William Dalrymple is a writer and historian. His books include From the Holy Mountain: A Journey Among the Christians of the Middle East. He wrote an article for The Guardian which previews his new book. This is a collection from it.
On 24 September, 1599, 80 merchants and adventurers met at the Founders Hall in the City of London and agreed to petition Queen Elizabeth I to start up a company. A year later, the Governor and Company of Merchants trading to the East Indies, a group of 218 men, received a royal charter, giving them a monopoly for 15 years over “trade to the East”. The charter authorized the setting up of what was then a radical new type of business: not a family partnership – until then the norm over most of the globe – but a joint-stock company that could issue tradeable shares on the open market to any number of investors, a mechanism capable of realizing much larger amounts of capital. (The Virginia Company charted in 1606 to explore and create settlements in America was a joint-stock company.) The first chartered joint-stock company was the Muscovy Company, which received its charter in England in 1555. The East India Company was founded 44 years later. No mention was made in the charter of the EIC holding overseas territory, but it did give the company the right “to wage war” where necessary. That is right; The Company had an army.
Sir Thomas Roe, the ambassador sent by James I to the Mughal court, appeared before the Emperor Jahangir in 1614 – at a time when the Mughal empire was still at its richest and most powerful. Jahangir inherited from his father Akbar one of the two wealthiest polities in the world, rivaled only by Ming China. His lands stretched through most of India, all of what is now Pakistan and Bangladesh, and most of Afghanistan. He ruled over five times the population commanded by the Ottomans – roughly 100 million people. His capitals were the megacities of their day.
As time went by, the East India Company executed a corporate coup unparalleled in history: the military conquest, subjugation and plunder of vast tracts of southern Asia. It almost certainly remains the supreme act of corporate violence in world history. For all the power wielded today by the world’s largest corporations – whether ExxonMobil, Walmart or Google – they are tame beasts compared with the ravaging territorial appetites of the militarized East India Company.
The Persians helped. As late as 1739 the Mughals still ruled a vast empire that stretched from Kabul to Madras. But in that year, the Persian adventurer Nadir Shah descended the Khyber Pass with 150,000 of his cavalry and defeated a Mughal army of 1.5 million men. Three months later, Nadir Shah returned to Persia carrying the pick of the treasures the Mughal empire had amassed in its 200 years of conquest: a caravan of riches that included Shah Jahan’s magnificent peacock throne, the Koh-i-Noor, the largest diamond in the world, as well as its “sister”, the Darya Nur, and “700 elephants, 4,000 camels and 12,000 horses carrying wagons all laden with gold, silver and precious stones”, worth an estimated £87.5m in the currency of the time. This haul was many times more valuable than that later extracted by The Company from the peripheral province of Bengal.
The destruction of Mughal power by Nadir Shah, and his removal of the funds that had financed it, quickly led to the disintegration of the empire. Much of the success of the Company was mediated by Robert Clive, an adventurer who started his career as a civil servant of the East India Company; he later transferred to the military service of the Company.
After the Battle of Plassey in 1757, a victory that owed more to treachery, forged contracts, bankers and bribes than military prowess, Clive transferred to the EIC treasury no less than £2.5m seized from the defeated rulers of Bengal – in today’s currency, around £23m for Robert Clive and £250m for the company.
August 1765, when the young Mughal emperor Shah Alam, exiled from Delhi and defeated by East India Company troops, was forced into what we would now call an act of involuntary privatization. The scroll is an order to dismiss his own Mughal revenue officials in Bengal, Bihar and Orissa, and replace them with a set of English traders appointed by Robert Clive – the new governor of Bengal – and the directors of the EIC, who the document describes as “the high and mighty, the noblest of exalted nobles, the chief of illustrious warriors, our faithful servants and sincere well-wishers, worthy of our royal favors, the English Company”. The collecting of Mughal taxes was henceforth subcontracted to a powerful multinational corporation – whose revenue-collecting operations were protected by its own private army.
The document signed by Shah Alam – known as the Diwani – was the legal property of the company, not the Crown, even though the government had spent a massive sum on naval and military operations protecting the EIC’s Indian acquisitions. But the MPs who voted to uphold this legal distinction were not exactly neutral: nearly a quarter of them held company stock,
The company’s rule quickly turned into the straightforward pillage of Bengal, and the rapid transfer westwards of its wealth. Within a few years, 250 company clerks backed by the military force of 20,000 locally recruited Indian soldiers had become the effective rulers of Bengal.
August 1765, when the young Mughal emperor Shah Alam, exiled from Delhi and defeated by East India Company troops, was forced into what we would now call an act of involuntary privatization. The scroll is an order to dismiss his own Mughal revenue officials in Bengal, Bihar and Orissa, and replace them with a set of English traders appointed by Robert Clive – the new governor of Bengal – and the directors of the EIC, who the document describes as “the high and mighty, the noblest of exalted nobles, the chief of illustrious warriors, our faithful servants and sincere well-wishers, worthy of our royal favors, the English Company”. The collecting of Mughal taxes was henceforth subcontracted to a powerful multinational corporation – whose revenue-collecting operations were protected by its own private army.
