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Expansion and Consolidation of Colonial Power

Subject: History

Unit: Expansion and Consolidation of Colonial Power

Lesson: Expansion and Consolidation of Colonial Power Lesson Developer : Prof. Lakshmi Subramanian College/Department : Professor, Centre for Studies in Social Sciences,

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Expansion and Consolidation of Colonial Power

Table of contents

Chapter 2: Expansion and consolidation of colonial power • 2.1: Expansion and consolidation of colonial power • Summary • Exercises • Glossary • Further readings

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Expansion and Consolidation of Colonial Power

2.1: Expansion and consolidation of colonial power

Introduction

The second half of the saw the formal induction of the English East Company as a power in the Indian political system. The (1757) followed by that of Buxar (1764) gave the Company access to the revenues of the subas of , and Orissa and a subsequent edge in the contest for paramountcy in Hindustan. Control over revenues resulted in a gradual shift in the orientation of the Company’s agenda – from commerce to land revenue – with important consequences. This chapter will trace the development of the Company’s rise to power in Bengal, the articulation of commercial policies in the context of that developed as an informing ideology in and that found limited application in India by some of the Company’s officials. This found expression until the 1750’s in the form of trade privileges, differential customs payments and fortifications of Company settlements all of which combined to produce an alternative nucleus of power within the late Mughal set up.

The English Company: origins and growth

Founded by a royal charter dated 31 December 1600, the English was a joint stock company of London merchants who took the decision to intervene in the Euro- Asian trade that had been initiated by the Portuguese and subsequently expanded by the Dutch. The impulse to control trade between Europe and Asia in spices and pepper, calicoes and textiles went back to the end of the 15th century, when the Portuguese first cut into the Italian stranglehold of the Levantine trade, and directly transported spices from Asia to Europe. The Dutch followed suit with measures that were even more draconian, to ensure complete control over supplies of spices and their carriage, although by the middle of the 17th century, there was a definite shift from the quest for spices to the craze for calicoes. The same motivation drove the English Company which, however, had only one tenth of the capital owned and mobilized by the known as the Verenigde Oostindische Compagnie or V.O.C. It was this lack that persuaded the English Company to turn towards India not only for its valued textiles that paid for spices but also found growing numbers of buyers in England and Europe. Over the course of a century, the Company established trading posts in western and eastern India as well as in the Coromandel. From modest beginnings in 1617, the Company extended its trading activities by the end of the 17th century, when Bombay, Madras and Calcutta emerged as major trading centres and spheres of influence.

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Expansion and Consolidation of Colonial Power

Value addition: did you know? The Levant

The Levant is the collective name for countries along the shores of the eastern Mediterranean and includes Anatolia, Syria and Egypt. The area was the principal transit point in the transit trade between the East and the west and consisted of transportation of spices and luxury goods. Traditionally the Levantine trade was dominated by the Venetian merchants who were until the 16th century the principal distributors of spice in Europe. Trade coming into the mouths of the Red Sea and the Persian Gulf and dominated by Asian merchants and Arabs reached the Levant where the goods were picked up by the merchants of the Italian city states. The discovery of the all sea route to Asia by the Portuguese ended the stranglehold of the Italians and directly impacted on the older trade of the Levant.

Sources: http://en.wikipedia.org/wiki/File:The_Levant_3.png

In its nascent stage, the English East India Company traded in textiles and functioned within a well established trading system in India. The Company’s servants, termed factors, advanced money to brokers who channeled these to weavers and primary producers. There was a growing expansion in the textile trade but not at India’s expense as India received substantial consignments of bullion in return for its manufactures. In fact, the growth of the textile industry ensured the enrichment of brokers and supply merchants and in the case of Bengal even improved the bargaining capacity of weavers. There was thus no question at this stage of the Company becoming a political power even if they periodically made demands that were not considered appropriate and that even occasionally undermined the sovereign dignity of the land.

