Regulating Act, 1773

Background and evolution

After the Battle of Plassey (1757) and the grant of the Diwani of Bengal, Bihar and Orissa in 1765, the East India Company became a territorial power. Its servants made huge private fortunes through trade and gifts, while the Company itself faced financial trouble. The Bengal famine of 1770 and reports of misrule and corruption shocked British opinion. In 1772, the Company asked the British government for a large loan, giving Parliament the chance to impose conditions.

Parliamentary committees investigated the Company's affairs, and Lord North's government passed the Regulating Act along with a loan act. The aim was to bring the Company's political functions under some control by the British state without ending the Company's role, and to reduce abuses by its officials.

Key features and provisions

• Governor-General: the Governor of Bengal became Governor-General of Bengal, with a council of four; decisions were by majority, and the Governor-General had a casting vote only in a tie.
• Supervision of presidencies: Bombay and Madras could not make war or treaties without Bengal's approval, except in emergencies.
• Supreme Court: a court at Calcutta with a Chief Justice and three judges, with jurisdiction over British subjects and Company servants.
• Reporting: the Court of Directors had to report to the British government on revenue, civil and military affairs.
• Conduct: Company servants were forbidden from private trade and from accepting bribes or gifts from Indians.
• Court of Directors: directors were to be elected for four years.