But when the news reached England of the re-establishment of the Company's affairs, and of the great advantages that had been gained for them by the various treaties concluded by Clive, the joy of the Proprietors was extreme; the price of stock rose, and there was a general and more clamorous demand for an increase of dividend. During the war in India, it had been reduced from 8 to 6 per cent. The more prosperous state of affairs seemed now to justify a considerable increase.
On this point, unfortunately, the Directors and Proprietors differed. While the Directors, as managers of the general stock, and intimately acquainted with the difficulties amidst which they were placed, looked to the clearing off of their burdens, and, the better to effect this object, had, not very wisely, attempted to conceal the expected extent of the new revenues, the Proprietors, who, by various channels, had gained information, probably exaggerated, of the recent addition to the Company's means, clamoured for an instant rise of dividend. The Directors saw that the change which had taken place in the Company's affairs in Bengal, however favourable, could not at once operate in Europe. The immediate demands on the Company were great, while a considerable period of time was requisite to allow the capital sent from Bengal to China, and elsewhere to be invested in goods, returned to England, sold, and the proceeds realised. The Company might be in great affluence abroad, and bankrupt at home. Demands to the amount of 2,600,000_l._ became payable between Michaelmas and Midsummer (1766), while only 2,000,000_l._ were available to discharge them. It was therefore necessary to borrow in order to pay even the ordinary dividends.
The Court of Directors did not show much ability in extricating themselves from the dilemma in which they were placed. Had they fully weighed the difficulties of their situation, and the necessity there was, even for the sake of the prosperous management of the Company's funds, and the payment of its lawful creditors, that the Court of Proprietors should be conciliated and unanimity preserved, they would themselves, without concealing their difficulties, have proposed some moderate increase of the annual dividend, and have held out the prospect of a farther rise at some future and not very distant period. Instead of acting on some such plan of politic conciliation, they shunned meeting the Proprietors, and exerted every endeavour to continue the low dividend then payable, so very disproportioned to the price to which stock had now risen. Their situation was delicate, but their conduct was injudicious, as they were liable to be overruled by the Court of Proprietors in any contest with whom they must inevitably fail.