The Anarchy: The East India Company, Corporate Violence, and the Pillage of an Empire

by William Dalrymple

Corporations have neither bodies to be punished, nor souls to be condemned, they therefore do as they like. Edward, First Baron Thurlow (1731–1806), the Lord Chancellor during the impeachment of Warren Hastings

One of the very first Indian words to enter the English language was the Hindustani slang for plunder: loot. According to the Oxford English Dictionary, this word was rarely heard outside the plains of north India until the late eighteenth century, when it suddenly became a common term across Britain.

1765 was really the moment that the East India Company ceased to be anything even distantly resembling a conventional trading corporation, dealing in silks and spices, and became something altogether much more unusual. Within a few months, 250 company clerks, backed by the military force of 20,000 locally recruited Indian soldiers, had become the effective rulers of the richest Mughal provinces. An international corporation was in the process of transforming itself into an aggressive colonial power.

It was not the British government that began seizing great chunks of India in the mid-eighteenth century, but a dangerously unregulated private company headquartered in one small office, five windows wide, in London, and managed in India by a violent, utterly ruthless and intermittently mentally unstable corporate predator – Clive. India’s transition to colonialism took place under a for-profit corporation, which existed entirely for the purpose of enriching its investors.

Sir Thomas Roe, the ambassador sent by James I to the Mughal court, is shown 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, rivalled 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 – and his subjects produced around a quarter of all global manufactures.

Jahangir’s father Akbar had flirted with a project to civilise India’s European immigrants, whom he described as ‘an assemblage of savages’, but later dropped the plan as unworkable.

In many ways the East India Company was a model of commercial efficiency: one hundred years into its history, it had only thirty-five permanent employees in its head office. Nevertheless, that skeleton staff 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 the Company always had two targets in its sights: one was the lands where its business was conducted; but the other was the country that gave it birth, as its lawyers and lobbyists and MP shareholders slowly and subtly worked to influence and subvert the legislation of Parliament in its favour. Indeed, the East India Company probably invented corporate lobbying. In 1693, less than a century after its foundation, the EIC was discovered for the first time to be using its own shares for buying parliamentarians, annually shelling out £1,200 a year to prominent MPs and ministers.

Although its total trading capital was permanently lent to the British state, when it suited, the East India Company made much of its legal separation from the government. It argued forcefully, and successfully, that the document signed by Shah Alam in 1765 – known as the Diwani – was the legal property of the Company, not the Crown, even though the government had spent an enormous 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, which would have plummeted in value had the Crown taken over. For the same reason, the need to protect the Company from foreign competition became a major aim of British foreign policy.

Drake had set sail in ‘great hope of gold [and] silver … spices drugs, cochineal’,

India then had a population of 150 million – about a fifth of the world’s total – and was producing about a quarter of global manufacturing; indeed, in many ways it was the world’s industrial powerhouse and the world’s leader in manufactured textiles. Not for nothing are so many English words connected with weaving – chintz, calico, shawl, pyjamas, khaki, dungarees, cummerbund, taffetas – of Indian origin.44

the silk-clad Mughals, dripping in jewels, were the living embodiment of wealth and power – a meaning that has remained impregnated in the word ‘mogul’ ever since.

Little wonder that the British were soon being reviled in the Surat streets ‘with the names of Ban-chude* and Betty-chude† which my modest language will not interpret’.78

The bankers and merchants of Bengal who sustained Siraj ud-Daula’s regime had finally turned against him and united with the disaffected parts of his own military; now they sought to bring in the mercenary troops of the East India Company to help depose him. This was something quite new in Indian history: a group of Indian financiers plotting with an international trading corporation to use its own private security force to overthrow a regime they saw threatening the income they earned from trade.60

Clive and his colleagues had intended to do little more than re-establish British trade on a favourable footing and to ensure the accession of a more friendly Nawab. But what they had in fact done was fatally and permanently to undermine the authority of the Nawabs, bringing chaos to what had been up to that point the most peaceful and profitable part of the old Mughal Empire.

Now the Company was transformed a second time, not just as a vehicle of trade operating from a scattering of Indian coastal enclaves, but as the ruler of a rich and expansive territorial empire extending across South Asia. For this, above all, was the moment this corporate trading organisation succeeded in laying the ground for its territorial conquest of India. A business enterprise had now emerged from its chrysalis, transformed into an autonomous imperial power, backed by a vast army, already larger than that of the British Crown, and was poised now to exercise administrative control over 20 million Indians. A body of merchants had been transformed into the de facto sovereign rulers of much of northern India.

