The Anarchy: The Relentless Rise of the East India Company

by William Dalrymple

The economic and political theorist Thomas Pownall wrote how ‘people now at last begin to view those Indian affairs, not simply as financial appendages connected to the Empire; but from the participation of their revenues being wrought into the very frame of our finances … people tremble with horror even at the imagination of the downfall of this Indian part of our system; knowing that it must necessarily involve with its fall, the ruin of the whole edifice of the British Empire’.57 This was certainly the view of the King. George III wrote that he believed ‘the real glory of this nation’ depended on the wealth of India which offered ‘the only safe method of extracting this country out of its lamentable situation owing to the load of debt it labours under’.58

It was now increasingly obvious that if Parliament did vote to bail out the Company to the tune of £1.4 million* there would have to be a quid pro quo, and a measure of parliamentary supervision of the EIC in return for authorising such an immense loan.

On 18 December 1772, the directors of the East India Company were summoned to the Houses of Parliament. There they were fiercely examined by General John Burgoyne’s Select Committee, which had been set up to investigate EIC abuses in India, and particularly accusations of embezzlement and bribe-taking.

The Resolution was eventually rendered harmless by a series of amendments and another praising Clive’s ‘great and meritorious services to this country’. In the end, after an all-night debate, Clive had been cleared by a vote of 95 for censure to 155 for clearing his name.

But in this, too, North ultimately failed. The Company enjoyed chartered privileges, guaranteed by the Crown, and its shareholders were tenacious in their defence of them. Moreover, too many MPs owned EIC stock, and the EIC’s taxes contributed too much to the economy – customs duties alone generated £886,922* annually – for it to be possible for any government to even consider letting the Company sink. 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.

In these circumstances, the outlines of the deal between the Company and Parliament soon became clear, and with it the new partnership with the state that would result. The colossal loan of £1.4 million* that the Company needed in order to stave off its looming bankruptcy would be agreed to. But, in return, the Company agreed to subject itself to a Regulating Act, defined by Lord North’s India Bill of June 1773, which would bring the EIC under greater parliamentary scrutiny.

On 19 June 1773, Lord North’s bill passed its final reading by 47 votes to 15. The world’s first aggressive multinational corporation was saved by one of history’s first mega-bailouts, an early example of a nation state extracting, as its price for saving a failing corporation, the right to regulate and rein it in. But despite much parliamentary rhetoric, the EIC still remained a semi-autonomous imperial power in its own right, albeit one now partially incorporated within the Hanoverian state machinery.

Shortly after the passing of the Regulating Act, Clive set off abroad on the Grand Tour, dining with some of his former Compagnie des Indes adversaries as he passed through France. For a year, he toured the classical sites of Italy, collecting artworks and meeting some of the most powerful and fashionable figures in Europe; but he never recovered his peace of mind. He had always suffered from depression, and twice in his youth had tried to shoot himself. Since then, despite maintaining an exterior of unbroken poise and self-confidence, he had suffered at least one major breakdown. To this burden was now added agonising stomach pains and gout. Not long after his return to England, on 22 November 1774, at the age of only forty-nine, Robert Clive committed suicide in his townhouse in Berkeley Square.

Clive left no suicide note, but Samuel Johnson reflected the widespread view as to his motives: Clive, he wrote, ‘had acquired his fortune by such crimes that his consciousness of them impelled him to cut his own throat’.69

These were views Philip Francis held steadfastly until his death, and from the day of his arrival in Calcutta he worked hard to bring Hastings down, to block all his initiatives and to reverse all the work he had already done.

Hastings had every reason to feel aggrieved. Far from being regarded as the incarnation of Company corruption, up to the arrival of Francis, Hastings had been regarded as a man with a spotless reputation.

Far more than any of his contemporaries, Hastings was conscious of the many flaws in the Company’s regime, and wrote about them tellingly: ‘To hold vast possessions, and yet to act on the level of mere merchants, making immediate gain our first principle; to receive an immense revenue without possessing protective power over the people who pay it … [these] are paradoxes not to be reconciled, highly injurious to our national character … and bordering on inhumanity.’

Between his appointment, in February 1772, and the coming of Francis and the other councillors two and a half years later, Hastings had already done much to overhaul and reform the worst aspects of Company rule in Bengal.

Hastings’ first major change was to move all the functions of government from Murshidabad to Calcutta. The fiction that Bengal was still being ruled by the Nawab was dispensed with and the Company now emerged as the undisguised ruler:

Throughout 1773, Hastings worked with extraordinary energy. He unified currency systems, ordered the codification of Hindu laws and digests of Muslim law books, reformed the tax and customs system, fixed land revenue and stopped the worst oppression being carried out on behalf of private traders by the local agents.

Underlying all Hastings’ work was a deep respect for the land he had lived in since his teens. For, unlike Clive, Hastings genuinely liked India, and by the time he became Governor spoke not only good Bengali and Urdu but also fluent court and literary Persian.

