15. The East India Company controlled farm outputs to maximize trade value
Particularly in India, the EIC established quotas in agricultural output based on the values to be gained in trade, controlling prices by responding to demand, without concern for the impact on local populations. These attitudes exacerbated the effects of famine within the Indian subcontinent on several occasions during the 18th and 19th centuries. The effects of starvation and the EIC’s response to it led to several rebellions and wars in India, and the cost of controlling the population increased steadily. Armies raised from the native population often were themselves contentious. The EIC throughout its existence practiced the policy that a British officer of any rank was senior to a native officer of any rank.
Thus, a British subaltern outranked the most senior Indian officers, who were limited in the rank they could achieve, a glass ceiling, as it were, created by company policy. The resentment of the natives in the ranks was often fueled by British condescension towards them, and created a simmering pool of discontent within the ranks of the company’s armies. The suppression of mutinous troops was another drain on company resources. The EIC did not, for the most part, suppress the religious practices of the Hindu and Muslin faith’s, at least not as a matter of policy.
16. The British government made several attempts to rein in the power of the EIC
By the end of the 18th century Parliament was aware of the power of the EIC and attempted to rein it in through a series of legislative acts over the succeeding years. Some succeeded, at least initially, others did not. What did evolve, over the first half of the 19th century, was an increased linking of the company and the government, with each influencing the other in ways which focused primarily on profits for the company, and increased tax revenues for the government. The “subjects” brought to the British Empire through the company’s expansion were of less concern for either.
In 1813 Parliament renewed the EIC’s charter for another twenty years, but the resistance in India of many of His Majesty’s “subjects” had strained resources to the breaking point. Parliament reiterated that the Crown was sovereign over the EIC’s territories (though the EIC retained control), and eliminated its monopoly on all trade other than tea and the lucrative trade with China (ignoring the fact that the opium trade was illegal, at least as far as China was concerned). The EIC needed the profits from the opium trade to fund its armies and to provide the cash with which to purchase tea.
17. The tea trade remained the backbone of the EIC following the Napoleonic Wars
The tea trade, which the EIC retained a monopoly on for tea grown in India and its other land holdings, remained the focus of the company’s business. Tea was purchased in India from local rajas, who were little more than vassals of the company, and who remained in power thanks to EIC money and troops. The expenses of the system, particularly those borne by the company to maintain its armies, strained its cash reserves to the limit. The opium trade, which shipped opium to China despite the resistance of the Chinese governments, was implicitly acknowledged by the British government.
Allowing the EIC to profit from the opium trade freed Parliament from providing too much support to the EIC in the form of reduced taxation, or the support of regular British Army regiments in India. Meanwhile the EIC continued to manipulate the price and availability of tea in global markets. By the end of the Napoleonic Wars in 1815, the EIC was essentially a commercialized entity of the British government, which controlled over half of the world’s trade, despite the steadily growing resentment of the exploited peoples of India and China.
18. The East India Company built substantial infrastructure in London
At its inception, the East India Company’s headquarters was in leased quarters in Bishopsgate. In 1638 it moved into a Leadenhall street mansion known as Craven House. In the early 18th century the house was entirely rebuilt, and was known as East India House. It was from this location that the Indian subcontinent was officially governed by the company for over a century. Other locations which were the site of EIC activities included the East India Dock Company, which constructed the East India Docks for the purpose of supporting the ships of the India trade. There was an import dock and an export dock.
The EIC established the East India College in 1806 as an institution to train its future employees. It was the civilian counterpart of the Military Seminary, and its training included languages, history, philosophy, law, and other subjects deemed necessary by the company to prepare men to administer its territories. Most of the students selected to attend were there as a result of patronage (as were most of the jobs with the EIC). The practice allowed the EIC to ingratiate itself with members of Parliament and of the English nobility, often allowing them to dispose of evidence of indiscretions by having them educated and sent to India or other far off lands.
19. The East India Company introduced a system of promotions based on merit
When the British East India Company was formed and throughout its first two centuries of existence, the vast majority of its positions were filled through patronage. The system strengthened its political position but weakened its administrative abilities, which became more and more critical as time went on. Beginning in the latter years of the 18th century it introduced a system of promotions based on performance, supported by its training institutions in England. While promotions in its military remained largely based on seniority of time in service, civil positions became more competitive among those of proven ability.
It never fully eliminated the practice of patronage, but it developed a responsive and able civil service administration of a sorts in some areas of India, which eventually served as the model for the British and Indian civil service in India. Nonetheless, throughout the period in which the EIC served as the government of its holdings in India, corruption was commonplace on the subcontinent, and in the offices of the company in London. Scores of English businessmen made themselves millionaires through their positions within the company, in India and other areas controlled by their employer.
20. The East India Company was responsible for collecting taxes from Indian subjects
Beginning in about 1765, Robert Clive delegated the collection of taxes from Indian subjects to Indian deputies, who were paid by taking a commission based on the total amount collected. It was a system which was obviously ripe for corruption. After Clive left India for the final time, taking a vast amount of personal wealth with him, Warren Hastings was made governor-general for all of the company’s holdings in India, and Indian collection of taxes was eliminated, with the responsibility for revenue collection in the hands of company employees.
