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
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 gain.
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
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 tyranny.
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
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
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" (p 161).
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
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 deeds.
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
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 overseas.
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
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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