he said could "be readily disposed of at the several places where it was necessary for the ship to touch for wood and water, or intelligence, during her intended voyage through the Eastern Islands." As a corrective to this extraordinary request, he assured the board, that, if he should meet with any unexpected delay at these markets, he would send their cargo to its destination, having secured a swift-sailing sloop for the protection of his ship; and this sloop he proposed, in such a case, to leave behind. Such an extraordinary eagerness to deal in opium lets in another view of the merits of the alleged dulness of the market, on which this trade was undertaken for the Company's account.

The Council, who had with great condescension and official facility consented to every demand hitherto made, were not reluctant with regard to this last. The quantity of opium required by the freighters, and the permission of a trading voyage, were granted without hesitation. The cargo having become far more valuable by this small infusion of private interest, the armament which was deemed sufficient to defend the Company's large share of the adventure was now discovered to be unequal to the protection of the whole. For the convoy of these two ships the Council hire and arm another. How they were armed, or whether in fact they were properly armed at all, does not appear. It is true that the Supreme Council proposed that these ships should also convey supplies to Madras; but this was a secondary consideration: their primary object was the adventure of opium. To this they were permanently attached, and were obliged to attend to its final destination.

The difficulty of disposing of the opium according to this project being thus got over, a material preliminary difficulty still stood in the way of the whole scheme. The contractor, or his assignees, were to be paid. The Company's treasure was wholly exhausted, and even its credit was exceedingly strained. The latter, however, was the better resource, and to this they resolved to apply. They therefore, at different times, opened two loans of one hundred thousand pounds each. The first was reserved for the Company's servants, civil and military, to be distributed in shares according to their rank; the other was more general. The terms of both loans were, that the risk of the voyage was to be on account of the Company. The payment was to be in bills (at a rate of exchange settled from the supercargoes at Canton) upon the same Company. In whatever proportion the adventure should fail, either in the ships not safely arriving in China or otherwise, in that proportion the subscribers were to content themselves with the Company's bonds for their money, bearing eight per cent interest. A share in this subscription was thought exceeding desirable; for Mr. Hastings writes from Benares, where he was employed in the manner already reported and hereafter to be observed upon, requesting that the subscription should be left open to his officers who were employed in the military operations against Cheyt Sing; and accordingly three majors, seven captains, twenty-three lieutenants, the surgeon belonging to the detachment, and two civil servants of high rank who attended him, were admitted to subscribe.