# Regulating Act 1773

The East India Company Act 1772 (13 Geo. 3. c. 63) (also known as the Regulating Act 1773) was an act of the Parliament of Great Britain intended to overhaul the management of the East India Company's rule in India (Bengal). The act did not prove to be a long-term solution to concerns over the company's affairs. The East India Company Act 1784 (24 Geo. 3. Sess. 2. c. 25) was therefore subsequently enacted as a more radical reform. It marked the first step towards parliamentary control over the company and centralised administration in India.

## Background

By 1773, the East India Company (EIC) was in dire financial straits. The company was important to the British Empire because it was a monopoly trading company in India and the east, and many influential people were shareholders. The EIC paid £40,000 (equivalent to £46.1 million in 2015) annually to the government to maintain its 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 EIC 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, complemented by the Tea Act 1773, had the principal objective of reducing the surplus of tea held by the financially troubled EIC and improve its financial standing.
Lord North overhauled the management of the India Company with the Regulating Act. The EIC 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. The Act set up a system whereby the British government supervised the work of the EIC. Company shareholders opposed the Act, and the EIC was still a powerful lobbying group in Parliament despite 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.
* First step taken by the British government to regulate and control the company's affairs in India.
* 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.
* The act named four additional men to serve with the Governor-General on the an executive Supreme Council of Bengal: Lt-Gen John Clavering, George Monson, Richard Barwell, and Philip Francis. Decisions would be taken by majority of the council, and the Governor General could only vote in the case of a tie.
* A Supreme Court was established at Fort William at Calcutta (1774). British judges were to be sent to India to administer the British legal system that was used there. Sir Elijah Impey was the first chief justice. The court has both civil and criminal, and original and appellate jurisdiction.
* It permitted the company to keep its territorial possession in India. It has not take away the company's power completely, hence being termed a 'regulating act'.