Critical Podium Dewanand India
book review: The Corporation (Britisch East India
Company) That Changed the World by Nick Robins and Sreeram Chaulia
Sacrificer Nick Robins and Sreeram Chaulia
Sacrifice code wfor0337
Sacrifice date 25 march 2009
A law unto itself
The Corporation That Changed the World by Nick Robins
Reviewed by Sreeram Chaulia
The British East India Company was a colossus responsible for the creation
of the iniquitous modern world. Historian Nick Robins' trenchant new history
of this giant re-examines the world's most powerful corporation during
the Age of the Enlightenment in terms of its shadow over the global economy
of today. It is an attempt to expose its destructive legacy so that future
interactions between western corporations and Asian countries are based
on principles of fairness.
From the 17th to the 19th century, the East India Company shocked its
age with executive malpractice, stock-market excesses and human oppression,
outdoing the felons of our times such as Enron. Its contemporaries across
the political spectrum saw the "Company" as an overbearing and
fundamentally problematic institution.
Karl Marx called it the standard bearer of Britain's "moneyocracy".
Adam Smith, the economist deeply suspicious of mighty corporations, was
horrified at the way in which the Company "oppresses and domineers"
in India. Edmund Burke, the father of modern conservatism, declared India
to be "radically and irretrievably ruined through the Company's continual
drain of wealth".
Established in 1600 by royal charter, the Company's operations stretched
from the Atlantic Ocean to India, Southeast Asia, China and Japan. Colonial
rule in India was the eventual outcome of the Company's forays, but its
ultimate purpose was profit-making with an eye to shareholders and the
annual dividend in London.
Personal and private profits were the abiding motives of this Company,
which "reversed the centuries-old flow of wealth from West to East
and engineered a great switch in global development" (p 7). Robins
challenges romantic reinterpretations of the Company's past, now under
way in Britain, for ignoring the abuse, misery, devastation and plunder
that marked its presence in India. His point is that the Company should
be assessed on the basis of its extortion, corruption and impunity rather
than peripheral contributions to "discovering" Oriental culture.
Throughout its life, the Company had to justify its existence by citing
the customs revenues it earned and the gifts it could offer. Presents
and bribes to princes and parliamentarians were "part of the fundamental
costs of business" (p 28). A favorable relationship with the crown
and Asian elites were essential for retaining barriers to entry that sustained
the Company's trade monopoly.
From the beginning, armed force was the key for the Company to access
Asian markets. Its governors boasted of "conducting commerce with
a sword in your hands" (p 29). An all-powerful "Secret Committee"
defined the Company's political and military strategies to achieve economic
Force and fraud went hand in hand to obtain market dominion. The Company
was ever ready to contemplate conquest for commercial interest. It echoed
the motto of its rival, the Dutch East India Company, "We cannot
carry on trade without war, nor war without trade" (p 40).
The first wave of East India traders focused on spices from what is now
called Indonesia. They "traded where necessary and plundered were
possible" (p 43). Sir Josiah Child, governor of the Company in the
1680s, conceived a radical plan to transform it into a sovereign power
and "formidable martial government" in India.
This initial thrust was repulsed by Mughal armies. After the death of
Emperor Aurangzeb in 1707, the Company secured duty-free trading rights
in Bengal, Hyderabad and Gujarat by means of hefty bribes. From 1720,
it was the undisputed blue-chip mercantile stock on the London stock exchange,
extracting healthy profits from textiles through collaboration of local
Indian potentates such as Nabakrishna Deb.
The Company undermined the revenue base and the local economy of the
rulers of Bengal, India's richest province in the 1750s, by depriving
vast numbers of natives of their livelihood. Regulatory pressures and
competition from other European trading houses threatened the commercial
position of the Company.
In retaliation for being expelled from Bengal, the Company's warrior
baron, Robert Clive, mounted an amphibious offensive sprinkled with intrigue
and conspiracy that won the day at the Battle of Plassey in 1757. Victory
gave the Company command of public revenues and the internal market of
After another triumph at the Battle of Buxar in 1764, Bihar and Orissa
were at the mercy of "John Company" and progressively pauperized
by unrequited trade. From economic independence, Indian weavers were forced
into slavery, unable to sell to others and obliged to accept whatever
the Company paid. Military force expanded to squeeze raw materials from
producers. Methods of Company repression included fines, imprisonments,
floggings and forced bonds.
Profiteering and insider trading by company executives reached their
acme as bans on corruption were ostentatiously ignored. Illegal syndicates
to monopolize the betel-nut, salt and tobacco trade and persistent overestimation
of the financial value of acquisitions were routine shenanigans in the
Company. Clive led a remorseless grab campaign on the riches of an entire
people and rerouted the flow of wealth to the West.
The Company increased eastern India's vulnerability to natural disaster
and triggered a famine in 1770 that cost more than 1.2 million lives.
Instead of introducing time-tested revenue relief during distress, it
raised taxes and purchased grain by force for hoarding. The sheer barbarity
and violence of the Company's conduct during the famine were "one
of the worst examples of corporate mismanagement in history" (p 94).
