1757- East of the Cape of Good Hope

by Narendra Mehra

  In Southern India, the geography of the region was already affected after the landing of the Portuguese. South of the Narbada River, some Hindu rulers had survived the Moslem occupation of India particularly in Vijayanagar and maritime state of Calicut which was ruled by the Zamorins. And there were five Muslim sultanates in Central India. The Portuguese connection started in India after the arrival of Vasco da Gama at Calicut in 1498 and later consolidated by Alfonso de Albuquerque who founded the capital (Estado da India) at Goa in 1510. The Muslims in central India made sure by repeated counter attacks on the Portuguese that they were not able to consolidate and expand their position in India. North India was occupied by the Mughals and the western part of India was ruled by the Marathas.

  The Marathas were nationalists and felt compelled to stand up to the Mughals, and later the British. They had a kingdom in western India along the Western Ghats, spilling into the coastal plains of the Konkani and across the Deccan towards Central India. The Marathas were hardy people, highly intelligent and belonged to the cultivator class. Mostly, they were short and stocky, very tenacious and enterprising. The rise of the Marathas against the foreign rulers was inspiring as it cemented considerable resistance against both the Muslims as well as the British. They were able to sack the Mughal port of Surat in 1664, which Jahangir had leased to the British. The Marathas basically represented what was left of the Hindu rule after the Muslim conquest of India; they represented both the interests of India and Hinduism. In the end, Marathas were successful in dismantling the Mughals as their struggle with Aurangzeb in 1681 exhausted and disintegrated the Mughal dynasty. Unfortunately, it paved the way for the British who were waiting in the wings like a coyote. See ‘No Plassey, No Empire.’.

  There were other players in the mix too such as the Rajput, the Sikhs, the Persians and the Afghanis. The Mughals essentially created Sikhs as a militant body after Aurangzeb executed their leader guru Teg Bahadur in 1675. The Mughals guarded their sovereignty ferociously and they did not tolerate Teg Bahadur’s disciples calling him Sacha Padsha (True King) as that form of address could both be interpreted as a spiritual leader as well as a mistrust of the Emperor. Both the Sikhs and the Mughals kept the restless Afghans in check at the western border. Rajput another martial race on the western desert region were a buffer but both the Mughals and the Sikhs used the alliance with Rajput in their political schemes, thus wasted a lot of military energy and paved the way for the British to expand their tentacles over that part of the country. The British played political games man ship and they did their best to make sure that those various groups, Marathas, Rajput, Sikhs and the Mughals did not join in a common front against them. A lot of chicanery, arson and murder became a part of the colonial landscape. See chapter on ‘Predatory Wars’.

  India was thus defended as a nation particularly on the western front starting from northwest to the southern tip of India as historically India had always been attacked from the west, except for Goa, where the Portuguese were bottled up, the Europeans were not able to establish any hegemony on the western coast of India. Even the British lease at Surat which was granted by Jahangir did not go very far for the British. It was therefore not by accident, that the French founded their post at Pondicherry and the British at Calcutta and India’s long coastline in the east became its bane. Josiah Child, the British governor of EIC, who promoted the use of force in India, was the first to float the idea of starting a trading post at Madras in 1701 and many trading posts followed in Bengal after that.

  India’s trade in Bengal Province was particularly brisk because of the concentration of skilled labor and the availability of raw materials. Bengal produced raw silk, silk goods, fine muslins, calicoes, opium, saltpeter (a component of gun powder), indigo and most Europeans had set up trading posts in the Bengal Province besides at the other parts of the Country. Traders from Central Asia, Armenia and Persia came by caravans and there was a well developed system of caravan sarais, (Inns), currency exchanges and other travel needs.

  Bengal also produced rice abundantly; it was exported by sea to far off places like Masulipatnam, Ceylon and Maldives. Its sugar was exported to Golconda, Arabia, Mesopotamia and Persia. Hemp, flax, borax, Jute and tobacco also found its way to foreign markets. It was the richest and most fertile province of India. Its population was thirty million and yielded revenue of over thirty million rupees (£3.0 million). Babur wrote that “the revenue of the countries held by me (Year 1528) from Bhira to Bihar was 52 krurs.” He gave a complete breakdown of the Revenue of Hindustan based on various sarkars (ruling provinces). The total revenue amounted to five hundred twenty million Rupees. Using Moreland’s conversion rate of 2s and 3d to the rupee; the total revenue from those Provinces, just in North India alone was £65 million. The revenue of Britain at that time was about one million pounds.