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Expansion and Consolidation of Colonial Power

What made the Company different from other foreign merchants who came to India, settled down and traded? There were three major differences and some scholars have associated these with the play of mercantilist ideas. In the first place, the Company demanded from the ruling government, privileges that exempted them from paying customs duties even as they took over the responsibility of maritime protection to indigenous shipping. Secondly, the Company authorities fortified their centres where they had their own courts of adjudication and thereby set up a special zone of influence where Mughal writ could not run. Thirdly they felt emboldened to offer protection to fugitives from the law as part of a general policy of peopling their centres with a client population of collaborating subjects. In fact, it was precisely around these issues of privilege and exemption that the Anglo Mughal wars of 1757, 1764 and the subsequent clash with Muhammed Reza Khan occurred in Bengal. In fact the element of force used by the English East India Company especially in the 18th century lent a particular coercive edge to its profile that marked it very distinctly off from other foreign merchants including the other trading companies. This was partly due to their secure political position and also because they drew on an older system of force and ‘legitimate protection’ that the Portuguese had introduced into the trading system of the Indian Ocean.

To what extent were these claims part of a larger mercantilist driven political project? To answer this we need to understand what mercantilism means and how this encouraged some Company servants even in the 17th century to confront the Grand Mughal.

Defining mercantilism

The term ‘mercantilism’ refers to a corpus of economic theories espoused by states in early modern Europe and perceived as critical elements in ensuring the health of states. The objective was to control and regulate trade and ensure its proceeds and maintain the bullion reserves of the states. Put simply, it was important to prevent an unnecessary outflow of treasure from the state abroad, to curtail imports and encourage exports. Dominant between the 16th and 18th centuries, it led to some significant instances of government intervention over the economy in the form of standardization, of controlling guilds and even regulating commerce by floating chartered companies, thereby giving them monopoly over trade with certain regions and giving them sovereign political power in distant continents. All these were intended to enhance the power of the state. Implicit in mercantilism, was the assumption that wealth constituted power and that power and wealth were the proper ultimate ends of national policy.

A key tract that is universally acknowledged as a quintessential mercantile doctrine was ’s ‘England’s Treasure by Forraign trade’. Mun was in fact a major protagonist for the English East India Company and insisted that its policies were not responsible for the deficits of specie that England faced and also that its imports could find valuable markets in Europe when re-exported. The close connections between the Company in India and the state in England certainly bear out the importance of such views, which enjoyed wide currency. This is not to say that the Company did not enjoy considerable local autonomy or that it could and did take independent policies but to make the point that the Company was not mere traders but that it acted as a vehicle for promoting public and interest.

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There is considerable evidence to indicate that from the very beginning the Company could use force to push its interests and that the Company and the state were united in realizing certain diplomatic and even financial goals. Recall for instance how the island of Bombay that Charles II had received as dowry by the Portuguese crown was transferred to the Company as its base so that it could be used in future against Portuguese settlements in .

Mercantilism in action: the Company settlements of Madras, Bombay and Calcutta

The Company settlements at Madras, Bombay and Calcutta began as humble trading stations that the authorities secured from local political rulers or, as in the case of Bombay, as part of a settlement with the Portuguese. These settlements were seen as regional hubs - Madras was the coordinating centre for settlements in southern India, Bombay for the western part and Calcutta for trading stations and factories in the east. It was here that the Company established and maintained its full strength, consisting of the and his council, and through them, coordinated the trading operations of their servants. From the very beginning, the Company sought to fortify these stations against the local/regional authorities while simultaneously encouraging local artisans and merchants to come and take up residence in the new city. The intention was to develop the city as a special zone of influence and thereby invest it with political authority.

Within the city, there were two clearly demarcated zones – the White and Black towns whose inhabitants had occasionally to pay taxes for their protection and municipal safeguards. These occasionally created conflict of interest leading to altercations and the Company occasionally had to maneuver cautiously to maintain its primacy. However, the element of force in the Company’s policies was never entirely absent and the image of the Company as a semi sovereign power, albeit in a restricted space, was established by the end of the 17th century. This found expression in repeated fortification measures, in altercations with local authorities, and in the case of Bombay’s Governor Sir Josiah Child, even confrontation with the Mughal State (1688-89). Josiah Child in fact believed that the commercial success of the Dutch East India Company or VOC as it was known had been due to its political strategy and that the only way to win recognition from the and the right to trade as a sovereign power was by adopting a war policy. Furthermore, Bengal was to be the testing ground for the region as it was increasingly assuming a critical place in the Company’s trade.