Some of the company employees hired by Hastings were from the native population, a practice he observed in the company armies and applied to its civilian employees as a means of assuring loyalty. Hastings was accused of corruption and his seven-year investigation and trial in England resulted in his being acquitted. He was awarded a 4,000 pounds annual payment by the company for the rest of his life. Under his administration of India, he unwittingly allowed the caste system to be solidified by employing high-caste scholars to advise the British in the writing of the body of law. He was followed as governor-general by Charles Cornwallis, who dismissed the Indians in the company’s service.
21. Charles Cornwallis instituted reforms which benefited the company and institutionalized racism
Charles Cornwallis (who surrendered the British Army at Yorktown during the American Revolutionary War) arrived as governor-general of India and initiated reforms which affected company operations both in trade and in administration. He removed the Indians in the company’s employ, and had the Hindu and Muslim laws translated into English. In 1793 he imposed the Cornwallis Code, which established the British as the top of the imposed class structure which recognized both caste and religious hierarchies. He also changed the means of tax collection on property through a reform called the Permanent Settlement. Landowners were taxed based on the value of the land, whereas previously taxes were based on the income the land produced.
Cornwallis believed the changes would benefit the tenant landholders as much as the land owners, because improvements made by tenants would enhance the value held by the owner. Instead the Permanent Settlement did the opposite, the landowners were left free to abuse the tenants by claiming for themselves as much of the crops from the land as they wished, since the produce of the land was no longer subject to taxation. Cornwallis led the EIC troops in the Third Anglo-Mysore War (1790-1792) which further expanded the holdings of the EIC through conquest, and for which Cornwallis was elevated in the British peerage to a Marquess for his success.
22. Ships were built in India for the China trade, and banned from British ports
The EIC used Indian labor and design under the supervision of British officers to build many of the ships used for the China trade. The vessels were built and crewed by Indian sailors, out of mostly teak hulls and decks. The trade between India and China was dominated by such ships for the century between the mid-17 and mid-18th. The ships were built to be fast while carrying large cargoes, and sturdy enough to mount guns for protection against pirates. It was in these vessels that the opium smuggling into China began, and the vessels returned bearing Chinese silks, tea, and other commodities for trade.
The great tea clippers which had their heyday in the first half of the 19th century were built to support the tea trade, when speed was of the essence. Clippers were built by all maritime nations, but their hulls, designed for speed, were unable to carry enough cargo to make them profitable, other than in the tea and spices trades. The EIC built ships to carry its goods in India and Great Britain, though the vessels built in India were banned from entering British and European ports, limiting their use to the Indian Oceans and the South Pacific.
23. The modern Indian Navy has its roots in the East India Company
India has a long naval tradition, which existed before the arrival of the English, French, and Dutch, but the modern Indian Navy’s roots can be traced to the East India Company in the 1600s. In 1612 the EIC built a port facility at Suvali, a small village near Surat, to support a navy to protect commerce from piracy. The naval force was formalized as the Honourable East India Company’s Marine in September, 1612. The small navy was kept busy dealing with pirates along the coast and in river estuaries, and during its patrols its officers, who were British employees of the EIC, charted much of the Indian and Chinese coasts.
In 1686 the navy had outgrown the port of Suvali, and the force’s headquarters was moved to Bombay and renamed the Bombay Marine. From 1824 – 1826 the Bombay Marine fought in the First Anglo-Burmese War, a conflict between the EIC and Burma, which ended in a victory for the EIC and territorial expansion in Burma. At the end of the war, which was not the end of EIC territorial expansion, the British East India Company – a private company – had its own army, its own navy, had conquered territory in its own name, and controlled half of the world’s trade, from an office building in London.
24. The Great Rebellion of 1857 brought the company to its end
In 1857 troops of the EIC throughout India rose in rebellion against their British masters. The troops – known as Sepoys – gave the rebellion its most widely used name of the Sepoy Mutiny. In India it is known as the First War of Independence. At the time of the rebellion, more than 300,000 Sepoys were in the EIC armies, which were divided into three separate entities, the Bombay Army, Madras Army, and the Bengal Army. About 50,000 British troops were divided between the three armies, also employed by the EIC. The Bengal Army contained a large number of Sepoys who were higher-caste natives. The rebellion began in the Bengal Army.
It was rapidly and brutally suppressed by the EIC using Sepoy troops which remained loyal to the EIC. During the rebellion religious strife emerged and massacres of prisoners and civilians were frequent. Atrocities were perpetuated by all sides and were widely reported in the press in Great Britain, where sentiment against the Indians hardened. But in the aftermath of the rebellion, sentiment turned against the EIC and its administration of India. In August, 1858, the British government enacted the Government of India act of 1858, transferring the control of India to the British Crown.
Queen Victoria added the title Empress of India to her stylings, and the period known as the British Raj began in India following the Sepoy Rebellion. Most of the East India Company bureaucracy remained in place, though no longer employed by the company. The company itself remained in existence for another fifteen years, administering the tea trade for the British government, though it no longer had a monopoly. It also assumed the role of keeping the British outpost at St. Helena supplied, due to its importance to British ships and as a source of saltpeter, an essential component of gunpowder.
It was dissolved formally in 1874 by acts of Parliament. The company’s army and navy were absorbed by their counterparts under the British Crown. The Bombay Marine became Her Majesty’s Indian Navy. Most of the policies of the EIC regarding its military arm remained in effect under the Raj, as did those of the administration for some time. British influence continued to expand in the Indies through the middle of the 20th century, when Indian independence was finally granted as the British Empire broke apart in the aftermath of World War II.
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