The document signed by Shah Alam – known as the Diwani – was the legal property of the company, not the Crown, even though the government had spent a massive sum on naval and military operations protecting the EIC’s Indian acquisitions. But the MPs who voted to uphold this legal distinction were not exactly neutral: nearly a quarter of them held company stock,
The company’s rule quickly turned into the straightforward pillage of Bengal, and the rapid transfer westwards of its wealth. Within a few years, 250 company clerks backed by the military force of 20,000 locally recruited Indian soldiers had become the effective rulers of Bengal.
An international corporation was transforming itself into an aggressive colonial power.
Only seven years after the granting of the Diwani, when the company’s share price had doubled overnight after it acquired the wealth of the treasury of Bengal, the East India bubble burst after plunder and famine in Bengal led to massive shortfalls in expected land revenues. The EIC was left with debts of £1.5m and a bill of £1m unpaid tax owed to the Crown. When knowledge of this became public, 30 banks collapsed like dominoes across Europe, bringing trade to a standstill.
In a scene that seems horribly familiar to us today, this hyper-aggressive corporation had to come clean and ask for a massive government bailout.
But unlike Lehman Brothers, the East India Company really was too big to fail. So it was that in 1773, the world’s first aggressive multinational corporation was saved by history’s first mega-bailout – the first example of a nation state extracting, as its price for saving a failing corporation, the right to regulate and severely rein it in.
Historians propose many reasons for the success of the corporate invasion: the fracturing of Mughal India into tiny, competing states; the military edge that the industrial revolution had given the European powers. But perhaps most crucial was the support that the East India Company enjoyed from the British parliament. The relationship between them grew steadily more symbiotic throughout the 18th century. Returned nabobs like Clive used their wealth to buy both MPs and parliamentary seats – the famous Rotten Boroughs. In turn, parliament backed the company with state power: the ships and soldiers that were needed when the French and British East India Companies trained their guns on each other.
By 1803, when the EIC captured the Mughal capital of Delhi, it had trained up a private security force of around 260,000- twice the size of the British army – and marshaled more firepower than any nation state in Asia. It was “an empire within an empire”, as one of its directors admitted.
In a scene that seems horribly familiar to us today, this hyper-aggressive corporation had to come clean and ask for a massive government bailout.
But unlike Lehman Brothers, the East India Company really was too big to fail. So it was that in 1773, the world’s first aggressive multinational corporation was saved by history’s first mega-bailout – the first example of a nation state extracting, as its price for saving a failing corporation, the right to regulate and severely rein it in.
Historians propose many reasons for the success of the corporate invasion: the fracturing of Mughal India into tiny, competing states; the military edge that the industrial revolution had given the European powers. But perhaps most crucial was the support that the East India Company enjoyed from the British parliament. The relationship between them grew steadily more symbiotic throughout the 18th century. Returned nabobs like Clive used their wealth to buy both MPs and parliamentary seats – the famous Rotten Boroughs. In turn, parliament backed the company with state power: the ships and soldiers that were needed when the French and British East India Companies trained their guns on each other.
By 1803, when the EIC captured the Mughal capital of Delhi, it had trained up a private security force of around 260,000- twice the size of the British army – and marshaled more firepower than any nation state in Asia. It was “an empire within an empire”, as one of its directors admitted.
Burke correctly identified what remains today one of the great anxieties of modern liberal democracies: the ability of a ruthless corporation corruptly to buy a legislature. And just as corporations now recruit retired politicians in order to exploit their establishment contacts and use their influence, so did the East India Company.
On 10 May 1857, the EIC’s own security forces rose up against their employer and on successfully crushing the insurgency, after nine uncertain months, the company distinguished itself for a final time by hanging and murdering tens of thousands of suspected rebels in the bazaar towns that lined the Ganges – probably the most bloody episode in the entire history of British colonialism.
On 10 May 1857, the EIC’s own security forces rose up against their employer and on successfully crushing the insurgency, after nine uncertain months, the company distinguished itself for a final time by hanging and murdering tens of thousands of suspected rebels in the bazaar towns that lined the Ganges – probably the most bloody episode in the entire history of British colonialism.
Yet the idea of the joint-stock company is arguably one of Britain’s most important exports to India, and the one that has for better or worse changed South Asia as much any other European idea. Its influence certainly outweighs that of communism and Protestant Christianity, and possibly even that of democracy.
Companies and corporations now occupy the time and energy of more Indians than any institution other than the family.
Companies and corporations now occupy the time and energy of more Indians than any institution other than the family.
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