British East India Company Raj

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BRITISH EAST INDIA COMPANY RAJ

BRITISH EAST INDIA COMPANY RAJ In the late eighteenth century the British East India Company gained control of much of the territory that is now India, Pakistan, Bangladesh, and other territories in Southeast Asia for Great Britain. The company carried on an extensive trade throughout a vast area, including China, but in this article attention will be given almost wholly to India, where its activities had a decisive role in India's economic and political life and in its relationships with Great Britain and the rest of the world. Its activities in India will be noted in three main periods: from 1600 to 1750; from 1750 to 1798; and from 1798 to 1858, when, as proxy for Great Britain, it became the major political power throughout India, finally losing its position in 1858. In examining these time spans, major consideration will be given to the establishment of British control, the fate of indigenous political powers, and the creation of new military, administrative, and revenue systems.

1600–1750: The British East India Company in the Mughal Empire

Trade and monopoly

The British East India Company became a legal entity when a charter was granted on 31 December 1600 by Queen Elizabeth I to a group to trade to the East India Indies, by which was meant countries on the Indian Ocean. They also were granted a monopoly of the trade between England and all the countries defined as part of the East Indies. This restriction of the home market for Asian products to the British East India Company was to remain a subject of fierce controversy for the next two hundred years, but the monopoly was defended by the company as absolutely essential for its financial success. Such monopolies were common features of contemporary European economic life, but the company had three great problems to overcome before it could make a profit. One was that two European rivals—the Dutch East India Company, or the Vereenigde Oost-Indische Compagnie, which was already established, and the French Compagnie des Indes Orientales, which would soon be set up—were hostile to the British attempt to enter their trading areas. Another difficulty was getting the Mughal government, both at the center and in the provinces, to grant permission and to provide protection to the company's traders. This permission was not easily obtained, because the Mughals were not interested in European trade, but in 1615 Sir Thomas Roe, as an ambassador from the English king to the emperor's court, was given permission to set up trading posts not only at the port of Surat in Gujarat but inland at a number of towns, including Agra and Patna. A third, and fundamental, problem was finding items to trade. The English soon discovered that their great staple of trade—woolens—would find no market in India, and that the only product for which there was a demand was bullion, gold and silver. Throughout the company's long association with India, imports into Europe, not exports to India from Europe, would be the key to its successes and failures. The traditional European demand associated with the Indian trade had been spices, particularly pepper, but by the middle of the seventeenth century demand was peaking. Indigo, valued as a dye, brought a good profit in Europe, as did raw silk for the French and Italian weaving industries. Saltpeter was used in the flourishing munitions industry. By far the most important Indian exports for the company, however, were Indian textiles, especially Indian cotton cloth, which was cheaper than the linens and woolens of England. Expensive Indian patterned fabrics, such as chintz and calico—words of Indian origin, as are the names of most specialized cotton fabrics—became fashionable among the wealthy.

The British East India Company's ventures were an important link in bringing Mughal India and the entireIndian Ocean littoral into the world trading market while making England a dynamic force in the emerging capitalist economy. Various aspects of the British East India Company's activities in India contributed to its influence. The bilateral trade between England and India based on its monopoly of imported Indian goods was basic, but their reexport to the rest of Europe gave the company a solid, and expandable, base for its profits. The goods imported from India had to be paid for in bullion, with more than 75 percent of the value of the company's exports to India being in bullion, not in goods; one source of this money was the reexport trade. The bullion was made into coinage by the Mughal authorities and was then used by the European traders in their dealings with the Indian merchants. Another source of profit for the company was what was known as the "country trade," port-to-port trade in Indian goods within India itself and with other Asian regions. Java and Sumatra, for example, willingly accepted Indian textiles instead of bullion.

The rise of the port cities

The British East India Company's trade is closely linked with the emergence of new urban centers in India. At first, it sought a foothold in existing trading centers on the coast for its "factories," as its trade depots were called after the official in charge: the factor, or agent. He and his assistants bought goods from Indian merchants, storing them until the company's ship's arrived, or if the factory was inland, arranging for transport to the port. The first factory was set up in 1611 at Macchilipatnam, on the southeast coast, a center for the manufacture of chintz, where the Dutch already had a factory. Then in 1613 the company established a factory at Surat in Gujarat, which for centuries had been a trading center for Indian goods to the Middle East and Southeast Asia.