  India’s trade and commerce was largely carried out in cash. People knew the value of the currency of other countries. Remember that India was the industrial workshop and the richest economy in the world. The Persian Larin reached India in large numbers; it was a silver bar stamped at the end and equaled about one half of Akbar’s (Second Mughal Emperor) silver Rupee coin. The overland trade to Europe was carried out in the sequin or Chickeen which was a Venetian gold coin and equaled to about four of Akbar’s rupee silver coins. The Italian Ducat came the same way and had just about the same value. The Spanish riels-of-eight reached India by the sea and its value was equal to about two rupees. Merchants, who needed to remit large sums of money, usually carried pearls or precious stones for sale at their destination in India. The history recorded the resplendent display of wealth of the Maharajas and the rulers of various princely states in terms of gold, pearls and precious stones. India was a very opulent society and its wealth was supported by agricultural surpluses. All that wealth was ultimately denuded by the British.

  The coins in regular use were silver and copper. Gold coins were also struck and were hoarded as wealth; that is what attracted the raiders to India, the Timur, Genghis Khan, Nadir Shah, the Abdalis and lastly the British. The chief silver coin was the rupee, 172 ½ grains; the chief copper coin was the dam; 40 dams equaled a Rupee. The copper was mined at the Rajputana mines and most of silver came as a result of the trade. The rupee was worth about two English shillings. Moreland stated that it was worth 2s and 3d.

  The inhabitants of the country performed their transactions in cash and the administration established and operated the mints. The mints produced gold and silver coins after those metals were refined to the highest purity. The ‘Ain- Akbari’ described the wages earned by labor for putting up the encampments for royal travels. The monthly pay of the foot varied from 240 to 130 dams. (From six to 3 ¼ rupees per month). This is very significant as the wages earned by labor in the nineteenth century at the British tea plantations barely amounted to one rupee per month. The British adjusted the wages against assumed charges. This was carried on year after year for about two hundred years, which explains the stark poverty of India. The British left behind in India many victims of wage fraud.

  British Trade:

  When the British set up the trading posts in India, they soon realized that they had two problems; “first they will have to steal the market share of the business from the Dutch & the French and secondly they had no money and nothing to sell to India in exchange. The only recourse for the later problem was to bring silver from home. Britain never wanted to part with their silver, as it was against their national mission. Britain had relied upon the trade of India and progressively used India for funds beginning from the very inception of those trade relations. Indian merchants and traders lent to Britain even for initial commerce as they had very puny resources of their own. The money lenders of Surat lent to the British traders as early as 1630 and one native banker, Vijay Vora lent them the money for initial trade and commerce, and he also lent them fifty thousand rupees at Agra. In 1650, the agent of Vijay Vora in Golconda advanced a loan of ten thousand rupees
to EIC which financed the company’s voyage to Peg in Burma and the British borrowed four hundred thousand rupees in 1669 in Surat from a group of creditors. Lack of funds with the British sowed the seeds of future conflicts with just about anyone they dealt with, the Dutch, the French and lastly with the Indian merchants and the Mughal rulers as they started resorting to unethical business practices. The British came from a very impoverished country with very little tax base. Their impoverishment played in their favor. They lived by borrowing and knavery.

  The British East India Company (EIC) built up a big presence in India trading in Indian coffee, textiles, silk, opium and saltpeter which improved the life of ordinary English people and also they started earning money by re exporting what they were importing from India. The British East India Company (EIC) business in 1751-52 was about three and a half million rupees or four hundred thousand pounds. (In today’s money, it will be over £382 million if you consider the wage differential between then and now). In Europe they were able to mark up the prices five times over what they paid in India, so it was over two billion pound business per year.

