An Empire on the Edge

by Nick Bunker

  Far from being eager to assist them, the king and his friends believed that the company’s wounds were self-inflicted. Only with reluctance did they open negotiations about a scheme to save it. At the meeting on October 8, Colebrooke bluntly told Lord North that the company could not pay its debts, including, of course, the money it owed the Treasury. In itself, this was not disastrous, because the tax collector in Great Britain always took the first slice of what remained when a company went down. In extremity, Lord North could seize every pound of tea and every yard of silk in the warehouse. However, for a multitude of reasons the cabinet felt obliged to intervene, and not least because India might fall to France.

  However woefully the company had administered Bengal, a province so rich in potential could not be abandoned, and a bankrupt company could not sustain the Bengal army. As for the China trade, the taxes levied on the tea it brought home came to about £800,000 a year, about 7 percent of the government’s income. If the East India Company went down, English families would still drink the beverage and pay the duty, but once the warehouse was empty, who would finance voyages to Canton? The French and the Dutch might step in, increase their own traffic to the East, and flood Britain and the colonies with still more smuggled tea. Indeed the Public Advertiser carried a report from Amsterdam saying that the Dutch were loading naval stores and munitions to be sent to their posts at Cape Town and in Java. The wider threat to the British economy left the cabinet all the more perplexed. With trade already so depressed, the company’s failure might deliver an irreparable blow. With their connections with the mill owners in the Midlands, Lord Dartmouth and Lord Gower knew just how bad things were, as gloomy letters arrived from Matthew Boulton about the blight that afflicted Birmingham.

  One last consideration was political. However bleak the situation might appear, at least it gave Lord North an opportunity to force reform on the East India Company. Since the grant of the diwan, ministers had come and gone, but each one had followed Indian affairs with increasing anxiety. An enterprise so vital could not be allowed to do exactly as it chose, especially when it scandalized not only the public but also the king. Ever since news arrived of the Bengal famine, the papers had run stories of extortion and suffering in India. Lampooned in the press, Sir George Colebrooke and his friends became objects of hatred, but it was not so easy for the government to intervene.

  Because the company had a royal charter, new regulations would require an act of Parliament. Until now, Lord North had been reluctant to try to pass the law required, not least because he might not win the vote. Aloof though the House of Lords might be, fifty members of the House of Commons held the company’s stock. Along with the rest of the company’s board, Colebrooke sat as a member of Parliament with the power to scatter gifts and favors in the form of remunerative jobs in India. North of the border he did the same. With his new estate in Scotland, Colebrooke aspired to be a local magnate, hovering around the Duke and Duchess of Argyll, who controlled a servile batch of MPs of their own.

  In a sense, therefore, the crisis came as a blessing for Lord North, albeit heavily disguised. Gradually, his ideas began to take shape. In return for a loan from the taxpayers, North could defeat Colebrooke and hold the company to ransom. North could demand reform, a say in the running of India, and new directors prepared to listen to Whitehall. But even now, while the Bank of England fumed quietly in the background, Colebrooke prevaricated. Dark rumors had begun to circulate, spread by Crichton and his friends, about the underhand dealings a year before, when the company lied about the Bengal bills and Colebrooke secretly bought stock to keep its price from falling. On October 9, Lord North asked to see all the company’s accounts, but it took nearly a month for all the data to arrive.

  “Papers are ordered everyday by the Treasury from India House,” wrote Edmund Burke, but the figures they contained were confusing and opaque. Twice Lord North had to interrogate the management, at long meetings around the Treasury’s boardroom table, before they revealed the truth about their balance sheet. Finally, on November 13, the company came up with a firm number: they would need £540,000 immediately and a great deal more in 1773. By this time, less than two weeks were left before Parliament reassembled on the twenty-sixth, when the company’s losses would have to be made public.14

  Furious with the directors, the king urged Lord North not to compromise about reform. “Any wavering now would be disgraceful to you, and destruction to the public,” he told his chief minister. Meanwhile, the atmosphere on the streets had gone from bad to worse. With the price of food still rising steeply, the capital had witnessed another riot, the kind that any rebuff to John Wilkes would inspire. As North and the king had expected, the city aldermen had disqualified enough of Wilkes’s votes to stop him from becoming lord mayor. On the evening of November 9, the candidate they chose held his inaugural ball. Led by unemployed seamen, a huge crowd gathered outside the Guildhall. They lit bonfires, stripped the wigs from the heads of guests, and tried to force an entry. “Damn my Lord Mayor for a scoundrel,” cried one man. “He has got Wilkes’s right, and we shall have him out.” The new mayor sallied forth waving his sword while the militia fought back the mob.15

  As Newgate Prison filled with rioters, the opening of Parliament drew near with the newspapers poring over the company’s affairs. Opinion pieces began to appear that advanced ingenious schemes for resolving the crisis. Gradually, they converged around a central theme. Although the company had run out of cash, it had acquired an immense stock of tea, with more due to arrive the following summer. A means must be found to unlock the value of the leaves and release a stream of money to keep the company alive.