Surat exemplified the close connection between political power, long-distance trade, and a high level of commercial activities. Its wealthy bankers financed trade throughout India and the Persian Gulf, and they lent money to the foreign multinationals, including the British and the Dutch East India companies. At all times, but especially in the seventeenth century, the company's trade depended on Indian merchants as well as Indian government officials. This may serve as a reminder of how different India was from North America, where the English were penetrating at approximately the same time. As the Portuguese had reported when they arrived in 1497, India was a land of "large cities, large edifices and rivers, and great populations, among whom is carried on all the trade in spices and precious stones" (Lach, p. 96). Surat was an entrepôt that had all these items and more to trade. The factory in Surat set a basic pattern that was to be followed elsewhere. The factor, or senior merchant, was in charge of the depot, with English assistants, some of them in their teens; the depot was in a compound with living quarters, store houses, and offices for doing business with Indian traders and merchants. They were protected by both European and Indian guards, the embryo of the later armies of the company.

Long before the British East India Company became a territorial power, it was embedding itself into the Indian financial and economic institutions that made political conquest possible. Three of these early settlements—Madras, Bombay, and Calcutta—became great modern cities, centers of economic and political power, which were retained in independent India but under names that reflect their pre-British origins: Chennai, Mumbai, and Kolkata. Their origin and growth, so intimately connected with modern India, demonstrates, as a foremost authority on trade and politics in the region insists, that "the historical connection between long distance trade and the process of urbanization was a simultaneous phenomenon, a source of both strength and weakness to the towns and cities of the Indian Ocean" (Chaudhuri, Asia before Europe, p. 367).

The British East India Company established the settlement that later became Madras, one of the three great port cities of India, in 1639 on the southeast coast. That the center of the settlement was known as Fort Saint George is a reminder of how trade and military security were linked. It became the capital of Madras presidency, as all of the British East India Company's factories that were established in the region were brought under the control of its chief official. Until late in the eighteenth century, the presidency was linked directly with the company's officials in London, giving it an autonomy that was jealously prized.

The establishment of a settlement at Bombay was in part a result of the growing instability in Surat, occasioned by attacks from Shivaji, the great Maratha warrior, in his rebellion against the Mughals. Consisting of a group of islands, Bombay had come under Portuguese control in 1534. It was given to the English king as part of his dowry when he married a Portuguese princess in 1661, and was ceded to the British East India Company in 1668. Bombay was not of much importance at first, as it was remote from market sources, but it began to flourish in the eighteenth century when the company built a wall to protect its own traders and Indian merchants from Surat and elsewhere. An important shipbuilding industry was started by a Parsi, a member of the small Zoroastrian minority from Gujarat that soon became a dominant factor in Bombay's industrial, commercial, and cultural life. It was, like Madras, the capital of the company's presidency, consisting of the areas that are now the states of Maharashtra and Gujarat. In the nineteenth century it became a center of trade, manufacturing, and educational enterprises, as well as political power. In all these enterprises, except for political power, Indians were prominent.

Calcutta, the third of the great urban centers, was founded by the company in 1690 in an area that was chosen because it had direct access to the sea by the Hugli River. The site had little importance to the Mughal rulers, so the company was given proprietary rights to three villages. The fortification the company built was called Fort William, and in 1700, when it became the third of the presidencies, it was known as the presidency of Fort William in Bengal. Calcutta was to play an even larger role in modern India's history—as the second city of the British empire after London—than would the other two port cities. It was the political capital of the vast British Indian empire until 1912, when the capital was moved to Delhi. It was also the dominant center of trade and culture, as well as original home of the national political movement that later gained independence for India.

One feature of the new urban areas that had great significance for the future was that they were all magnets for migration from areas hundreds of miles from the cities themselves. Another was that the cities became centers of European influence, as well as for new professions such as journalism and medicine. The thousands of Indians employed by the new government and by the traders and merchants were also concentrated in the port cities.

