BRITISH AND THE EAST INDIA COMPANY

ARRIVAL OF THE BRITISH IN INDIA

In 1608, British ships landed in Surat on the west coast of India. Sir William Hawkins traveled overland to meet with the imperial Mughal court in Agra to ask for permission to set up a trading post. The Mughal emperor was reluctant to grant the request out of fear of inflaming the tempers of the Portuguese who had been on the subcontinent since the arrival of de Gama in 1498. Between 1612 and 1615, a Briton maned Thomas Coryate walked from England to India. [Source: Pico Iyer, Smithsonian magazine, January 1988]

When the English arrived, India was a country with a large population of Hindu peasants ruled by Muslim Mughals princes. The original Portuguese trading outpost had been taken over by the Dutch. The British got their start in Bengal and Madras, namely because no other European powers were there. the Dutch occupied the Portugese possessions in the east.

Economic competition among the European nations led to the founding of commercial English company agents became familiar with Indian customs and languages, including Persian, the unifying official language under the Mughals. In many ways, the English agents of that period lived like Indians, intermarried willingly, and a large number of them never returned to their home country. The knowledge of India thus acquired and the mutual ties forged with Indian trading groups gave the English a competitive edge over other Europeans. The French commercial interest--Compagnie des Indes Orientales (East India Company, founded in 1664)--came late, but the French also established themselves in India, emulating the precedents set by their competitors as they founded their enclave at Pondicherry (Puduchcheri) on the Coramandel Coast. [Source: Library of Congress]

British Begin to Take Over India

The British take over of India in many ways was more accidental than deliberate. It is best summed in the celebrated phrases "in a fit of absence of mind." Calcutta, Bombay and Madras began as trading posts. When there assets became worth protecting, garrisons manned by small private armies were established. Merchants with gifts for local rulers were replaced by soldiers, who later for all intents and purposes became the local leaders. [Source: Pico Iyer, Smithsonian magazine, January 1988]

Some scholars argue that Britain was mainly interested in "quiet trade" without getting involved in messy Indian politics, but the weakness of the Mughal empire in its era of decline and competition from other European powers forced them to get involved. The first English traders to set foot in India were given direct orders not to conquer because it cut into profits. "All war is so contrary to our interest," a 1681 directive read, "that we cannot too often inculcate to your strictest aversion thereunto."

In 1717 the Mughal emperor, Farrukh-siyar (1713-19), gave the British--who by then had already established themselves in the south and the west--a grant of thirty-eight villages near Calcutta, acknowledging their importance to the continuity of international trade in the Bengal economy. As did the Dutch and the French, the British brought silver bullion and copper to pay for transactions, helping the smooth functioning of the Mughal revenue system and increasing the benefits to local artisans and traders. The fortified warehouses of the British brought extraterritorial status, which enabled them to administer their own civil and criminal laws and offered numerous employment opportunities as well as asylum to foreigners and Indians. [Source: Library of Congress *]

The British factories successfully competed with their rivals as their size and population grew. The original clusters of fishing villages (Madras and Calcutta) or series of islands (Bombay) became headquarters of the British administrative zones, or presidencies as they generally came to be known. The factories and their immediate environs, known as the White-town, represented the actual and symbolic preeminence of the British--in terms of their political power--as well as their cultural values and social practices; meanwhile, their Indian collaborators lived in the Black-town, separated from the factories by several kilometers. *

Establishment of the East India Company

India was governed but the East India Company from the beginning of the 17th century to the middle of the 19th century . Their first charter was granted by Queen Elizabeth I in 1600. The company was conceived in September 1599 by a group of London merchant who raised 30,000 pounds to send a group of ships to the east to purchase silks, spices and jewels and bring them back to England. The first ships sent by traders who would later form the East India Company were not bound for India, they were destined for the Spice Islands in what is now Indonesia. [Source: Pico Iyer, Smithsonian magazine, January 1988]

After receiving the blessing of Queen Elizabeth I, five ships set sail for the Spice Island in the Dutch Indies. The Dutch refused to sell any spices to the British ships, which headed to the west coast of India so they wouldn't return empty handed.

Nick Robins of Bloomberg wrote: “Established by royal charter in 1600 with a monopoly on all trade with Asia, the East India Company had many incarnations in its almost 275-year run. For the first half of its existence, it remained a commercial supplicant, exporting bullion to pay for Asia’s luxury goods: first spices, then textiles and tea. Along the way, it became an early model for today’s joint-stock corporation and pioneered new management techniques for long-distance supply chains. [Source: By Nick Robins, Bloomberg, March 12, 2013 *-*]

For the most part local leaders welcomed the East India Company and allowed it to set up shop. By the beginning of the 17th century, the British East Company was operating out of “factories in Bombay as well as Madras and Calcutta. The company maintained its own army so as not to place to much of burden on the British crown. It employed sepoys--European-trained and European-led Indian soldiers--to protect its trade, but local rulers sought their services to settle scores in regional power struggles.

