From the distance of centuries, the struggles of the East India Company to control its officials look depressingly familiar.
The sun, it was said, never set on the British Empire during the heydays of its glory as an imperialist power. The jewel in the British Crown was, of course, the East India Company, which initially began as The Governor and Company of Merchants of London Trading into the East Indies, following a royal charter issued by Elizabeth I in 1600. This later became shortened to simply the East India Company and also, colloquially, the Honourable John Company – despite the fact that, as its own board of directors frequently recognised in its 250 years of operations, its activities were often anything but honourable.
Nevertheless, the Company, a powerful engine manned by powerful men, brought out the best of adventurism, not just on the high seas but on land as well. The buccaneering style of its merchants and servants catapulted England from an also-ran European entity in the early 18th century to a first-class world power till the time of World War II. This group had subsequently scraped together the relatively small start-up capital of approximately 69,000 pounds sterling, by far the lowest of their continental competitors. This risky enterprise inadvertently gave birth to the first multinational company – one that went far beyond its trading activities, to administer Company Rule with powers of life and death over those it considered its subjects. Eventually, it controlled a significant chunk of the globe.
It was in 1757, after the decisive Battle of Plassey, that the nature of the Company changed irrevocably from isolated trading outposts in Surat, on the Coromandel Coast and Bengal’s Hooghly River. This took place by virtue of a series of dastaks or firmaans issued by successive Mughal emperors after lobbying in the Mughal Court, allowing the Company to trade (inland as well as export, often, free of tax), and thus becoming essentially a vast colonial empire.
The party begins
Like most novel ideas, controlling the world through trade simply happened. It is unlikely that the British, who had fancied themselves as no more than merchants with a specific agenda, had any larger ambition in mind at the turn of the 17th century. The coincidence of the ‘discovery’ of a source of vast, largely untapped raw material – primarily cotton, salt petre and indigo – and the beginnings of the Industrial Revolution back home, changed demand and consumption patterns forever. And the English, through the circumstances of their presence in Southasia, took full advantage. Their military prowess, especially on the seas, helped them to aggressively take on other European powers that were already trading in the region and beyond. The hard-fought battles eventually gave the Company a virtual monopoly all the way to Hong Kong, accruing massive profits for years to come.
However, establishing Company Rule took nearly 100 more years. It was around the middle of the 18th century that the John Company saw its spectacular rise in an entirely unexpected direction. In spite of clear instructions ordering the early merchants not to involve themselves in the internal politics of the countries in which they worked, this was exactly what happened. Until 1757, the Company’s aims and ambitions were really no different from modern-day global companies – first through trade in its basic import-export form, and later by setting up integrated manufacturing companies and factories for jute, tea and textiles, followed by engineering.
Where the first was concerned, import-export during the late 1600s and most of the 1700s dealt exclusively with the shipping of cotton textiles, silk, indigo, muslin and salt petre from the Company’s Indian outposts. Opium was exported from India illegally through managing agencies, as the fortunes to be made from the infamous contraband were immense. The pattern would shift slowly, and many such questionable policies in connection with the company’s thirst for greater profits would plague its reputation. These would eventually spark widespread protests against imperialism, despite its concurrent developments in infrastructure by way of railways and roads, educational institutions and hospitals – though primarily for the company’s own facilitation.
The early 18th century saw the rise of the Indian nabob, the British merchant prince enjoying the lifestyle of a Mughal nobleman: a mansion set in huge grounds for living quarters, a retinue of servants, a hookah by the elbow and, very probably, an Indian wife or mistress and a brood of half-castes. The most famous such forerunner was Job Charnock, a Chief Agent of the Company and the founder of Calcutta, in 1690, as a modern mercantile city. Given the profit margins of a 100 percent and more, and that the fact that no outsiders were allowed to trade, the evolving lifestyle of the Company’s merchants was unsurprising.
The party was spoiled somewhat by the attack by Siraj-ud-Daula, the then-Bengal nawab who ruled from Murshidabad, one of the richest Bengal provinces, on Fort William in 1756. A year later, Robert Clive, a rising military careerist, would defeat Siraj-ud-Daula’s forces at Plassey, conspiring with the latter’s uncle Mir Zafar, and thereby establishing a more formal rule and the beginning of what would be the British Empire. The directors sitting in London suitably honoured Clive as commander in chief of its forces in India, making him the governor of Bengal and awarding him a seat in the Irish Peerage. This was a time for internal reorganisation and, by 1774, the governors who ruled the three presidencies of Madras, Bengal and Bombay gave way to a central, more authoritarian figure – the governor-general. This figure was to rule the Company and, eventually, the country, from the Calcutta Presidency.
The party peaks
The achievements of the Company officials were, for its bosses in London, double-edged. On one hand, they succeeded in acquiring the profits the directors so desired. On the other, they also presented a conundrum in terms of discipline and governance. Controlling operations from distant London was impossible. Such work was entrusted to Company officials who, in positions of authority, used their powers to amass personal fortunes while pursuing the same for the Company.
