on your prudence," say they, "to discourage
foreigners; and being intent, as you have been repeatedly acquainted, on
bringing home as great a part of the revenues as possible in your
manufactures, the outbidding them in those parts where they interfere
with you would certainly prove an effectual step for answering that end.
We therefore recommend it to you to offer such increase of price as you
shall deem may be consistently given,--that, by beating them out of the
market, the quantities by you to be provided may be proportionally
enlarged; and if you take this method, it is to be so cautiously
practised as not to enhance the prices in the places immediately under
your control. On this subject we must not omit the approval of your
prohibiting the weavers of Cuddalore from making up any cloth of the
same sortments that are provided for us; and if such prohibition is not
now, it should by all means be in future, _made general, and strictly
maintained_."

This system must have an immediate tendency towards disordering the
trade of India, and must finally end in great detriment to the Company
itself. The effect of the restrictive system on the weaver is evident.
The authority given to the servants to buy at an advanced price did of
necessity furnish means and excuses for every sort of fraud in their
purchases. The instant the servant of a merchant is admitted on his own
judgment to overbid the market, or to send goods to his master which
shall sell at loss, there is no longer any standard upon which his
unfair practices can be estimated, or any effectual means by which they
can be restrained. The hope entertained by the Directors, of confining
this destructive practice of giving an enhanced price to a particular
spot, must ever be found totally delusive. Speculations will be affected
by this artificial price in every quarter in which markets can have the
least communication with each other.

In a very few years the Court of Directors began to feel, even in
Leadenhall Street, _the effects of trading to loss_ upon the revenues,
especially on those of Bengal. In the letter of February, 1774, they
observe, that, "looking back to their accounts for the four preceding
years, on several of the descriptions of silk there has been an
_increasing loss_, instead of any alteration for the better in the last
year's productions. This," they say, "threatens the destruction of that
valuable branch of national commerce." And then they reco