The buoyancy in the London money market, resulting from the 
withdrawal of an enormous mass of capital from the ordinary 
productive investments, and its consequent transfer to the security 
markets, has, in the last fortnight, been somewhai lessened by the 
prospects of an impending Indian loan to the amount of eight or 
ten million pounds sterling. This loan, to be raised in England, 
and to be authorized by Parliament immediately on its assembling 
in February, is required to meet the claims upon the East India 
Company by its home creditors, as well as the extra expenditure 
for war materials, stores, transport of troops, &c., necessitated by 
the Indian revolt. In August 1857, the British Government had, 
before the prorogation of Parliament, solemnly declared in the 
House of Commons that no such loan was intended, the financial 
resources of the Company being more than sufficient to meet the 
crisis. The agreeable delusion thus palmed on John Bull was, 
however, soon dispelled when it oozed out that by a proceeding of 
a very questionable character, the East India Company had laid 
hold on a sum of about £3,500,000 sterling, intrusted to them by 
different companies, for the construction of Indian railways; and 
had, moreover, secretly borrowed £1,000,000 sterling from the 
Bank of England, and another million from the London Joint 
Stock banks. The public being thus prepared for the worst, the 
Government did no longer hesitate to drop the mask, and by 
semi-official articles in The Times, Globe, and other governmental 
organs, avow the necessity of the loan. 

It may be asked why a special act on the part of the legislative 
power is required for launching such a loan, and then, why such 
an event does create the least apprehension, since, on the 

contrary, every vent for British capital, seeking now in vain for 
profitable investment, should, under present circumstances, be 
considered a windfall, and a most salutary check upon the rapid 
depreciation of capital. 

It is generally known that the commercial existence of the East 
India Company was terminated in 1834, when its principal 
remaining source of commercial profits, the monopoly of the 
China trade, was cut off.**”° Consequently, the holders of East 
India stock having derived their dividends, nominally, at least, 
from the trade-profits of the Company, a new financial arrange- 
ment with regard to them had become necessary. The payment of 
the dividends, till then chargeable upon the commercial revenue 
of the Company, was transferred to its political revenue. The 
proprietors of East India stocks were to be paid out of the 
revenues enjoyed by the East India Company in its governmental . 
capacity, and, by act of Parliament, the Indian stock, amounting to 
£6,000,000 sterling, bearing ten per cent interest,’ was converted 
into a capital not to be liquidated except at the rate of £200 
for every £100 of stock. In other words, the original East India 
stock of £6,000,000 sterling was converted into a capital of 
£12,000,000 sterling, bearing five per cent interest, and charge- 
able upon the revenue derived from the taxes of the Indian 
people. The debt of the East India Company was thus, by 
a Parliamentary sleight of hand, changed into a debt of the In- 
dian people. There’ exists, besides, a debt exceeding 
£50,000,000 sterling, contracted by the East India Company in 
India, and exclusively chargeable upon the State revenues of that 
country; such loans contracted by the Company in India itself 
having always been considered to lay beyond the district of 
Parliamentary legislation, and regarded no more than the debts 
contracted by the Colonial Governments in Canada or Australia 
for instance. 

On the other hand, the East India Company was prohibited 
from contracting interest-bearing debts in Great Britain herself, 
without the especial sanction of Parliament. Some years ago, when 
the Company set about establishing railways and electric tele- 
graphs in India, it applied for the authorization of Indian Bonds 
in the London market,a request which was granted to the amount 
of £7,000,000 sterling to be issued in Bonds bearing 4 per cent 

India Company”, The Economist, No. 749, January 2, 1858.— Ed. 

interest, and secured only on the Indian State revenues. At the 
commencement of the outbreak in India, this bond-debt stood at 
£3,894,400 sterling,* and the very necessity of again applying to 
Parliament shows the East India Company to have, during the 
course of the Indian insurrection, exhausted its legal powers of 
‘borrowing at home. 

Now it is no secret that before recurring to this step, the East 
India Company had opened a loan at Calcutta, which, however, 
turned out a complete failure. This proves, on the one hand, that 
Indian capitalists are far from considering the prospects of British 
supremacy in India in the same sanguine spirit which distinguishes 
the London press; and, on the other hand, exacerbates the 
feelings of John Bull to an uricommon pitch, since he is aware of , 
the immense hoardings of capital having gone on for the last 
seven years in India, whither, according to a statement recently 
published by Messrs. Haggard & Paxley, there has been shipped in 
1856 and 1857, from the port of London alone, bullion to the 
amount of £21,000,000. The London Times, in a most persuasive 
strain, has taught its readers that 

“of all the incentives to the loyalty of the natives, that of making them our 
creditors was the least doubtful; while, on the other hand, among an impulsive, 
secretive and avaricious people no temptation to discontent or treachery could be 

stronger than that created by the idea that they were annually taxed to send 
dividends to wealthy claimants in other countries.” 

The Indians, however, appear not to understand the beauty of a 
plan which would not only restore English supremacy at the 
expense of Indian capital, but at the same time, in a circuitous 
way, open the native hoards to British commerce. If, indeed, the 
Indian capitalists were as fond of British rule as every true 
Englishman thinks’ it an article of faith to assert, no better 
opportunity could have been afforded them of exhibiting their 
loyalty and getting rid of their silver. The Indian capitalists 
shutting up their hoards, John Bull must opem his mind to the 
dire necessity of defraying himself in the first instance, at least, the 
expenses of the Indian insurrection, without any support on the 
part of the natives. The impending loan constitutes, moreover, a 
precedent only, and looks like the first leaf in a book, bearing the 
title Anglo-Indian Home Debt. It is no secret that what the East 
India Company wants are not eight millions, or ten millions, but 

’ a “Indian loans”, The Economist, No. 750, January 9, 1858.— Ed. 
b The Times, No. 22883, January 6, 1858, “Money-Market and City Intelli- 

twenty-five to thirty millions pounds, and even these as a first 
installment only, not for expenses to be incurred, but for debts 
already due. The deficient revenue for the last three years 
amounted to £5,000,000; the treasure plundered by the insurgents 
up to the 15th October last, to £10,000,000, according to the 
statement of the Phoenix, an Indian governmental paper; the loss 
of revenue in the Northeastern provinces, consequent upon the 
rebellion, to £5,000,000, and the war expenses to at least 
£10,000,000. 

It is true that successive loans by the Indian Company, in the 
London Money Market, would raise the value of money and. 
prevent the increasing depreciation of capital; that is to say, the 
further fall in the rate of interest; but such a fall is exactly 
required for the revival of British industry and commerce. Any 
artificial check put upon the downward movement of the rate of 
_discount is equivalent to an enhancement in the cost of production 
and the terms of credit, which, in its present weak state, English 
trade feels itself unable to bear. Hence the general cry of distress 
at the announcement of the Indian loan. Though the Parliamen- 
tary sanction adds no imperial guarantee to the loan of the 
Company, that guarantee, too, must be conceded, if money is not 
to be obtained on other terms; and despite all fine distinctions, as 
soon as the East India Company is supplanted by the British 
Government its debt will be merged into the British debt. A 
further increase of the large national debt seems, therefore, one of 
the first financial consequences of the Indian Revolt.