land. If however, contrary to every reasonable expectation, France should still persist in her projects against the peace of India, she will have to contend unsupported by the arms, and (what is of more importance) by the resources of any Indian ally, with a British army, animated by recent success, unembarrassed either by any native enemy in Mysore, or by any French faction at Hyderabad, and free to act on any point which France might venture to assail.

Such appear to me to be the consequences of the late settlement, as they relate more immediately to the interests of the Honourable Company; but it will be proper to consider them also as they affect our allies.

Although the advantages offered to the Peishwa by the treaty of Mysore, may not be calculated to satisfy the rapacious character of the Mahratta State, it is reasonable to suppose, that under all the circumstances of the case, they will be received as a distinguished testimony of our amicable disposition towards the Court of Poonah; and that they will tend to appease its characteristic jealousy, if not to conciliate its cordial attachment.

The establishment of an Hindoo State in Mysore, with the restoration of the temples and endowments of that religion, must be grateful to the Government of Poonah, independently of the advantages arising from the substitution of a power of the same religion, and of pacific views, in the place of an odious Mahommedan usurpation, scarcely less hostile to the Mahratta than to the British nation.

With regard to the Nizam, his ambition would also have been more gratified with an arrangement, which should have thrown into his hands a larger share of territory and power; and the distribution of the property captured at Seringapatam, among the British troops and those of his Highness, disappointed his private expectations of appropriating a large portion of that property to his own use. The solid and permanent benefits however, which have resulted to his Highness from the recent improvement of his connection with the Company, and particularly from the new settlement of Mysore, are so obvious and considerable, that they may reasonably be expected to overbalance any temporary disappointment of his avarice or ambition. The existence of his throne was saved by the destruction of the French party at Hyderabad, in October, 1798.

The formidable power of Tippoo Sultaun, which perpetually menaced his Highness's possessions, and filled his Court and dominions with intrigues and treason, has been annihilated, and a friendly and allied state established in Mysore. His Highness has received a large increase of territory, revenue, and power; together with several important fortresses tending greatly to secure the tranquillity of his dominions. His expenses in the war have been inconsiderable; and if a comparison were to be instituted of the advantages accruing to him, and to the Company from the whole arrangement, those obtained by his Highness would probably be found to preponderate; for, the danger from which he has been delivered was even more imminent than that which menaced the Company's possessions; and while his expenses have borne no proportion to ours, he has attained equal benefits both of indemnification and security. The collateral benefits derivable by the Company from its connexion with the Rajah of Mysore, will necessarily extend to the Nizam, and be scarcely less felt by him than by us, while he shall remain faithful to his alliance with the Company; and the advantages which his Highness would receive from the proposed mediation of the Company between him and the Mahratta empire, are highly estimated by all those who understand the interests of the Court of Hyderabad. If that mediation should fail, his Highness will receive an increase of territory beyond the amount of the proportion acquired by the Company, in the general partition; I have the satisfaction to know, that although his Highness's extravagant expectations have not been gratified to the full extent, his most able and experienced counsellors are fully sensible of the extensive and solid benefits acquired by his Highness, under the general operation of the late treaties. I am, therefore, persuaded, that his Highness's just sense of the permanent interests of his state, will command his cordial co-operation in the maintenance of the new settlement.

The interests of the Rajah of Mysore, being identified with those of the Company, and the safety, prosperity, and honor of the Peishwa, and of the Nizam, being amply secured by the treaties of Hyderabad and Mysore, and by the subsidiary treaty of Seringapatam; I entertain a confident expectation, that the recent settlement of the dominions of

Tippoo Sultaun will prove not less durable, than I trust, it will be found equitable in its fundamental principles, beneficial in its general operation, and conformable in every point of view, to the liberal character of the English East India Company, and to the just and moderate policy prescribed by parliament, for the Government of the British empire in the East.

I am, &c.
MORNINGTON.

No. XXVII.

The Right Hon. Henry Dundas to the Earl of Mornington.

MY DEAR LORD,

Wimbledon, 18th March, 1799.

Received at Fort William, 5th August, 1799.

