Charter Act of 1813 with Video

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 Introduction

Among historians, the Charter Act of 1813 is rated more significant than the Charter Act of 1793. There are reasons for such an inference. The Charter Act of 1793 had given the patent to the Company for twenty years. There was a lot of agitation against the renewal of the Charter when twenty years ended. But, it was finally renewed for the next twenty years by the  Charter Act of 1813. The Act ended the monopoly of the trade of the company under the laissez-faire theory of Adam Smith, provided for the education of the Indians under the principles of Utilitarianism, and asserted the complete sovereignty of the British Crown in and over the Company's territories following the policy of imperialism.

Circumstances at the time of the enactment of the Charter Act of 1813.

1. The Prevailing Political Ideologies of the time

Adams Smith published his book “An Inquiry into the Nature and Causes of the Wealth of Nations” in 1797. In the book, he propounded a principle of political economy which became famous as the principle of the Leissez Faire. Soon, it took hold of the English merchant's mindset as well the politicians of England. In 1813, the twenty year period of the monopoly of trade to India granted to the East India company in 1793 expired. The anti-monopolists attacked the East India Company vehemently and demanded to abolish its monopoly. In such a political climate, the Directors of the Company again approached the Parliament to renew its charter.

2. Economic Crises of the time

At the beginning of the nineteenth century, Europe was under Napoleon's domination. Napoleon tried to subjugate Britain, which he had termed a nation of shopkeepers. He adopted the political weapon of the Continental System, which was a strategy of economic blockade. It severely affected the trade and industry in Britain. The prices of the staple food increased. In 1811, Britain suffered an economic crisis. The harvest had failed, and it was followed by riots. Unemployment was on the increase, and wages declined. Britain sought the answer in the political economy theory of Adam Smith which came in support of free trade. The leading politicians in the House of Commons who were in contact with the directors of the Company frankly told them that they would not be able to safeguard their privilege of the monopoly of trade with India. The House of Commons had reached a conclusion that the Indian trade would be flung open to all the interested merchants.

3. Problems of Company's Creation

The East India Company had created many difficulties by its own acts and policies, and it had created a problem for it in England. The policy of war and expansion adopted by Lord Wellesley had enlarged the Indian territorial possessions. Except for a few regions like Punjab and Sind, the rest of India had passed under British paramountcy. It had become difficult for the Company to continue as a political sovereign and a commercial organisation.

4. Massive Debt of the Company and an Important Fifth Report

The debt of the company had increased tremendously before the expiry of its period before 1813. It resulted from the aggressive policy adopted by Lord Wellesley in India. In 1805, the Company was under a debt of 2.1 crore pounds, paying 28 lakhs interest annually. In 1808, the Directors of the Company applied for a substantial loan from the Government. The House of Commons appointed a Committee to enquire into the financial difficulties of the Company. The Committee submitted its report in July 1812, which is famous as the Fifth Report. The Fifth Report is considered to be the most authoritative document on the realities of the land revenue and judicial and political arrangements in India at that time.

5. Anti-monopolists Parliamentarians and their Private Trade interests lobby

No sooner did the Directors apply for the new charter than there started a heated debate in the House of Commons. A group of parliamentarians aggressively urged the view in the House of Commons that the monopoly of Indian trade given to the Company must be ended, and all British citizens must get the right to trade freely in India. The parliamentarians supporting the private trading interests gradually became stronger in the House of Commons. The Directors of the Company made every effort to neutralise the anti-monopolist move in the British parliament. The company petitioned the legislature to present its case before a council of the Parliament. The company was given the opportunity.

6. The Directors sought a Hearing in the Parliament

The Directors pleaded before the Council of the Parliament, supported by strong evidence and testimonies of the people who were directly associated with the working of the company in India. The Company presented two major arguments. Their first argument was that with the end of the monopoly on Indian trade, their trade profits would dry out, and it would not be feasible for the Company to conduct government work over the Indian territories. Their second argument was that the unlimited access to the Europeans in the Indian trade would create such political dangers that might not be manageable. The witnesses authenticated their stand in support of leading people like Warren Hastings, Lord Teignmouth, Charles Grant, and Colonel Malcom before the Parliamentarian. They strongly pleaded that trade in India could be conducted with advantage only through the agency of the Company. However, the anti-monopolist Parliamentarians gathered sufficient strength to pull down all their arguments.

7. Support in raising ban on Christian Missionaries Activities in India

The issue of the permission for the Christian Missionaries to conduct their activities proved very decisive in the framework of the Charter Act of 1813. The Company had followed the rule that banned the Christian Missionaries from conducting their religious activities on Indian territories under the government of the Company. There was a strong movement in England favouring the permission of Christian missionaries to conduct their religious activities in India. Nearly less than 850 petitions were laid on the table of the House of Commons demanding the withdrawal of the ban on Christian missionaries. The demand favouring the Christian Missionaries supported the stand of anti-monopolists against the Company.

8. The 13 Resolutions of Anti-monopolists and Pro-Christian Missionaries Parliamentarians

The anti-monopolists and pro-Christian Missionaries Parliamentarians successfully carried the majority with them. They submitted their proposals to the Parliament in 13 resolutions which framed the Charter Act of 1813 provisions.

