The Board of Directors

In Europe, the necessary qualification for an investor to vote at their general board were:

• £500, which was the original share price of a stock of the company, and
• at least 6 months ownership of this stock.

Parliament changed the qualifications by:

• raising the price to £1,000,
• declaring that the share should be acquired by one’s own purchase and not by inheritance, and
• at least 1 year ownership of this stock.

In the past, its 24 executives were chosen annually.

• Now, each executive is chosen for 4 years.
• 6 of them should go out of office by rotation every year.
• They cannot be re-chosen at the election for 6 new executives for the ensuing year.

With these changes, the executive board and the board of directors were expected to act with more dignity and steadiness.

But it seems impossible to render such boards fit to govern because most of their members had too little interest in the empire’s prosperity.

Frequently a man of great, sometimes even a man of small fortune, is willing to buy £1,000 share in India stock merely for the influence it gives him by a vote in the board of directors.

• It lets him appoint the plunderers of India, not get the plunder.
• The board of directors appoint those plunderers.
• Those executives are under the influence of their investor-directors.
• Those investors elect those executives and sometimes overrule the executive staff in India.

If a man can enjoy this influence for a few years, then he can provide for his friends.

• He frequently cares little about the dividend, or even the value of his stock.
• He seldom cares at all about:
  • the empire’s prosperity, or
  • the management of the company

The investors are sovereigns who are perfectly indifferent about:

• the happiness or misery of their subjects,
• the improvement or waste of their dominions,
• the glory or disgrace of their administration, and
• irresistible moral causes.

This indifference was more likely to be increased by some of the new regulations made by the parliamentary inquiry.

For example, a resolution of the House of Commons declared:

• The company can only divide 8% on their capital when:
  • the £1,400,000 lent to the company by government are paid, and
  • their bond-debts are reduced to £1,500,000.
• Whatever remained of their revenues and neat profits at home should be divided into 4 parts:
  • 3 of them are to be paid into the exchequer for public use.
  • 1 part is reserved as a fund for:
    • further reducing their bond-debts, or
    • company emergencies

But if the company were bad staff and bad sovereigns when their net revenue and profits belonged to themselves, they were surely would not be better when:

• 3/4 of the net revenue belonged to other people, and
• 1/4 of the net revenue were to be inspected and approved by other people, for the company’s benefit.

¹¹⁶ It might be better that the company’s own staff and dependants be allowed to embezzle whatever surplus remains after paying the 8% dividend, than to let the surplus go to investors.

• This will make their staff differ with those investors .
• The interest of those staff and dependants would then predominate in the court of proprietors to dispose it to support acts of depredation.
• With the majority of proprietors, the court’s authority might be reduced.

¹¹⁷ The regulations of 1773, accordingly, did not end the disorders of the company’s government in India.

At one time, they saved more than 3 millions sterling into the Calcutta treasury during a momentary fit of good conduct.

• They then extended their access to some of the richest and most fertile countries in India.
• But all was wasted and destroyed when they found themselves unprepared to stop the incursion of Hyder Ali.

Because of those disorders, the company is now (1784) in greater distress than ever.

• To prevent immediate bankruptcy, it again begs the aid of government.
• Different plans have been proposed by the different parties in parliament for its better management.
  • All those plans agree in supposing the obvious that it is unfit to govern its territorial possessions.
• Even the company itself is convinced of its own incapacity, that it is willing to give them up to government.

¹¹⁸ The right of making peace and war in distant and barbarous countries is connected with the right of possessing forts and garrisons there.

The joint stock companies constantly exercised the right of making war and peace and had it expressly conferred on them. They unjustly, capriciously, and cruelly exercised this right.