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

by William Dalrymple

  Peshwa Baji Rao II

  1775–1851

  The Last Peshwa of the Maratha Empire, who ruled from 1795–1818. When he first succeeded to the musnud he was slight, timid, unconfident-looking boy of twenty-one with a weak chin and a downy upper lip. He quickly showed himself comprehensively unequal to the challenge of holding together the different factions that made up his Maratha power base, and the treaty he signed with the East India Company at Bassein in 1802 led to the final unravelling of the great Maratha Confederacy.

  Daulat Rao Scindia

  1779–1827

  When Mahadji Scindia died in 1794, his successor, Daulat Rao, was only fifteen. The boy inherited the magnificent army that Benoît de Boigne trained up for his predecessor, but he showed little vision or talent in its deployment. His rivalry with the Holkars and failure to come together and create a common front against the East India Company led to the disastrous Second Anglo-Maratha War of 1803. This left the East India Company the paramount power in India and paved the way for the British Raj.

  Jaswant Rao Holkar

  1776–1811

  Jaswant Rao was the illegitimate son of Tukoji Holkar by a concubine. A remarkable war leader, he showed less grasp of diplomacy and allowed the East India Company fatally to divide the Maratha Confederacy, defeating Scindia first and then forcing him into surrender the following year. This left the Company in possession of most of Hindustan by the end of 1803.

  Introduction

  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. To understand how and why it took root and flourished in so distant a landscape, one need only visit Powis Castle in the Welsh Marches.

  The last hereditary Welsh prince, the memorably named Owain Gruffydd ap Gwenwynwyn, built Powis Castle as a craggy fort in the thirteenth century; the estate was his reward for abandoning Wales to the rule of the English monarchy. But its most spectacular treasures date from a much later period of English conquest and appropriation.

  For Powis is simply awash with loot from India, room after room of imperial plunder, extracted by the East India Company (EIC) in the eighteenth century. There are more Mughal artefacts stacked in this private house in the Welsh countryside than are on display in any one place in India – even the National Museum in Delhi. The riches include hookahs of burnished gold inlaid with empurpled ebony; superbly inscribed Badakhshan spinels and jewelled daggers; gleaming rubies the colour of pigeon’s blood, and scatterings of lizard-green emeralds. There are tiger’s heads set with sapphires and yellow topaz; ornaments of jade and ivory; silken hangings embroidered with poppies and lotuses; statues of Hindu gods and coats of elephant armour. In pride of place stand two great war trophies taken after their owners had been defeated and killed: the palanquin Siraj ud-Daula, the Nawab of Bengal, left behind when he fled the battlefield of Plassey, and the campaign tent of Tipu Sultan, the Tiger of Mysore.

  Such is the dazzle of these treasures that, as a visitor last summer, I nearly missed the huge framed canvas that explains how all this loot came to be here. The picture hangs in the shadows over a doorway in a wooden chamber at the top of a dark, oak-panelled staircase. It is not a masterpiece, but it does repay close study. An effete Indian prince, wearing cloth of gold, sits high on his throne under a silken canopy. On his left stand scimitar- and spear-carrying officers from his own army; to his right, a group of powdered and periwigged Georgian gentlemen. The prince is eagerly thrusting a scroll into the hands of a slightly overweight Englishman in a red frock coat.

  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. 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 Company, whom 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 favours, 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 Company had been authorised by its founding charter to ‘wage war’ and had been using violence to gain its ends since it boarded and captured a Portuguese vessel on its maiden voyage in 1602. Moreover, it had controlled small areas around its Indian settlements since the 1630s.1 Nevertheless, 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.

  By 1803, when its private army had grown to nearly 200,000 men, it had swiftly subdued or directly seized an entire subcontinent. Astonishingly, this took less than half a century. The first serious territorial conquests began in Bengal in 1756; forty-seven years later, the Company’s reach extended as far north as the Mughal capital of Delhi, and almost all of India south of that city was by then effectively ruled from a boardroom in the City of London. ‘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

  We still talk about the British conquering India, but that phrase disguises a more sinister reality. 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.

