The East India Company – the pioneer of corporate aggression – Guest Author : Nirmalya Chatterjee
Introduction
The East India Company (‘The Company’) was undoubtedly the greatest multinational corporate enterprise to succeed in replacing some of the most powerful rulers and subjugating the vast Indian sub-continent for over three hundred years in a calculated and ruthless manner. Shrewd acumen and Governmental support, backed by a small but superbly efficient team of administrators and ruthless private army were key to its achievements. This article is a brief account of the pioneering strategies and tactics the Company devised that enabled them to create the largest colony in history.
Birth
The year was 1599. September 23,1599 to be exact. A group of the richest merchants and brave sea captains gathered in a small merchant hall in London with the then Mayor gracing the meeting. They had gathered pledges from about a hundred investors for a total of about $5 million in today’s value, not a very large sum for this privately held start-up company. England was a modest agriculture based economy at the time. The investors envisioned trading with the East would be a way to make some profit and stimulate the British economy, as the Spaniards, the Portuguese and the Dutch were doing at the time. Some of the investors were in positions of great power and were close to the monarchy. Queen Elizabeth I heard whispers of a ‘British Empire’. The company charter – authorizing them exclusive rights for the trade and unlimited freedom to do whatever they deemed necessary to achieve their objectives – received the Queen’s blessing. None of the commonly heard questions like ‘conflict of interest’, ‘monopoly’, ‘insider trading’, bribery, or, ‘Foreign Corrupt Practices’ crossed anyone’s mind. Thus, a multi-national company was born to drive the history’s greatest economic and political conquest.
Launch
Sea routes to the Indian ocean were very much controlled by the Portuguese and the Dutch merchants with their formidable might at the time. The first major act for the British was to pirate a Portuguese ship full of jewels, gold, cloth, cinnamon and bring it to England – and it was the largest ship ever seen in England. What were also valuable in the ship were all the trade routes and navigation maps for India and far east that the Portuguese merchants had created. This followed a major battle (the Battle of Swally) near Surat where the Company decisively defeated the Portuguese. With the wind of military victory behind them, the Company now turned to diplomacy to gain a foothold into the mainland. India at the time had a population of about 125 million and was producing about a quarter of global manufacturing. It was the world’s largest producer of textiles. King James I sent Sir Thomas Roe to Emperor Jahangir to strike a deal to start operations in Surat and, in exchange, provide the Emperor with luxury goods from Europe to his great satisfaction. Jahangir encouraged the Company’s trade and offered it ‘free liberty without restraint’ to operate. The company established over twenty factories in Madras, Bombay and Calcutta in the next several decades. The major factories became the walled forts of Fort William in Calcutta, Fort St George in Madras and the Bombay Castle. The Company’s main businesses were textiles, silk, dye, and tea. King Charles II, in an effort to strengthen the company, gave it the rights to territorial acquisitions, to mint money, to make war and peace, and to administer civil and criminal justice system. And by early 1700, Emperor Jahangir, in a gesture of good hospitality, completely waived customs duty for the Company in Bengal. All of the stars were becoming aligned for the company!
Monopoly
As the company continued its march on growing its trading operations, the Parliament started to become concerned about the monopoly it was enjoying and enacted a law in 1698 to take away the exclusive rights and created a parallel East India Company. Lo and behold, the powerful stockholders of the old company quickly put money in the new company and started controlling it too. After a few years of squabble between the two companies, they merged in 1708 along with bringing in a third partner – the State. The marriage between the private and public is now official. The government became more engaged to defend the interests of the Company due to ongoing Anglo-French war. Profits brought through trades were invested in lobbying by doling out company shares to the members of the parliament. Intense lobbying and corporate takeovers to stifle competition has remained a common practice since then!
Robert Clive
As commercial interests started to establish firm roots, the Company began to focus its attention on its military and territorial ambitions. Robert Clive was undoubtedly the single biggest contributor in paving the way for the company to expand its operations and ultimately establish the British Empire in the subcontinent. Clive joined the company as a humble Accountant in his early twenties. He was quickly sent off to Madras. Clive did not like being in India at all. But he was fiercely ambitious and unusually forceful. This was also the time when the French forces attacked the company in Madras. Clive demonstrated his extra-ordinary potentials in military operations and turned back the French attack. The Company awarded him hefty commissions for his work following which he got married in Madras and returned to London with his bride. Clive ‘bought’ a seat in the parliament with his commission money but got ejected for engaging in corrupt practice. Soon thereafter, the Company Board received an intelligence report in London of French armada’s imminent voyage heading towards India. Clive, with his past success making him a natural choice for the Company, welcomed the opportunity to redeem himself and headed to India for the second time.
