Regulating Act of 1773
Encyclopedia
The Regulating Act of 1773 was an Act
of the Parliament of Great Britain
intended to overhaul the management of the East India Company's rule in India
. The Act did not prove to be a long-term solution to concerns over the Company's affairs; Pitt's India Act
was therefore subsequently enacted in 1784 as a more radical reform.
was in dire financial straits. The Company was important to Britain
because it was a monopoly
trading company
in India
and in the east and many influential people were shareholder
s. The Company paid annually to the government to maintain the monopoly but had been unable to meet its commitments because of the loss of tea
sales to America since 1768. About 85% of all the tea in America was smuggled Dutch
tea. The East India Company owed money to both the Bank of England
and the government; it had 15M lb (6.8M kg) of tea rotting in British warehouses and more en route from India.
Lord North decided to overhaul the management of the East India Company with the Regulating Act. This was the first step to the eventual government control of India. The Act set up a system whereby it supervised (regulated) the work of the East India Company.
The Company had taken over large areas of India for trading purposes and had an army to protect its interests. Company men were not trained to govern so North's government began moves towards government control since India was of national importance. Shareholders in the Company opposed the Act. The East India Company was still a powerful lobbying group in Parliament in spite of its financial problems.
A supreme court was established at Fort William at Calcutta. British judges were to be sent to India to administer the British legal system that was used there.
Act of Parliament
An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...
of the Parliament of Great Britain
Parliament of Great Britain
The Parliament of Great Britain was formed in 1707 following the ratification of the Acts of Union by both the Parliament of England and Parliament of Scotland...
intended to overhaul the management of the East India Company's rule in India
Company rule in India
Company rule in India refers to the rule or dominion of the British East India Company on the Indian subcontinent...
. The Act did not prove to be a long-term solution to concerns over the Company's affairs; Pitt's India Act
Pitt's India Act
The East India Company Act 1784, also known as Pitt's India Act, was an Act of the Parliament of Great Britain intended to address the shortcomings of the Regulating Act of 1773 by bringing the East India Company's rule in India under the control of the British Government...
was therefore subsequently enacted in 1784 as a more radical reform.
Background
By 1773, the East India CompanyEast India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...
was in dire financial straits. The Company was important to Britain
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...
because it was a monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
trading company
Trading company
Trading companies are businesses working with different kinds of products which are sold for consumer, business or government purposes. Trading companies buy a specialized range of products, maintain a stock or a shop, and deliver products to customers....
in India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
and in the east and many influential people were shareholder
Shareholder
A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....
s. The Company paid annually to the government to maintain the monopoly but had been unable to meet its commitments because of the loss of tea
Tea
Tea is an aromatic beverage prepared by adding cured leaves of the Camellia sinensis plant to hot water. The term also refers to the plant itself. After water, tea is the most widely consumed beverage in the world...
sales to America since 1768. About 85% of all the tea in America was smuggled Dutch
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
tea. The East India Company owed money to both the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
and the government; it had 15M lb (6.8M kg) of tea rotting in British warehouses and more en route from India.
Lord North decided to overhaul the management of the East India Company with the Regulating Act. This was the first step to the eventual government control of India. The Act set up a system whereby it supervised (regulated) the work of the East India Company.
The Company had taken over large areas of India for trading purposes and had an army to protect its interests. Company men were not trained to govern so North's government began moves towards government control since India was of national importance. Shareholders in the Company opposed the Act. The East India Company was still a powerful lobbying group in Parliament in spite of its financial problems.
Provisions of the Regulating Act
- The Act limited Company dividendDividendDividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...
s to 6% until it repaid a loan (passed by an accompanying act, 13 Geo. 3 c. 64) and restricted the Court of Directors to four-year terms.
- It prohibited the servants of company from engaging in any private trade or accepting presents or bribes from the natives.
- The Act elevated Governor of BengalBengal PresidencyThe Bengal Presidency originally comprising east and west Bengal, was a colonial region of the British Empire in South-Asia and beyond it. It comprised areas which are now within Bangladesh, and the present day Indian States of West Bengal, Assam, Bihar, Meghalaya, Orissa and Tripura.Penang and...
Warren HastingsWarren HastingsWarren Hastings PC was the first Governor-General of India, from 1773 to 1785. He was famously accused of corruption in an impeachment in 1787, but was acquitted in 1795. He was made a Privy Councillor in 1814.-Early life:...
to Governor-GeneralGovernor-General of IndiaThe Governor-General of India was the head of the British administration in India, and later, after Indian independence, the representative of the monarch and de facto head of state. The office was created in 1773, with the title of Governor-General of the Presidency of Fort William...
and subsumed the presidencies of MadrasMadras PresidencyThe Madras Presidency , officially the Presidency of Fort St. George and also known as Madras Province, was an administrative subdivision of British India...
and BombayBombay PresidencyThe Bombay Presidency was a province of British India. It was established in the 17th century as a trading post for the English East India Company, but later grew to encompass much of western and central India, as well as parts of post-partition Pakistan and the Arabian Peninsula.At its greatest...
under Bengal's control.
- The Act named four additional men to serve with the Governor-General on the Calcutta Council: Lt-Gen John ClaveringJohn Clavering (British Army officer)Lieutenant General Sir John Clavering KB was an army officer and diplomat.-Military career:Baptised in Lanchester, County Durham, England in 1722, Clavering was the younger son of Sir James Clavering Bt and Catherine Yorke, and younger brother of Sir Thomas Clavering, 7th Baronet...
, George Monson, Richard BarwellRichard BarwellRichard Barwell was an Anglo-Indian writer and politician.Barwell was the son of William Barwell, governor of Bengal in 1748, and afterwards a director of the East India Company, and Sheriff of Surrey in 1768...
, and Philip Francis. Barwell was the only one with previous experience in India. These councillors were commonly known as the "Council of FourCouncil of Four (India)The Council of Four was established in 1773 to limit the influence of the Governor-General of India, Warren Hastings. It is sometimes referred to as the Calcutta Council. It consisted of Sir Philip Francis, Lt. General Sir John Clavering, The Honourable Sir George Monson and a designated East India...
".
A supreme court was established at Fort William at Calcutta. British judges were to be sent to India to administer the British legal system that was used there.