Honourable Company: A History of The English East India Company (60 page)

There was of course a simple solution – redirect the Indian surplus to finance the China deficit. But without the Company’s bullion shipments, Bengal was soon chronically short of specie. India’s only surplus was in kind, not cash, and although some Indian cottons and saltpetre could be sold at Canton, it was not until Canton relaxed its strict prohibition on the import of Bengal opium that this simple solution was possible.

Meanwhile Dalrymple had outlined an alternative as part of his master plan for Balambangan. He observed that China’s overseas trade traditionally hinged on the import of primary produce from south-east Asia and the archipelago. As well as pepper and spices it comprehended a pungent cornucopia of everything from tin ore to gold dust and animal skins, from sea-slugs to birds’ nests and sharks’ fins. Tearing a leaf this time not out of Saris’s journal but out of that of Peter Floris, he also observed the archipelago’s demand for Indian cottons and opium. The solution then was a three-way exchange – Indian produce for that of south-east Asia, south-east Asian produce for that of China.

Dalrymple expressed himself with clarity and cogency but in reality he was not so much formulating a new policy as rationalizing an existing state of affairs. Ever resourceful, the ‘country’ or ‘private’ trader had already moved in on the south-east Asian market.

No aspect of the Company’s history so successfully evades analysis as private trade. By the eighteenth century the Honourable Company’s monopoly was enforced only over the ‘out and back’ carrying trade between Europe and the East. Within the East all trade, be it the river traffic of Bengal, the coastal traffic of the Malabar and Coromandel ports, or the oceanic intercourse between India, Arabia, Persia and China, was a legitimate field for private speculation. The life-blood of the Company’s major settlements, it engrossed the energies of all their inhabitants, be they European or Indian, civil or military, Company’s servants or ‘free merchants’.

It was this combination of a profusion of participants with an incredible diffusion of markets which made the trade so impossible to regulate – and which makes it so difficult to analyse. But it seems clear that
whereas at the beginning of the century the long-distance trade was mainly between the Arabian Sea ports, by the 1760s it had swung decisively to the other side of India. As noticed, it was private trade that preceded the Company’s links with Burma, the Philippines and the archipelago. And the same was true of the Malay peninsula which had thus far been left entirely to the private trader.

‘Private’ shipping could be anything from a ten-ton prahu like the
Tartar
to a 500-ton Indiaman. It might be owned or chartered. The owners or charterers, who might or might not be responsible for its cargo, could be an informal partnership, an established syndicate, or a society with monopolistic tendencies not unlike those of the Honourable Company. The Benkulen factors, in their private capacity, operated as a ‘General Concern’; in Bombay, Madras and Calcutta the first ‘Agency Houses’ were taking shape.

One such was the firm of Jourdain, Sulivan and de Souza which in 1770 became ‘The Madras Association’. Based at Fort St George, it had built up a thriving trade with the Malay peninsula and Aceh by selling Indian cottons to the Malay and Bugis traders and buying from them produce suitable for the China trade. It had agents in Aceh (Sumatra) and Kedah (Malaya) who handled not only their own company’s trade but also that of other private traders from Bengal or elsewhere. In effect the firm was operating a local monopoly in these ports and as such its operations came to the attention of the Court of Directors in London. In 1772, on their orders, Madras dispatched an agent to the Sultan of Aceh with a view to planting a settlement and developing this trade for the Company’s benefit. The overture was rebuffed and a similar mission to both Kedah and the Rhio (Riau) islands, a mere twenty miles from modern Singapore, also failed.

Kedah and Rhio had been suggested by Captain Francis Light, one of the Madras Association’s employees who had originally come out to the East as an officer in the Royal Navy. As well as the commercial value of a base in the vicinity of the Malacca Strait, Light could clearly see its strategic importance as a half-way house for the China trade. Thus when Rhio dropped out of the reckoning, he was quick to come forward with alternative sites including the island of Penang. Meanwhile Forrest, who had also once served under Admiral Pocock, drew attention to the other strategic need, that for a safe haven during the monsoon in the Bay of Bengal. He rightly observed that nothing had been done about this since the Negrais disaster, and the validity of his concern was painfully
highlighted when in 1782 a French fleet again entered the Bay. After a succession of typically indecisive battles, the British fleet returned to Bombay to refit. Briefly the French had the run of the Bay and ‘nearly succeeded in blockading Calcutta’ (D. G. E. Hall).

