Regulating Act of 1773
|Long title||An Act for establishing certain Regulations for the better Management of the Affairs of the East India Company, as well in India as in Europe|
|Citation||13 Geo. 3 c. 63|
|Introduced by||Frederick North, Lord North on 18 May 1773|
|Royal assent||10 June 1773|
|Commencement||10 June 1773|
|Relates to||13 Geo. 3 c. 64|
|Text of statute as originally enacted|
The Regulating Act of 1773 (formally, the East India Company Act 1772) 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.
By 1773, the East India Company was in dire financial straits. The Company was important to the British Empire because it was a monopoly trading company in India and in the east and many influential people were shareholders. The Company paid £400,000 (the present-day (2015) equivalent is £46.1 million) annually to the government to maintain the monopoly but had been unable to meet its commitments since 1768 because of the loss of tea sales to America. 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 15 million lbs (6.8 million kg) of tea rotting in British warehouses and more en route from India. The Regulating Act 1773, was complemented by the Tea Act 1773, which had a principal objective that was to reduce the massive amount of tea held by the financially troubled British East India Company in its London warehouses and to help the financially struggling company survive.
Lord North decided to overhaul the management of the 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 dividends to 6% until it repaid a £1.5m 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 Bengal, Warren Hastings to Governor-General of Bengal and subsumed the presidencies of Madras and Bombay under Bengal's control. It laid the foundations for a centralized administration in India. Governor of Bengal became the Governor General of Bengal with an executive council of four to assist him. Decisions would be taken by majority and Governor General could only vote in case of tie.
- The Act named four additional men to serve with the Governor-General on the Supreme Council of Bengal: Lt-Gen John Clavering, George Monson, Richard Barwell, and Philip Francis.
- 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.