The East India Company: The World's Most Powerful Corporation (The Story of Indian Business) (9 page)

The split had not changed things in India very much. There was a brief five years when the rival companies
engaged in an embarrassing one-upmanship in India. Each carried the English flag, claimed to be the sole representative of the king, and asked the local rulers for trading privileges with the exclusion of the other. Murshid Kuli Khan and Azimusshan, the Bengal treasurer and viceroy respectively, took advantage of the competition and accepted gifts from both parties. The union left these recently concluded finanial deals in the lurch.

In the long run, the merger gave the Company an organizational stability that it had lacked through much of the seventeenth century. The capital of the Company was a fixed and definite sum, and the annual value of trade relatively stable, determined by an almost fixed shipping capacity. The conflict between the Crown and the Parliament, in which it had been caught in the last quarter of the seventeenth century, was a thing of the past. From time to time, the Company made loans to the public treasury to finance warfare. The Parliament returned the favour by not questioning the autonomy of the Company, and indeed authorizing it as a territorial power in its own right.

While peaceful relations continued between the state and the Company, the oceans were becoming more turbulent than before. During the seventeenth century, the number and the power of the ‘privateers’ had grown.
These were mercenary ships licensed by the state to carry arms and available for naval battles with foreign powers. When there was no battle, the privateers offered their services to private traders. And some of them roamed the seas in search of opportunities to attack cargo ships of foreign origin. A band of these sailors-merchants-pirates appeared off the coast of Surat in the last decades of the seventeenth century.

In 1694, an English sea captain, Avory, raided a merchant ship belonging to the great Bohra merchant of Surat, Abdul Ghafoor. The raid upon the most important firm in western India laid bare a problem that had been growing for some time—the proliferation of European pirates. These mariners moved between private trade, plunder of ships on the high seas and service for the royal navy as privateers. Being simultaneously on the right and the wrong sides of the law, they could buy political protection with offer of a share in the profit from trade.

Avory’s raids raised popular protest in Surat. The protests threatened to become violent, even posed a threat to the life of the president, were he not meanwhile arrested and kept in irons inside the state prison. The
Company got away by offering escort ships to accompany the haj-bound fleets. Two years later, Avory was followed by a more illustrious figure, William Kidd, a Scotsman who had spent the first forty years of his life in the West Indies and New York City in predatory pursuits. In 1696, he reached the pirate haven Madagascar. Thereafter, Kidd took a decision that was entirely unusual even for pirates of this time. He raided and robbed a ship returning from Mecca to India, loaded with rich Indian pilgrims. The ‘brutality was extreme, and [the pirates] carried it so far as to violate several women of rank who were on board’, reported Niccolao Manucci in 1707. Kidd probably thought he would get away without being identified, but the fleet was accompanied by a ship belonging to the Company, and it defended the party against the attack. Having been exposed, Kidd now openly prowled the west coast of India in search of prey and pillaged a number of French ships as well as friendly ones.

Aurangzeb held the English accountable for this, not without reason, for the Company representatives knew what was going on. But they did not do anything to stop it because some of the pirates, in their role as traders and privateers, helped the Company officials. Aurangzeb, however, did not take a very harsh stand against the British and his prime minister Asad Khan and naval
officers diffused the threat to the Company. The dispute nevertheless unnerved the English, and they wrote frantic letters to the directors apprising them of the political risk that piracy posed for the official trading missions. These reports resulted in the sponsors of piracy to wash their hands off these episodes and deny their role. Kidd’s own political sponsors either turned against him or were out of power when Kidd was captured, tried and executed in 1701.

BETWEEN 1600 AND 1750, the trade between Indian merchants and artisans and European traders, backed by easier transportation between the two continents, led to major shifts in British consumption patterns. This era witnessed the Company pioneering the start of a European society in India. In the course of these changes, the Company had to deal with commercial crises and political upheavals. As K.N. Chaudhuri has shown, its resilience derived from three principal strengths, a bureaucracy, success in tapping Spanish silver, and the closer relationship it forged with the government.

As this chapter will show, the consequences of its consolidation as a trading and political power were far-reaching for India and for the world.

The Company was the bridge between an unfolding pattern of mass consumption in Britain and tropical goods meeting that demand. The trend was disrupted by wars, plagues and fires. Even in the best of times, the boom was a very slow process by today’s standards. Nevertheless, consumer welfare increased, for consumption expanded faster than the population of England. Extensive commercial infrastructure and institutions came into being, financed from the profits of overseas trade. Great merchant families emerged in London; ports, docks and warehouses were constructed, shipping freights fell, commercial laws were codified and shipbuilding became a big industry. Whole new generations acquired the skills—from navigational to linguistic to financial—that served foreign trade.

Banking and insurance expanded to make London, with Amsterdam, the financial capital of Europe. One development of great importance was the bill discounting business. In the eighteenth century, trade credit instruments began to be widely used across firms, countries and continents. Bankers joined the boards of merchant companies. The Bank of England (1694) functioned as a ‘lender of last resort’ and banker to the state. Together with the Company, it formed the core of the emerging financial markets and supported the
military-fiscal regime of the Hanoverian monarchs. These institutions were later to serve the Industrial Revolution. Whereas in the early eighteenth century, industrial firms rarely did business on credit, in the early nineteenth century, the large factories routinely followed the system. Their ability to accept credit depended on the soundness of the bill discounting business that had already been in existence. That ability made it possible for Manchester to sell textiles across the world.