Book: The Honorable Company: A History of the English East India Company by John Keay

First East India Company Outposts in India

Madras was the first major trading center set up by the British. Established in 1639 and originally known as Fort St. George, it was located on a five-mile-long harborless beach on the east coast of India, and was leased for 600 pounds a year. A hundred years later it had grown into city of 300,000. [Source: Pico Iyer, Smithsonian magazine, January 1988]

In 1661 the East India Company acquired a small barren island called Bombay for a fee of 10 pounds a year from King Charles II who had been given the island as part of his dowry from Catherine of Braganza. In the early 18th century, after some clashes with local rulers, the company established a small trading post called Fort William on a mud flat of the Sea of Bengal. This trading post was later renamed Calcutta.

The first important product the British brought home from India was indigo from Bengal. The company exported Indian textiles, sugar and indigo and acquired more territory by getting involved in local wars and political intrigues. Later tea, coffee, rubber, sugar and cotton were introduced. They revolutionized the economies and South Asia and dramatically altered the landscape.

Conflict Between Britain and France Spills into India

India in the early 18th century was a chaotic place. The Mughal empire was breaking up. The Persians and tribes from Central Asia were moving in from the West and the European peoples were establishing beachheads on the coast. [Source: Pico Iyer, Smithsonian magazine, January 1988]

A dispute between France and England, known as the Seven Year War in Europe and the French and Indian War in North America, spilled out into Asia. In 1746, the French captured Madras, and paraded the English governor and some of his officials in chains at the French outpost in Pondicherry. The new French governor strengthened his position by training local troops known as sepoys.

Both English and French armies employed Europeans as officers but relied n Hindu and Muslim sepoys to do most of the fighting. Dressed in handsome uniforms, the sepoys became the envy of every maharajah, who in turn signed land-for-troops deals with the French. In this way the French were able to establish a sizable colony in southern India. The British fought back with their own force of sepoys.

South India witnessed the first open confrontation between the British and the French, whose forces were led by Robert Clive and François Dupleix, respectively. Both companies desired to place their own candidate as the nawab, or ruler, of Arcot, the area around Madras. At the end of a protracted struggle between 1744 and 1763, when the Peace of Paris was signed, the British gained an upper hand over the French and installed their man in power, supporting him further with arms and lending large sums as well. [Source: Library of Congress]

Robert Clive

Commander Robert Clive (1725 to 1774) is regarded by some scholars as the founder of the British empire in India. He was an employee and a leader in the British East India Company and was responsible for important military victories that helped establish Britain as the major power in India. [Source: Micheal Olmert, Smithsonian Magazine]

Clive also become one of the richest men of his time. He built one of the grandest estates in England and purchased gold and jewels. Explaining to the British parliament that he could have taken more if he wanted, he said, “A great prince was dependant upon my pleasure, an opulent city lay at my mercy, it richest banners bid against each other for my smiles. I walked through vaults thrown open to me alone, piled on either hand with gold and jewels.”

Clive was the son of a country squire from Shropshire near the Welsh border. As a child he was regarded as aggressive and reckless. He did poorly in school and was sent to the southeast Indian coast to work as a clerk. As a young man he was lonely and bored and spent a lot of time in the governor's library. Among many of his compatriots he was regarded as a lunatic. Once he ended up in a duel after accusing a fellow Englishman of cheating at cards. Clive missed his shot and dared his challenger to shoot him in the head.

Robert Clive and the British East India Company Army

Clive was one of those captured by the French in Madras in 1746. He was able to escape and joined the British East India Company's military forces. When the fight stopped he returned to his position as clerk. Five years later when fighting with the French resumed he entered the company’s army again as a captain. [Source: Micheal Olmert, Smithsonian Magazine]

Clive distinguished himself at a battle in 1751. With a force of 500 sepoys and Britain regulars, Clive marched inland from Madras and took the fort of Ascot, the French-controlled provincial capital. He attacked a forced that was twice as large as his in middle off a monsoon storm. The French forces thought he was mad and then fled. Inside the fort, Clive held off a 50-day siege by a French-trained army of 10,000 men. Clive won the respect of his men by joining the fight and followed him because they regarded him as lucky.