Siraj ud-Daula
Bengal was the richest province of the Mughal Empire then and Calcutta became by far the biggest trading station of the company by mid-eighteenth century with over 60 percent of the company’s exports from Asia passing through there. The Company Directors sent
Conquering Bengal
The Company Directors in London concluded that it was important to retake Calcutta and ordered the four battleships to sail from Madras to carry out the mission. Clive was not going to miss his big chance. He saw a great opportunity to make some profit in the company stock. Clive quickly took back Calcutta, declared war on Siraj in the name of the Company and went into the offensive. The Jagat Seth bankers, very unhappy with Siraj, created the front in Mir Jafar, and offered to help the Company in overthrowing Siraj. The Company Directors realized that was not the original goal but gave a green signal to the plan. Mir Jafar, aptly described by Clive as ‘a prince of little capacity’, had no hesitation in accepting the bribe to become the puppet Nawab. Clive departed for Plassey with a small army of 800 Europeans, 2200 South Indian sepoys and only eight cannons in June of 1757. Siraj was waiting in the mango plantations of Plassey with his 50,000 men safely entrenched. Soon after the battle started, a huge contingent of the Mughal army started leaving the fighting, led by none other than Mir Jafar. He delivered his promise, the battle ended in a stampede, and he became the new Nawab. Siraj ran away but was quickly apprehended and brought back to be executed soon after he turned twenty-five. Clive, collected $250 million as his prize money and became the richest man in Europe. The entire content of the Bengal treasury was loaded into hundred boats and floated down the Ganges from Murshidabad to the Company headquarters in Calcutta. Siraj’s palki that he left at Plassey is proudly displayed at Powis Castle in Wales. The Hindustani word ‘loot’comfortably found a home in the English dictionary for good. Plassey was followed by the Battle of Buxur in 1765. The Company defeated the army of Mughal Emperor Shah Alam and coerced him to grant the company the right (Diwani) to collect revenue in Bengal province with the help of its own armed forces. The Company, only answerable to its shareholders, stopped remotely looking like a trading company. The Company Directors were elated to watch the share price almost double!
Empire Building
The Company spent the second half of the eighteenth century building an empire while filling up its coffer. The Company was an empire within an empire. It coordinated its progress with the Government and sent a variety of able hands from England, notably, Hastings, Cornwallis (back from surrendering to George Washington in America) and Wellesley. The size of its private army grew from a few hundred at the beginning of the eighteenth century to over 250,000 at the end – double of the total British army at the time. It used clever and ruthless execution to sequentially defeat the Nawab of Awadh, Tipu Sultan of Mysore, the mighty Maratha Confederacy of Holkar & Scindia, and finally the last of the Mughal Emperors. It had created a vast and sophisticated administration, built much of London dock and was managing almost half of British trade. This very significant period of sub-continent’s colonial history merits a lengthy and in depth discussion in a separate article. The Company’s rule turned into massive pillage of Bengal and transfer of the loot to west. Exploitive agriculture policy caused the famine in Bengal in 1770 wiping out one third of the population which led to massive shortfall of land revenue and the Company’s bubble burst causing thirty banks to collapse in Europe. The Company then asked for a massive government bail-out. It was too big to fail. The world’s first multi-national corporation was saved by the history’s first mega-bailout!
Globalization
The Company then leveraged its commercial prowess in the subcontinent to expand globally. China had the world’s largest GDP at the time and was a large exporter to the Western countries. Opium was banned in China. The Company created a monopoly on shipping opium from Calcutta to a Hong Kong island illegally to the tune of over 1400 tons a year. As China started to crack down on the illegal trade, the First Opium War started in 1839 between Chinese and British forces, whereby China had to give up its control over Hong Kong to the British. A Second Opium War started by Britain and France against China in 1856 that lasted for over five years and ended with China allowing opium importation from anywhere in the world. China’s sovereignty over its territory was compromised until the end of the twentieth century when Hong Kong was turned over back to China. The Government passed the Tea Act of 1773, which allowed the Company to sell tea from China to the American colonies. American patriots dumped the tea in Boston Harbor in protest of unfair taxes which started the American Revolution ending in its independence from the British empire in 1776.
