Page 1 of 2 BOOK REVIEW A law unto itself The Corporation That Changed the World by Nick Robins
Reviewed by Sreeram Chaulia
The British East India Company was a colossus responsible for the creation of
the iniquitous modern world. Historian Nick Robins' trenchant new history of
this giant re-examines the world's most powerful corporation during the Age of
the Enlightenment in terms of its shadow over the global economy of today. It
is an attempt to expose its destructive legacy so that future interactions
between
Western corporations and Asian countries are based on principles of fairness.
From the 17th to the 19th century, the East India Company shocked its age with
executive malpractice, stock-market excesses and human oppression, outdoing the
felons of our times such as Enron. Its contemporaries across the political
spectrum saw the "Company" as an overbearing and fundamentally problematic
institution.
Karl Marx called it the standard bearer of Britain's "moneyocracy". Adam Smith,
the economist deeply suspicious of mighty
corporations, was horrified at the way in which the Company "oppresses and
domineers" in India. Edmund Burke, the father of modern conservatism, declared
India to be "radically and irretrievably ruined through the Company's continual
drain of wealth".
Established in 1600 by royal charter, the Company's operations stretched from
the Atlantic Ocean to India, Southeast Asia, China and Japan. Colonial rule in
India was the eventual outcome of the Company's forays, but its ultimate
purpose was profit-making with an eye to shareholders and the annual dividend
in London.
Personal and private profits were the abiding motives of this Company, which
"reversed the centuries-old flow of wealth from West to East and engineered a
great switch in global development" (p 7). Robins challenges romantic
reinterpretations of the Company's past, now under way in Britain, for ignoring
the abuse, misery, devastation and plunder that marked its presence in India.
His point is that the Company should be assessed on the basis of its extortion,
corruption and impunity rather than peripheral contributions to "discovering"
Oriental culture.
Throughout its life, the Company had to justify its existence by citing the
customs revenues it earned and the gifts it could offer. Presents and bribes to
princes and parliamentarians were "part of the fundamental costs of business"
(p 28). A favorable relationship with the crown and Asian elites were essential
for retaining barriers to entry that sustained the Company's trade monopoly.
From the beginning, armed force was the key for the Company to access Asian
markets. Its governors boasted of "conducting commerce with a sword in your
hands" (p 29). An all-powerful "Secret Committee" defined the Company's
political and military strategies to achieve economic gain.
Force and fraud went hand in hand to obtain market dominion. The Company was
ever ready to contemplate conquest for commercial interest. It echoed the motto
of its rival, the Dutch East India Company, "We cannot carry on trade without
war, nor war without trade" (p 40).
The first wave of East India traders focused on spices from what is now called
Indonesia. They "traded where necessary and plundered were possible" (p 43).
Sir Josiah Child, governor of the Company in the 1680s, conceived a radical
plan to transform it into a sovereign power and "formidable martial government"
in India.
This initial thrust was repulsed by Mughal armies. After the death of Emperor
Aurangzeb in 1707, the Company secured duty-free trading rights in Bengal,
Hyderabad and Gujarat by means of hefty bribes. From 1720, it was the
undisputed blue-chip mercantile stock on the London stock exchange, extracting
healthy profits from textiles through collaboration of local Indian potentates
such as Nabakrishna Deb.
The Company undermined the revenue base and the local economy of the rulers of
Bengal, India's richest province in the 1750s, by depriving vast numbers of
natives of their livelihood. Regulatory pressures and competition from other
European trading houses threatened the commercial position of the Company.
In retaliation for being expelled from Bengal, the Company's warrior baron,
Robert Clive, mounted an amphibious offensive sprinkled with intrigue and
conspiracy that won the day at the Battle of Plassey in 1757. Victory gave the
Company command of public revenues and the internal market of Bengal.
After another triumph at the Battle of Buxar in 1764, Bihar and Orissa were at
the mercy of "John Company" and progressively pauperized by unrequited trade.
From economic independence, Indian weavers were forced into slavery, unable to
sell to others and obliged to accept whatever the Company paid. Military force
expanded to squeeze raw materials from producers. Methods of Company repression
included fines, imprisonments, floggings and forced bonds.
Profiteering and insider trading by company executives reached their acme as
bans on corruption were ostentatiously ignored. Illegal syndicates to
monopolize the betel-nut, salt and tobacco trade and persistent overestimation
of the financial value of acquisitions were routine shenanigans in the Company.
Clive led a remorseless grab campaign on the riches of an entire people and
rerouted the flow of wealth to the West.
The Company increased eastern India's vulnerability to natural disaster and
triggered a famine in 1770 that cost more than 1.2 million lives. Instead of
introducing time-tested revenue relief during distress, it raised taxes and
purchased grain by force for hoarding. The sheer barbarity and violence of the
Company's conduct during the famine were "one of the worst examples of
corporate mismanagement in history" (p 94). Callousness toward Indian lives was
a natural result of its political tyranny.
Millions more Indians lost their lives when the Company's stock crashed in
London in the mid-1770s. After the bubble burst, the English government
introduced a new post of governor general of India to curtail the Company's
freedom. The principle of extraterritorial liability for corporate malpractice
was founded when Clive's successor in Bengal, Harry Verelst, was found guilty
of human-rights abuses in 1777. From 1774, three councilors
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corporations, was horrified at the way in which the Company "oppresses and
domineers" in India. Edmund Burke, the father of modern conservatism, declared
India to be "radically and irretrievably ruined through the Company's continual
drain of wealth".