The victory at Ascot made the British East India Company the power to be reckoned with in India. After ten years in India, Clive married and returned to Britain, where he took a seat in Parliament and suffered poor health that was the result o diseases he picked up in India. In 1756, Clive was recalled to Madras, this time at the rank of lieutenant colonel. Clive arrived just as a drama called the Black Hole of Calcutta was unfolding.

Black Hole of Calcutta

The French and the British also backed different factions in the succession struggle for Mughal viceroyalty in Bengal. Suraj-ud-Dowlah, the Nawab (Mughal Prince) of Bengal, sided with the French. In 1756, he attacked the trading center of Calcutta with 30,000 foot soldiers, 20,000 horsemen and 400 war elephants. The British garrison, which was defended by only 200 men, fell easily.

After the defeat the captured 146 British officers and civilians were placed in a 18-x-14-foot prison cell later known as the "Black Hole," where they were left with no water and forgotten about. A total 123 of the 146 prisoners died after one night in the sweltering, suffocating, crushing conditions. Survivors reportedly stayed alive by sucking their own sweat and, in the case of 16-year-old Mary Carey, by drinking her own tears.

One of the survivors J.Z Holwell later wrote: "Many unsuccessful attempts were made to force open the door; for having nothing but our hands to work with, and the door opening inward, all endeavors were vain and fruitless...We had been but few minutes confined before every one fell into a perspiration so profuse, you can form no idea of it. This brought on a raging thirst, which increased in proportion as the body was drained of its moisture." [Source: Eyewitness to History, edited by John Carey, 1987, Avon Books]

"Various expedients were thought of to give more room and air. To obtain the former, it was moved to take off their clothes...and in a few minutes every man was stripped...every hat was put in motion to produce a circulation of air...Before nine o'clock every man's thirst grew intolerable, and perspiration difficult...Now every body, excepting those situated in and near the windows, began to grow outrageous, and many delirious: Water, water, became the general cry...The water appeared...Though we brought full hats within the bars, their issued such violent struggles, and frequent contest to get at it, that before it reached the lips of any one, there would be scarcely a small tea cup full left in them.”

Death and Survival in the Black Hole of Calcutta

Holwell wrote: "From about nine to near eleven...my legs were almost broke with all the weight against them. By this time I myself was near pressed to death, and my two companions...were really so...My friends...for whom I had a real esteem and affection, had for some time been dead at my feet: and were now trampled upon by every corporal or common soldier, who by the help of more robust constitutions, had forced their way to the window." [Source: Eyewitness to History, edited by John Carey, 1987, Avon Books]

"With much difficulty I forced a passage to the center of the prison...I traveled over the dead...My poor friend Mr Edward Eyre staggered over the dead to me, and with his usual coolness and good-nature, asked me how I did? but he expired before I had time to make him a reply. I laid myself down on some of the dead behind me. Many to my right and left were sunk with violent pressure, and were soon suffocated; for now a steam rose from the living and the dead...and the stench of the dead bodies was growing so intolerable."

I "kept my mouth moist from time to time by sucking the perspiration out of my shirt sleeves, and catching the drops as they fell, like heavy rain, from my head and face...Whilst I was at this second window, I was observed by one of my miserable companions...allaying my thirst by sucking my shirt-sleeve. He took the hint, and robbed me from time to time of a considerable part of my store... I had in an ungovernable fit of thirst attempted drinking my urine but it was so intensely bitter, there was no enduring a second taste."

Finally "an order came for our release, it being then near six in the morning. As the door was opened inwards, and as the dead were piled up against it, and covered all the rest of the floor, it was impossible to open it by any efforts without; it was therefor necessary that the dead should be removed by the few that were living within, who had become so feeble, that the task, though it was the condition for life, was not performed without the utmost difficulty... About a quarter after six in the morning, the poor remains of 146 souls, being no more than three and twenty, came out of the black hole alive...The bodies were dragged out of the hole by the soldiers, and thrown promiscuously into the ditch of an unfinished raveling, which was afterwards filled with earth.

“Some doubted the veracity of the account, saying as few as 43 actually died. But that didn’t really matter. Everyone in British knew about the Black Hole of Calcutta and it helped marshaled a nasty retaliatory response against the French and their Begal allies sort of the like the one against the American Indians after the Battle of Little Big Horn.

