Honourable Company: A History of The English East India Company

by John Keay

  At a time when a house in Berkeley Square cost £10,000 and ten square miles of rural Shropshire £70,000 – both of which Clive soon acquired – £234,000 was an enviable windfall bound to occasion some criticism. But there was nothing illegal about these transactions. Far from concealing his good fortune, Clive was inclined to boast of it. On the day of his victorious parade through Murshidabad, a place ‘as extensive, populous and rich as the city of London’ (unlike Calcutta which was merely ‘something bigger than Rotherhithe and Deptford’), he claimed to have been bombarded with much better offers and ‘might have become too rich for a subject’. Indeed he could not but marvel at his own ‘moderation’.

  Such moderation, however, was no comfort to Mir Jafar whose financial plight, though critical, was studiously ignored. The Murshidabad treasury was simply emptied and the contents sent downriver to Calcutta on a flotilla of barges. That covered half the total debt; the other half was rescheduled with the banking Seths and then rescheduled again. Each rescheduling occasioned the cession by the new Nawab of further privileges and/or territory. To the thirty-eight villages originally made over to the Company in the 1717 farman (but not conceded until the treaty with Siraj) were added, under the secret treaty with Mir Jafar, the twenty-four Parganas, a substantial slice of territory extending downriver from Calcutta to the sea. In 1758 the districts of Burdwan, Nadia and Hughli, all upriver of Calcutta, plus Hijili island and part of Dhaka were also pledged to the Company. And within four years there was a further grant which included distant Chittagong. It was as if the British were consciously acquiring title deeds with a view to redeeming past failures.

  The revenues thus made over to the Company were revenues lost to the new Nawab. His efforts to make up the deficit alienated his feudatories; his troops, their pay in arrears, became hopelessly unreliable. Clive’s stated policy was to support the Nawab and uphold the offensive and defensive alliance which features in the secret treaty. But the effect of such financial constraints was to reduce Mir Jafar to a liability and turn him against the Company. The Select Committee blamed his ‘extremely tyrannical and avaricious and at the same time indolent’ character; but similar words had been used of his predecessor and a similar fate would befall his successor. Clive himself would eventually accept that the arrangement was unworkable and would dismantle it during his second administration.

  So while Clive and his colleagues amassed vast fortunes, Bengal was destabilized and impoverished by a disastrous experiment in sponsored government. Unfortunately these two features of the post-Plassey situation were related, and therein lies the main indictment of Clive and his Council. Mir Jafar endeavoured to play the role assigned to him with conviction. Twice he honoured Calcutta with a state visit, always a lucrative occasion for the hosts since while the presents from the Nawab went straight into their pockets, those to the Nawab were charged to the Company (including a curious selection of waxworks itemized as ‘1 Virgin Mary, 12 standing Venuses to pull off behind, 1 lying ditto, 6 kissing figures, 8 ladies under a glass, and 1 Mary and Joseph’).

  In these, and the more substantial disbursements made at each rescheduling of his debt, Mir Jafar seems to have assumed that by gratifying the Bengal councillors he might expect a more lenient interpretation of his commitments. If so, he was sorely disillusioned. For Clive had so arranged matters that in return for five per cent of all sums made over to the Company and its servants, Rai Durlabh, one of the main conspirators and the man in charge of the Murshidabad treasury, would detach himself from his allegiance to the Nawab and become a focus of British interests and intrigues at Murshidabad. It was he who interpreted the details of the secret treaty to maximum British advantage, ensured that private individuals like Clive benefited, and assisted Clive’s agents in acquiring lucrative revenue farming contracts under fictitious Indian names. When in 1758 this betrayal was in the open, Warren Hastings wrote of the inevitable prejudice to British interests and influence. Soon after, Rai Durlabh was given sanctuary in Calcutta and British troops were detailed to escort his family down from Murshidabad. But not before a highly suspicious correspondence had come to light which seemed to implicate Clive’s agents and Rai Durlabh in a plot to assassinate the new Nawab. Hastings took the matter seriously; Clive dismissed it, but with a disclaimer that must rankle as much for its hypocrisy as for its prejudice. ‘I would leave all trickery to the Hindoos and Mussalmen to whom it is natural, being convinced that the reputation we have in this country is owing…to the ingenuity and plain dealing for which we are distinguished.’