Main Provisions of the Charter Act of 1813.

1. In the preamble to the Charter Act of 1813, it was explicitly declared that the sovereignty of the British Crown over the Company's territories in India was paramount.

2. The Company was granted the right over the Indian possessions and revenues for the following years.

3. The monopoly of the Company over Indian trade was ended, and it was thrown open to all British citizens. The Company was, however, allowed the monopoly of the Chinese trade and trading in tea.

4. A provision directed the Company to keep its trade and revenue records separate and distinct.

5. A new licence system was introduced under which all the British merchants and Christian Missionaries were permitted to come and settle in India and perform their activities. The licence was to be issued by the Court of Directors, and if they deny it any identity, then the Board of Control could grant such licences.

6. A provision (Article 87) instructed the Company to set apart one lakh rupees annually to encourage education, literature and science among the 'Native Indians' of the British territories in India.

7. A set of provisions was provided that extended and further defined the powers of the Board of Control concerning its work of superintendence and control over Indian affairs.

8. The Company was allowed the right to make appointments as before. However, in case of appointments to higher offices like that of the Governor-General, Governors and high officials, the approval of the Crown was made mandatory. Similar authority was granted to the Board of Control in case of some more appointments.

9. The Charter established an Ecclesiastical Department of the Government of India. The Company was allowed to appoint one Bishop and three Archdeacons to look after the religious welfare of the Europeans in India.

10. Provisions were also added that directed the Company to use their Indian revenues under various heads. Many charges were made eligible for payment from the Indian revenue in the order of preference, like the charges of maintenance of the forces in India, the payment of the interest on the debt of the company and maintenance of the civil and commercial establishment of the Company were the three major charges which were to be paid out of the revenue of India in that order of preference.

11. The Charter Act also laid down the provision to arrange the training of the Company's Civil and Military Servants.

Significance of the Charter Act of 1813

The Charter Act of 1813 is considered highly significant for various. It left the core constitution of the Company unchanged. However, there were many changes that it initiated that had long-term effects on the history of India and the constitution of India.

1. The monopoly of Indian trade of the Company was abolished.

The monopoly of Indian trade given to the Company was an issue of debate and intense criticism for a long. The monopoly of Indian trade was abolished. However, the Company was allowed a monopoly over China trade and the trade in tea. On the whole, it was a victory for the trade interests of the people of England, who favoured free trade. The Company now faced competition in the market. On the other hand, it increased the trade of the people from England and benefitted the economy of England. It was reflected in the trade figures over a period of time. In 1813, the England trade with India was 1.3 crore pounds. By 1865, the British trade increased to 10 crore pounds.

2. The Indian economy was badly affected.

The abolition of the trade monopoly and acceptance of free trade policy did not prove good for the health of the Indian economy. The British free traders spread over different fields of India's economy and changed the economic structure of India. It benefited the Industrial Revolution in England as the profit earned from India paid for the investment needed to bring Industrial growth to England. The age-old production system of India based on cotton yarn and textile manufacturing was destroyed. The Indian economy was reduced to the position of raw material-producing economy. The Indian economy was exposed to international economic forces without replacing it with new industries in place of displaced industries. It became the cause of the deindustrialisation of India. The people who were ejected from the traditional textile industry were forced to fall back on agriculture as the primary source of their survival. It changed the structure of the Agricultural economy of India. Gradually, the Indian economy was reduced to the level of consumers of finished products of India’s industry, for which it played the role of a raw material-producing economy. A scholar commented that it was not the machine of the Industrial Revolution of England that destroyed the Indian economy but the political power that unleashed the market forces that destroyed the Indian economy.

3. The Charter Act of 1813, for the Parliament, the English public opinion is more important over and above every other opinion.

The Charter Act of 1813 proved that the British Parliament gave full regard to the public opinion of the people of England. The Company tried its best to retain its monopoly over the Indian trade. The Company presented the distinguished witnesses who supported the existing arrangements. However, the Parliament gave more importance to the public opinion of England, which was totally against the continuation of the monopoly rights and favoured the free trade policy in Indian trade.

4. The Parliament gave attention to the education of the Indians

The British Parliament explicitly declared that the Crown of the sovereign power over the Indian territories under the government of the Company. It took over the responsibility of providing education to the Native Indians, which was considered the moral duty of the sovereign power as per the political thought of the times. It was another thing that the government under the Company was the actual executing arm in India, did not care to utilise the funds and kept accumulating for a long period. However, it started a period of modern education for the Indians, which was crucial for developing the constitution of India later.

5. It gave permission to the Christian missionaries to run their institutions in India.

The Directors of the Company did not allow the Christian missionaries to undertake their activity in the territories under their rule. They feared that it would agitate the people of India and harm their trade activities. However, the Charter Act specifically allowed the Missionaries to undertake their activities in the territories under the government of the Company. It was found that within a decade, the missionaries became more active in starting schools and colleges in India, which they used as an instrument to spread Christianity. The Christian Missionaries became more active in the field of education than the Government.