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If anyone has read the Government of India Act 1858, please tell if the East India Company shareholders got any compensation.

Rodrigo de Azevedo
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Akash Baweja
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1 Answers1

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The answer is no.

The first paragraph of the Government of India Act, 1858 simply stated that:

THE Government of the territories now in the possession or under the Government of the East India Company, and all powers in relation to Government vested in or exercised by the said Company in trust for Her Majesty, shall cease to be vested in or exercised by the said Company; and all territories in the possession or under the government of the said Company, and all rights vested in or which if this Act had not been passed might have been exercised by the said Company in relation to any territories, shall become vested in Her Majesty, and be exercised in her name; and for the purposes of this Act India shall mean the territories vested in Her Majesty as aforesaid, and all territories which may become vested in Her Majesty by virtue of any such rights as aforesaid.

In other words, India had been governed in trust for the Crown by the East India Company, and the East India company lost its right to govern under the 1858 act.

The Government of India Act, 1858 did not dissolve the East India Company. It remained in existence, albeit a shadow of its former self, until the East India Stock Dividend Redemption Act was passed in 1873 on the expiry of the Charter Act of 1853.

The text of the Government of India Act, 1858 is available on the Statutes Project website and also on this page from South Dakota State University.

sempaiscuba
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    My understanding is that the East India Company was all but bankrupt by 1858. Do you know if that is true? If so, it probably belongs in your answer. – Pieter Geerkens Jan 13 '18 at 21:43
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    @PieterGeerkens I don't think so. I do know that they continued to manage the (still fairly lucrative) tea trade on behalf of the British Government after 1858 until the 1873 act came into force. – sempaiscuba Jan 13 '18 at 22:02
  • @PieterGeerkens Well, they were £70 million in debt. @ sempaiscuba: Do you have a source on this? The East India Company stopped trading in 1834. – Semaphore Jan 13 '18 at 23:26
  • That's about what I thought. Apparently it had a dysfunctional share structure, with inordinate payouts to nabobs required in order to remain a going concern that ate up all revenue. But I haven't been able to locate more specific details. Was there a deflation after the Napoleonic Wars perhaps? – Pieter Geerkens Jan 13 '18 at 23:31
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    @PieterGeerkens My understanding was that their military and administrative costs in India simply outstripped government revenues. Of course paying a 10.5% dividend was financially ruinous too. – Semaphore Jan 13 '18 at 23:49
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    @Semaphore I don't remember the source for the management of HMG's involvement in the tea trade (I'm still on holiday, so don't have most of my sources on hand). It's mentioned in the Wikipedia article, together with the supply of St Helena, for whatever that's worth. Nick Robins' The Corporation that Changed the World notes that the company continued to pay their 10.5% dividend until 1874 [p197]. – sempaiscuba Jan 13 '18 at 23:52
  • @Semaphore By memory, I think they only managed the trade for HMG. I don't think they actively traded on their own initiative, but I can't find anything about it online either way. – sempaiscuba Jan 13 '18 at 23:58
  • @sempaiscuba I'm not sure I see the relation, since the government paid those dividends. – Semaphore Jan 14 '18 at 00:02
  • @Semaphore Again from memory, but the dividends were (at least partially) offset by the revenues/commission/management fees (I can't recall the term they used). – sempaiscuba Jan 14 '18 at 00:16