Bengal: the British bridgehead

By the early 18th century Bengal became a key region for the Company’s trade in textiles, and Bengal goods came to comprise nearly 60 percent of the English imports from Asia. Even before this, the English Company had secured an important farman from Emperor that gave them the right to trade without paying duties in return for a payment of 3000 . The foundation of Calcutta in 1690 and its fortifications in 1696, followed by the acquisition of the villages of Kolikata, Gobindapur and gave the Company a

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Expansion and Consolidation of Colonial Power

convenient launching pad and with the formalization of the duty free trade farman in 1717 by the emperor Farrukhshiyar, the prospects for an expansion became even brighter. By this time, the situation in respect to both the political context as well as the trading milieu had substantially changed, emboldening the Company’s servants to contemplate limited political projects primarily to further their commercial interests.

Bengal, as we have seen on an earlier occasion, was the one of the few provinces to have escaped the spiral of Mughal decline. Under the rule of an enterprising governor, the region enjoyed a substantial increase in productivity, the benefits of which the regional administration was able to exploit. With the collaboration of new social groups in the region – the , the mahajans or bankers and the administrative and scribal groups, the ruling aristocracy was able to enjoy substantial power and autonomy. In contrast to the attitude of the Mughal state, the regional administration resisted the demands of the European companies when they tended to be excessive, and in the process set the stage for a major round of confrontation in the future.

The bone of contention between the Company and the ruling administration in Bengal was the interpretation of the farman of 1717. Theoretically, this granted the Company the right to carry on duty free trade, to rent thirty eight villages around Calcutta and to use the royal mint. In fact however, the Company officials chose to amplify the scope of the farman by claiming exemptions for their private trade ventures as well. refused to consider this demand and denied permission to extend the duty free provision for private trade as well as to buy the thirty-eight villages adjacent to Calcutta. His successors continued with the policy of containment.

Value addition: did you know? Private trade or country trade Country or private trade referred to the inter-Asiatic trade of the servants of the European trading companies. In an effort to compensate for low salaries, the Company authorities allowed their servants to trade in the inter-port trade of Asia. By doing this, the Company allowed an area of conflict to develop between its official and corporate objectives and the private interests of its agents. In fact by the 1730’s in Bengal the value of British private investment in the internal and export trade of Bengal probably matched that of the Company Source: Chaudhury, K. N. 1978. The Trading World of Asia and the English East India Company 1660-1760. Cambridge: Cambridge University Press, 209-210.

Between 1740, when the war of Austrian succession broke out in Europe and involved England and France in hostilities in India, and 1757, when the fateful battle of Plassey was fought, the English East India Company steadily augmented its position by adding fortifications, running a trade in dastaks and permits and even offering fugitive subjects of the protection in the city of Calcutta that was emerging as an alternative power centre. The situation rapidly deteriorated under Nawab Siraj-ud-daulah whose actions and attempts at centralization alienated a section of the ruling class that gravitated towards the

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Company and sought its intervention to appoint a new Nawab instead. The formation of the anti Siraj clique in was sponsored by a powerful group headed by Omi Chand, the Jagat Seths, Khwaja Wajid and all of whom represented the ascendancy of the commercial-administrative lobby and their links with the ruling administration. Whether the growing dissensions within the ruling administration were responsible for Plassey or whether the designs of the Company were directly instrumental in producing the conflagration is a matter of debate among historians. To examine the debate, it is necessary to comment on the relative trading position of the English East India Company in Bengal, especially in relation to its rivals, both European and Indian and thereafter to situate it in the context of the political crisis that gripped Murshidabad in the 1750’s.