His letters, including some written to his friend Samuel Johnson, reveal a deep affection for India and Indians quite absent from the openly racist letters of Clive: ‘Our Indian subjects,’ wrote Hastings, ‘are as exempt from the worst propensities of human nature as any people upon the face of the earth, ourselves not exempted. They are gentle, benevolent, more susceptible to gratitude for kindness shewn them than prompt to vengeance for wrongs sustained, abhorrent of bloodshed, faithful and affectionate in service and submissive in legal authority.’

Hastings particularly disliked the haughty way Company servants dealt with Indians and the tone they often took: ‘There is a fierceness in the European manners, especially among the lower sort, which is incompatible with the gentle temper of the Bengalee, and gives the former an ascendant t...

‘Asiatick Society’ was founded in 1784 which, among other projects, sponsored the first translation of the Bhagavad Gita, for which Hastings composed a rightly celebrated introduction: ‘It is not very long since the inhabitants of India were considered by many as creatures scarce elevated above the degree of savage life,’ he wrote, ‘nor, I fear, is that prejudice yet wholly eradicated, though surely abated. Every instance which brings their real character home will impress us with a more generous sense of feeling for their natural rights, and teach us to estimate them by the measure of our own.

Under Jones and Hastings, the Asiatic Society became the catalyst for an outpouring of scholarship on the civilisation of what Jones called ‘this wonderful country’.

Moreover, Hastings’ interest in the Gita was not just antiquarian: aspects of its philosophy came to guide him in his personal life and he took as his own maxim the sloka [verse], ‘Your entitlement is to the deed alone, never to its results. Do not make the results of an action your motive. Do not be attached to inaction. Having renounced rewards resulting from actions, wise men endowed with discrimination are freed from the bondage of birth and go to the Regions of Eternal Happiness.’

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’.

The political paralysis in Bengal soon became clear to all the Company’s many enemies in India, and it was not long before two powers in particular decided to test the strength of their now divided and weakened adversary.

The first power were the Marathas, who had been for nearly seventy years, since the death of Aurangzeb, by far the strongest military power in India, and largely responsible for the slow dismembering of the Mughal Empire.

That day ended with 28,000 Maratha dead on the battlefield, including much of the younger Maratha leadership and the Peshwa’s only heir, shot by a ball through the chest. The following day, a further 40,000 disarmed Maratha captives, who had surrendered and thrown themselves at the mercy of the Afghans, were to a man executed on Durrani’s orders. The Peshwa Ballaji Rao died broken-hearted soon after: ‘his mind had become confused and he began to revile and curse his people’.

The second power was a new force, which in the 1770s was just emerging and beginning to flex its military muscles: the Mysore Sultanate of Haidar Ali and his formidable warrior son, Tipu Sultan.

Srirangapatnam.

Both the Marathas and Tipu’s Mysore Sultanate would in time develop to be the two fiercest and most challenging military adversaries the Company would ever face, and the final obstacles to its seizure of peninsular India.

For some time the directors had been growing alarmed at how Indian military techniques were rapidly improving across the region: the easy victories of the Plassey era, a decade earlier, were now increasingly eluding the Company. It had taken Indian states some thirty years to catch up with the European innovations in military technology, tactics and discipline that had led to the Company’s early successes; but by the mid-1760s there was growing evidence that that gap was fast being bridged:

Trinomalee,

In the end, the Company sued for peace. Haidar was successfully bought off: a treaty was signed and the Mysore forces returned home. But the fact that the Company could now be so easily surprised and defeated was a lesson noted with satisfaction in many courts in India, particularly that of Haidar in Mysore and the Marathas in Pune.

It was near Pune, twelve years later, in 1779, that the Company received its first major defeat since the victory at Plassey. In February, without consulting Hastings in Calcutta, the Bombay Council got itself entangled with internal Maratha politics and signed an agreement with one of the Marathas’ ousted leaders, Raghunath Rao, offering to reinstate him on the throne of Pune as regent to the young Maratha Peshwa.

On 24 November, this rogue expedition, unauthorised by Calcutta, left Bombay harbour and set off towards Pune with just 2,000 sepoys, a few hundred European cavalry and artillery, and a force of 7,000 of Raghunath Rao’s Maratha caval...

The reputation of the Company’s army would never be the same again. But as well as exposing the limits of the Company’s military power, the failed Pune expedition also revealed the degree to which the Company now had ambitions to reshape and interfere in the politics of the entire South Asian region. For the brilliant Maratha Prime Minister Nana Phadnavis, ‘the Maratha Machiavelli’, this was the moment that he realised the urgent need for the various Indian powers, whatever their differences, to pull together and form an alliance against the alien intruders, and to attack them with a united front while their leadership was still weak and divided.103

They win over any disconnected member of the State and through him work its ruin. Divide and grab is their main principle. They are so blinded by selfish interest that they never observe written agreements. God alone can fathom their base intrigues. They are bent on subjugating the states of Pune, Nagpur, Mysore and Hyderabad one by one, by enlisting the sympathy of one to put down the others. They know best how to destroy Indian cohesion. They are adept at the art of creating insidious differences and destroying the harmony of any State.