The accepted practices of the day – no different, really, from those of more contemporary businesses – included accepting cash, expensive gifts, running a trade parallel to the Company’s and taking kickbacks for contracts. By way of generous commissions, a company official was able to make at least ten times his already significant salary, thus enabling him to retire after just a half-dozen years of work, if he so chose. If they were ever charged with corruption, the standard defence of Company officials was to claim the high-risk nature of the business in which they were involved. According to one biographer of the Company, gifts from grateful rulers to people in the “right position in the Company’s service” was to the tune of staggering sums, and councillors and commanders in chief retired with personal fortunes ranging up to 400,000 pounds sterling – impressive even by current standards.
Disciplining such officials from some 10,000 miles away was out of the question. The directors at East India House in Leadenhall Street thus had no choice but to wait till the erring officials sailed home on grounds of ill health or retirement. At that point, however, disciplinary actions did take place. While there are many who chose to describe the various trials that took place as witch hunts, impeachment proceedings against Company officials caused a major stir among the London public during the late 18th century. Two of the most famous impeachments and high-level parliamentary trials for misgoverning and appropriation of fortunes beyond their entitlements were of Robert Clive and Warren Hastings, both giants in their own way.
Robert Clive, or ‘Clive of India’, rose from humble beginnings as the lowliest of Company clerks in Madras. Deciding to join the Company’s army as ensign, he rose steadily after capturing the French stronghold at Arcot near Madras, to become governor. Thereafter, he defeated French forces at Chandernagore, the large French settlement on the Hooghly; and, in 1757, Siraj-ud-Daula at Plassey, when more than half Murshidabad’s treasury is said to have passed into his control. On his arrival in London in 1760, Clive was said to have had with him a fortune. Murshidabad suffered the most between 1757 and 1765: its annual revenue at the time of 2.5 million pounds sterling was severely depleted, as Mir Zafar and Mir Quasim, both contenders for the throne after Siraj-ud-Daula, paid out enormous sums to the Company. In the course of the parliamentary trial against him for his excesses, Clive was supposed to have declared himself “astonished at his own moderation”. His acquittal in 1773 nonetheless left him disgraced, and the following year he committed suicide.
In 1773, legislation was passed attempting to curb the power of the Company servants. The Act was designed to prevent the amassing of huge fortunes on the back of the Company, by ending private trade by Company officials. Circumvention was natural, and the Company suddenly found itself presented with inflated expense bills. In 1781, a mere revenue collector could retire with a fortune of 3000 pounds sterling. Taking over as Bengal Governor in 1772, Warren Hastings (the company’s first governor-general, from 1774 to 1785) was also eventually to face impeachment charges, though many said he was being used as a scapegoat. Despite his reputation as a generous and capable administrator, in the latter years of his career he had begun to be known for his dubious deals (particularly the extortion of money from the Raja of Benaras and the Begum of Oudh), and his many political rivals did not fail to take advantage. In 1786, parliamentarian Edmund Burke introduced impeachment charges against him on grounds of corruption. This resulted in a seven-year trial, and though Hastings was eventually acquitted, he was left a ruined man.
The party ends
The Company’s obsession with frugality soon led it to censure yet another Governor-General. Richard Wellesley was hauled up on charges of commissioning the imposing Government House in Calcutta for a sum of close to 8000 pounds sterling, evidently after being spurred on by a friend’s observation that India should be ruled from a “palace and not a counting house”. But such misdemeanours were relatively harmless compared to the Company’s business policies. More than corruption, the most significant blot on the Company’s tenure was the Bengal Famine of 1769, which wiped out nearly a third of Bengal’s population. Apathetic Company rule was to blame, which enforced stringent taxes during the crisis to boost land revenues.
Likewise, the Company placed significant pressure on reluctant peasants to grow increasingly more indigo. This fetched handsome profits, leading to rebellion and the infliction of savage brutalities by white indigo planters in the hinterland. Though this was curbed, it was not before the whole of London had gotten to hear of the savageries, bringing home the far-less-than-pleasant aspects of colonialism.
The most sweeping policy change in terms of the Company’s corporate governance was, perhaps, the Permanent Settlement, introduced by the second Governor-General, Lord Cornwallis. In a break from the Mughal practice where land was vested in the state, the Settlement vested land rights in zamindars. The ryots, or peasants, who enjoyed customary rights on the land as well as hereditary possessions, suddenly had to deal with zamindars acting as rent collectors for a percentage appointed by the Company.
These were reasons enough to lead to social discontent. Ultimately, they provided one of the reasons for the uprising in 1857, after which the Company won the war but lost its powers. The considered view in London at the time was that the Company had messed things up very badly. With the Government of India Act of 1858, the Company’s possessions, including its army, were vested in the British Crown – a nationalisation of sorts and a remedy increasingly heard in the 21st century as a solution to the chaos of bankrupt companies and failed corporate governance. But the remedy, eventually, would need another remedy: independence altogether.