In 1601 the English East India Company was founded. A group of City merchants decided to risk their capital only after there had been favourable reports about trade prospects in the East. They sought a monopoly of the East for trading purposes, dealing in silk, ivory, spices and cotton. This ultimately led to the establishment of the British Raj. The history of Anglo-Indian relations was determined by the long-held belief among the English that India was never to be their permanent home. North America was thought to be more favourable to European migration; the distance was not so far as to be disorientating and the “New World” could still retain a European culture. India was never this type of permanent home for Europeans.
The English went to India to trade and rule, but not to settle, an attitude which increased the distance between the rulers and the ruled. By modern standards, British rule in India lasted a long time: nearly 200 years. The endurance of British rule was remarkable given the physical size of the country. India covers 1.8 million square miles, an area twenty times larger than Great Britain. Communications were poor; languages and customs in India maintained an almost permanent gap between official intentions and local practice. The monsoons always dislocated transportation whilst the Indian villages were cut off from everything except their immediate surroundings.
An exclusive English charter did not affect foreign competitors. The Dutch East India Company had been founded in 1595 and already had considerable control over the Spice Islands. The English East India Company chose to concentrate its efforts on the mainland of India. In 1613 it received permission from the Great Mogul to found a trading station (a “factory”) where servants of the Company could live and work. By 1647 the Company had 23 factories and 90 employees in India. The major factories became the walled forts of St George in Bengal, Fort William in Madras and Bombay Castle.
Fortunes could be made by Company employees. One of the most famous men to do this was “Diamond” Pitt. As Governor of Fort St George he bought an uncut diamond weighing 410 carats for �20,000. His son Robert smuggled the diamond to England; it took five years to cut the stone which was sold to the French Regent for �35,000. In 1791 it was placed among the French Crown Jewels and was valued at �480,000. Often employees of the Company who had made their fortunes in India returned to England and purchased estates which gave them political power. Consequently the East India lobby was extremely powerful in parliament.
Two major events in the eighteenth century changed Britain’s position in India:
the Mogul Empire collapsed after being divided by internecine warfare which meant that it could not withstand foreign invasions from the north west.
England’s military and economic power, especially at sea, outpaced that of her European rivals. England not only underwent the Industrial Revolution and consistently beat her European rivals but also began founding her Indian empire.
There were a number of Anglo-French conflicts in India in the early eighteenth century including the episode known as the “Black Hole of Calcutta” where (according to one report) 146 men were cramped into a space 18 feet long by 14 feet wide. A major Anglo-French conflict was the Seven Years’ War, fought in Europe, North America and India. At the Peace of Paris (1763) that ended the Seven Years’ War, the conflicts in Europe, America and Asia were ended. So far as India was concerned, the following terms were agreed:
the French agreed to use their stations at Pondicherry, Mah� and Chandernagore only as trading posts and not to maintain troops there
the French recognised the British-supported rulers in the Carnatic and the Deccan
the British East India Company controlled the provinces of the Carnatic (with its capital at Madras) and Bengal (capital, Calcutta).
In 1764 the native princes of Bengal and Oudh combined to try to eject the British but their revolt was crushed by Clive; the Company extended its influence over the province of Oudh.
The year 1765 marks the real beginning of the British Empire in India as a territorial dominion. Clive’s reforms marked a new development in the history of the East India Company. No longer was it using puppet Indian governments to beat down European rivals in competition for trade but overwhelmingly had defeated Indian forces struggling for independence of European control. The company had become a government as well as a trader. However, the Company clung to the idea that it was still only a trading company and refused to admit that it had territorial responsibilities. Huge areas of India were acquired by the Company, not by the British government. Company officials were trained to buy and sell, to run warehouses and offices and to deal with book-keeping. They were not trained to govern. The British government gradually took over from the Company the right to govern vast provinces of India.
In 1767, following the victory over the natives of Bengal, Chatham decided to claim that all Indian territory must be under the sovereignty of the Crown. It might then be leased out to the company as a favour. However, Charles Townshend, the Chancellor of the Exchequer, had committed himself to the idea that there should be bargaining between the Company and government. Chatham, angered by rebellion in the government’s ranks, retired from the fray leaving Grafton to sort out the problem. In June 1767 the business was patched together.
the British government regulated the amount of dividends the Company could pay to 10%
the Company was required to pay �400,000 for two years to the Treasury
if the dividend fell below 6% the Company was not obliged to pay the annual subsidy to the government
it had to export a fixed amount of British goods to India.
the Company was allowed to keep its possessions.