  The British merchants got into immediate problem with the Indian merchants. They left home to do business in India with no money. They got into arrears with dadni merchants (dadni meant advance money. This was paid to the Indian merchants by the British to enable them to make advances to spinners and weavers). The merchants were not willing to do business with the British, as they did not pay the merchants to cover the dadni advances they made for the British purchases. The dadni merchants did not encounter any difficulty with the French and the Dutch. The British ingenuity was remarkable. First, they had a ‘Eureka’ moment, they realized that the Indians were imbecile and could be duped. Here the ghost of Pizzeria was guiding them. Then they exploited the native cultural trust. It was easy to borrow in India and the Jagat Seths (Court financiers of Mughal Emperors), lent them the funds as the money they lent was not very significant to them. Lastly, the British fell upon their core strengths, which were piracy, pillage, cheating and aggressiveness. In their dealings, their main interest was to buy at the lowest price and make the payments as little as late as possible. The Indian merchants would get the British goods made according to their specifications and they were left with no flexibility to sell those goods to others for nonpayment. The British exploited the situation at the time of delivery; they would ask for abatement of prices and accepted only hand sorted goods.

  The Court papers in Bengal, (Court, and Serial No. I, 1755-58 page 15, paragraph 46.), reveal a remarkable story about the character of those British merchants. From one of the meetings, it was easy to assemble the nature of their dispute with the Dadni merchants who refused to do business with them on their terms. In 1751, when the British East India Company Board met to sign up contracts for purchases for the following year, the following dialogue took place:

  The Board addressed the meeting of the dadni merchants: “Please describe the terms for the ‘investment contracts for the following year”.

  Dadni Merchants: “We would not consider entering in to new contracts, unless all pending bills were paid in full”. This reply was given on their meetings on April 1st, 15th, 18th and 22nd and this steadfast refusal was maintained until 27th May.

  Board: “How much reduction in contract prices would you give as you have jacked up the prices, because you have received heavy orders from the French and the Dutch?”

  Dadni: ‘Contracting on the same terms as last year, viz. One third ready money and two third dadni, with interest on the former effective 1st June and interest on 50% dadni to commence from 15th June and on remaining 35% from the 1st October.

  Board: “If we are unable to advance the 35 % on 1st Oct., we may give you a Note at interest for the amount there was delay in contracting for”. Also, “what are your terms for the raw silk”?

  Merchants: “For raw silk more or less the same as in the previous year for dadni and ready money goods.

  For saltpeter, Omichand’s offer of 5 Arcot rupees and 14 annas (16 annas equaled a rupee) per factory maund (approximately forty kg.) had to be accepted, though the Calcutta Council wanted it at the rate of Arcot 5-4 per maund. They had to yield because they were apprehensive that the French or the Dutch would purchase this petre if there were delay in contracting for it.

  The Bengal Council’s therefore complained that for raw silk the merchants had demanded ‘extravagant prices’ as the French, Dutch and Guajarati (Indian Merchant Community) were buying up at a very high prices. It was with great difficulty that Sobharam Basak, Ramakrishna Seth, the Cotmahs and other dadni merchants could be persuaded to agree to have contract of raw silk. Their complaint continued that when the time came for the delivery of the piece goods, the merchants brought in their cloth very slow. They complained, that on account of the strictness in sorting (as demanded by the British) they lost on gurrahs and soot rumals from 20 to 25 %, for which they wrote to their dalals (brokers) to whom they advanced dadni, to deduct the like amount out of the cloth. In answer, the merchants replied that they will not send them any more of the kind of goods on those terms. The British whined that the French and Dutch merchants being supplied with money early in season had raised the price of cloth at the auruangs. They therefore took the decision to forbid buying in the hope that the cloth would be cheaper. But the Calcutta Council thought that delay was intentionally made in January and so, there should be cut in pricing.