The result was what Adam Smith would call ‘a strange absurdity’ – a Company State.66

Henceforth, 250 East India Company clerks backed by the military force of 20,000 Indian sepoys would now run the finances of India’s three richest provinces, effectively ending independent government in Bengal for 200 years. For a stock market-listed company with profit as its main raison d’être, this was a transformative, revolutionary moment.

But frock-coated and periwigged British officials were now everywhere at the apex of the administrative pyramid, making all the decisions and taking all the revenues. A trading corporation had become both colonial proprietor and corporate state, legally free, for the first time, to do all the things that governments do: control the law, administer justice, assess taxes, mint coins, provide protection, impose punishments, make peace and wage war.

Up to now, gold bullion had represented 75 per cent of the EIC’s imports to Bengal, and was the source for much of the ‘prodigious ancient riches of the province’. But now the Company no longer had to ship anything from Britain in order to pay for the textiles, spices and saltpetre it wished to buy and export: Indian tax revenues were now being used to provide the finance for all such purchases.

As a result, in the words of Richard Becher, the new Company Resident in Murshidabad, ‘the first Consideration seems to have been the raising of as large Sums from the Country as could be collected’ – in other words simply to secure as large a revenue as possible through land taxes, and then to transfer that surplus to London bank accounts.92

For Clive and his shareholders it was another triumph: ‘Fortune seems determined to accompany me to the last,’ Clive wrote to his friend and biographer, Robert Orme. ‘Every object, every sanguine wish is upon the point of being completely fulfilled, and I am arrived at the pinnacle of all that I covet, by affirming the Company shall, in spite of all the envy, malice, faction and resentment, acknowledge they are become the most opulent company in the world.’93 To Clive’s immense personal profit, the value of EIC stock climbed dramatically, nearly doubling in value in eight months.

Many raised the valid point that a private corporation enjoying a government trading monopoly ought not to be running an overseas empire: ‘Trade and the Sword ought not to be managed by the same people,’ wrote Arthur Young in a widely circulated pamphlet. ‘Barter and exchange is the business of merchants, not fighting of battles and dethroning of princes.’39

A barbarous enemy may slay a prostrate foe, but a civilised conqueror can ruin nations without the sword.

for the first time a writer grappled, for example, with the question of how to deal with a multinational whose tentacles extended well beyond national frontiers. It also asked important questions about containing an over-powerful and unusually wealthy proprietor: what would happen, asked Bolts, if one very rich magnate were to become too wealthy and powerful for a nation state to control? What would happen if someone could buy the legislature and use his wealth to corrupt MPs for his own business ends?

Clive responded on 21 May 1773 with one of his most famous speeches, saying he objected strongly to being treated like ‘a common sheep-stealer’. After Plassey, he thundered, ‘a great prince was dependent on my pleasure; an opulent city lay at my mercy; its richest bankers bid against each other for my smiles; I walked through vaults which were thrown open to me alone, piled on either hand with gold and jewels! Mr Chairman, at this moment I stand astonished by my own moderation.’

Ultimately, it was saved by its size: the Company now came close to generating nearly half of Britain’s trade and was, genuinely, too big to fail.

So began a period of intense political conflict and governmental paralysis in Bengal, generating what Ghulam Hussain Khan, who was baffled by the Company’s methods of decision-making, called ‘an infinity of disturbances and confusions which perpetually impeded the wheels of government’. There was no ‘head over them all, with full power and authority’. Instead, authority was invested with the Council – ‘what the English call a committee, four or five men … that are perpetually at variance with each other, and perpetually in suspense about their own staying, and their being succeeded by another’. The result was a ‘constant failure’ that now plagued ‘every endeavour’ of the Company … ‘This country seems to have no master,’ concluded the historian.92

When in 1787 the Hyderabadi minister Mir Alam spent several months in Calcutta he was amazed at the scale of the Company’s Calcutta military establishments. He was particularly impressed by the arsenals he saw in Fort William: ‘Three hundred thousand muskets hung up in good order and easy to collect, ammunitions factories hard at work, and two to three thousand cannons in place with five to six thousand more in reserve and ready for use.’35 Forty years earlier, in 1750, the Company had been a trading corporation with a small security force and a few crumbling forts; by 1790 it had effectively transformed its Indian holdings into a tightly run fiscal-military state guarded by the most powerful army in Asia.

In America, Britain had lost its colonies not to Native Americans, but to the descendants of European settlers. Cornwallis was determined to make sure that a settled colonial class never emerged in India to undermine British rule as it had done, to his own humiliation, in America. By this period one in three British men in India were cohabiting with Indian women, and there were believed to be more than 11,000 Anglo-Indians in the three Presidency towns.61 Now Cornwallis brought in a whole raft of unembarrassedly racist legislation aimed at excluding the children of British men who had Indian wives, or bibis, from employment by the Company.