  At the height of the Victorian period in the mid-nineteenth century there was a strong sense of embarrassment about the shady, brutal and mercantile way the British had founded the Raj. The Victorians thought the real stuff of history was the politics of the nation state. This, not the economics of corrupt corporations, they believed was the fundamental unit of study and the real driver of transformation in human affairs. Moreover, they liked to think of the empire as a mission civilisatrice: a benign national transfer of knowledge, railways and the arts of civilisation from West to East, and there was a calculated and deliberate amnesia about the corporate looting that opened British rule in India.

  A second picture, this one commissioned from William Rothenstein to be painted onto the walls of the House of Commons, shows how successfully the official memory of this process was spun and subtly reworked by the Victorians. It can still be found in St Stephen’s Hall, the echoing reception area of the Westminster Parliament. The painting was part of a series of murals entitled The Building of Britain. It features what the Hanging Committee at the time regarded as the highlights and turning points of British history: King Alfred defeating the Danes in 877, the parliamentary union of England and Scotland in 1707, and so on.

  The fresco in this series that deals with India shows another image of a Mughal prince sitting on a raised dais, under a canopy. Again, we are in a court setting, with bowing attendants on all sides and trumpets blowing, and again an Englishman is standing in front of the Mughal. But this time the balance of power is very different.

  Sir Thomas Roe, the ambassador sent by James I to the Mughal court, is shown before the Emperor Jah
angir 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. Jahangir, who had a taste for exotica and wild beasts, welcomed Sir Thomas Roe with the same enthusiasm he had shown for the arrival of the first turkey in India, and questioned Roe closely on the oddities of Europe. For the committee who planned the House of Commons paintings, this marked the beginning of British engagement with India: two nation states coming into direct contact for the first time. Yet, as the first chapter of this book shows, British relations with India actually began not with diplomacy and the meeting of royal envoys, but with a trade mission led by Captain William Hawkins, a bibulous Company sea dog who, on arrival in Agra, accepted a wife offered to him by the emperor and merrily brought her back to England. This was a version of history the House of Commons Hanging Committee chose to forget.

  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.

  Historians propose many reasons for the astonishing success of the Company: the fracturing of Mughal India into tiny, competing states; the military edge that Frederick the Great’s military innovations had given the European Companies; and particularly the innovations in European governance, taxation and banking that allowed the Company to raise vast sums of ready money at a moment’s notice. For behind the scarlet uniforms and the Palladian palaces, the tiger shoots and the polkas at Government House always lay the balance sheets of the Company’s accountants, with their ledgers laying out profit and loss, and the Company’s fluctuating share price on the London Stock Exchange.

  Yet perhaps the most crucial factor of all was the support that the East India Company enjoyed from the British Parliament. The relationship between them grew steadily more symbiotic throughout the eighteenth century until eventually it turned into something we might today call a public–private partnership. 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.

  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. The parliamentary investigation into this, the world’s first corporate lobbying scandal, found the EIC guilty of bribery and insider trading, and led to the impeachment of the Lord President of the Council, and the imprisonment of the Company’s Governor.

  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.

  The transaction depicted in the painting was to have catastrophic consequences. As with all such corporations, then as now, the EIC was answerable only to its shareholders. 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.

  Before long the province, already devastated by war, was struck down by the famine of 1769, then further ruined by high taxation. Company tax collectors were guilty of what was then described as the ‘shaking of the pagoda tree’ – what today would be described as major human rights violations committed in the process of gathering taxes. Bengal’s wealth rapidly drained into Britain, while its prosperous weavers and artisans were coerced ‘like so many slaves’ by their new masters.