Although the Company paid lucrative dividends, and its servants (the so-called “nabobs”) took fortunes from India, its finances generally were unsound. The military and administrative costs, plus the debt to the Treasury imposed heavy burdens which a private company was unable to carry.
Between 1770 and 1772 famine devastated Bengal. One sixth of the population died and as a result the territorial revenues accruing to the company declined by �400,000. At the same time its military costs rose by over �160,000. This period also saw a crisis of commercial confidence, economic stagnation and trade depression in Europe. This meant that the East India Company could not dispose of its Indian goods as well or as quickly as it had hoped. It was brought near to bankruptcy. The Company’s directors appealed to parliament for financial aid which led to the passing of the Tea Act in 1773. Although this was intended to assist the East India Company, it led to the Boston Tea Party and the start of the American War of Independence.
Lord North’s government also passed the Regulating Act for India (1773). This was the first step along the road to government control of India. A system was established whereby the government supervised the work of the East India Company but did not take power for itself. The Governor-General and his council were appointed for five years, with control over the territories in Madras and Bombay as well as Bengal. The Company was still managed by the Board of Directors although parliament had to be informed about military, financial and civil affairs. The Crown claimed the right to administer justice but in legal suits between British subjects and natives of India it could only do so at the request of the defendants. It would not hear claims by natives against British subjects. Generous salaries were fixed and the accepting of bribes by servants of the Company was forbidden.
The government attempted to make the East India Company less a commercial enterprise than a respectable delegated authority of itself. To organise this effectively meant that parliament had to regulate the company’s policies from the top and thus overcome its very real powers of direct administration and patronage.
Hastings was the first Governor-General to be appointed. Hastings had lived in India for most of his life and had worked for the East India Company from boyhood. He knew more about Indian life, culture and government than virtually anyone else in the Company. He adapted his methods to the necessities of Indian life and consequently behaved like a benevolent despot. In 1772 he had become Governor of Bengal. Hastings achieved a great deal. He set up a civil service, dismissed native tax-collectors and appointed British collectors who were strictly forbidden to take bribes. He sent a British army across India to Bombay to fight the first Mahratta War (1775-82) against the tribes of central India. The French had persuaded the tribes that Britain would be unable to take firm action against them because of her involvement in the American War of Independence. Hastings’ actions saved Bombay and extended the influence of the Company in the western provinces.
After 1774 Hastings was in a very difficult position. The Council of Four went to India convinced that all East India Company officials were dishonest and inefficient. One of the Council of Four was Sir Philip Francis, the leader of the campaign against Hastings. He is generally believed to be Junius of the Junius Letters. In 1780 he returned to Britain (with a fortune that he had “acquired” in India) and persuaded politicians that the Company and its officials were behaving dishonestly and tyrannically – which is the premise on which the Council began. They attempted to undo all that Hastings had done and later they organised his impeachment. One of the reasons for his impeachment was that Hastings was said to have accepted rewards for helping the ruler of Oudh. The ruler of Oudh had made a treaty with the Company. In return for the right to trade in his province the Company agreed to help him maintain law and order. The ruler asked for Hastings’ help when his female relations (the Begums) refused to hand over the jewels and other treasure that they had seized. Hastings sent a force to invade the Begums’ palaces, retake the treasure and return it to the ruler.
In 1780, Hyder Ali, the ruler of Mysore, attacked the Carnatic. Hastings sent Sir Eyre Coote and a British army to defend it. In 1781 Coote defeated Hyder Ali, thus saving Madras and the Carnatic.North’s government was suffering from the effects of the deteriorating situation in America and did nothing about India. The Regulating Act did not work well because the burden of responsibility between government and Company was obscure. Also there was a general suspicion that the immense patronage of the Company was twisted to serve the political ends of the government. A further element of criticism had become important by the 1780s: there was a growing humanitarian feeling which led to attacks upon the company for neglecting – or outraging – the basic rights and decencies of the Indian population in areas of British influence.