In different times, different goods led the consumer boom. Asian pepper was the leading article in the first half of the seventeenth century. The medieval Europeans were ready to spend fortunes and risk lives for black pepper—and cinnamon, ginger, saffron, nutmeg, clove, mace and galangal, more or less in that order. Why pepper was so coveted a good is still not fully understood. It was once thought that spices were used as preservatives, or worse, to hide the smell of stale meat. In a recent book, Paul Freedman questions this notion. Having consulted many old cookbooks written in several languages, he concludes that spices were a status symbol, a luxury rather than a necessity, the more sought after because of their association with the exotic East. In the second half of the century, two American products, tobacco and sugar, were added to the basket of leading
imports. As the cost of production in the Virginian plantations fell drastically, the price of tobacco in 1700 fell to one-twentieth the 1620 price, and the import increased from below 20,000 to 22 million pounds. West Indian sugar production and import began to expand late in the seventeenth century, and continued on a similar trajectory through much of the early eighteenth century.

By 1700, two products from India dominated the Company’s imports, cotton cloth and saltpetre. Two general types of cloth entered the European market—chintz or printed textiles, and calicoes or bleached cloth. The particular attraction of coloured cloth had less to do with the cloth itself, and rather more with the range of exquisite natural dyes that were used to colour them. Moreover, decorative technologies like blocks, embroidery and hand-painting or kalamkari were already highly developed in India. Eventually, Indian prints began to define the standards of fashion in Europe.

In 1700, the total textile import by all European companies from India amounted to 25-35 million square yards. Britain took about two-thirds this quantity. Despite Parliamentary acts trying to restrain the trade, there was little change in volume in the next one hundred years; in 1790–1800, the average quantity imported from India into Britain was still 22 million yards. Although
some of this import substituted domestic production, much of it came in as additional consumption. If the population in Britain was 5 million in 1700, the cloth imported from India would amount to 5 yards per person, which was possibly a quarter to a third of the total consumption of cloth per person.

The last Asian product to feed the consumption boom was tea. Tea-drinking in England became a mass habit from early in the 1700s. The quantity of tea brought into Britain was less than a million pounds in 1728. In 1755, three million pounds came in. ‘Where will this evil stop?’ asked a worried pamphleteer in 1757. In the 1770s, anywhere between four and seven million pounds of tea were being imported, much of it smuggled. Smuggling was unstoppable because tea was one of the most heavily taxed consumer items. It was the repeal of the tea taxes in response to the smuggling, and the imposition of compensatory taxes on re-exports of tea to the American colonies, that led to the Boston tea party in 1773.

The consumer boom was not just a by-product of the great expansion in overseas trade. Rather, as the historian J.R. Ward suggests in an article, the two developments reinforced one another. While trade transformed British society, mass consumption of traded goods encouraged overseas trade. This effect could be seen most clearly in
the case of tea. The Company’s expansion into China in the eighteenth century owed indirectly to the growth of an urban working class in Britain, and the fast-growing habit of drinking tea. Anybody who cared for the poor would be in favour of overseas trade.

What made the wheel of trade go round was American silver.

The Spanish conquest of the Americas made silver cheaper in Europe than in Asia. The Company repeatedly tried to pay for Indian goods with European goods. Except woollen textiles to a small extent, no other export succeeded in India until late in the eighteenth century, when the Indians began buying a lot of iron goods from Britain. Until then, demand in India and European manufacturing capability did not match well at all. The Company’s purchases in India, therefore, depended on access to silver as a means of payment. The decision to export bullion owed also to the high cost of borrowing money in India. Interest rates were much higher in India than in western Europe, and it made sense to import capital into India

The export of bullion made the Company’s position in the City of London politically insecure. The currencies
of the time were all metallic, and gold and silver were in great demand everywhere as means to balance trades. Under these circumstances the Company’s annual procurement in order to finance the India trade caused widespread concern about balance of trade in other fronts. Reactions from the many critics of the firm threatened to become violent when news came that the Company had become drawn into fighting battles in India, as in the time of John Child’s tryst with the Mughal army.

Improvements in shipping and the knowledge of shipping routes also aided trade and settlement.

Travel by an East Indiaman, the ship that carried personnel and cargo for the European East India Companies, changed between 1600 and 1750.

The very first voyages had been exploratory, in that they stopped in a number of places to test commercial prospects, and therefore could take almost two years to reach India. These trips were constantly plagued by accidents. This is best shown with the example of one early journey. The fourth voyage of the Company, in which John Jourdain was a passenger, set off in March 1608. In May, the voyagers stopped at the Canary Islands
and the Cape Verde Islands to pick up water, grain and goats and proceeded on a non-stop run for five weeks to reach the Cape in July. On the way, they passed one Portuguese carrack and a Dutch ship, itching to pick up a fight. Devastated by scurvy, the crew rested in Cape for two months, while the ships were refitted for the stormy waters that awaited them. In September they set off again, losing sight of two ships in a violent storm. One of the ships caught up with them in Aden months later, the other one had a miserable time trading in Sumatra and returned broke to England. In November 1608, the main ship, looking for Zanzibar, reached Pemba on the East African coast. Here skirmishes broke out between the local merchants and the Europeans, and the ships fled the port.

