The Corporation that Changed the World

15792820The answer to the implied question is, if you hadn’t guessed it, the East India Company. This is a great critical introduction to what the Company was, what it did, and how it relates to the corporate malfeasance we are so familiar with today.

Established on a cold New Year’s Eve, 1600, England’s East India Company is the mother of the modern corporation. In its more than two and a half centuries of existence, it bridged the mercantilist world of chartered monopolies and the industrial age of corporations accountable solely to shareholders. The Company’s establishment by royal charter, its monopoly of all trade between Britain and Asia and its semi-sovereign privileges to rule territories and raise armies certainly mark it out as a corporate institution from another time. Yet in its financing, structures of governance and business dynamics, the Company was undeniably modern (5).

Modern too, its insatiable greed and the split between this shareholder demand for profits and responsibility for any of the consequences.

From Roman times, Europe had always been Asia’s commercial supplicant, shipping out gold ad silver in return for spices, textiles and other luxury goods. European traders were attracted to the East for its wealth and sophistication at a time when the western economy was a fraction of the size of Asia’s. And for the first 150 years, the Company had to repeat this practice, as there was almost nothing that England could export that the East wanted to buy (7).

Essentially this is the story of how the East India Company forced this to change in search of profit. It is a harrowing story intertwined with English history in ways that this book doesn’t always tease out but bookmarks for us. For example, the literary figures who worked there, were surely influenced by their work even when not being explicit about it. Like Charles Lamb, Thomas Love Peacock, James and John Stuart Mill, James Bentham. On James Mill in particular there is this awesome anecdote:

One account describes how “when particularly inspired he used, before sitting down to his desk, to not only strip himself of his coat and waistcoat, but of his trousers, and so set to work, alternately striding up and down the room and writing at great speed.” (189)

This also connects to other histories of Empire, like one of those that fascinates me most — the evangelical project to settle Sierra Leone (read an early account here in relation to the Clapham Sect, another in relation to other trading companies here, and a later more fuller one here). I had as yet only ever heard of it as a way to resettle free Blacks from London to Africa, but here it is presented very briefly through the lens of the Lascars in London, noted because John Lemon, 29-year-old lascar and hairdresser and cook from Bengal married an Englishwoman named Elizabeth before they set off as part of the Sierra Leone expedition, surviving the passage but from there their future is unknown (21).

That is an aside however, a trail to follow. It’s almost a relief from the overwhelming anger and sadness this tale of greed inspires. Structural greed, as it’s three main flaws accoridng to Robins (and these remain unchanged today) are these, which lead to what can only be called villainy in the search for ‘immediate and excessive returns’:

  1. Executives and shareholders can pursue own profit to the detriment of all others — there is no higher purpose of the corporation.
  2. Limitation of liability frees shareholders and to a great extent executives of responsibility for their actions in the pursuit of these profits.
  3. The separation of ownership and control allows executives to pursue profit and exploit the company for their own ends.

Within this greater framework of greed and exploitation, individuals were also on the look out to make their own fortunes:

For its executives, the purpose of a career with the Company was to achieve a ‘competence’, making enough money to be able to retire and adopt the conspicuous consumption patterns of the British landed gentry. This could bot be achieved by saving from the salaries received from the Company, which barely covered living expenses. As a result, the ambitious Company man had to use his position a a platform for patronage and private trade (29).

What separated this form of corporation from the present one is primarily the risk and the power. Because the risks were, of course, much higher  — the round trip from India to London could take up to two years and there was limited communication or control possible. The East India Company also had to continually renew its royal charter, which required regularly justifying its existence outside of its investors at regular intervals.

On this other hand this royal charter allowed it to mint coin in oversees holdings, exercise justice, and the right to wage war — thus their army changed from private security to a tool for land acquisition. Robins quotes Niels Steengard as saying — ‘the principal export of the pre-industrial Europe to the rest of the world was violence.’ (44)

The history of the EIC is this its efforts to maximise its power, and to minimise risks and controls. Its impact on the monarchy was one example — after the Glorious Revolution brought William of Orange and Mary to the throne, commercial rights were high on the list of priorities in the minds of the British elite in drawing up the ‘unprecedented Bill of Rights that would bind the new monarchs’ (52).

