Hostile Takeover: How a Private Company Colonised India

There are two main narratives of the colonisation of India by the British Empire. One says that the benevolent British acquired an empire in India in “a fit of absent-mindedness”, fulfilling their duties as rulers unwillingly and to the best of their ability, and conferring benefits on the subject nation in the process. The counter-narrative is that the evil and racist British descended wilfully on the subcontinent intent on domination, wholesale theft, and devastation, asset stripping an entire empire and irrevocably damaging one of the world’s most diverse and sophisticated cultures in the process.

Understandably, the contest between these narratives is a heated one, and arguments over the nature and impact of colonisation are still highly contentious to this day. As we’ll see, though, neither of these dominant narratives is either 100% true or completely false. The colonisation of India was a complex process spanning several hundred years, and while there is plenty of theft, devastation, and racism, there’s also a surprising amount of absent-mindedness and sheer dumb luck. So let’s delve into the incredible story of how one of the world’s first private corporations executed a hostile takeover of one of the richest empires in human history.

Humble Beginnings

When the East India Company was first conceived, the global centres of civilisation and innovation were still in Asia and the Middle East. And in Europe, the most prized commodity of the day was spice, with the modern day equivalent of billions of dollars being sunk into the acquisition and transportation of now everyday items like nutmeg and pepper.

This period is often referred to as “the age of exploration”, as this was when Europeans first began venturing beyond the bounds of the old Roman world. From a European point of view, they were discovering that the rest of the world actually existed. From a non-European perspective, ill-mannered, poorly educated, and violent strangers suddenly began descending on ancient port cities. But as they often came bearing gold and silver bullion, and were too backward to be considered a serious threat, the great urban civilisations of China and India thought it profitable to humour them, and entertaining to study them.

Towards the end of the 16th Century, a delegation of Dutch spice traders arrived in London, their mission being to purchase as many ships as the City could offer, so great was the volume of the Dutch spice trade. Sir Thomas Smythe, Auditor of the City of London, felt this request to be hurtful to England’s national pride. His fellow merchants shared his feelings and told the Dutch – untruthfully and somewhat petulantly – that England had far too much trade of its own and could spare no ships for the Dutch East India Company.

Auditor Smythe, who had founded the Levant trading company and made a fortune shipping spices from Aleppo in modern day Syria, gathered his associates and petitioned the Queen for permission to form a company trading spices to the East Indies. The Queen and privy council were enthusiastic about the idea. Beset by foreign wars and plagued by repeated rebellions, the government were keen for any potential increase in revenue.

On the 24th of September 1599, the first shareholders of “The Company of Merchants of London Trading to the East Indies”, to give the Company its full name, met in Founders’ Hall, in the old Roman part of London which now forms the financial district known as “The City”. All the senior executives of the Levant company were absorbed into this new venture, and an open invitation was extended to the merchants of London to buy shares in this new joint stock company.

This type of company – familiar to us today as a publicly traded corporation – was then a recent invention of Tudor England. A collection of more than two hundred merchants and bankers gathered for the first meeting, with everyone from the Lord Mayor to local grocers and bakers pledging funds according to their means. Alongside the respectable City investors was a large contingent of privateers – basically licensed pirates – many of whom came fresh from disastrously unsuccessful efforts at Buccaneering in the Caribbean, and eager to acquire quick riches in different climes.

There was a temporary setback when the Crown suddenly ordered the formation of the Company to cease. Peace negotiations with the Spanish had taken a positive turn following the death of the Spanish king the year before, and the government feared a new, heavily armed trading venture might be seen as provocative. These talks foundered in 1600, however, and the Company was finally granted its royal charter.

And what a charter it was. The Company was granted a monopoly on trade in the East Indies, a vast swathe of territory stretching from the Indian Ocean to the Pacific, as well as being given limited sovereignty, which meant it could annexe and administer territory on behalf of the Crown, as well as raise armies and go to war. Back then, a company charter like this wasn’t as insane as it might sound today.

It was definitely on the generous side, but quite a few of the larger international trading companies, such as those already operating in Africa and Russia, had similar privileges. The particularly open-ended nature of the East India Company’s charter, however, was to prove fateful.