As a result of this scare, further attempts were made to establish a Company presence in both Aceh and Rhio. The Dutch quickly preempted Rhio while Aceh guarded its independence as jealously as it had in the days of James Lancaster. Its Sultan, another Ala-uddin, nevertheless valued his European friends. When Forrest called there in accordance with instructions from Calcutta to make one last bid for a Company settlement, the Sultan conferred on him the Order of the Golden Sword and graciously accepted a copy of Voltaire’s works. It is not recorded whether Forrest knew that Lancaster’s crew had sung a psalm for the Sultan; but as if to repeat the courtesy, Forrest also presented Ala-uddin with a musical token, in this case a rendering of a traditional Malay verse ‘to the
Comnti Vivace
of the 3rd Sonata of Corelli’.

With Rhio and Aceh out of the running, that left Penang. Light was still on good terms with the Kedah Sultan who owned it and in 1786 the Sultan ceded the island to the Company. Light took possession, renaming it Prince of Wales Island. Thus, a whole generation of false starts and missed opportunities since Negrais, the Company again had a foothold in mainland south-east Asia.

Penang would prove ideal neither as a commercial emporium for the produce of the archipelago, nor as a half-way house on the route to China, nor even as a naval base in the Bay of Bengal. But it would slowly acquire the security and permanence which had eluded Negrais and Balambangan. From Penang political and commercial opportunities would tempt the Company to intervene on the Malay peninsula and to exploit the weakness of the Dutch in the archipelago. And on Prince of Wales Island Thomas Stamford Raffles would take up his first overseas post. All that stood between Penang and Singapore was just over 300 miles of dazzling coastline and just over thirty years of burgeoning trade, plus the global repercussions of the Napoleonic Wars.

Turning again from the tinkling East to the ever grinding importunity of India, it is as if the East India Company were now in fact two companies, one maritime, the other continental; one commercial, the other territorial; one East, the other India. This dualism could conceivably be traced back to the Company’s origins and the rival establishments at Bantam and Surat; or indeed forward to the Victorian juxtaposition of, on the one hand, a free trade or ‘informal’ empire of the seas with, on the other, that colossal landed dominion that was ‘our Indian empire’.

Tempting as it is, such theorizing would, though, be as misplaced as the commoner fallacy of concentrating on one of these strands to the neglect of the other. For it is only in the late eighteenth century that anything like parity between them emerges. Thanks as much to the ever expanding China trade as to political developments in Bengal, then indeed the Company seemed to be straddling two horses. Inevitably questions began to be asked; should it continue purely as a mercantile association and follow the suggestions eagerly proffered by the likes of Dalrymple for opening up China, the Pacific, and even Australia and north-west America? Or should it abjure such speculative markets and embrace what seemed the surer prospect of trade and revenue on the Indian subcontinent?

Logically Clive had surely been right when in that letter to Pitt (Chatham) of 1759 he had urged the idea that ‘so large a sovereignty’ as was available in Bengal was ‘too extensive for a mercantile company’ and required ‘the nation’s assistance’. Like a building contractor whose excavations had unexpectedly unearthed some fabulous city, it was appropriate that the Company should be relieved of responsibility for its ‘find’ by
those who understood how to manage such things. Let it instead concentrate on that for which it was constituted – ‘trading to the East Indies’ – and let the business of sovereignty and government be left to sovereign governments.