This was matched by a long-standing and complex web of corruption and bribery in the interests of the company. Post 1688 it centered around the figure of Governor Sir Thomas Cooke, subject of a special inquiry. The sums are staggering for the time: £107, 013 paid out in ‘special services’, £80,468 to win a new charter. Another £90,000 used by Cooke to buy stock to shore up the chartering process.

A number of fortunes were made in autocratic bids to gain more power and profit — that of director Sir Josiah Child (‘Perhaps more than any other of the Company’s executives before or since, Josiah Child had demonstrated where an appetite for corporate power could lead’ (57)). The Pitt fortunes emerged, of course, from the ‘Pitt Diamond’, 410 carat rock obtained by Thomas Pitt, governor of Madras.

That would be another interesting distraction to follow. More inspiring perhaps, in terms of distractions, is the brief mention of a weavers’ insurrection in 1696, and their march on the East India House after 5,000 marched on Parliament against imports of Indian cloth. Later they ransacked and threatened homes of Company officials and very nearly sacked the Company storerooms. In view of what happens to weavers, you wish they had.

because we are about to come to the most horrifying period of the EIC’s fairly horrifying history. The period in which it caused Bengal to go from one of the richest areas in the world — hard to imagine today because it continues to be what the EIC made of it — one of the poorest.

The Battle of Plassey, 23 June 1757, is the turning point. Robert Clive attacked and defeated the nawab of Bengal, capturing Calcutta and thus ‘enabling the Company to achieve its long desired monopoly over the export trade, expanding into the internal market and appropriating the public revenues of Bengal for its own benefit’ (77).

One estimate states that in the decade after Plassey, Bengal lost 2/3 of revenues.

Bengal’s weavers were devastated — they were not rich but good evidence shows they lived and worked under much better standards of living than the weavers in England, with more control over their production terms and conditions. Any power they held over their labour was smashed. Their history says they cut off their own hands so they couldn’t be forced to work under the conditions demanded by the company. Rather than exporting cloth, Bengal began to export cotton and import cloth, devastating industry and all the lives that depended on it.

A new era of exploitation with impunity became the rule: ‘A new catchphrase entered the language — “a lass and a lakh [a lakh being Rs100,000] a day–to describe the lifestyle of the Company’s executives in Bengal’ (86).

They did not just devastate weaving, but all other systems of support and livelihood. When famine hit they continued exporting grain, and raised their taxes. I had not, until recently, even heard of this famine, this terrible murder of millions of people in 1770 (ish). Governor Warren Hastings  gave the number of 10 million, a third of the population of Bengal. A hundred years later, another famine:

Working in the midst of the terrible 1877 famine that he estimated had cost another 10 million lives, Cornelius Walford calculated that in the 120 years of British rule there had been 34 famines in India, compared with only 17 recorded famines in the entire previous two millenia (93).

Robins writes:

The Bengal Famine stands out as perhaps one of the worst examples of corporate mismanagement in history (97).

which seems to me to be a bit of an understatement, a bit missing the point perhaps. Besides, it depends how you define mismanagement, the point of  a corporation is to make a profit, and the EIC continued to make a profit through these years, difficult as they found it. This is the damning indictment of our times.

Robins then points out the ideological inconsistencies of corporations and their neoliberal supporters — but they are a bundle of inconsistencies. Still, it is good to remember:

Reading Smith afresh…it is shocking how his penetrating critique of the corporation has been so comprehensively suppressed. Nothing of his scepticism of corporations, their pursuit of monopoly and their faulty system of governance, enters into the speeches of today’s neo-liberal advocates. Promoting his vision of free trade, they conveniently ignore that this can only be achieved with steadfast curbs on corporate power (119).

And through all of it, there is a particular ridiculousness and in-fighting:

General John Clavering, Philip Francis and George Monson–arrived in Calcutta in October 1774, tensions arose. Instead of the 21-gun salute they were expecting, Hastings had organised only 17 cannon to fire as they landed (126).

There is the spectre of Edmund Burke arguing for the Indian people in the trial of Governor Warren Hastings — and I do love that he was brought to trial. I also appreciate this in Burke:

‘Rather than viewing history as a civilisational contest between primitive and progressive nations, Burke believed that each society had its own intrinsic value, which should not be sacrificed to the interests of profit or power (141)

But I haven’t even started on the account of China yet, the stealing of their secrets of tea production, the enforced opium trade through war and smuggling. And slowly the EIC was losing its corporate character, though none of its greed.