The Company’s earliest ventures did not exactly cover it in glory. By the time they were ready to embark on their first voyage, Auditor Smythe was in prison, suspected of involvement in a rebellion plot, and their first flotilla, led by the ship Red Dragon, was becalmed in the English Channel for six weeks, in full view of derisive onlookers ashore. When their ships and crew finally arrived in Java, they found trading conditions unpropitious, as the Dutch East India Company had already stitched up the market.

Fortunately, they happened upon a fully laden Portuguese ship in the Malacca Straits and promptly captured it and relieved it of its cargo. The profits from this enabled the Company to set up its first two factories – which is what they called their trading stations at the time – in modern day Indonesia. After this early success, however, trading spice in the East Indies proved to be risky, expensive, and only rarely profitable. At the same time, they discovered that demand for Indian “piece work”, the term for Bengali manufactured textiles, was so strong in the area that it was a more valuable trade good than silver bullion.

So it was that in 1608, the Company ship Hector fetched up at the Gujarati port of Surat. Here they found a massive land empire ruled by the Mughals, a Turko-Mongol dynasty descended from Timur the Great and Genghis Khan. Their domains stretched from the Indus Valley all the way to Afghanistan and possessed a level of wealth which visiting Europeans could barely comprehend. Impoverished and war-torn England was seen as a third world country by the Mughal emperor Jahangir Khan, who made it very publicly known that he preferred to spend his time with Sufi holy men, rather than these Europeans.

Hector’s commander was an uncouth privateer named Hawkins, former captain of the Red Dragon. He got along well with the emperor but wasn’t taken seriously as an ambassador. He was fobbed off with an Armenian Christian slave, whom he married, and was sent back to England basically empty-handed.

After Hawkins’ return, King James I sent a professional diplomat named Sir Thomas Roe. Ignorant of the mores and customs of the court, Roe attempted a direct approach, dragging conversation back to matters of trade at every opportunity. Jahangir, in his turn, affected boredom, preferring instead to pepper his guest with questions about English customs and women, as well as engaging in scholarly debates about theology and philosophy.

After three years of wheedling and gift giving, however, the East India Company was finally granted the right to set up a trading station in Surat in 1618.

At the same time as Roe was awkwardly petitioning Jahangir Khan, another Company emissary was busy on the opposite side of the country, working on the leaders of the fabulously wealthy Golconda Sultanate – Jahangir’s rivals on the west coast. In Golconda, the Company was able to get a license to trade in chintz fabric and jewels. East India Company overtures down south in Patna were similarly successful, with the traders there setting up a house dealing almost exclusively in saltpetre, the essential ingredient for gunpowder.

Searching for “Bumbye”

Held in contempt by the territory’s most powerful leaders, and clinging to three precarious footholds at opposite ends of the country while in direct competition with the Western world’s greatest trading powerhouses, this wasn’t the most auspicious start. The Company had chosen well, however, as profits from the spice trade began to level out, whereas the returns from the goods they were trading from India – textiles, saltpetre, jewels, and pepper – very quickly began to outstrip them.

In those unsettled and violent days, a trading post or factory was usually indistinguishable from a military fort. In the beginnings of the hey-day of artillery, these forts were ideally set on high ground, hedged about by natural defences like rivers, marshes, or cliffs, with rounded towers to deflect shot, and crenelations to provide cover for cannoneers and snipers. Most of the Dutch and Portuguese factories were so fortified, but Sir Thomas Roe, in his initial advice to his masters back home, recommended a policy of pacifism.

He noted the massive extent of the Mughals’ military power and strongly advised that the English, in the form of the Company, seek their trade “at sea, and peacefully”. At first, this advice was followed, so it was some years before the Company set up its first fortified trading post, despite the fact that they’d expanded throughout the many kingdoms and sultanates who paid tribute to the Mughals. This first fort, however, was placed and constructed so badly it was almost immediately abandoned as indefensible and worse than useless.

In 1628, a company executive named Francis Day applied to the Mughal governor for permission to build a fortified settlement in the town of Madraspatnam. Ordinarily, when building a fort, considerations such as supply lines, defensive geography, and proximity to any potential allies and enemies, are prime considerations. In the case of Mr Day, there was one reason alone for his choice of site, this being that he was having an affair with a Tamil lady who lived in the area.