Decline of the Mughal empire

Historians have long speculated on the reasons for the decline of the power of the Mughal rulers in the first half of the eighteenth century; the general conclusion must be that there was no one cause, but rather a multitude of factors working together. These included the expenses of wars that had depleted the treasury; a crushing burden of taxation that some authorities believe led peasants to flee the land in despair; rebellions and uprisings by the Marathas and the Sikhs; and invasions by the Persians in 1739 and by the Afghans in 1748. The empire might have survived these shocks, but many of the governors of the Mughal provinces, while never formally denying allegiance to the emperor, in fact became virtually independent. It was this situation of weakened central authority and competing regional leaders that made possible the realignment of powers throughout the region that saw the British East India Company emerge as a dominant actor.

1750–1798: The British East India Company Seizes Power

The armies of the British East India Company

While the search for trade took the British East India Company to India, it was its armies that kept it there, both as a trader and later as a ruling power. The story of those armies is complex, but each of the presidencies had its own army raised in India. It was the French Compagnie des Indes Orientales, not the British, that made two crucial discoveries. One was that Indians could be hired as soldiers for far less than Europeans and that they made excellent soldiers if given modern European military discipline and weapons. The other discovery was that it was possible to gain influence and even control at the courts of Indian princes through the use of the armies to support activities of the princes or their rivals. In addition to its own armies, the British East India Company had regiments and officers from the English army sent to assist them. All these armies were paid for by the company from its Indian profits. The superiority of its military forces was demonstrated in a number of conflicts in South India with the Indian princes, especially the nawāb of Arcot, but also by its defeat of the French forces in various engagements from 1740 to 1748, and then, more decisively during the Seven Years' War (1756–1763), when the English effectively excluded France from India. While the seizure of power by the company in Bengal was partly due to financial and political intrigue, its armies were always the potent force that established and maintained its power.

Regime change in Bengal

The appointment of Sirajud-Dawla as nawāb, the Mughal governor of Bengal, in 1756 marked a new direction in the history of modern India. His predecessor had given the British East India Company trading privileges that exempted its traders from certain taxes, but the company had grossly abused them, hindering Indian merchants and depriving the government of revenue. The company had also increased the fortifications around Calcutta. When Siraj-ud-Dawla was appointed in 1756, he understood, perhaps better than any other Indian ruler, the danger the British East India Company posed. The capture of Calcutta in 1756 by his army created one of the most famous episodes in the Indo-British relationship, when British captives were imprisoned in a small room overnight and many of them died because of the heat and overcrowding. This event passed into British historical myth as "the Black Hole of Calcutta," becoming a symbol of the barbarity of Indians, with Siraj being pictured as a monster of cruelty, a threat to his own people as well as to the English traders. The decision was made, therefore, to replace him with a ruler who would be an ally of the company. At the battle of Plassey in 1757 the company's army, under Colonel Robert Clive, defeated and killed Siraj, replacing him with their candidate. One of the greatest Indian merchants of the time, Jagat Seth, had also helped in the overthrow, hoping to profit from a British victory, though he was in turn cheated by Clive. The company had hoped to rule through the new nawāb, but they soon found, in their terminology, that he was "disloyal" and had to be replaced.

The next important move in the transfer of political power came in 1764, when the company's army defeated the combined armies of the nawāb of Bengal and the Mughal emperor at the battle of Buxar. Then, in 1765, the company's agents forced the emperor to give them control of the revenue systems of the heavily populated areas of Bengal, Orissa, and Bihar. This meant that the British East India Company had become the largest territorial power in India, and that it would be able to use the tax revenues of a vast area of India to buy the goods for its export trade. These events fundamentally altered the position of the British in India.

