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By 1773, the East India Company was in dire financial crisis. The Company was important to Britain because it was a monopoly trading company in India and in the east and many influential people were shareholders. The Company paid £400,000 annually to the government to maintain the monopoly but had been unable to meet its commitments because of the loss of tea sales to America since 1768 as Dutch were able to enter the American Markets. The East India Company owed money to both the Bank of England and the government; it had 15 million lbs of tea rotting in British warehouses. The mismanaged Finances made the company almost insolvent and the company was forced to apply to the British Government for a loan.The East India Company was basically a trading farm that made business over a vast area of India but also maintained an army to protect its interests. PM Lord North decided to start Governmental control, as East India Company had no experience in ruling it conquered few areas.The British Parliament appointed two committees: (1) Secret Committee (2) Select committee. Based on the recommendations of the two committees there two Act were passed
(1) Granted to the company a loan of £ 14,00000 at 4% interest
(2) Regulating Act, 1773
Lord North decided to overhaul the management of the East India Company and to provide some form of legal government for the Indian possessions of the East India Company with the Regulating Act 1773. This was the first step along the road to government control of India. The Act set up a system whereby it supervised (regulated) the work of the East India Company but did not take power for itself. Since the Government in Britain regulated the company and did not take it over, it was termed “Regulating Act”. East India Company had a very powerful lobby in Parliament in spite of the financial crises of the Company. The Shareholders along with this lobby of Parliament opposed the act.
Summary: The Regulating Act of 1773 was passed because:
By: Ankush Sharma ProfileResourcesReport error
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