Despite this somewhat random placement, the settlement flourished. Within a few decades it had attracted a bustling population of 40,000, formed its own local government, and retained a decent company of soldiers to guard its walls. Madras, as it came to be known, became the Company’s main hub.

It was also the first place to mint the proverbial “pagodas” – gold coins with a temple on one side, and the monkey god Hanuman on the other. In later years, the expression “to shake the pagoda tree” referred to the practice of going to India, extracting an enormous personal fortune, and returning home to England to buy a country estate and a seat in parliament.

By 1661, England was a rising power at sea, and King Charles II had cemented a Portuguese alliance through marriage, receiving the island of Bombay (now Mumbai) as part of the dowry. Government authorities, who referred to the place as “Bumbye”, had never heard of it. As critical paperwork had gone missing in transit, they also had no idea where their new territory was, initially guessing that it might be somewhere near Brazil.

When they did eventually figure it out, they found that Bombay was situated on the best natural harbour in the subcontinent. The Crown, having no interest in administering any new Indian territory, outsourced it entirely to the East India Company in exchange for Company sovereignty over the island.

Unfortunately, when the 450 man delegation showed up to take possession, the Portuguese governor mounted an armed resistance, having received no instructions to hand it over. Overpowering the Company men, he had them confined to a barren island nearby. By the time the diplomatic confusion had been resolved, three quarters of the party had died, so Bombay was handed over to a half dead junior secretary. Despite this unpromising start, Bombay soon became one of the Company’s biggest centres of operations and chief naval base in India, with such a large population that it needed a scaffold for torturing witches – an essential facility for any large English town at the time.

The last of the big English settlements in this early period was Calcutta. Unlike the others, Calcutta was a greenfield site, chosen by Factor Job Charnock for the sole reason that there was a shade tree on the spot. Charnock was operating in something of a vacuum as, just a few years earlier, a beer salesman turned Company executive had decided, from his office in London, that complaints against Mughal officials in the province of Bengal should be answered by force.

A fleet of warships sailed to Bengal to take aggressive action, only to meet a massively expanded Mughal army, fresh from conquests in the north and west of the empire. Mughal forces shattered the English invaders in a rapid series of swift and decisive engagements, burned and looted the English factories, and blockaded Bombay. Owing to this disastrously stupid attack, Bengal, the richest province in India, was temporarily closed to the Company, and Job Charnock was the first to attempt a fresh start.

The spot Job chose was a deadly location, rife with mosquito and waterborne disease. But the fact that Calcutta straddled the major riverine trade routes meant that huge profits could be made, if only the merchants who went there could survive to bank them. Job’s main claim to fame, apart from founding Calcutta, was forcibly stopping a widow from jumping onto the funeral pyre of her late husband – a practice known as suttee, which the British would later outlaw.

He had this lady carried to his house, where, according to primary sources, “they lived very lovingly together for some years”. Mr Charnock scandalised the town by taking part in Hindu rites with his wife and seems to have immersed himself entirely in local customs, a Christian burial for her when she succumbed to fever being his only concession to the culture of his birth.

Decline and Fall

By 1757, the Company had become a medium-sized player in the Indian textile trade, with the British government greedily collecting the tax revenue without displaying the slightest interest in the running of their numerous territories in India. Tensions between the Company and Mughal rulers typically ran high. This was partially owing to the Company’s practice of providing tax havens to merchants who wished to trade in their towns, and partly to the drunkenness and bad behaviour of its employees. Expulsion wasn’t an option, however, as local Mughal princes had become dependent on the revenues from European traders, as well as suffering a significant decline in their own power.

The emperor Aurangzeb, an austere and highly religious ruler, rashly over-extended the empire, stirring up the hornet’s nest of the Marathas, a fierce mountain people who had long been raiders into Mughal territory. His religious fanaticism also alienated the Rajputs, a Hindu people in the north who had formed the bulk of Mughal military power. Discriminated against by their Sunni Muslim emperor, they became less interested in expending blood and treasure to contain the Maratha threat.