English trade in Bengal and ‘sub-imperialism’

We have already observed on a previous occasion that the Euro-Asian trade carried on by the trading companies like the English East India Company was ordered around two important staples – spices and textiles. By the end of the 17th century the share of Bengal in the total trade of the English East India Company began to increase and in 1710, was 47 per cent. Between 1728 and 1760 the high quality and expensive fabrics of Bengal accounted for 60 to 80 per cent of the total number of pieces. Textiles were procured through a contractual agreement between local merchants and the Company – the former undertaking to supply a specified number of pieces at the port of shipment by a certain date and organizing their purchase from the manufacturing districts. The system of advances entered into with the local merchants was referred to as the dadni system – the amount or dadan given in advance was often a bone of contention. Supply merchants were primarily local merchants including Armenians who were known to purchase at prices 30 per cent below those paid by the Company. Indian intermediary merchants also performed cultural roles as they were able to negotiate with political authorities as well. Consequently, for the greater part of the first half of the 18th century, brokers and intermediaries remained an invaluable part of the investment machinery.

Official or corporate trade however, represented only one facet of the English East India Company’s activities. It was the private trade of Company servants that emerged as a major phenomenon in the 18th century and was largely instrumental in lending an edge to the political agenda of the English Company. The policy of permitting Company servants to trade in intra-Asian trade or ‘country trade’ as it was called, as a means of compensating insufficient pay, had meant that private traders had become an entrenched interest group and made sure that they continued to make fantastic profits by deploying their official privileges against the authority of the local government. Private enterprise in the first half of the 18th century provided the basis for the meteoric rise of Calcutta as the premier city, supplanting the older Mughal town of Hugli.

The expansion of English shipping was primarily at the expense of Asian shipping which had dominated the trade in the Indian Ocean. European and English private traders increased their stranglehold partly on account of the better naval protection they afforded to local merchants against piracy. Operating with larger ships with greater tonnage, the English

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private traders were able to dominate the freight trade as well as compete with the other merchants in the west Asian markets. Their presence and ambitions became a factor to be reckoned with and in fact provided the material basis for the Company to articulate a political agenda. Whether this was the determining factor in the breakdown of Anglo-Nawabi relations is however, a more difficult question to answer categorically. What is evident is the escalating irritation on the part of the Company authorities to two things. One was the pressures that the Company in its private and official capacity faced in getting adequate supplies because of political disruption. raids in western Bengal often interfered with the production process and the imperative to procure silk and textiles often outweighed all other considerations. On the other hand there were also the growing pretensions of English private traders who, according to some historians, were facing French competition in the and had to find a way of getting out of the impasse.

What was the nature of English private trade and how did they come to form a lobby and how did the ruling authorities respond to the challenge? There is very little doubt that the private servants of the Company amassed huge fortunes by illegal private trade and by the sale of dastaks or official permits. Company servants deliberately glossed over these acts of flagrant abuse and defiantly assumed a confrontationist position in relation to the Nawabi administration. According to historians like Sushil Chaudhuri, this was the culminating point of an earlier policy of mercantilist aggression practiced by Josiah Child and assumed more explicit overtones in the 1750s. The conflict that broke out in 1756-57 was, according to the same historian, the consequence of ‘sub-imperialism’ or the aggression of private traders who plotted and planned the fateful conspiracy leading to the overthrow of the old regime. The aggression was partly fuelled by the pressures of trade that private merchants were facing especially from French competition. The early 1750s saw a resurgence of French private trade – their fleet numbering 27 in 1754.

The road to Plassey

The French factor had more than one ramification. In addition to the challenge of private trade of the French Company servants, there was the growing presence of the French Company. Its victories against the English in southern India produced serious apprehensions among the English about the possibility of a Franco-Nawabi alignment in Bengal as well. This apprehension found expression in a frantic stepping up of fortifications of the city of Calcutta without the express permission of the new Nawab Siraj-ud-daulah. The situation deteriorated even further when the Company stepped forward to extend protection to his fugitive subjects and thereby directly challenge his sovereign authority. It may be recalled that the young and impetuous Nawab had by this time alienated a section of the old ruling class by dislodging old favourites and thereby helped foment a dissident party in his durbar. The latter, looking for outside support to precipitate a conflict and resolve it in their favour, approached the Company, which was only too willing to emerge as mediator and subsequently as de facto ruler.