  A good proportion of the loot of Bengal went directly into Clive’s pocket. He returned to Britain with a personal fortune, then valued at £234,000, that made him the richest self-made man in Europe. After the Battle of Plassey in 1757 – a victory that owed as much to treachery, forged contracts, bankers and bribes as it did to military prowess – he transferred to the EIC treasury no less than £2.5 million* seized from the defeated rulers of Bengal – unprecedented sums at the time. No great sophistication was required. The entire contents of the Bengal treasury were simply loaded into one hundred boats and floated down the Ganges from the Nawab of Bengal’s palace in Murshidabad to Fort William, the Company’s Calcutta headquarters. A portion of the proceeds was later spent rebuilding Powis.

  The painting of Clive and Shah Alam at Powis is subtly deceptive: the painter, Benjamin West, had never been to India. Even at the time, a reviewer noted that the mosque in the background bore a suspiciously strong resemblance ‘to our venerable dome of St Paul’. In reality, there had been no grand public ceremony. The transfer took place privately, inside Clive’s tent, which had just been erected on the parade ground of the newly seized Mughal fort at Allahabad. As for Shah Alam’s silken throne, it was in fact Clive’s armchair, which for the occasion had been hoisted on to his dining-room table and covered with a chintz bedspread.

  Later, the British dignified the document by calling it the Treaty of Allahabad, though Clive had dictated the terms and a terrified Shah Alam had simply waved them through. As the contemporary Mughal historian Ghulam Hussain Khan put it: ‘A business of such magnitude, and which at any other time would have required the sending of wise ambassadors and able negotiators, and much negotiation and contention with the ministers, was done and finished in less time than would usually have been taken up for the sale of a jack-ass, or a beast of burden, or a head of cattle.’3

  Before long the EIC was straddling the globe. Almost single-handedly it reversed the balance of trade, which from Roman times on had led to a continual drain of Western bullion eastwards. The EIC ferried opium east to China, and in due course fought the Opium Wars in order to seize an offshore base at Hong Kong and safeguard its profitable monopoly in narcotics.

  To the West it shipped Chinese tea to Massachusetts, where its dumping in Boston harbour triggered the American War of Independence. Indeed, one of the principal fears of the American Patriots in the run-up to the war was that Parliament would unleash the East India Company in the Americas to loot there as it had done in India. In November 1773, the Patriot John Dickinson described EIC tea as ‘accursed Trash’, and compared the potential future regime of the East India Company in America to being ‘devoured by Rats’. This ‘almost bankrupt Company’, he said, having been occupied in wre
aking ‘the most unparalleled Barbarities, Extortions and Monopolies’ in Bengal, had now ‘cast their Eyes on America, as a new Theatre, whereon to exercise their Talents of Rapine, Oppression and Cruelty’.4

  By 1803, when the EIC captured the Mughal capital of Delhi, and within it, the sightless monarch, Shah Alam, sitting blinded in his ruined palace, the Company had trained up a private security force of around 200,000 – twice the size of the British army – and marshalled more firepower than any nation state in Asia.

  A mere handful of businessmen from a distant island on the rim of Europe now ruled dominions that stretched continuously across northern India from Delhi in the west to Assam in the east. Almost the entire east coast was in the Company’s hands, together with all the most strategic points on the west coast between Gujarat and Cape Comorin. In just over forty years they had made themselves masters of almost all the subcontinent, whose inhabitants numbered 50 to 60 million, succeeding an empire where even minor provincial nawabs and governors ruled over vast areas, larger in both size and population than the biggest countries of Europe.

  The EIC was, as one of its directors admitted, ‘an empire within an empire’, with the power to make war or peace anywhere in the East. It had also by this stage created a vast and sophisticated administration and civil service, built much of London’s Docklands and come close to generating nearly half of Britain’s trade. No wonder that the EIC now referred to itself as ‘the grandest society of merchants in the Universe’.

  Yet, like more recent mega-corporations, the EIC proved at once hugely powerful and oddly vulnerable to economic uncertainty. 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 £1.5 million and a bill of £1 million* in unpaid tax owed to the Crown. When knowledge of this became public, thirty banks collapsed like dominoes across Europe, bringing trade to a standstill.