Callousness toward Indian lives was a natural result of its political
Millions more Indians lost their lives when the Company's stock crashed
in London in the mid-1770s. After the bubble burst, the English government
introduced a new post of governor general of India to curtail the Company's
freedom. The principle of extraterritorial liability for corporate malpractice
was founded when Clive's successor in Bengal, Harry Verelst, was found
guilty of human-rights abuses in 1777. From 1774, three councilors appointed
by Parliament sought to overthrow Warren Hastings, the Company's governor
of Bengal, on charges of corruption.
The backlash of state regulation was, however, short-lived. Hastings
weathered the storm and embarked on wars and mercenary missions to crush
peasant revolts. Natives unable to pay exorbitant taxes were slaughtered
or "confined in open cages". The traditional rights of Indian
producers were harmed to an extent that the productive capacity of Bengal
was inevitably reduced. Frantic military expeditions and wars followed
to fleece the last ounce out of a hemorrhaging Indian economy.
The robbery and wanton pillage of India by the Company were popular in
Britain. Burke's impeachment trial of Hastings lasted seven years, and
an unfair English judicial system guaranteed that it would be a lost cause.
Hastings' defense that India was a primitive and inferior land in which
different standards of justice should be applied was upheld by the minders
of Pax Britannica. Imperial pride and patriotism interfered in efforts
to bring the Company to justice.
Hastings' successor, Lord Cornwallis, introduced the English model of
landlordship in India to build up a political class of gentry (zamindars)
who would support Company rule. Twenty million small landholders were
dispossessed of their rights as a "rule of property" was pushed
through. "India was not European or Christian, and so was ultimately
subjected to a second-class settlement, treated as a piece of property
rather than a living community of people" (p 140).
In the 19th century, the Company's military operations burgeoned and
its army grew tenfold. Lord Wellesley, the governor general up to 1805,
had a voracious appetite for land and fortresses, looting rare Indian
treasures and shipping them to museums and country houses in Britain.
In Malabar, tax rates were raised and land for plantation was usurped
by Company agents.
Laborers, including children, were kidnapped to work as slaves "with
clothes stuffed in their mouths to keep them quiet" (p 144). Rebellions
were stamped out by the Company's strong-arm tactics that proclaimed,
"The more villages you burn and the more cattle and other property
that are carried off, the better" (p 145). By 1820, military impulse
was the master, not the servant, of business opportunity.
With the opening of trade and the surge of new British entrepreneurs
in the 1830s, the Company lost its monopoly. To make up for the loss,
its tea sales to China were doubled and paid for with contraband smuggling
of opium. The need to maintain a monopoly over opium production in India
to sneak the poison into China led the Company to wage wars on the Marathas
and Sindh. The Company also sent out military support to British forces
in the 1842 Opium War against China that opened a new chapter of colonialism
in Asia. In Britain, the imperial benefit of opium trade justified its
In its twilight years in India, the Company was guided by an arrogance
of power resting on the alleged superiority of Western civilization. Racist
scorn and verbal abuse by Company staffers mounted, with "nigger"
becoming a common expression for Indians in the 1840s and 1850s. John
Stuart Mill, the Company's loyal executive for three decades, put the
icing on the cake by envisaging dictatorship over India as an "educative
force and a legitimate mode of government in dealing with barbarians"
Increasing racial and administrative haughtiness lay at the root of the
Revolt of 1857 that terminated the Company's rule of India. British troops
recaptured lost territories after the revolt with extreme savagery, paralleling
"a ferocious bloodlust in British society" (p 164). From 1858,
direct rule by the British crown was installed in India, but Indians had
to continue to pay dividends on the stock of the extinct Company in the
form of interest on transferred debts until World War II.
The British establishment "has not yet confronted its corporate
imperial past", what with monuments to Clive and other Company notables
enjoying pride of place in the heart of the current power structure of
the United Kingdom (p 170).
The Company was allowed free rein in its heyday and is now being given
a sympathetic makeover in exhibitions and events commemorating "nabobs"
and their penchant for Indian culture. Nostalgia for bygone imperial domination,
coupled with Prime Minister Tony Blair's new call for Britain to become
a mini-America, still cloud an honest appraisal of the Company's black
Robins draws a number of lessons from the Company's history. Enforceable
systems of justice have to hold powerful corporations to account for damage
to society and the environment. Both managerial personnel and shareholders
should ensure that their hunger for financial returns does no harm.
Mergers, acquisitions and cartels to widen the market and narrow competition
have to be prevented by a global competition authority outside the environs
of the World Trade Organization. Robins concludes that the chief obstacle
to democratizing world markets and rebuilding "ethical equality between
East and West" is the administration of US President George W Bush,
which seeks to free businesses of any form of redress for their actions
In 1700, India and China accounted for 47% of world gross domestic product
while Western Europe's share was a mere 26%. By 1870, the Asian giants
slumped to a combined 29% of world GDP and Western Europe leaped to 42%.
The East India Company was the primary device for this reversal of world
scales. In the 21st century, with China and India once again rising to
world economic prominence, monitoring and controlling Western multinational
corporations is a cardinal responsibility.
The Corporation That Changed the World: How the East India Company Shaped
the Modern Multinational by Nick Robins. Pluto Press, London, September
2006. ISBN: 0-7453-2523-8. Price: US$24.95, 218 pages.
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