The Anarchy: The Relentless Rise of the East India Company

by William Dalrymple

Robert Clive, 1st Baron Clive 1725–74 East India Company accountant who rose through his remarkable military talents to be Governor of Bengal.

One of the very first Indian words to enter the English language was the Hindustani slang for plunder: loot.

Owain Gruffydd ap Gwenwynwyn,

The painting shows a scene from 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 privatisation.

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.

By 1803, when its private army had grown to nearly 200,000 men, it had swiftly subdued or directly seized an entire subcontinent.

‘What honour is left to us?’ asked a Mughal official, ‘when we have to take orders from a handful of traders who have not yet learned to wash their bottoms?’2

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.

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.

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.

With no stake in the just governance of the region, or its long-term well-being, the Company’s rule quickly turned into the straightforward pillage of Bengal, and the rapid transfer westwards of its wealth.

The idea of a joint stock company was one of Tudor England’s most brilliant and revolutionary innovations.

Although the Muscovy Company directors soon came to the conclusion that the northern route did not exist, in the process of looking for it they discovered, and successfully traded along, a direct overland route with Persia via Russia. Before Ottoman Turkish conquests cut the road in 1580, they sent out six successful voyages to Isfahan and the other great bazaar towns of the region, and managed to post a respectable profit.24

This turned out to offer far wider powers than the petitioners had perhaps expected or even hoped for. As well as freedom from all customs duties for their first six voyages, it gave them a British monopoly for fifteen years over ‘trade to the East Indies’, a vaguely defined area that was soon taken to encompass all trade and traffic between the Cape of Good Hope and the Strait of Magellan, as well as granting semi-sovereign privileges to rule territories and raise armies.

In 1623, the English factory (trading station) at Amboina in the Moluccas was attacked by the Dutch VOC troops and ten Englishmen were tortured and killed. This opened several decades of conflict between England and Holland in which, despite occasional successes, the English consistently came off worse. At one point a Dutch fleet even sailed up the Thames and attacked Sheerness, destroying the ships in Chatham and Rochester dockyards.42

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.

The Company existed to make money, and Bengal, they soon realised, was the best place to do it.

The tactic worked: Da’ud Khan backed off. In this way the EIC prefigured by 300 years the response of many modern corporates when faced with the regulating and taxation demands of the nation state: treat us with indulgence, they whisper, or we take our business elsewhere.

In 1732, Nader had seized the Persian throne in a military coup. Shortly afterwards he deposed the last infant Safavid prince, ending 200 years of Safavid rule. Seven years later, in the spring of 1739, he invaded Afghanistan.

Having defeated the Mughals in an initial engagement, Nader Shah then managed to capture the Emperor himself by the simple ruse of inviting him to dinner, then refusing to let him leave.

Peace, however, now proved more elusive: the dogs of war, once let slip, were not easily brought to heel. Rather than disbanding his new sepoy regiments, Dupleix decided to hire them out to his Indian allies, and to use them to gain both land and political influence.

Whatever their many vices, wrote Shushtari, the English welcomed and rewarded talent: ‘the English have no arbitrary dismissal,’ he noted, ‘and every competent person keeps his job until he writes his own request for retirement or resignation. More remarkable still is that they take part in most of the festivals and ceremonies of Muslims and Hindus, mixing with the people. They pay great respect to accomplished scholars of whatever sect.’

Aliverdi Khan, who was of mixed Arab and Afshar Turkman stock, had come to power in 1740 in a military coup financed and masterminded by the immensely powerful Jagat Seth bankers, who controlled the finances of Bengal.

In retrospect, Bengalis came to remember the last years of Aliverdi Khan as a golden age, which all subsequent epochs failed to match: the country was rich and flourishing

But in truth, Shah Alam was already too late. The Bengal he was heading to was in the process of being changed for ever by a new force in Indian politics: the East India Company and, in particular, the machinations of Robert Clive.

Under the command of the Dublin-born John Zephaniah Holwell, the roughly 150 remaining members of the garrison who had failed to make their escape continued the resistance for one more morning.

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.

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.

On 9 February 1760, just four days after Clive had left India, Shah Alam crossed the Karmanasa, the boundary of Mir Jafar’s dominions, and announced to his followers that the time had come to retake ‘the prosperous and rich province’ of Bengal for the Empire.