The first round of confrontations occurred in 1756 with the opening shots being fired by Siraj. When the Company did not heed the Nawab’s warnings regarding the grant of protection to Ballabh and the abuse of dastaks, he retaliated by taking over the

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Expansion and Consolidation of Colonial Power factory at Kasimbazar. Its governor Drake refused to consider any diplomatic solution, only to face the ignonimous attack on Calcutta and its capture by Siraj on 20 June.

Value addition: did you know? The Black Hole legend of Calcutta In 1756, in course of the Anglo-Mughal war when the reigning Nawab of Bengal Siraj-ud-daulah laid to Calcutta and took control of the English fort, his soldiers locked up the defenders in a small cell that measured 14 feet by 18 feet and had only two small high barred windows for air. On an exceptionally hot night the prisoners choked and suffocated and barring 23 survivors, the rest died of thirst and exhaustion. The chief survivor was John Zephaniah Holwell who left behind a wildly exaggerated account of the tragedy that came to be known as the Black Hole tragedy. He claimed 123 out of 146 captives had died. Modern historians have doubted the veracity of Holwell’s account. For British power, it was an important motif that was invoked time and again – Lord Curzon even built a memorial recalling the tragedy. A more recent work by Jan Dalley looks at why the event became so important in subsequent British narratives. Source: Dalley, Jan. 2006. The Black Hole: Money, Myth and Empire. London: Penguin

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Figure 2.1.1: The Source: http://www.allposters.com/-sp/The-Black-Hole-of-Calcutta-in-Which-Only-23-of- 146-Prisoners-are-Said-to-Have-Survived-Posters_i1861418_.htm

The capture of Calcutta and its renaming by Siraj as Alinagar constituted the second and brief phase of the Anglo-Nawab war in Bengal. For the English Company and its servants the situation was intolerable and they could hardly bear to consider losing their trade privileges and prospects. The arrival of the squadron from Madras under Clive changed the equation. Astutely exploiting the support of the dissenting faction, Clive gave no quarter and now took the lead in planning the perfect coup d’etat. Combining forces with the dissenters led by the bankers, powerful zamindars and officials, a mock battle was staged on 23 June 1757 where Siraj was defeated and executed. Mir Jafar, the leader of the contingent that remained inactive in the battle was made the new Nawab but with real power effectively passing into the hands of the English Company.

What followed Plassey was the infamous plunder that saw huge transfers of money to the army and the navy, to Clive and other favorites and a free-for-all fray for the Bengal revenues. Even more serious was the ruthless exploitation that the region faced at the hands of English private traders who abused their newly acquired position to extort, trade unfairly and abuse dastaks even more indiscriminately. Private trade now moved from the periphery of the region, from principal towns and outposts to the interior, dismantling in the process an entire political and moral dispensation. The sky was the limit as far as the

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Expansion and Consolidation of Colonial Power private traders were concerned and the region now lay exposed to a rapacity and extortion that was unprecedented. For ruler and ryot, for merchant and manufacturer, the situation became increasingly burdensome as a new structure of exactions came to dominate Company policy between 1757 and 1765.

The regime that was cobbled together after Plassey was made unviable by the very agreements that the Company entered into with the new ruler. Mir Jafar had unwisely and rashly made extravagant financial promises in return for English support without realizing how empty the treasury actually was. Further, he was not in a position to revoke any of the trade related privileges that the English merchants enjoyed and was forced to sustain his base by mounting operations against zamindars and by squeezing local merchants. Neither of these strategies worked and when in desperation he turned against the Company by siding with the Dutch and the Mughal prince Ali Gauhar, he was displaced by whose reputation in Bihar as an efficient officer had endeared him to the Company. The Company in its wisdom assumed that his appointment would stabilize their position but without realizing that their demands were bound to antagonize him in the long run. On his part Mir Qasim abided by his agreements and focused his energies on developing his base in Bihar until he ran foul of the English private traders there. A major controversy arose over the abuse of dastaks by the Company servants with a pronounced anti Mir Qasim clique emerging. When the Nawab abolished duties altogether and thereby ensured an equal playing field for Indian and European, the Company intervened and reinstated Mir Jafar on the throne.