The British Raj
There was widespread, deep resentment in the army personnel and civilians against the Company oppression. This ultimately exploded into massive rebellion known as the Sepoy Mutiny of 1857 and 1858 which resulted in unprecedented killings and atrocities on both sides. This alarmed the Government and opened their eyes to the anarchy and devastation that occurred in the vast subcontinent for over two hundred years. Parliament passed the Government of India Act 1858 dissolving the Company. The center of power and control shifted from the Company’s modest East India House at London’s Leadenhall Street to Westminster and Buckingham Palace. The British Raj was established!
Epilogue
Leo Tolstoy wrote: “A Commercial company enslaved a nation comprising two hundred million people.” The Times of London commented on the Company in 1873: “It accomplished a work such as in the whole history of
Nirmalya Chatterjee is a
Fascinating and very well written!
awesome work!
Impressive and well written. Mr. Chatterjee is walking encyclopedia of Indian History.
Indian sub-continent has one of the most fascinating and intriguing history in the world stretching through several millenniums. There is so much to learn from. Appreciate your comments, Vivek Ji.
I want to thank and congratulate Nirmalaya Chatterjee bhai ji for his excellent review of the history of this small company which with shrewdness, and the backing of the Kings and the clergy became an empire. East India company took full use of their trading skills and the zealously, hatred, greed, incompetence and disunity amongst the Indian rulers of those days.
Nirmalaya bhai is a very perceptive writer. I learned a lot. Hope he will write such profound articles in the future too
Glad you enjoyed the article. Appreciate your comments. I will continue to write similar articles. Thank you Sulekh Ji.
Congratulations Nirmalyaji. You are one of the few persons I came across who has a great home Library. Thanks for educating Las Vegas community about history. Enjoyed the article thoroughly. I knew most of the facts since
we read in history. Hence I know there was a typographical error on page 2 about 1700, it should have been either 17th century or early 1600.
Keep up the good work.
Girija Ji, thank you for pointing out the error. Yes, I meant to say 17th century, not 1700. Glad you enjoyed the article. Will continue to write for the community. Kind regards.
This is a very well written article by Mr Chatterjee with a great flow of thoughts and detailed information. Please keep more such articles coming .
Nirmalya, Very revealing detailed information about how East India Company started and turned into British Raj. I was always wondering. Thanks! 🙏🙏
May be you can answer one more Question: How did MUSLIMS manage to win and ruled East India extensively even though they entered India from Afghanistan etc. from North?
One significant observation from your Article:
Unethical and Immoral Operations can succeed when Idiot and Uneducated Ignorant Rulers and Common People are FOOLED by just ONE SELFISH KNIVING Person like Clive, Hitler, Stalin, Nehru, Jhinna, Putin, Trump etc. HISTORY HAS PROVED IT OVER AND OVER AGAIN !!
PM NARENDRA MODI took BHARAT back in 2014 from Government ruled by Muslim Nehru Family since 1947…. It took very long time to take it back because like Hitler said,”It’s easier to fool people than convincing them that they have been FOOLED” 👍👍👏👏
Nirmalya, thanks for valuable historical information about how East India Company started and how it turned into British RAJ! I didn’t know the details. THANKS 🙏
Your story confirms my belief that ONE UNSCRUPULOUS, UNETHICAL AND IMMORAL PERSON like Clive, Hitler, Stalin, Nehru, Jhinna, Putin, Trump, etc. can fool Stupid and Ignorant Rulers and Common People to come to power! Hitler’s Famous Quote, “It is much easier to fool people than convincing them that they have been fooled”.
It took 67 years to convince Bharat People that Nehru Family have strong Muslim Roots and finally they voted BJP PM MODI in 2014 after coming to realization that Bharat has been HINDU Country for thousands of years. Unfortunately our country was ruled by Muslims and Brits for more than 500 years.
Nothing new in the article. Wikipedia and many other sources have similar and more info available 24/7. We need creative or unusual stuff, not recycled info.