Which company outstripped Walmart in terms of market power, Enron for corruption and Union Carbide for human devastation? It was the East India Company. Driven by the desire to earn higher and higher profits — for the company as well as for themselves — its functionaries came to rule large territories in India. This was no mean feat. But the same people shocked the world with their malpractices and human oppression.
The East India Company was a pioneer amongst joint stock companies and laid the foundation for modern-day corporations. When it was set up on December 31, 1600, shareholders provided money for each voyage. It was only in 1657 that it became a permanent joint stock company. The face value of its share was £100. Over the next 200 years and more (it was finally dissolved in 1874), the share price moved up and down as its fortunes changed.
It climbed to £150 in 1693 and then fell below the face value once various enquiries brought to light the corruption of its officers. The lowest point came in 1698 when another company was allowed to set up shop to trade with India and the East India Company fell to £37. The threat was short-lived and the stock rose to £200 by 1717 and £420 in 1719. After that, news of a victory (carried by ship, of course) drove the share price up, defeats brought it down. Enquiries and strictures, too, deflated the stock. Hyder Ali’s capture of its territories, for instance, made the share price nosedive; Clive’s victories in Bengal made it rally.
There are many books on the East India Company, also called “John Company” or simply “Company Bahadur”. But none tracks it like a corporation — and that’s what it was at the end of the day. Nick Robins’s The Corporation that Changed the World (Orient Longman, 2006; Rs 295) is perhaps the only attempt to look at the East India Company’s history though the stock market.
The East India Company, in spite of the wealth it added for its shareholders, employment it provided to people (Charles Lamb and John Stuart Mill, among others) and the taxes it paid to the British government, had to face severe criticism at home. The louder it grew, the more nervous its shareholders became. Adam Smith, Edmund Burke and Karl Marx examined the Company’s working at different times and came to the conclusion that all was not well with it. Smith called it one of the biggest enemies of the open market and the efficiencies the open market brings about in allocation of resources. “Every rupee of profit made by an Englishman,” Burke told Parliament, “is lost forever to India.” Marx, writing 70 years after Burke when the East India Company was on its last legs, called it a standard-bearer of Britain’s “moneyocracy”.
Both Smith and Burke worried that the East India Company’s commercial success could impinge upon the hard-won liberties of Britain. They both wanted to place ethics and responsibility at the heart of the enterprise. But the imperatives of empire, and not ethics, won the day. The excesses and devastations were, after all, happening in a distant land. The momentous India Act of 1784 saw the start of the Company’s transformation from a commercial venture to an imperial administrator.
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The mutiny of 1857, which nationalist Indian historians like to call the first war of independence, was the final nail in the Company’s coffin. It was finally agreed that the East India Company had over-reached itself and the consequences had been disastrous. In 1858, direct British rule was established in the country. Sixteen years later, the East India Company was wound up.
What did Company rule mean for Indians? The answer can perhaps be found in Jawaharlal Nehru’s The Discovery of India. He says the areas ruled the longest by the East India Company and later the British government — Bihar, Bengal and Orissa — were the poorest provinces of the country.