The stage was now set for a second round of confrontation; this time under a more substantive alliance bloc consisting of Mir Qasim, the ruler of , and the Mughal Emperor Shah Alam II. Historian Rajat Ray has identified this bloc as the first serious act of resistance by the Mughal ruling class to early colonial penetration. This coincided with other acts of popular resistance and social violence that reflected the extent of upheaval and erosion that the Bengal political system had been subject to.

The combined forces faced a resounding defeat in the that followed in 1764. This was a decisive battle as it signaled the military superiority of the English army and subsequently inducted the Company as an actual revenue claimant in the political system. In 1765, the treaty of gave the Company the diwani (the revenue collecting right) over Bengal, Bihar and Orissa and with this an enormous revenue base that they could deploy in their bid for paramountcy. A resident was now posted at Murshidabad and his office steadily became the locus of real power in the province. The grant of the diwani to the English East India Company became the basis for dual government in which native rulers retained their titles and dignities while the Company administered the government and collected revenues through Indian officials.

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Figure 2.1.2: , 1st Baron Clive of Plassey: Clive receiving the land revenues of Bengal, Bihar, and Orissa Source: http://www.britannica.com/EBchecked/topic-art/482290/100522/Robert-Clive- receiving-the-land-revenues-of-Bengal-Bihar-and

Post Plassey trends in Bengal – exactions and control

The most perceptible impact of Plassey and Buxar on the trading economy of Bengal lay in the realm of its trading economy. The rampant abuse of trade privileges and the phenomenal expansion of English private trade was at the expense of the local trading economy – as Mir Qasim had observed, ‘every village and district in the province was ruined by their trade’. After Buxar, the Company tried to introduce a measure of regulation, putting the private traders under some pressure. At the same time, there was the flagrant use of political power by the Company to eliminate rival European competition and this was especially evident in the textile trade. Weavers and artisans came under greater control – forced to produce exclusively for the Company that enforced a monopsony on textile production. This meant that buyers were strictly forbidden to compete in the market, the opposite of monopoly where there were many buyers for one seller. The late 70s and 80s saw khatbandi regulations binding artisans to sell exclusively to the Company and denied them any bargaining powers. When these abuses were redressed by the direct agency system of Cornwallis, the British position as the largest single buyer of textiles had been ensured. The impact of monopsony on producers was reflected in deteriorating living standards. On the basis of the little data that is available for regions like Malda, a key textile centre, wages lagged behind raw material prices and other prices. At Dacca in 1790

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weavers were getting from the Company prices that were 6 to 8 per cent less than what other traders were offering. Contemporary evidence, albeit fragmentary, indicates that the Company used its dominant political position to fix terms of exchange and push down wages to subsistence levels.

While the Company’s political supremacy made the effects of domination inevitable and visible, it also ensured the system of the Company investment would be self sufficient. Bullion imports were no longer necessary to support the Bengal trade – the revenues from the province were now available to finance the Company’s trade to both Europe and China. The resultant bullion scarcity worsened the economic situation of the province – debasement of silver currency, shortage of specie adding to the problems of the economy. Native trading capital was subordinated to European enterprise; the process had begun as early as the abolition of the dadni system and its replacement by the gomastha system where paid Indian agents under supervision of the Company officers dominated the supply trade. Between 1770 and 80, more restrictions became visible as the agency system of 1787 -89 excluded even dalals or brokers in the textile business.

The agricultural scene fared even worse. As claimants to land revenue, the Company opted for a policy of revenue maximization and in the process endorsed dubious methods of land revenue collection through revenue farming and amils. Several old landed magnates or zamindars faced rack and ruin even as bankers and creditors expressed reluctance to advance them credit. Company servants exploited the zamindars, took over the position of shroffs or bankers and advanced money at exorbitant interest rates, thus adding to the vulnerability of the zamindars. Agriculture suffered because impoverished zamindars were not in a position to afford customary exemptions and waivers and even loans to the peasants. Other factors that added to the decline in agricultural productivity were scarcity of labour in a number of districts and over assessment through a series of land revenue collection experiments initiated by the Company. A crisis point was reached in 1769-70 when Bengal experienced a terrible famine that carried off nearly one third of its population. The failure of the rains compounded with the worst excesses of Company servants who cornered grain and set up local monopolies top produced terrible conditions of shortage and starvation.