  From the board, the desperate Laurence Sulivan came up with a plan to float a loan in Amsterdam, with the tea to be used as collateral: a rather lame suggestion, as the largest Dutch banks were also close to failure. An equally hopeless proposal came from Colebrooke, who wanted to ask investors in England for £1.5 million to refinance the business. With money so tight in London this was out of the question. But while these feeble ideas went the rounds, a more practical scheme had begun to emerge. In late September, a writer calling himself “A Fair Consumer” published a letter in the press that made a telling point. In London, wholesale Bohea cost three shillings and four pence a pound. In Amsterdam, where the taxes were tiny, the same packet of tea cost only one shilling and eight pence.

  As everyone knew, this situation created the vast black market that ate away at the company’s position. The solution was obvious: turn the tables on the Europeans by slashing the price in London to the same low level even if the company took a temporary loss. By flooding the market with cheap tea, the company would drive the smugglers to the wall and cripple its competitors in the China trade.16

  It was only the germ of an idea, but gradually it evolved into a scheme to send the surplus tea to America. Before it could reach fruition, it would be warped out of shape by intrigue and political maneuver on both sides of the Atlantic. At times the story that follows will resemble an intricate jigsaw puzzle in the style of the rococo, but without it the Boston Tea Party would never have taken place.

  Chapter Seven

  WHIGS, WEST INDIANS, AND

  THOMAS HUTCHINSON

  It is impossible that I can look with Indifference upon the Prosperity of the East India Company.

  —GEORGE III, NOVEMBER 26, 17721

  On November 25, George III returned to London from his summer palace at Kew. The following day he opened Parliament. As the weather grew colder, with storms in the Channel keeping the French in their harbors, so the risk of war receded. After such a meager harvest, the government had to find a way to reduce the price of bread—“as far as human wisdom can provide, for alleviating the distresses of the poor,” in the words of the king—but the question of India would dominate the session.

  Lord North had not yet decided what to do about the company. But politically his hand of cards was strong, and in the months that followed, he
would overplay it with a vengeance. For the next nine years, despite his fits of despair, North never lost a debate in the House of Commons on an issue of national policy, whether it concerned India or the colonies or finance. Sometimes a vote would go against him, but never on a subject serious enough to put the government in danger. On the streets the Wilkesites frightened the horses, but in Parliament the official opposition could rarely win a point. They were the Rockingham Whigs. Until the colonies were all but lost, they never broke Lord North’s command of the assembly.

  At times the Whigs roused themselves to fight with energy and courage, as they did in a series of great debates that preceded the outbreak of the fighting. But those debates took place in 1774–75, after the destruction of the tea in Boston, when perhaps it was already too late to halt the drift to war. Their best chance to prevent this calamity had actually arisen much earlier, in 1773, and their failure to seize the opportunity to do so was a sad reflection of their own deficiencies.

  In the three years before the fighting began at Concord, the arithmetic of politics in Great Britain did not change materially. The bottom line is this: while Lord North always had a majority, it existed only because he worked far harder than the Rockinghams to win the political battles of the day. The upper chamber, the House of Lords, consisted of 167 peers of the realm and the compliant bishops of the Church of England, including Brownlow North. But although the king and the cabinet could almost always count on victory in debate, it was here that the Rockinghams possessed their strongest cohort of supporters who—if correctly deployed—might have prevented the sending of the tea to Boston, and then the war.

  In the eighteenth century, it was very rare for the Lords to vote down a measure proposed by the government of the day, but it did sometimes happen. During the long debates on abolition of the Stamp Act, the peers had done so on two occasions—in both cases, the peers were supporting Sandwich and Suffolk, in their hawkish stance toward the colonies—and the Rockinghams might have staged their own counterattack in 1773. They could muster as many as thirty votes in the upper house; and since often more than half its members failed to attend debates, this might have been sufficient to mount an effective ambush if and when Lord North made a bad move. The Rockinghams included the rump of the old Whig oligarchy, which, under the first two Georges, had governed the country in alliance with Sir Robert Walpole. Inclined to favor conciliation with the colonies, they were generally far wealthier than the likes of Dartmouth or Lord North. If they wished, the Rockinghams could have used the House of Lords to obstruct an aggressive policy toward America, and eventually they tried to do so: but only when the crisis had already gone beyond repair.

  Their weakness lay in their leadership. For a figurehead, the opposition looked to Charles Watson-Wentworth, second Marquess of Rockingham. Six years earlier, in his own brief period as prime minister, he had abolished the stamp tax and passed the American Declaratory Act. As tall and dignified as Lord Gower, the marquess drew a vast income from his Irish estates in county Wicklow and even more from his rolling acres, rich with coal, in Yorkshire and the English Midlands. But at the age of only forty-two he already devoted less time to politics than he did to hypochondria, spending long holidays taking the waters at Bath.*1

  Best of all Rockingham loved the pleasures of the turf, at the Doncaster races or on the downs at Newmarket, where his horses reigned supreme. But his enemies laughed at his feeble speeches in the Lords—the marquess was, said Gower to Sandwich, a “poor, dumb creature”—while his friends despaired at his lack of energy. A little way behind his fillies and his foxhounds, he counted Edmund Burke as a favorite companion. But for all Burke’s eloquence and Rockingham’s money, the Whigs fell at every hurdle that they tried to jump. Led by the indolent marquess, they carried a heavy handicap of snobbery and self-interest. It left them all too slow to react to the early warning signs of more trouble in America, including the Gaspée raid: which they scarcely noticed at all.2