For the people of Bengal, the next decade was a bitter time, when the Mughal system of administration collapsed. The English were ignorant of the complexities of the system, but eager to extort as much money as possible from the peasants and Indian merchants. They were guided by the remnants of the old system, which were equally corrupt and rapacious. The effect of these years on the land and its people was summed up by one of the company's servants in a report to London in 1769. "It must give pain to an Englishman," he wrote, "to have reason to think that since the accession of the Company to the Diwani the condition of the people has been worse than it was before. . . . This fine Country, which flourished under the most despotic and arbitrary government, is verging towards its Ruin" (Muir, pp. 92–93). Such reports, of which there were many, of what the British were doing in India to its people led to great criticism of the British East India Company. There was also a fear that the company's servants, like Clive and others, returning to England with their great ill-gotten fortunes, would buy their way into Parliament. The result was the passing of regulations to control the company, culminating in a series of acts, including what is known as Pitt's India Act of 1784, which gave Parliament control over the company's affairs in London but left the administration of the India territories in the hands of the company. Indians had no role in this first constitutional act, but its linkage to the constitution of independent India in 1950 is direct. The three Residencies were linked under a governor-general, appointed with the approval of British government. The first appointee was Warren Hastings (1774–1783), one of the most famous names in Indo-British history, who carried on wars against the Indian powers that substantially increased British power.

The major changes in the administrative structure that tightened British control while moving India toward a Western state model—albeit an authoritarian one—began during the governor-generalship of Lord Cornwallis (1786–1793), the British general who had been defeated by the American rebels at Yorktown in 1781. The central issue for the Bengal government was the establishment of a revenue system for the collection of taxes on agricultural land, the major source of revenue. There were three main problems to be solved. The first was to decide who actually owned the land: the rulers; the zamindars, or tax officials; or the peasants. There was an enormous discussion as the officials studied the Mughal records, and in the end it was decided, largely because it was the simplest thing to do, that the zamindars would be recognized as the "owners" of the land. The second problem was the amount that the zamindars had to pay in taxes, and it was agreed that the current assessments would be accepted, with some adjustments. The third issue was the duration of the assessment: would it be fixed for a ten-year period, or would it be annually variable. Again, it seemed simplest to decide that the amount they were paying in 1793 would be fixed as the permanent tax. Probably, in the short run, this was good for the government, assuring a fixed income, and it was certainly good for the zamindars, as they became a wealthy class as land increased in value. The peasants were left, however, without protection as zamindars increased their rents at will. The Bengal system was not introduced elsewhere; various systems, such as direct taxation of the peasants or of the village, were used as British collectors realized that there were many different systems of land taxation in the different regions of India.

Another great change of the last decade of the eighteenth century was the establishment of a new kind of bureaucracy that would eventually be uniform throughout India. By this time, there was widespread belief among Englishmen that Indians could not be trusted with positions of influence and control. This belief was based partly on experiences with Indian tax officials after 1765 but also on the growing prejudice that both Hindu and Muslim societies were so corrupt that Indians could not be employed at the highest levels of government. As a result, after 1793, only British were employed in higher posts. This new Indian civil service, extremely well-paid, with security of tenure and the ability to retire to England in late middle age, was very attractive to sons of the English middle classes. The army, strengthened by new technology and new discipline, followed the same pattern, with only Europeans being commissioned as officers. Eurasians, people of mixed parentage were also excluded. It became, however, one of the best and one of the largest standing armies in the world in the nineteenth century. This new ruling class was remarkably small, with about two thousand in the civil service and fifty thousand British officers and men in the army, for a population that in 1850 probably numbered about 200 million. Its rule was only made possible by the hundreds of thousands of Indians who served in the lower ranks of both the civil and military services.

Important changes were also introduced in the legal system. At first, the British tried to work through existing Indian laws and systems of courts, but they soon discovered that the legal system was particularistic to regions and that what they thought were Hindu law codes were abstract principles and ideal religious practices that had never been uniformly followed. By the end of the eighteenth century, English law began to be applied and an English system of courts was created, with the judges of the higher courts all being British. Here, as elsewhere, Indians were divested of real authority, and specifically Indian laws disappeared, with one very important exception. Personal law, that is, matters relating to marriage, inheritance, and adoption, were defined by religious usage: Hindu practices for Hindus, Muslim usages for Muslims, and Christian ones for Christians. This remains one of the most controversial aspects of the British legal inheritance.

