THE CHARTER ACT OF 1813

This Act was enacted with the arrival of Lord Hastings in India. By 1813 when the
renewal of the Company’s charter was due, there were elaborate discussions about the
justification of the commercial privileges enjoyed by the Company. The East India
Company as a territorial power had expanded leaps and bounds, and it was considered
very difficult for it to continue as a commercial and political entity. Many political
thinkers and statesmen in Britain wanted to control the activities of the Company and its
officials as they were afraid that the Company and its rich officials could completely
debauch the English nation and its politics. Therefore, arose the need to control the
Company’s activities in India and to limit its powers and privileges.

At the same time, there was a rising school of Economists representing free-trade
capitalism who were against the monopoly of the Company in trade and professed
opening up of markets to other players as well.

Salient features of the Act:

 The Company’s monopoly over trade in India ended, but the Company retained
the monopoly trade with China and the trade in tea.
 The Indian trade was thrown open to all English trading entities. No changes
were made in the Company’s constitution and the grant of possession of
territories and revenues in India was extended for 20 years till 1833.
 Through this Act. The powers of the Board of Control were not only clearly
defined but also enlarged .
 The Company was required to maintain separate accounts of commercial
receipts as distinct from revenues generated from territories. The Company’s
power and patronage were reduced as the Court of Directors could make
appointments to the offices of the Governor-General Commander-in chief etc.
Subject to the approval of the Crown and the Court of Directors’ orders to this
effect had to be countersigned by the President of the Board of Control.
 A sum of one lakh rupees was to be set aside for the revival, promotion of
literature, and encouragement of learned natives of India and for the
introduction and promotion of knowledge of Modern Science. (This was an
important statement from the point of State’s responsibility for education.)
 The regulations made by the Councils of Madras, Bombay and Calcutta were now
required to be laid before the British Parliament. The constitutional position of
the British territories in India was thus explicitly defined for the first time.
  Christian missionaries were also permitted to come to India and preach their
religion.

Assessment of the Act

This Act was a link in the natural chain of progression in the efforts of the British
Parliament to put a leash on the Company’s power and privileges as this Act further
enhanced the powers of Board of Control and reduced the powers of Directors of the
Company.

The opening up-of trade to other English trading companies unleashed an era of
competition in trade which resulted in an overall increase in trade volume and
revenues for the British empire accruing from the enhanced trade. For example, the
value of trade increased from 13 million pounds in 1813 to 100 million pounds in 1865.
Opening up of trade and ending monopoly also helped the British to counter the
challenges posed by the Continental system of Napoleon.

Setting aside of lakh rupees for the development of education in India laid the
foundations of the English system of education in India which threw open the gates of
modern values of democracy, equality, nationalism etc.