Clive and the Battle of Plassey

The English were outraged by the horrors of the Black Hole of Calcutta. A year later Clive sailed from Madras with 800 British troops and 2,000 sepoys to face a Bengal-French force of 55,000 men at Calcutta. Clive found help from a combination of vested interests that opposed the existing nawab: disgruntled soldiers, landholders, and influential merchants whose commercial profits were closely linked to British fortunes. [Source: Micheal Olmert, Smithsonian Magazine]

On January 1, 1757, the British were able to take Fort William in Calcutta after a fierce bombardment but Clive’s force of 3,200 men was surrounded as he approached along the Hugli River near the tiny hamlet of Plassey (Palashi, about 150 kilometers north of Calcutta) by 40,000 Indian and French troops, 15,000 cavalry, 50 artillery pieces and a force of war elephants.

Again Clive’s bravery and luck would save the day for the British in the face of what seemed like insurmountable odds. Clive’s force took refuge in an almond grove which offered them some cover from enemy artillery. Again a heavy downpour helped turned the tide, apparently this time by dampening the firepower of the enemy. Clive’s forces were then able to knock out the French-Bengal artillery, several war elephants and scattered their forces. After some grapeshot killed Siraj’s most trusted general, Siraj-ud-daula fled on the back of a camel, the French emplacements were overrun and the British carried the day with only 22 soldiers dead and 50 wounded.

British East India Company’s Stature in India Grows

The Battle of Plassey solidified the power of Britain’s East India Company, greatly weakened the French and made Clive a rich man. Clive installed a Mughal puppet leader in Calcutta, who showed his gratitude by showing Clive the nawab's treasure and allowing Clive to take whatever he wanted. Clive took 211,500 pounds of treasure and a grant assuring him of 27,000 pounds a year for life. At the time, a gentleman in England could live well on 800 pounds a year.

Nick Robins of Bloomberg wrote: “The company then loaded the contents of the Bengal treasury onto a fleet of 100 boats and sent them downriver to its base in Calcutta. In one stroke, Robert Clive, who had engineered the victory, netted 2.5 million pounds for the company and 234,000 pounds for himself. (Today, this would be equivalent to a 262 million-pound corporate windfall and a cool 25 million-pound success fee for Clive.) The flow of wealth from Europe to Asia would now be reversed, and the East India Company’s shares soared on London’s markets. [Source: By Nick Robins, Bloomberg, March 12, 2013]

Clive returned to Britain in 1660. He bought himself a fashionable house in London, an estate in Ireland and took a Parliament seat. In 1765, he returned to India and defeated the Mughal forces at Buxar (Baksar, west of Patna in Bihar) in 1765, and the Mughal emperor (Shah Alam, r. 1759-1806) conferred on the company administrative rights over Bengal, Bihar, and Orissa, a region of roughly 25 million people with an annual revenue of 40 million rupees. The imperial grant virtually established the company as a sovereign power, and Clive became the first British governor of Bengal. [Source: Library of Congress]

Clive reformed the East India Company’s administration and army and ironically clamped own on profit taking by members of the company. He also negotiated an agreement with the Mughal Emperor, establishing the diwani system. in which the British received the right to collect revenues from all the emperor’s territories in return for providing military protection. This sealed the power of the British in India. In 1767, Clive returned to Britain, became addicted to opium and died of an opium overdoes in 1774, which some have argued was suicide and other’s say was accidental.

"After the takeover of Bengal," Pico Iyer wrote, "relations between the British and the natives changed radically. Company merchants were free to roam the province, helping themselves to the fruits of the land through joint ventures with Indian partners. Suddenly they were in a position to expect presents themselves." One English was awarded a salt works with 13,000 worker; another was awarded 117,000 pounds after distinguishing himself in battle. Yet another, opened his own mint. [Source: Pico Iyer, Smithsonian magazine, January 1988]

Rise of British Empire in India

After the defeat of France in the Seven Year War, in 1763, French colonial ambitions in India came to an end. From that point Britain—through the East India Company and later the British government— or all intents and purposes controlled all of India, either ruling states or dominating princely protectorates. India became the centerpiece ("the jewel in the crown") of Britain's empire.

The Mughal's didn’t resist the British. Instead the British East India Company was given control of Bihar and Bengal region by the Mughal Shah in 1765 and granted the right to collect land revenue there. This was a tremendous coup for the East India Company; Bengal was the source of two thirds of Britain's exports from Asia.

By the beginning of the 18th century, the East India Company was one of the largest employers in London, trading silver, firearms, and devices like clocks for Indian cotton, spices, silk, indigo, gemstones and opium. Trading post such as Calcutta, Madras and Bombay had grown into self-sufficient cities with British garden neighborhoods, warehouses and courts of law. The "civil servants" that worked here were defended by "military servants."