When Aurangzeb died in 1707, the stresses of the empire’s sudden expansion and lurch into religious intolerance had already taken their toll. Aurangzeb’s successors murdered each other so frequently that in one single year, four Mughal emperors were crowned and deposed. In the meantime, regional governors began splitting their cities and provinces off from central authority, having lost faith in the Mughal government, and especially its ability to fend off attacks from the Persians and Marathas. The Carnatic wars, a series of bloody and inconclusive battles for dominance between petty kings and princes, were the result of this disorder, and were indirectly responsible for the Company’s evolution into a military as well as a trading power.

The French East India Company, a small and phenomenally corrupt enterprise controlled directly by the French royals, fell under the delusion that they could take over the entire Mughal Empire by force of arms. They began by training armies of local soldiers, known as sepoys, in modern European artillery and infantry tactics, which had by now outstripped those of Asia. Using these modern tactics and technology, the French found that relatively small forces could hold their own against huge Maratha or Mughal armies. French mercenaries rapidly became a must have for any Indian prince, and the French company just as rapidly turned from a trading enterprise into a private security contractor, fighting battles in exchange for grants of land.

The English, knowing themselves to be on the brink of war with France, and worried about being outgunned by their old enemies and expelled from the country, soon began training up their own armies of sepoys. As the Company’s charter granted them limited sovereignty, they were able to commission military officers and declare wars, and they used these powers to play local rulers off against the French. So successful were they at this that they eventually fought the French company to a standstill, drained of resources and sitting on large swathes of territory they could neither sell nor afford to manage. One of the surprise stars of this campaign was a young Company officer with no prior military experience – a man named Robert Clive.

The Battle of Plassey

Clive was the son of minor nobility in Shropshire. A morose and violent youth, he had run protection rackets on the local merchants, and his parents despaired of placing him in any respectable profession. The opportunity to go abroad came about through family connections, and young Clive was sent packing to Madras.

On the way, he fell overboard and had to be rescued. While in Madras, he was miserable, making no friends, attempting suicide, and fighting a duel. As English rivalry with the French company worsened, however, Clive was transferred to the military arm of the East India Company, where he revealed a surprising talent for rapid assaults and guerrilla warfare.

After a dazzlingly successful military career, ended by a stint as a provisioning officer – a plum posting allowing its holder to make extortionate profits – Clive returned to England newly married and wealthy enough to buy a rotten borough – a small electorate controlled by its owner, which basically guaranteed a seat in parliament.

Unluckily for Clive, his rotten borough was too rotten, and a parliamentary inquiry had him expelled from the house. His spending on bribes and gratuities had nearly bankrupted him, and it looked as if Clive’s overseas adventures had all been for nought. Meanwhile, in Calcutta, a particularly dim-witted Company governor named Roger Drake had decided to re-fortify the city without asking the local Nawab’s permission. The Nawab – a regional noble technically representing the Mughal emperor – attempted to resolve the situation diplomatically, sending his agent Narayan Singh to negotiate.

Before Singh had even arrived, the Nawab died, leaving his grandson, Siraj Ud Daula as heir. Siraj immediately went on the warpath, murdering potential rivals for the throne in rapid surprise attacks, and was in fact on his way to kill a distant cousin when he happened upon Narayan Singh as he was leaving Calcutta. Singh reported having been locked up and then expelled from the city without even being granted a hearing, treatment which enraged Siraj.

After sending numerous demands for restitution, to which Drake did not even reply, Siraj marched on Calcutta with an army 70,000 men strong. Drake, who could not be persuaded that any attack was imminent until he actually saw the enemy’s flags on the horizon, had a grand total of 200 mercenaries and sepoys on hand.

Siraj’s army took the city within a matter of days, razing the English factory, murdering the inhabitants, and plundering without restraint. Clive, who had come back out to India to repair his squandered fortune, was at that moment in charge of a combined English and Company army, along with three Royal Navy warships, sent out to counter a French attack. The belief that the French were about to attack was based on faulty intelligence, and the warships and extra soldiers had very little employment when the news from Calcutta arrived. Clive was hastily tasked to lead the expedition to reclaim Calcutta for the Company.

Clive and the naval commander, a man named Watson, sailed upriver towards Calcutta, engaging and defeating several fortified garrisons left by Siraj Ud Daula’s generals along the way. In once such engagement, a sailor named Strahan, who had overindulged in rum, decided to scale a breach made in the walls of a river fort. At the top, he threatened the garrison troops with his cutlass and pistol, shouting, “This place is mine!”, before his friends rushed to rescue him from his folly. This was all too much for the fort’s garrison, who abandoned it to the English.