Value addition: did you know? The Bengal famine The Bengal famine (1769-73) was a catastrophe affecting the lower Gangetic . A combination of drought conditions with extortionate revenue policies followed by the officers of the English East India Company created an unprecedented crisis situation leading to starvation related deaths and epidemic. Although mortality figures are not entirely reliable and historians are not unanimous about this, it is evident that the famine decimated at least one third of Bengal's population. Source: Original

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The ruling government in Bengal had little power to confront the situation which was clearly a consequence of Company aggression and private greed. The overriding urge to maximize profits and to squeeze out indigenous enterprise made the situation intolerable and even if successive rulers – Mir Qasim and later Muhammed Reza Khan, the Naib Nazim of Bengal voiced their grievances and reservations, the juggernaut of Company domination could hardly be arrested. Reza Khan protested against all those exactions and illegal excesses that not only jeopardized the economy and strained merchant, manufacturer and cultivator, but he lamented the decline of an older moral economy that the power of the Company had subverted.

Conclusion

From a small trading body that prostrated before the Mughal Empire for minor trading concessions and privileges, the English East India Company had emerged as the principal political player after 1757. There is no doubt that its access to Bengal, India’s richest province, gave it the much needed revenue to out-maneuver the other players in the contest for supremacy over the subcontinent. It could field a larger army, it could pay off its supporters and it could win the confidence of creditors and financiers to bankroll its conquests. It is tempting to see in the Company’s meteoric rise the concrete manifestation of the policy of mercantilism. In fact however, one could suggest that complex webs of interconnections and alignments created a situation which made it possible on the one hand for the Company to be considered as an option of mediation by local powers and for the Company to consider political power as one of its options on the other. In the case of the local elite, especially the Bengal ruling class in 1757, the decision to solicit the assistance of the Company proved a costly miscalculation. The Company did not turn out to be like other mercenary mediators – instead it turned on its allies and demanded an ever-increasing share of the pie. From 1757 to 1856 it was but a matter of time when the Company would move in by hook or by crook, by force or by diplomacy to appropriate the whole of Hindustan.

2.1 Summary

• The English East India Company was founded by a royal charter dated 31 December 1600. It was a joint stock company of London merchants who took the decision to intervene in the Euro-Asian trade that had been initiated by the Portuguese and subsequently expanded by the Dutch.

• Over the course of a century, the Company established trading posts in western and eastern India as well as in the Coromandel.

• The Company servants engaged in private trade between the various ports of the Indian Ocean. This is often referred to as country trade.

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• The emergence of the English East India Company and its policies are generally understood to have been the expression of mercantilist ideology.

• The term ‘mercantilism’ refers to a corpus of economic theories espoused by states in early modern Europe that aimed at enhancing bullion reserves through the channels of foreign trade.

• The Company steadily secured its position in Bengal, which became its principal base of operations. It was in the city of Calcutta that the origins of the future Company Raj were laid down.

• The first round of confrontation came in 1757 when the Nawab of Bengal Sirajuddaulah resisted the demands of the Company and attacked Calcutta. This proved to be a crucial turning point as it directly affected the private trade interests of the Company servants. The victory at Plassey (23 June 1757) although won by treachery firmly inducted the Company into the political structure of Bengal. From here the road to expansion was only a matter of time.

2.1: Exercises

Essay questions

1) Identify the principal stages in the development of the English east India Company’s power in Bengal between 1717 and 1765.

2) How did English private trade affect the politics of the English East India Company in the build up to Plassey?

3) What were the consequences of early Company rule on the Bengal economy?

Objective questions

Question Number Type of question LOD

1 Short answer 1

Question What is Mercantilism?

Correct Answer / Mercantilism is an economic theory that believed in Option(s) augmenting a state’s bullion resources, in developing colonies

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and improving prospects for foreign trade. Advocates of mercantilism believed that a country’s wealth was determined by a favourable balance of trade, i.e. when its exports exceeded its imports.

