Regulating Act 1773

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 companyinIndia 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.^[2]

• 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.^[3]
• 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 HastingstoGovernor-General of Bengal and subsumed the presidencies of Madras and Bombay under Bengal's control.^[3] 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.^[3]
• A Supreme Court was established at Fort WilliamatCalcutta (1774). British judges were to be sent to India to administer the British legal system that was used there.
• Establishment of Supreme Court at Calcutta with Sir Elijah Impey as first chief justice. Court has both the Civil and criminal jurisdiction. With original & appellate jurisdiction.
• It has permitted the company to keep back its territorial possession in India. It has not given the complete power to company hence called as regulating act. Ultimately, we can conclude that it was the first step towards parliamentary control over the company.

• East India Company Act
• Pitt's India Act
• Government of India Act 1858