The tables were being turned. It was now Company troops who learned what it meant to be defeated, to be taken prisoner, to be mistreated. Munro, whose failure to rescue Baillie had been a major factor in the disaster, and who on his return to Madras with what was left of his panic-stricken army, was jeered and hooted at in the streets, called the Battle of Pollilur ‘the severest blow that the English ever suffered in India’.

Even more humiliatingly, several British regimental drummer boys were made to wear dresses – ghagra cholis – and entertain the court in the manner of nautch (dancing) girls.125 At the end of ten years’ captivity, one of these prisoners, James Scurry, found that he had forgotten how to sit in a chair or use a knife and fork; his English was ‘broken and confused, having lost all its vernacular idiom’, his skin had darkened to the ‘swarthy complexion of Negroes’ and he found he actively disliked wearing European clothes.126 This was the ultimate colonial nightmare, and in its most unpalatable form: the captive preferring the ways of his captors, the coloniser colonised.

The Company – now more than £10 million* in debt and unable to pay its own salaries – was now faced by a combination of all the strongest powers in India, supported by the French.129 Privately Hastings imagined himself ‘on board a great leaky vessel, driving towards a Lee Shore with Shipwreck not to be avoided, except by a miracle’.

The Company kept its toehold in the south only by the lack of confidence and initiative shown by its adversaries, and the quick supply of reinforcements from Calcutta. Over the months to come, with a mixture of imaginatively wide-ranging military action and deft diplomacy, Hastings managed to break both the Triple Alliance and the unity of the Maratha Confederacy when, on 17 May 1782, he signed the Treaty of Salbai, a separate peace with the Maratha commander Mahadji Scindia, who then became a British ally.

For the Company’s enemies it was a major missed opportunity. In 1780, one last small push could have expelled the Company for good. Never again would such an opportunity present itself, and the failure to take further immediate offensive action was something that the durbars of both Pune and Mysore would later both bitterly come to regret.

In America, the Patriots had turned on the King, partly as a result of government’s attempts to sell the stockpiles of East India Company tea, onto which was slapped British taxes: the Boston Tea Party, an event that built support for what would become the American War of Independence by dumping 90,000 pounds of EIC tea, worth £9,659 (over £1 million today), in Boston harbour, was in part provoked by fears that the Company might now be let loose on the thirteen colonies, much as it had been in Bengal.

One Patriot writer, John Dickinson, feared that the EIC, having plundered India, was now ‘casting their eyes on America as a new theatre whereon to exercise their talents of rapine, oppression and cruelty …’132 Dickinson described the tea as ‘accursed Trash’, and compared the prospect of oppression by the corrupt East India Company in America to being ‘devoured by Rats’. This ‘almost bankrupt Company’, he said, having been occupied in ‘corrupting their Country’, and wreaking ‘the most unparalleled Barbarities, Extortions and Monopolies’ in Bengal, now wished to do the same in America. ‘But thank GOD, we are not Sea Poys, nor Marattas.’

After a horrendous war, the Patriots managed to see off the government troops sent to restore order after a series of standoffs. Even as Haidar was pursuing a terrified Munro back to Madras, British forces in America were already on their way to the final defeat by Washington at Yorktown, and the subsequent surrender of British forces in America in October.

The moment was recorded, for it marked what was recognised, even at the time, as a crucial turning point in the politics of eighteenth-century India. Shah Alam had now finally given up on the Company ever honouring its many promises to give him an army, or even just an armed escort, to help him reconquer his capital. If the Company would not help him then he would have to look for new allies – and this, by default, meant his ancestral enemies, the Marathas. But whatever the dangers, the Emperor was determined to gamble everything in the hope of regaining his rightful place on the Peacock Throne of his ancestors.2

Behind this apparently benign concern for the Emperor lay a deep anxiety on the part of the Company. Shah Alam’s announcement of his imminent departure had been entirely unexpected. Not only did the Emperor’s keepers want him in their own hands to legalise and legitimate whatever decisions they made, they also feared the consequences if others should seize him with the same intention.

With a view to changing the Emperor’s mind, one of the highest ranking Company officers, General Barker, was despatched to Allahabad to try and reason with him.

But Shah Alam had made up his mind. Barker found him ‘deaf to all arguments’.7 The Emperor even went as far as threatening suicide if there was any attempt by the Company to thwart him.

The Council ultimately realised it had little option but to accept the Emperor’s decision with the best grace possible: ‘It was not in our power to prevent this step of the King’s,’ they wrote to the directors in London in January 1771, ‘except by putting an absolute restraint on his person, which we judged would be as little approved by our Hon’ble masters, as it was repugnant to our own sentiments of Humanity.’

In fact, the Company had no one to blame but themselves for the Emperor’s dramatic decision.

Dramatic changes in the politics of Hindustan helped spur the Emperor into action. In the decade following the defeat of the Marathas at Panipat in 1761, and the death of 35,000 – an entire generation of Maratha warriors and leaders – the Afghans had had the upper hand in Hindustan from roughly 1761 until 1770.14