Clive’s army, about 3,000 strong, arrived at Calcutta on the 2nd of January 1757. The ships knocked out the enemy guns, and once they had breached the walls, Siraj’s troops fled the city. On the following day, Clive declared war on Siraj Ud Daula and marched his army to Siraj’s principal port, Bandar Hooghly, which they reduced to a wreck, slaughtering its garrison while they slept. Siraj responded by gathering an army 60,000 strong and camped in a foggy marshland, preparing for battle the next day.

Clive, deciding to decapitate the enemy army, mounted a night attack aimed directly at the person of Siraj Ud Daula. The attack failed, and Clive was seriously considering retreat, unaware that he had come close enough to seriously frighten Siraj, who surprised Clive by suing for peace the next day. Satisfied, Clive and Watson prepared to return to Madras.

Unfortunately for Siraj Ud Daula, his chaotic and murderous habits had alienated the Jagat Seth bankers, a pair of brothers so powerful they’ve been called the Rothschilds of their day. The bankers offered him a deal – use his forces to replace Siraj with one of his generals – Mir Jafar – and they would grant him fees and commissions worth more than half a billion dollars today. With this amount of money on the table, and egged on by the ambitious Clive, the Company decided to accept. The government forces under Watson were initially opposed to the plan, seeing themselves as servants of the Crown rather than the Company, but Clive was able to persuade them to join their assault by giving him the impression that his main objective was to remove the French, whom Siraj favoured, from India forever.

So it was that on the 13th of June 1757, Clive marched an army of about 3,000 European soldiers and Indian sepoys towards Murshidabad, Siraj’s capital. Siraj, in the meantime, had assembled an army 50,000 strong, including 53 heavy artillery pieces operated by French mercenaries. Clive was banking everything on Mir Jafar living up to his end of the bargain and coming over to the English side. Initially, the battle went very poorly for Clive, his troops pounded by the French gunners and cut to pieces by Siraj’s cavalry.

Fighting was halted before noon, however, by a torrential downpour.

Inexplicably, Siraj’s gunners failed to protect their powder against the rain. Clive’s army, on the other hand, instantly covered their guns and magazines with tarpaulins. One of Siraj’s cavalry commanders, assuming that the English guns were also incapacitated, ordered his 5,000 Afghan cavalrymen to charge.

They were promptly annihilated by Clive’s artillery. The cavalry commander was killed as well, and the sight of his corpse being brought back into Siraj’s lines so demoralised the enemy they began to withdraw. One of Clive’s deputies, against orders, advanced and took the enemy batteries as he saw them being abandoned.

At the same time, Mir Jafar, who was in charge of the main cavalry force, finally made good on his deal with the Jagat Seth, and withdrew his force from the field. These twin setbacks drove Siraj’s forces into a full blown rout, leaving Clive in possession of the field, and the British East India Company in charge of the richest province of India.

The East India Company gradually expanded its dominions, taking over most of the old Mughal empire by bribery and force of arms, and running its ancient markets and economy into the ground in a ruthless program of taxation and asset stripping. It wasn’t until the mutiny which started the first war of Indian independence, more than a hundred years later, that Company rule came to an end and the East India was dissolved in 1874. In their place, the British government took over, effectively nationalising the East India Company and ushering in the period of colonial rule known as the British Raj, which lasted until 1947. But for the vast majority of the period of English rule in India, the governors and soldiers who ran the empire were not government officials but, incredibly, employees of arguably the most powerful private company in history.

Key Takeaways

• The British East India Company’s colonization of India was complex, involving both deliberate and accidental actions.
• The Company’s initial focus was on spice trade, but they shifted to textiles and other goods due to higher demand.
• Early British settlements in India were established through a mix of diplomacy, luck, and military force.
• The Battle of Plassey in 1757 marked a significant turning point, giving the Company control over Bengal.
• The Company’s rule was characterized by both asset stripping and administrative oversight until its dissolution in 1874.

Sources

• Original MegaProjects video: Hostile Takeover: How a Private Company Colonised India
• Hero image source by The Antonym / openverse, cc0.

Related Coverage