1798–1858: Territorial Conquest

The great period of territorial conquest that began in 1798 depended on the powerful armies that the British East India Company had built up at the three presidencies, using its control of the Indian land revenues and the profits generated by the English and Indian traders. The chief architect of this expansion was Lord Wellesley, governor-general from 1798 to 1803, along with his even abler and more famous brother, Arthur Wellesley, later the duke of Wellington. Wellesley defended his conquests on various grounds. One was that the Indian rulers were tyrants who had overthrown legitimate rulers; conquest was therefore justified to restore to "an ancient and highly cultivated people their religious and civil rights" (Bayly, p. 81). He also stressed, however, that conquest was necessary to bring more tax revenues to support the large army. Finally, conquest would guard the company's territories against what he referred to, without irony, as the restless ambition of Asiatic rulers that led them to seize other ruler's lands.

These conquests were made either quickly or easily. Although by 1798 the British East India Company controlled large areas in the hinterlands of Bombay and Madras and almost all of the huge Mughal subas of Bengal, Bihar, and Orissa, three formidable organized military powers challenged British hegemony in the period from 1798 to 1858. In the south, Mysore was the site of an ancient Hindu kingdom that had been taken over by a Muslim commander, Hyder Ali, and he and his son, Tipu Sultan, endeavored to counteract the British East India Company's influence by building a strong army and adding new territories to secure more revenue. Tipu also threatened the company by seeking an alliance with the French. Wellesley decided that he must be removed, and after a bitter fight, he was defeated and killed, and a compliant descendant of the former Hindu rulers was made the ruler under British control. This became a familiar pattern in dealing with Indian rulers. In western and central India, the Marathas, with a number of powerful chieftains, rebelled against the Mughals and now became the chief threat to British power. Many of them were defeated and forced to sign treaties, known as "subsidiary alliances," making them, in effect, vassal states. Wellesley's wars were very expensive, and the British East India Company recalled him in 1805. Wars with the Marathas continued, however, until 1818, when their organized resistance to the sweep of British power ended.

With the Marathas defeated as a military threat, British power turned its attention in the 1830s to the area, now western Pakistan and Afghanistan, that remains in the twenty-first century a contested region of national and international ambitions. With a range of motivations—including hope for increased trade, fear of Russian advance into the region, and desire to overthrow an unfriendly ruler to be replaced with a more pliable one—the company's officials promoted the invasion of Afghanistan in 1839. At first the British were successful, but three years later they were driven out by an uprising of irate Afghans. Of the nearly 20,000 company troops, mainly Indian soldiers and camp followers, who fled in the dead of winter under fire by Afghan tribesmen, only one, a British army doctor, reached India. This event was the greatest disaster in British military history, and it must have encouraged Britain's enemies in India.

The officials of the British East India Company had begun to believe that great trading opportunities could be found by using the Indus River as a channel of communication into the Punjab and beyond that to Central Asia. The result of this ill-founded idea was the conquest in 1843 of Sind, of the vast region controlled by a number of Muslim chieftains stretching from the Arabian Sea northward along the Indus.

The next great challenge came from the Sikh kingdom in Punjab, the last independent power of any size in the subcontinent, that had been conquered by the Sikh warrior Ranjit Singh at the end of the eighteenth century. Conquest of the Gangetic Plains during the Wellesley era brought the British into conflict with the Sikh kingdom, which was decisively defeated in 1849. Punjab was annexed by the British, becoming a major center of British power. Many of the Sikh soldiers were quickly recruited into the company's army.

In addition to these wars of resistance fought by major Indian rulers, there were many local groups, often called "tribal people," living in the hilly and marginal areas of the country, who resisted the intrusion of the British—as they had all previous rulers—into their territories. While many of these groups fought valiantly, they were not able to match the military superiority of the British, nor could they form alliances with each other. Often after defeat they were co-opted by the new rulers into military service. In Central India, for example, the Bhils, tribal people living in impoverished hilly areas, were recruited into a military unit, the Bhil Corps, which was used against other recalcitrant groups.