East India Company: The Original Too-Big-to-Fail Firm

In 2013, Nick Robins of Bloomberg wrote: “For an institution that has been defunct for almost 150 years, the East India Company still evokes powerful reactions across the world. In 2012, when the Indian government debated allowing foreign companies to open supermarkets there, protesters shouted: “This is the return of the East India Company!” In the U.K., the East India Company’s extraordinary rise and fall have uncanny parallels with the stock-market bubbles and government bailouts that have shaken the economy over the past decade.And little wonder: At the heart of the company’s story are eternal questions about how to cope with the powers and perils of large multinational corporations. [Source: By Nick Robins, Bloomberg, March 12, 2013; Robins is the author of “The Corporation that Changed the World: How the East India Company Shaped the Modern Multinational.” *-*]

“It also created a series of lifestyle revolutions in 18th-century England. Daniel Defoe described in 1708 how the company’s calicoes, shipped from India, “crept into our houses, our closets, our bedchambers.” This calico boom prompted fierce resistance from Britain’s weavers, who felt threatened by a flood of cheap Asian imports. In 1720, the government responded with a ban on Indian calicoes, and it was behind this protectionist wall that the Industrial Revolution would take shape. *-*

“One market may have closed, but the East India Company refocused its efforts on the growing demand for Chinese tea on both sides of the Atlantic. Meanwhile, at the company’s headquarters on Leadenhall Street in London, annual general meetings had become the arena for fearsome battles between management and shareholders and between rival management cliques. These boardroom fights intensified following the Battle of Plassey in June 1757, when the company loaded the contents of the Bengal treasury onto a fleet of 100 boats. The flow of wealth from Europe to Asia would now be reversed, and the East India Company’s shares soared on London’s markets. *-*

“After the boom, however, came the bust. When drought struck Bengal in 1769, the company raised taxes and refused to intervene; contemporaries estimated that as many as 10 million people died in the resulting famine. Back in London, the East India Company’s shares slumped in response to the conflict in South India. This provoked a wider credit crisis, forcing the company’s directors to beg the government for a bailout in the summer of 1772. The East India Company’s centrality to Britain’s commercial and imperial ambitions meant that it was the original “too big to fail” corporation.” *-*

East India Company, the Boston Tea Party and Adam Smith

Nick Robins of Bloomberg wrote: “The British government tried to ensure that the East India Company would recover sufficiently to pay back its debts. One of the company’s assets was an immense amount of unsold tea. Instead of just importing the tea to Britain and then letting wholesalers ship it across the Atlantic, the company was granted the right to export the tea itself to Britain’s American colonies. The arrival of this controversial corporation inflamed a flagging protest against Britain’s taxes on tea. The result was the Boston Tea Party of December 1773. Here, Chinese tea bought with Bengali money by a British corporation was dumped in the sea by American patriots dressed as “Indians.” This was globalization 18th-century style. [Source: By Nick Robins, Bloomberg, March 12, 2013 *-*]

“The East India Company’s fall from grace provided a compelling case study for Adam Smith in “The Wealth of Nations.” Smith argued that the impositions placed on European colonies, and the practices of monopoly corporations, had prevented the Age of Discovery from resulting in a generalized spread of commercial benefits. By the time he published the book’s third edition, Smith was even more convinced of “the Absurdity and hurtfulness of almost all our chartered companies.” And he added a new critique of the joint-stock model of ownership: “Negligence and profusion must always prevail, more or less, in the management of such a company,” he concluded. *-*

“The revenue that tea provided enabled the East India Company to eventually recover. But this glamorous trade rested on a deadly secret: By the early 19th century, growth in the tea business was paid for by the mass smuggling of opium from the company’s Indian territories into China. And in India, the company had switched its attention from commerce to conquest, using its private army to take over the bulk of the subcontinent. *-*

“In Britain, free-trade advocates inspired by Smith had won the removal of the company’s monopoly on trade with India in 1813 and with China in 1833. Increasingly an anachronism, the East India Company continued as the administrator of its conquests in India until its sepoys rebelled in 1857. John Stuart Mill, the company’s leading executive, defended his employer against ferocious attack in Parliament, but he couldn’t stop the inevitable. The company was stripped of its operational responsibilities, and the British Raj began. If you go to the site of East India House today, you’ll find no plaque outside to mark that this was where the world’s most powerful corporation once dominated both trade and territories. “ *-*

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Ministry of Tourism, Government of India, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and various books, websites and other publications.

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© 2008 Jeffrey Hays

Last updated June 2015

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