The financial state of our affairs in India, and the arrangement of them in future, will be the subject of official correspondence from the Court of Directors, by some early conveyance; but the present situation of the finances and commerce of India have suggested to my mind many important considerations, which I would think it wrong to withhold from you in the form of a private communication, as the opinions I shall lay before you may probably operate upon your conduct previous to the period when the same opinions may reach you in the more tedious form of despatches through the medium of the Court of Directors. This mode of earlier communication with you is the more necessary, as I am aware some of the opinions which I hold will be the cause of a difference of opinion among the Directors, and must ultimately be settled by the authority of the Board of Control, a form of proceeding necessarily productive of delay.

If there had been the prospect of the war coming to any speedy conclusion, I should not have been uneasy by the circumstance of a very considerable addition of the debt in India, for the purpose of continuing a large investment from an Indian capital, because from the experience I have already had in extricating their affairs under very unpromising circumstances, I should have felt perfectly satisfied that a few years after the return of peace, would have sufficed, speedily,

to wipe off the debt which the mixt exigencies of war and commerce had created. This, however, has its bounds, for if the debt in India is allowed to increase so much as to become unwieldy and unmanageable, we are cut off from the means of extricating our affairs when peace shall have returned. The loans, from being made in times of difficulty, are accomplished at an exorbitant rate of interest, and thereby exhaust the whole of the surplus revenues, which is to operate as the sinking fund for the redemption of the debt after the return of peace. It is the more necessary I should give a particular attention to these considerations, because it is very natural for the Court of Directors to turn their eyes chiefly to the state of their affairs in Leadenhall-street, and both they and the Proprietors are flattered, by the view of sales at home, uncommonly large, and a swelling balance in their coffers at home; while, at the same time, it is obvious to every person who will take a comprehensive view of their affairs, that this flattering delusion, permitted to go on for a very few years, would bring irretrievable ruin upon the finances of India, and totally disable us from maintaining there that pre-eminence of wealth and power which has proved so important to the general interests of the British Empire.

Viewing this subject in all its bearings, I am well aware of the importance of keeping up the means of a large investment from India. This principle is important, not only from the encouragement it affords to the navigation and shipping of the kingdom; from the addition it makes annually to the wealth and capital of the country, and from its being a fruitful source of revenue; but in addition to all these and similar considerations, I must add the necessity of such an investment, as immediately connected with the prosperity of our Indian provinces. It is to the increased exports from India to Europe, that we are to attribute the increase of Indian prosperity, industry, population, and revenue; and the manufacturers of that country would be reduced to very deplorable circumstances if any severe check was to be given to the usual investment and exports from India. These considerations necessarily lead to the conclusion of bringing home as large an investment as our means will enable us to do. I see no difficulty in accomplishing this, but it must be done by means of resources which do not lead to the ruin of our

finances in India. The same circumstances which have led to put the whole commerce of the world into the hands of this country, do operate in a proportionable degree to extend beyond the example of all former times, the trade of the East India Company, and the produce of their sales in Leadenhallstreet. This ought to be encouraged by every means; but the overflowing balance from thence arising after defraying their necessary burdens at home, ought to be employed in the purchase of bullion, to be consigned to India and China, for the purchase of a large and profitable investment. The times, from the influx of wealth into this country, are highly favourable to such an operation, the beneficial effects of which are obvious in a variety of ways. Your Lordship states, and all the other settlements concur in the same statement, that our Indian possessions are greatly distressed from the want of specie. The measure I have mentioned effectually removes that distress, and is likewise productive of another essential benefit. It is stated that the increase of the loans at so high a rate of interest, checks all private credit, and obstructs all other pecuniary transactions; but this inconvenience would not be found, if the system I have alluded to, was carried into execution.

It is with much satisfaction I observe in some of your Lordship's recent despatches, that you find yourself warranted by the opinions of some of the most intelligent persons upon the spot, that the export of manufactures from this country may be considerably increased. This is certainly the most desirable of all resources for the supply of a commercial investment from India, and it ought to have no limits, except what are prescribed by the power of selling them in India or China. Another commercial resource, is what can be got in India upon the foundation of the remittance plan. This, I understand, has likewise received a check, in consequence of the high rate of interest paid for the government loans in India; but if these loans are stopped, and the capital of the debt itself considerably diminished each year by the remittance plan, an effectural cure is administered to this inconvenience, and the commercial resources of the Company materially aided, without the necessity of extravagant loans for that purpose.

These are the outlines of the system which, in my opinion, ought to be pursued during the remainder of the war, and as