Military victory alone was insufficient to restore British fortunes in India. A new regime had to be introduced to confront the extreme oddities created by a sharehold-owned corporation ruling over tens of millions of people. The reforms of the 1770s and 1780s had punctured the Company’s autonomy as a business, and the 1784 India Act had introduced a two-tier system — a ‘double government’ — with the Company maintaining a facade of authority, behind which the state pulled the strings through the Board of Control (173).

If anything good can be said of them it was that they were entirely secular, but with the increased blending of public and private interests this was to change. Driven through by Wilberforce:

After years of campaigning, Wilberforce and others managed to include in the 1813 charter Act provisions for the establihsmnet of a Church of England bishopric in India, as well as the removal of the Company’s longstanding ban on missionary activity (182).

These changes solidified by the need for military force after the uprising of 1857:

When the company retook Kanpur…where rebel troops had slaughtered European women and children, captured sepoys were made to lick the blood from the floors before being hanged. Summary executions became the norm. According to one officer, “we hold court-martials on horseback, and every nigger we meet with we either string up or shoot.” The Company’s recapture of Delhi was followed by systematic sacking, and the surviving inhabitants were tured out of its gates to starve (195).

Robins later mentions the Company’s practice of blasting captured rebels from cannons as lampooned in a cartoon in Punch. Such caricatures only work utilising common knowledge, and it is not mocking the practice itself, rather the Company’s bungling and mismanagement and corruption. This is the brutal experience of conquest and Empire that goes unspoken by Colonel Pargiter in Virginia Woolf’s The Years. I wonder where else it lurks, all the places I never imagined from the ways in which history and literature are taught so as to hide it.

But thus we come to the end of the EIC as company, and onto India as part of the British Empire. Robins states:

The Company is often regarded as an inevitable stepping-stone to the British Raj. Instead, the British Empire in India is better thought of as the product of the Company’s failure (196).

A key inversion I think, but I am not sure what else I think about it, what it might mean for how Empire is both narrated and understood. I don’t know enough yet. I will ponder. By 1858 the Company is done, the Crown has negotiated a long process to buy out stock in a structured deal that makes sure no one loses money.

Given their record, that is quite disgusting. Given the way this deal was financed even more so. Surely the EIC was not quite the bungler it appears.

Writing in 1908, Romesh Chander Dutt was outraged at the way in which the people of India had not only supplied the troops for their own conquest, financed the Company’s acquisition of the subcontinent through heavy taxation, but had also paid for the Company’s nationalisation. “And the Indian people are virtually paying dividends to this day,” he wrote, “on the stock on an extinct Company in the shape of interest on Debt.” (198)

And the key lessons Robins would have us take away?

From this continual metamorphosis, four facets emerge most clearly for our times: the Company as entrepreneur, its role as a revolutionary force in world affairs, its tendency to imperial dominion and the struggle to make it accountable for its actions (201)

For me it is all this, but also the efforts to control the Company and call it to account, how Burke exposed the weakness of Marxism in its wholesale buying in of social evolution and the march of progress, the attempts at uprising both in England and India, and finding out about this marvelous creation that I shall have to go and see as soon as possible at the V&A:

2006ah4175_tipus_tiger

Their website describes it as:

‘Tipu’s Tiger’, a carved and lacquered wooden semi-automaton in the shape of a tiger mauling a man, Mysore, India, about 1793. Museum no 2545 (IS).

But the tiger is not just mauling any man. It is a European man, expressing the hatred of the EIC by the Sultan of Mysore, who fell in battle against them. This was part of the spoils, which is why I can go to the V&A and see it, as the EIC museum in Leadenhall Street is no more. I hate that it has been looted, yet it is a most visceral reminder of the simple fact that Empire was not appreciated, did not bring civilisation, did not help the Indian people.

I wonder if people see it that way? Just as I wonder what effect removing the statue to Robert Clive from Whitehall would be as Robins argues for — something I would definitely like to try and see. They certainly had an impact on the fabric of London itself — there is a nice section on that at the end of the book — or better said, how much of that impact has been erased. But the natural world was changed forever by the EIC both in India and its other colonies, the immense wealth of India funded the changing monumentality of country houses and gardens, the profit driven import/export business shaped the lives of the most desperate of London’s poor, particularly the weavers and the dockers. There is so much more to explore here…

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