  In Bihar, the western sector of the Moghul province of Bengal, it was a similar story. Immediately after Plassey, Clive had sent troops to Patna to enforce Mir Jafar’s authority and replace the incumbent Governor with the new Nawab’s nominee. In the event he changed his mind, confirming in office a man openly contemptuous of Mir Jafar and now firmly attached to the British. Two years later Bihar was invaded by the rebellious Shahzada, the Moghul crown prince, aided and abetted by the neighbouring Nawab of Oudh. With every reason to doubt the loyalty of his Governor, Mir Jafar was obliged to call again on Clive’s help. The enemy quietly withdrew on word of Clive’s approach, but it was as a result of this action that the Nawab conferred on Clive the infamous jagir. It was valued at £30,000 per year for life, so was potentially worth far more than the £234,000 he had already accumulated; and unlike other jagirs there was a peculiarly good reason to suppose that he would not incur great expense in collecting it.

  A jagir was the endowment of land and revenue by which a high official of the Moghul Empire was enabled to support his status and feudal responsibilities. Clive would insist that he had never solicited such a grant and that it was all thanks to the Nawab’s ‘generosity’. Naturally he, like most of his colleagues, had been accorded grand Moghul epithets. In the courtly language of Murshidabad and Delhi, Clive was variously known as ‘Sabut Jang’, ‘Saif Jang’, ‘Amir-ul-Mamalik’, etc. (‘Firm in War’, ‘Sword of War’, ‘Grandee of the Empire’). These titles were no more significant than the English habit of sloppy transliteration whereby Siraj-ud-Daula became ‘Sir Roger Dowlet’. (‘Had he really been a baronet?’ asked one of the Company’s directors.)

  As a military commander rather than a despised merchant, Clive had also attracted titles of rank. In the Carnatic Mohammed Ali had conferred on him the honorary status of Nawab and after Plassey he had solicited and received through Mir Jafar the rank of mansabdar in the imperial hierarchy. As William Hawkins had discovered 150 years earlier, this rank entitled the holder to a jagir. Clive was well aware of it and though having no intention of discharging the obligations of office, like maintaining several thousand horsemen, he nevertheless urged his claim on Mir Jafar.

  What did come as a surprise was the location of the jagir. He had been refused lands in Bihar as too strategically sensitive; but he was probably unprepared for the grant of the twenty-four Parganas, the very districts so recently ceded to the Company. Herein lay the guarantee of payment plus the near certainty of objection. For it could hardly go unremarked that by accepting this jagir Clive became the Company’s overlord in the Moghul hierarchy or, in English parlance, its landlord. The Company, as zamindar of the twenty-four districts, collected and administered the revenue; but henceforth it must remit the fees for this privilege not to the Nawab but to one of its own employees. If not ‘too rich for a subject’, the mansabdar ‘Sabut Jang’ had certainly become too grand for a servant. Unsurprisingly he would soon be looking beyond Leadenhall Street for recognition and encouragement.

  There were yet other avenues for enrichment. Some, like tax farming, were below a mansabdar’s dignity. Others, like preferential trade, were not. After Plassey, in addition to their cash presents, many of the Bengal councillors (including Clive) became recipients of free passes for their internal trade and of concessions for government monopolies like salt. When that old chestnut of dastak came up for negotiation, Clive was to the fore in insisting that not only the Co
mpany’s goods but also those of their servants, their servants’ servants, and just about anyone else enjoying (or willing to pay for) British favour should enjoy custom-free movement throughout Bengal. At one fell swoop the Nawab was thus deprived of another source of revenue while the flood gates were thrown open for a bout of unscrupulous profiteering remarkable even by the standards of oppressed Bengal. Four years later Warren Hastings would observe that the entire inland trade had been engrossed by the British or those trading under British colours and British dastak.