A period then followed when the party floundered facing the northeast monsoon winds against them. The ship carrying food was lost. In January 1609 the famished crew reached a group of islands, possibly the Seychelles. These islands turned out to be a ‘paradise on earth’. Fish, fowl and the delightful fruit ‘coker nutt’ were there in plenty. There were also many small crocodiles, which were unusually tame, not having encountered hungry European sailors before, and were easily caught, killed and eaten. After a month of rest and recovery here, they set off to reach Aden, only just making it by
forcing a Gujarati ship captain to show them the way. In Aden, English iron and broadcloths found buyers, but not before much cunning bargaining mixed with veiled threats of murder and imprisonment. In July 1609, the ship sailed for the Gulf of Cambay. The monsoon winds again blew them off course to Kathiawar. It was not before September, after losing the main ship, that the crew reached Surat, to find that the Portuguese had forbidden the town administration to allow them entry. In the first decade of the seventeenth century, most expeditions moved in a similarly unpredictable fashion.

Between 1620 and 1750, innovations and improvements in shipbuilding reduced the journey time by an East Indiaman. The journey was much shortened. Ships more than doubled in size. Earlier, the small size meant that an extra ship was necessary to carry food and water and frequent stops had to be made for replenishment of supplies. If the ship carrying the provisions was lost, as in the fourth voyage, there would be famine on board. Now, food and water went with the passengers. Local pilots were not necessary any more. Shorter time at sea reduced the incidence of scurvy. The monsoon wind was used more efficiently than before. Victualling stops were fewer and further between. Instead of the Canary Islands or the Cape Verde, the ships leaving London stopped at Madeira to pick up wine, which was in great
demand among Europeans in India. The second long halt was at the Cape, where ships halted for repairs. From Cape to Calcutta, the two stops at Zanzibar and Aden were replaced with a more convenient stop at the Comoro Islands or Madagascar. In less than six months in all, the passengers would be in sight of Balasore, reaching the mouth of the Hooghly the next morning.

The centre of the Company’s operations in India was the factory, known as the aurung in Bengal. The factory was not a place for production, but a warehouse where goods were delivered, sorted, inspected and stored. It was run by a council. Apart from the chief, the main functionaries of the council were the accountant, the storekeeper, the purser marine and the secretary who kept minutes of all meetings, then known as ‘consultations’. The secretary also prepared a general review of the work of the factory and sent a copy of the consultations, along with this review, to the directors in London. These documents constitute the main resources used by historians. The chaplain and the surgeon were also prominent members of the factory set-up, and were the intellectual face of European society in India. After these officials in the pecking order was the steward.
Below the administration, there were a large number of merchants, factors, writers, clerks and apprentices.

Ordinarily, the office work was light, and completed in three hours during the morning, and three hours in the afternoon, with a long lunch break in between. But when ships arrived or departed, the office would be extraordinarily busy for a few days. Officers on the Company’s pay lived a regulated life, rather like that in an old university town. They had free quarters in the factory, and had a number of servants and attendants. The chief officers were also permitted to use palanquins. When moving about, they were accompanied by a group of European soldiers, and, sometimes, town-criers. The officers never ventured more than a mile or two from the factory. The furthest they usually went was the garden at the edge of the town. Here, if the location were Surat or Hooghly, the Dutch officers would join the English in the mornings and evenings for a friendly walk together.

Lunch usually took place on the public table, and was a lavish affair. European cooks were in demand, and the European factories keenly competed for their services. Wines and spirits were desperately in short supply. The best wines were imported, and reserved for the officers. Meals were usually accompanied by locally brewed spirits. A whole system of brewing developed to make
Indian raw material into a tolerable, if at times dangerous, drink. Hierarchy and formality were maintained in the seating order. And yet, as soon as the juniors found themselves alone, they dressed themselves in Indian robe and pyjamas, reclined upon the carpet to enjoy the meal Indian fashion, and, as the traveller Niccolao Manucci informs us, chewed paan and smoked hukkah afterwards.

Despite the outward show of regulation and moderation, life in the factory nurtured covert violence. The factors competed with each other professionally and personally. They had their clerks and apprentices spy on each other. The brazenness with which private trade was conducted gave the factory an air of corruption. Competition over women, and the unconvincing attempts at recreating an aristocracy, led to quarrels. Early documentation of daily life is replete with stories of duels fought on trivial issues. Near Alipur bridge in Calcutta stood two trees, known as the ‘trees of destruction’, for the number of duels fought under it, almost all of them over rivalry in love. In such conditions, the chaplains played a crucial role in instilling some moral order. The personality of the chaplain, therefore, made a large difference to the quality of life.