By 1848 the entire subcontinent had come effectively under British control, either directly as "British India" or indirectly as "Princely India" through subsidiary treaties. While there had been great political upheaval in the previous eighty years, the period under the new governor-general, Lord Dalhousie (1848–1856), saw many modernizing or Westernizing innovations. These included the building of railway and telegraph systems, as well as new roads and improvements in the postal service. Three universities modeled on the new University of London were established, determining the pattern of Indian higher education up to the present time, based on the use of the English language and an English curriculum. The first cotton mills were established, the beginning of an immense industry. In 1853 it was decided that all entrance to the Indian civil service would be through an examination system, ending the patronage system of the British East India Company. While technically Indians could compete in the new civil service system, the examinations were held in England and were based on an English curriculum, and thus very few Indians managed to pass them before the end of the nineteenth century. Another important change, and a cause of much dissatisfaction, was the policy of getting rid of some of the quasi-independent Indian states that had resulted from the subsidiary alliances of earlier wars. To Dalhousie and his officials they seemed medieval backwaters that served no purpose in a progressive age.

Many of these changes were applauded by Indians in the great port cities and other urban areas, but elsewhere, particularly in North India, there was smoldering resentment by influential segments of the population. These included descendants of Maratha rulers who had been defeated and members of the Mughal elites who watched the Mughal emperor become a virtual prisoner in his Delhi palace-fort. It also included both Muslim and Hindu religious leaders who saw the British encouraging the spread of Christianity by allowing missionary activity. The incident that ignited an explosion came, however, from Indian soldiers in the company's army, the group on which British power had depended for a hundred years.

What became known to the British as the "Sepoy Mutiny" started when the rumor spread that new guns issued to the Indian troops used bullets that were greased with cow and pig fat, a mixture contaminating to both Hindu and Muslim soldiers. The soldiers believed this to be an attempt to pollute them so they would abandon their religions and accept Christianity. Whatever the causes, on 10 May 1857, soldiers at Meerut murdered their officers, marched to Delhi 30 miles (48 km) away, and proclaimed the aged Mughal emperor their leader. Indian nationalist historians later called these events the beginning of the "First War of Independence." Whatever its name, the war was fought with tenacity and great brutality on both sides; in the end the British won because of superior military equipment and discipline, as well as unified leadership.

There were a number of results from the uprising that had long-range consequences. One was that most English rulers now believed that Indians were "disloyal" and could not be trusted. For many Indians, the success of the English in putting down the uprisings showed that the English were too powerful to be defeated by recourse to revolutionary violence. These points are debatable, but what is not debatable is the fate of the British East India Company as the ruler of India. In debates in the House of Commons in 1858 there was almost unanimity in blaming the uprisings on the mismanagement of the company, and its role as the government of India was abolished. Henceforth, government would be vested in the British Crown. Queen Victoria issued a proclamation declaring that she desired no extension of territory, promising freedom for all religions without any interference by government, and ensuring Indians the right to serve the government in all capacities. None of these promises were carried out completely, but the proclamation was received by educated Indians as a sign of hope for the future. After more than a century of involvement in ruling India, change and progress had made the company irrelevant.

Ainslie T. Embree

BIBLIOGRAPHY

Indian Office Collections are in the British Library in London, in the National Archives in New Delhi, and in the state archives of Calcutta, Madras, and Bombay. In the United States, the most extensive collection of printed materials is to be found in the Library of Congress. Three books by K. N. Chaudhuri fit the British East India Company into the dynamic world of Asian commerce: The English East India Company: The Study of an Early Joint-Stock Company, 1600–1640 (London: Frank Cass, 1965) fits the company into the economic life of early capitalist enterprise; Asia before Europe: Economy and Civilisation of the Indian Ocean from the Rise of Islam to 1750 (Cambridge: Cambridge University Press, 1990) gives the large picture of Asian trade; and The Trading World of Asia and the East India Company, 1660–1760 (Cambridge: Cambridge University Press, 1978) is a detailed study of its commercial activities in India and surroundings countries. For the complex social and political changes taking place in India in the period from 1750 to 1858, four volumes in The New Cambridge History of India, published by Cambridge University Press, present interpretations based on contemporary scholarship: John H. Richards, The Mughal Empire; Om Prakash, European Commercial Enterprise in Pre-Colonial India (1998); P. J. Marshall, Bengal: The British Bridgehead, Eastern India, 1740–1828 (1987); and C. A. Bayly, Indian Society and the Making of the British Empire (1988). Philip Woodruff, The Men Who Ruled India: The Founders (New York Schocken Books, 1964), is a laudatory, but interesting, celebration of the achievements of many of the individuals involved in the establishment of British rule.