  Theoretically the favours flowing so freely from Murshidabad should have benefited the Company even more than its servants. What Dupleix had promised, Clive had delivered. For at least the next three years, he predicted, there should be no need for the Company to export bullion to Bengal. The purchase of the year’s trade investment, as well as the expenses of its establishment, should now all be met from the Nawab’s treasury or from the territorial revenues made over to the Company. At the same time the Company’s trade should almost double, European competition having been virtually eliminated with the destruction of French Chandernagar and, soon after, the repulse of a Dutch initiative.

  But these rosy expectations so confidently proclaimed in the wake of Plassey took account neither of the dangers to Indo-European trade posed by the Seven Years War nor of the enormous military expenses being incurred in India. The Company’s Bengal trade did quickly recover to pre-1756 values, but by 1760 it was still showing no signs of exceeding them. On the other hand the military expenses being incurred in Bengal alone must have been ten times those of the pre-1756 period.

  All this occasioned harsh words from the Court of Directors in London. Clive wanted a permanent Bengal army of 2000 Europeans and three times as many sepoys (he had already raised his first Bengal regiment). The directors thought that with a friendly Nawab and no European rivals 300 European troops should be ample. They forbade the fortification of any of the outlying factories and were aghast at Clive’s ambitious plans for making Fort William impregnable.

  You seem so thoroughly possessed with military ideas [they wrote in 1758] as to forget your employers are merchants and trade their principal object, and were we to accept your several plans for fortifying [Calcutta], half our capital would be buried in stone walls.

  The Directors saw Bengal as a place of flourishing trade but surprisingly little profit, a feature which they ascribed to ‘the luxurious, expensive and idle manner of life’ which prevailed among their employees there. Happily the new turn of events provided the occasion for a thorough reform and with their usual gusto they proceeded to inveigh against every supposed indulgence from the abuse of dastak, ‘a practice we have ever disclaimed’, to the popularity of palanquins. They also took exception to ‘the vile manner’ in which the Bengal Council recorded its ‘Consultations’. ‘Basely copied entries frequently erased…indexes omitted and other unpardonable irregularities’ could only denote ‘a loose and negligent government’.

  This was supposedly borne out by the Council’s failure to supply a complete inventory of the plunder taken from Siraj’s administration in Calcutta and from the French in Chandernagar. The awards made to the troops out of Mir Jafar’s treasury were also censured and the directors were becoming increasingly uneasy at the boom in bills drawn on the Company in London. This was a normal method for employees to remit home their private profits. They lent money to the Company in India against bills redeemable at home, an arrangement that suited both parties. But it could easily get out of hand and, as private incomes rocketed while Company profits languished, the directors stigmatized the whole system as ‘cruel and barbarous’. All in all then, the Bengal administration was not only ‘amazingly weak’ but also operating in a style that was ‘highly injurious to our interests’.

  Such wholesale censure was nothing new and deserved no more than the usual response of evasion tinged with indifference. Obviously the directors had again been listening to men jealous of the Bengal Council’s achievements and desperate to win a share in the new bonanza. But, considering those same achievements, the Bengal councillors had reason to feel genuinely aggrieved; and none more so than Robert Clive. During his four years in Bengal Clive had acquired an unrivalled ascendancy over both the Select Committee and the Council. As Chairman of the former he had neutralized the resentment against his Madras-based authority by a string of dazzling successes. When the Court of Directors decreed a rotation style presidency, similar to the disastrous system introduced after the union of the New and Old Companies, the Council had agreed to flout orders and install Clive as acting President. In due course the directors had applauded this unprecedented exhibition of Council harmony and finally endorsed Clive as ‘Governor and President in Bengal’.

  Secure, as it seemed, in the confidence of the directors and the esteem of his colleagues, the Colonel and President not only resented criticism but presumed to challenge it. In December 1759, a few weeks before his intended departure from India, Clive wrote to the directors.