But Mir Jafar had a son-in-law, Mir Qasim, as different a man as could be imagined from his chaotic and uneducated father-in-law. Of noble Persian extraction, though born on his father’s estates near Patna, Mir Qasim was small in frame, with little military experience, but young, capable, intelligent and, above all, determined.58

Across Bihar and Bengal, the provincial Mughal elite rose as one behind Nawab Mir Qasim in a last desperate bid to protect their collapsing world from the alien and exploitative rule of a foreign trading company. Whether Mir Qasim realised it or not, all-out war was now unavoidable.

This was the granting of what in Mughal legalese was known as the Diwani – the office of economic management of Mughal provinces.

Ghulam Hussain Khan, by far the sharpest observer of his time, was quick to realise what this would mean on the ground. Firstly, it signified the effective extinction of his entire social class. The Mughal nobility, whose power had ultimately rested on their expertise as cavalrymen, were now effectively unemployed as the Company replaced them with infantrymen they recruited largely from rural Hindu Rajput and Brahmin backgrounds.

Moreover, wrote Ghulam Hussain Khan, the Company’s conquests represented an entirely different form of imperial exploitation from anything India had previously experienced. He articulated, long before any other Indian, both what being a subject colony entailed, and how different this strange and utterly alien form of corporate colonialism was to Mughal rule.

As Macaulay later put it, the Company looked on Bengal ‘merely as a Buccaneer would look on a galleon’.101 It took five years for the full effects of this regime of unregulated plunder to become apparent; but when it did so the results were unparalleled in their horror. The stage was now set for the great 1770 Bengal famine.

What they did not know was that this was one of the highest points the Company share price would ever reach; and that what lay ahead was an extended period of unprecedented ill fortune for the Company – financial, political and military – that would do immense damage to the EIC both at home and abroad, bringing it close to bankruptcy and complete closure.

Yet Hastings wished to retain and revive the existing Mughal system and operate it through Indian officials, only with the office of the Governor General and his Council replacing that of the Nawab. He even went as far as proposing that no Europeans should be permitted to live outside Calcutta, except at a few select factories connected with the Company’s trade.

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. Haidar, who was of Punjabi origin, had risen in the ranks of the Mysore army, where he introduced many of the innovations he had learned from observing French troops at work in the Carnatic Wars.

This was the ultimate colonial nightmare, and in its most unpalatable form: the captive preferring the ways of his captors, the coloniser colonised.

There was a growing sensation that everywhere the British Empire was in the process of falling apart. In Parliament, a year later, one MP noted that ‘in Europe we have lost Minorca, in America 13 provinces, and the two Pensacolas; in the West Indies, Tobago; and some settlements in Africa’.134 ‘The British Empire,’ wrote Edmund Burke, ‘is tottering to its foundation.’135

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.

Shuja ud-Daula

Mirza Najaf Khan died on 6 April 1782, aged only forty-six. For ten years he had worked against all the odds, and usually without thanks, to restore to Shah Alam the empire of his ancestors.

For all the theatre of the occasion – indeed one of the prosecutors was the playwright Richard Brinsley Sheridan – this was not just the greatest political spectacle in the age of George III, it was the nearest the British ever got to putting the Company’s Indian Empire on trial. They did so with one of their greatest orators at the helm – the Anglo-Irish Whig statesman and political theorist Edmund Burke, supported by his no less eloquent and much more radical rival, Charles James Fox.

Few were surprised when, after seven years, on 23 April 1795, Hastings was ultimately cleared of all charges.

This was a process which had already begun with the 1773 Regulating Act and had been further enhanced by Pitt’s India Act of 1784, which made the Company’s political and military transactions subject to government supervision. It eventually culminated in the outright nationalisation of the Company seventy years later in 1858, but by 1784 the writing was already on the wall.

This was not just a matter of statecraft. Tipu, despite being a devout Muslim and viewing himself as a champion of Islam, thoroughly embraced the syncretic culture of his time and believed strongly in the power of Hindu gods.

When Cornwallis reached Calcutta in September 1786, Tipu was already at war with both the Maratha Peshwa and the Nizam of Hyderabad, both of whom had been allies of his father. Unlike Haidar, who joined the Triple Alliance coalition against the British, Tipu’s aggressive attacks on his neighbours so alarmed both Marathas and Hyderabadis that, when courted by Cornwallis, they agreed to form a new Triple Alliance. This time the alliance would be with the Company, and it was aimed against Tipu’s Mysore.

many ways 1792 was the major turning point for the East India Company in India: before this, the Company was often on the defensive and always insecure.

Moreover, those who had bought land from the old zamindars were in many ways throwing in their lot with the new Company order. In this way, a new class of largely Hindu pro-British Bengali bankers and traders began to emerge as moneyed landowners to whom the Company could devolve local responsibility.