  In the House of Commons, the Rockinghams commanded a smaller following than they did in the Lords. The lower chamber had 558 members, of whom 513 sat for constituencies in England and Wales. The other 45 were Scottish. Behind Lord North and his colleagues from the Treasury there sat a loyal regiment of about 150 men, who would never vote against him on any serious question. They included officers in the army and the navy, other functionaries on the public payroll, and MPs for coastal boroughs where the electors were civil servants, from the post office or the customs. Another 20 belonged to the Bloomsbury gang, sitting for seats where Gower and his friends controlled the votes. Forty more were old allies of George Grenville, recently dead, the architect of the Stamp Act. They would also tend to rally behind the cabinet, partly because Lord Suffolk had been Grenville’s dearest disciple.

  Put all these together, and North had a base of support of more than 200 members. Add the MPs from Scotland, who were mostly very tame, and the number rose to nearly 250. Or so it did in theory, but in practice Lord North could never rely on them all to attend a debate. Later, when he asked Parliament to ratify some of his toughest policies toward America, more than 40 percent of MPs failed to cast a vote. Given this degree of apathy, a party of opposition might sometimes have a chance to catch the government by surprise if it could bring all its allies to the chamber.3

  Among the opposition in the Commons a few men—no more than six at the most—advocated radical ideas, akin to those of the Wilkesites. Another group owed their allegiance to a strange old warrior, who in his time had led the military effort against the French. Close to insanity, Lord Chatham—or William Pitt the Elder, to give him his other name—sulked in the wings of politics, every so often emerging like the ghost in Hamlet before he returned to silence and the shade. Americans counted Pitt as a friend because of his role in expelling the French from Canada and because he steadfastly opposed the Declaratory Act. In reality, Lord Chatham was another egotist. During the Seven Years’ War he had been superb—bold, decisive, and inspirational—but he could not cope with the dull routine and compromise of statesmanship in peacetime. He kept a following in Parliament, but it was very small.

  Edmund Burke in the late 1760s, just before he turned forty, from a print taken from a painting by Sir Joshua Reynolds. Library of Congress

  Between them, the radicals and the Chathamites had only about a dozen seats in the Commons. So here again the burden of opposition fell mainly to the Rockingham Whigs. When North took office, they numbered around 120, and in their opinion they spoke for liberty. They even had a manifesto—Thoughts on the Cause of the Present Discontents, published in 1770—in which Edmund Burke summed up the beliefs that held them together. According to Burke and the Marquess of Rockingham, the king and his friends—North, Sandwich, and the rest—were engaged in a project to subvert the constitution. They intended to create what Burke called “a system of favouritism” in which, in return for jobs, rank, title, and promotion, Parliament became the willing slave of the Crown.

  A master of English prose, Burke conveyed a powerful vision of a world in which justice and freedom were always in danger from conspiracies of powerful men. In saying this, he went almost as far as the Wilkesites, and in America he found many people who agreed with him. His ideas spread widely in the colonies, where they flowed into the rising tide of opposition to the British Crown.*2 There, too, public opinion had come to believe that North and the king were bent on the destruction of liberty.

  But while ideas are fine and splendid things, they matter not a jot in British politics if the people who advance them cannot turn them into votes. Edmund Burke had many friends and admirers, but for all his intellect and skill with words his following did not count where it mattered, in the division lobby. As Lord North scored one victory after another—his budgets and the Royal Marriage Act, for example—the Rockingham Whigs began to lose heart and fall away.

  By November 1772, their core vote had dropped to fewer than sixty. Even then, the Rockinghams might have achieve
d an occasional victory, because the Commons still contained a hundred independent members, mainly landed gentry from the shires. From time to time the country gentlemen would rebel, voting against Lord North. If Burke and his colleagues had made a cogent case against the government, they might have won the day. But as the debates about India would show, the Rockinghams were confused and demoralized. “I never felt more distress on any matters relating to Politicks, than I do at this moment,” wrote the marquess a week before Parliament reassembled. He felt too ill to travel to London. The invalid languished in Yorkshire with his dogs and Lady Rockingham, leaving his party to flounder.4

  Strange as it may seem, there was a case to be made to defend the East India Company against whatever plan of regulation Lord North might propose. The Rockingham Whigs could blame the crisis on the government, accusing it of squeezing too much money from the company and failing to send it military aid. As a matter of principle, they could also stand up for the company’s charter, in much the same way that Rhode Island stood up for its own equivalent. Appealing to their old apostle, the seventeenth-century philosopher John Locke, the Whigs might argue that charters were close to sacred, as binding contracts between George III and his subjects. And finally, if they wished to be more radical, Burke and his friends could employ their familiar argument against the overweening power of the state. They could denounce North’s plans for reform as yet another plot to use the revenues of Bengal to feed his own ambition and the king’s.