The arguments for reform in India strengthened and several attempts were made to introduce further legislation. In 1778 Robinson had produced a plan with had been shelved; the same had happened in 1781. However, since 1781 a select committee inspired by Burke had been reviewing Indian history and issuing reports that advocated the reform of the whole governance of India. Dundas had put before parliament a Bill for the government of India. This was rejected at the time but was very similar to the final piece of legislation.
Edmund Burke had become interested in India in 1773: he and his brother were shareholders in the East India Company and both, along with many friends, had lost money in the stock exchange disasters. William Burke did not gain as much, financially, as he had hoped when he went to India. Burke was convinced that the Company was in the hands of corrupt men who oppressed India, ignored honest merit and failed to give a return to the state or to the shareholders. He worked closely with Philip Francis, who had an axe of his own to grind. Burke persuaded Fox to try to reform British rule in India.
It had been a common feature of all reforming schemes since 1773 that they involved a greater degree of government regulation of the East India Company. This was defended on the ground that the state had an interest in administrative revenues in India. The solution proposed by Charles James Fox was ingenious. In 1783, Portland became the nominal Prime Minister in the notorious Fox-North Coalition ministry. North was Home Secretary and Charles James Fox was Foreign Secretary.
1783 India Bill
Burke drafted a “vigorous and hazardous” India Bill which Fox introduced to parliament early in December 1783. The Bill proposed a total separation of powers. The government would govern and the East India Company would deal with trade. This in itself raised all kinds of ghosts: direct rule from Westminster had recently failed in a most dramatic way in America. The Bill also proposed that seven Commissioners should be responsible for the government of India. Initially they were to be appointed by the government for four years and thereafter by the East India Company. The proposals alienated the City and the “nabobs” who had returned to England, but the greatest outcry came when the names of the Commissioners were published. Four were supporters of Fox, two were Northites and the seventh was North’s son. A great political scandal ensued with accusations of political rigging so the Foxites could secure a monopoly on the East India Company for four years.
The India Bill was used by the king to bring down the ministry. However, it was agreed by all that although Fox’s scheme had been defeated, some regulation of the East India Company was essential.
Pitt the Younger was appointed as PM in December 1783 and quickly introduced another India Bill. The Company co-operated with Pitt in putting forward a control scheme which only a year before they would have regarded as outrageous. The first attempt at legislation failed but Pitt’s second effort passed through parliament as the 1784 India Act by which the British government took another step along the road to control India. This system of dual control between Company and Crown worked for the next 75 years, until the Indian Mutiny. After that, parliament took over complete responsibility for India.
Pitt’s Act of 1784 reiterated the company’s own intentions by forbidding aggressive wars and annexations. Lord Cornwallis and his successor Sir John Shore (governor-general 1793-98) were eager to comply, but Cornwallis nevertheless found himself involved in the third Mysore war (1789-92) with Tipoo Sultan, who possessed his father’s ability without his judgement. The cause was a combination of Tipoo’s intransigence with conflicting obligations undertaken by the Madras government. It took three campaigns before Cornwallis could bring Tipoo to bay. Half his dominions were annexed, more as a precaution than as an exercise in imperialism. Tipoo remained formidable and, not unnaturally, more hostile than ever
The first Governor-General under the new Act was Lord Cornwallis (the same Cornwallis who had surrendered at Yorktown in 1781). He held office between 1786 and 1793 representing the British government and answerable to the Board of Control. He was succeeded by the Marquis of Wellesley who was Governor General between 1797 and 1805. After that, the post was help by Lord Minto (1807-13).
In 1813, the Marquis of Hastings (the Earl of Moira) was appointed Governor-General in 1813 and continued Wellesley’s work of extending British power. He completed the destruction of the Mahrattas in the third Mahratta War (1817-19), annexed Poona and forced the Hindu chiefs to submit. Nepal was more troublesome. It took an 18-month campaign (1814-16) in the Nepal mountains to force the Gurkhas to abandon their claims to British territory. Most of Nepal was left as an independent state and the Gurkhas have remained friendly to Britain ever since. By 1823 all India was directly or indirectly under British control although the attitude of the British towards the country and people today appears to be questionable.