  It may be mentioned that the dadni merchants contracted under penalties to deliver the goods at stated time and prices and were amenable to the laws of the country if they were guilty of any irregular practices. The dadni merchants had difficulty realizing the balance from EIC merchants after the dadni contract system ended. EIC then hired paid Indian agents (gomastas) who made purchases under the supervision of the white English servants. The British private traders attempted to dominate the economy of Bengal outside the sphere of EIC investments as they were under heavy pressure from home for more and more revenue. The reason, the British continued to have poor trade relations was for lack of money, the money that they could never bring from home. Mostly, the British traders relied upon piracy and plunder in the Indian coastal waters where they looted commercial cargo, letters of credit or anything of value to pay for their dadni purchases. As a matter of fact, the British man-of-war ship protector with 44 guns was in the Indian coastal waters looting commercial cargoes when the other man-of-war ships arrived for looting the Mughal Treasury at Murshidabad. The Dutch, the French and the Armenians were the serious competitors of the British with whom they had to compete and win the share of the market. The British did not know the fair way of competing, rather they relied on the foulest of ways as that was their core competency.

  Trouble with the Dutch:

  The Dutch East India Company was a trading company, which was established in 1602, when the States-General of the Netherlands granted it a 21-year monopoly to carry out colonial activities in Asia. The trading post in Bengal was established at Chinsura on the western bank of the Hooghly River and the British when they got the permission did so at Calcutta on the Eastern bank of the Hooghly River. That was the first sign of trouble between the Dutch and the British.

  The Dutch commerce in Bengal was a flourishing business. Their main interest was in opium and saltpeter; raw silk and calicoes were secondary. The British later followed the lead of the Dutch in opium trade and monopolized the opium trade entirely after the capture of Plassey. The Dutch exported the Indian opium to China and the islands of South East Asia. The Dutch East India company (VOC) was among the richest private company in the world with one hundred fifty merchant ships, forty warships and fifty thousand employees and a private army of ten thousand soldiers and they fought back with the British to protect their market share of the business.

  Between 1652- 1674, Britain fought multiple wars with the Dutch and the Dutch came out on top. Britain was driven out of Indonesian outposts. In 1667, a Dutch fleet sail
ed up the River Thames and occupied Sheerness and destroyed ships and docks at Chatham. Money was very important to the British aristocracy; they could not take these reverses. The Dutch was a small country, their population was less than half of England but more advanced financially astute and possessed superior technology. In frustration, as mentioned before, those merchants staged a coup against their own monarchy. James II was ousted, and the Dutch Prince, William of Orange was invited to occupy the English throne and the British and the Dutch interests merged.

  In 1683, the British fought the third war with the Dutch in their pursuit of the share of the trade. Josiah Child (1630-1699), the Head of British East India Company in London, who became the wealthiest man in Britain, started the war with the Dutch, interrupted the Dutch trade, which lead to the spike in pepper prices. In response, the Dutch flooded the market with pepper supplies from India and by 1683, the British East India Company (EIC) came close to bankruptcy. The price of the EIC shares plummeted from £600 to £250 and Josiah Child was temporarily forced out of office. The British and the Dutch then split the territory for trade and commerce. Indonesian spice trade went to the Dutch, textile trade to the British. The spice trade eventually became less and less attractive. Indian textiles became the rage; calicos, the chintz and cotton. For sheer quality, Indian fabrics, designs and workmanship were in a league of their own. As it will be seen later, Britain did her best to destroy that industry too, to promote their own machine made textiles in the Indian mass market.

  India was a very advanced society and an industrial workshop of the world. India met the industrial needs of the civilized world and the Dutch volume of trade in India was significant. In the early thirties of the eighteenth century, twenty ships from India carried a cargo of commerce including raw silk, saltpeter, silk goods and calicoes. In 1733, the Dutch East India Company paid a dividend of 25 percent. In 1746, they bought 36,000 maunds (a maund is approximately equal to 40 kilogram) of saltpeter at 3 1/2 rupees (one rupee was 2 English shillings) per maund and about 50,000 pieces of cotton piece goods. In 1755, the Dutch procured 175 bales of raw silk. In the fifties, they exported about 2, 48,000 pounds of silk each year. They imported silver to pay for it. In 1756, they imported silver valued at 31, 68,681 guilders. Their total export was 42, 19,737 guilders. In the political climate of the times, the Dutch were not very astute politically, they minded their business and focused on trade and commerce only and often bet on the wrong horse. In comparison to the British, they offended the Mughal Emperor often and could not get lucrative Farmans (Royal decree).