  Permit us to say that the diction of your letter is most unworthy [of] yourselves and us in whatever relation considered, either as masters to servants or gentlemen to gentlemen. Mere inadvertencies and casual neglects arising from an unavoidable and most complicated confusion in the state of your affairs has been treated in such language and sentiments as nothing but the most glaring and premeditated frauds could warrant…

  He went on to accuse the Court of Directors of giving credence to knaves and betraying such favouritism as would ‘tend to cool the warmest zeal of your servants here and anywhere else’. Presumably he reasoned that from a ‘Grandee of the Empire’, a ‘Heaven-born General’, and the Company’s jagirdar, such presumption would hardly be dismissed as impertinence. If so, he was wrong. This outburst was a direct challenge to the authority of the Company and it would cost him dear.

  It would, perhaps, be going too far to suggest that Clive, having master-minded a revolution in Bengal by subverting the authority of the Nawab, was now bent on a revolution in London and the subversion of the Honourable Company. Now, as later, he would probably have preferred to control the Company rather than remove it. But just as he was the first President openly to criticize its direction, so he was the first to go on record as questioning its existence. In January 1759, with many corrections and rephrasings, he drafted a long and unsolicited letter on Indian affairs and sent it secretly to William Pitt (the Elder), then the dominant figure in the war-time administration, the man who had dubbed his generalship ‘heaven-born’, and of course the grandson of ‘Governor Pitt’.

  In this highly revealing letter Clive contended that a glorious future awaited the British in India. If only the Company would ‘exert themselves’ and ‘keep up such a force as will enable them to embrace the first opportunity of further aggrandizing themselves’, they might take ‘the sovereignty of Bengal upon themselves’ (i.e. replace the Nawab). He was confident that the Moghul emperor would accord him imperial recognition since he, Clive, had himself been offered the diwani, the second most senior position in the province. This would have given him control of the province’s revenue collection and an easy position from which to claim the sovereignty; but he had felt obliged to refuse ‘for the present’, mainly because the Company would not authorize the troops ‘to support properly so considerable an employ’.

  But so large a sovereignty may possibly be an object too extensive for a mercantile company; and it is to be feared that they [i.e. the directors] are not of themselves able, without the nation’s assistance, to maintain so wide a dominion. I have therefore presumed, sir, to represent this matter to you [Pitt], and to submit to your consideration, whether the execution of a design that may hereafter be still carried to greater lengths [‘perhaps of giving a king to Hindostan,’ as he explained to his father], be worthy of the government’s taking it in hand.

  From Bengal alone he anticipated an annual income of ‘upwards of two millions sterling’ and he was certain that t
hat, plus the possession of ‘the paradise amongst nations’, was worthy of ‘public attention’. The whole business could be managed without draining the mother country ‘as has been too much the case with our possessions in America’. ‘A small force from home will be sufficient…’

  No response to this letter had reached Clive when, partly for health reasons, partly for career reasons, he sailed for home in early 1760. Pitt obviously had other things on his mind – like the Seven Years War. But, as will emerge, ‘Clive’s letter was the germ of the Parliamentary measures which led step by step to the transfer of the substance of authority from the Company to the Crown’ (Sir George Forrest).

  PART FOUR

  A PARTING OF THE WAYS

  1760-1820

  CHAPTER SIXTEEN

  Looking Eastward to the Sea

  SOUTH-EAST ASIA AND THE CHINA TRADE

  As a result of Plassey and the emergence of the Company as a major political power in India its priorities were bound to change. If supremacy in Bengal meant that revenue replaced commercial profits as its financial support then administration must replace trade as the profession of its employees. A proliferation of boards, councils and committees began to participate in the direction of its affairs in both London and India. Its Bengal establishment grew prodigiously and increasingly its outward-bound ships carried more in the way of troops and stores, passengers and European luxuries than they did of broadcloth. Ledgers became tax rolls, warehouses arsenals. Men who had once been proud to call themselves ‘servants of the Company’ now preferred to be seen as ‘serving in the Company’ – as if it were no different from serving in the Navy or the Treasury. The Company was perceived as a branch of government; and, ere long, it became a branch of government. Only lawyers called it ‘The United Company of Merchants of England trading to The East Indies’. To others it was the ‘East India Company’ or, more significantly, just ‘The India Company’.