Justification/ Feedback for the correct answer

Resource/Hints/Feedback for the wrong answer

Reviewer’s Comment:

Question Number Type of question LOD

2 Short answer 1

Question What did the English East India Company demand from the Indian rulers in the early 18th century?

Correct Answer / The English East India Company demanded rights of duty free Option(s) trade, of fortifications and maintaining its own judicial system in the settlements they occupied.

Justification/ Feedback for the correct answer

Resource/Hints/Feedback for the wrong answer

Reviewer’s Comment:

Question Number Type of question LOD

3 Short answer 1

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Question What do you understand by country trade?

Correct Answer / Country trade refers to the trade between the various ports in Option(s) the Indian Ocean carried on by the servants of the European East India Companies in their private capacity.

Justification/ Feedback for the correct answer

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Reviewer’s Comment:

Question Number Type of question LOD

4 Multiple choice question 2

Question Foundation of Calcutta took place in: a) 1650 b) 1680 c) 1690

Correct Answer / c) Option(s)

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Expansion and Consolidation of Colonial Power

Question Number Type of question LOD

5 Multiple choice question 2

Question Jagat Seths were: a) Bankers b) Revenue officials c) Scribes

Correct Answer / c) Option(s)

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6 Multiple choice question 2

Question Where would you find Alinagar? a) Madras b) Delhi c) Calcutta

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Expansion and Consolidation of Colonial Power

Correct Answer / c) Option(s)

Justification/ Feedback for the correct answer The capture of Calcutta by Nawab Sirajuddaulah in 1756 was followed by the adoption of a new name – Alinagar.

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2.1 Glossary

Black Town: the segregated Indian area in the port cities of Calcutta, Bombay and Madras Brokers:originally meant a simple mediator who brought buyers and sellers together and earned a commission on transactions. Over time, the broker became in Mughal India a key figure in the trading economy as he dealt with specific commodities, guaranteed supply of export goods and marketing of imports and even stood guarantee for cash advances made to supply merchants and primary producers. Dadni: a system of cash advances that the English Company used in procuring their annual Textile Investment. It involved a system of cash advances made to merchants who in turn channeled them to the weavers. Under the dadni system, the Company entered into a contractual agreement with local merchants who agreed to supply a specified consignment at a specified time. The Company in turn paid a proportion of the total value of goods in advance known as dadan and the rest on delivery. The risk of default by the producers was underwritten by the merchants. Farman:a royal order bearing the emperor’s seal :holder of revenue collecting rights. There were several categories of zamindar – primary, autonomous and intermediary.

2.1 Further readings

Calkins, Philip. 1970. The Formation of a regionally oriented ruling group in Bengal 1700- 1740. Journal of Asian Studies Vol 29 No 4.

Institute of Lifelong Learning, University of Delhi

Expansion and Consolidation of Colonial Power

Chaudhury, B. B. 1982. Regional economy 1757-1857- Eastern India”. In Dharma Kumar and Meghnad Desai eds. Cambridge Economic , 1757-1970. Vl 2. Cambridge: Cambridge University Press.

Chaudhury, Sushil. 1995. From Prosperity to Decline: Eighteenth century Bengal. Delhi: Manohar.

Mclane, John. 1993. Land and Local Kingship in 18th century Bengal. Cambridge: Cambridge University Press.

Marshall, P. J. 1987. Bengal: The British Bridgehead, eastern India 1740-1828. Cambridge: Cambridge University Press.

Marshall, P. J. 1976. East Indian Fortunes: The British in Bengal in the eighteenth century. Oxford: Oxford University Press.

Ray, Ratnalekha. 1979. Change in Bengal Agrarian Society, 1760-1850. : Manohar.

Ray, Rajat Kanta. 1985-86. Colonial Penetration and Initial Resistance: The Mughal Ruling Class, the English East India Company and the Struggle for Bengal 1756-1800. Indian Historical Review. Vol XII Nos 1-2.

Institute of Lifelong Learning, University of Delhi