But in fact, and for reasons that will be examined, precisely the opposite would occur. If, as an independent mercantile association, the Company was ill equipped for ‘so large a sovereignty’ as India, the solution that transpired was that it should be restrained and reformed until eventually it ceased to be either independent or mercantile and became instead a manageable and responsible administrative service. It was like designating the building contractor as a preservation society, dressing the brickies up as curators and expecting the digger-drivers to switch to trowels. The whole idea was crazy; unsurprisingly its implementation would prove slow, painful, and fraught with misery both for the Company and the people of Bengal.

Whoever considers the nature of our territorial acquisitions in the East Indies and the constitution of the several Courts of Proprietors and Directors [of the Company] by which they are governed, will, if he is a wise man, see, and if he is an honest man, confess, that nothing can be more absurd and preposterous than the present system.

Thus wrote John Robinson, Secretary to the Treasury and the British government’s leading authority on Indian affairs in the 1770s. Yet ‘absurd and preposterous’ as it was, Robinson was adamant ‘that the Government should
not
take the management of these acquisitions into its own hands’. He gave five reasons. He could not see how the Bengal acquisitions could be ‘properly’ transferred, that is, without infringing the Company’s chartered rights; he was against severing the commerce of Bengal from its administration because it was only through trade that the Bengal revenue could find its way to Britain; and he was ‘violently against’ any arrangement which would make the British government and the British exchequer responsible for Indian commitments.

This last concern was undoubtedly prompted by current experience of the American colonies. Indeed another of Robinson’s reasons for not wanting the Government to take on direct responsibility for India was that it already had one colonial revolt on its hands without inviting another. Had the whole Indian debate not coincided precisely with the loss of Britain’s first overseas empire in America it might well have taken
a very different path. It would certainly have been conducted with less caution and less passion. But what was happening in North America dictated what must not happen in India. Hence, while ducking direct involvement by the Government, Robinson insisted that the independence of the Company and the ‘democratic’ nature of its shareholders must be suppressed.

Finally he suggested that, since there were bound to be ‘errors’ in the management of such distant acquisitions, it was convenient that the Company’s directors should remain the scapegoats rather than the King’s ministers. In fact, given that these same ministers could scarcely command respect and authority at home, he thought that Leadenhall Street, once reformed, would be in a much better position to run Bengal than would Whitehall.

Robinson was writing in the context of Lord North’s ailing administration; but he could just as well have been referring to any of its weak predecessors or its immediate successors. This was an age of ministries rather than governments, each representing a coalition of factions rather than parties, and each serving self-interest rather than principle. In England notions of public service were scarcely more developed than in India. Office, however transitory, was seen more as a reward than a responsibility and incumbents agonized more over the dispensing of its perquisites than over the mastering of its paperwork. Direct state administration of Bengal promised to be no more disinterested and distinctly less consistent than Company administration. Indeed the great fear, voiced by both Government and Company, was that a state takeover would confer such a reservoir of desirable patronage on the King and his ministers as to enable them to buy off all opposition and thus subvert the constitution and possibly subordinate domestic priorities to the exigencies of Indian policy.

Looked at in retrospect, then, one might conclude that the Company was ‘set up’. If the prospects for corruption, exploitation, mismanagement and censure made Bengal too hot to handle for the Government, it was obvious that an association of self-confessed fortune-seekers would be virtually incinerated. Echoing Burke, imperial historians would invariably shudder and blush over the enormities perpetrated by the Company’s servants in the aftermath of Plassey. Misappropriation was commonplace; so were extortion and outright oppression. But it is noteworthy that at the time, and well into the 1780s, Burke himself remained silent. He wholly approved of the Company’s rule, vigorously
supported it during the debates on the 1773 Regulating Act, and let fly with his first salvoes of indignation only when the worst abuses had been curbed and the main culprits replaced. Thus Warren Hastings, his chosen target, is now generally regarded not as the dragon who laid low the Bengali economy but as the St George who by ending the most draconian ravages laid the foundations of a more equitable empire.

Faced with the bonanza that was Bengal, it was inevitable that riot should precede rule and that flagrant grounds for state intervention would result. But what is surprising is that state intervention was initially so casual and counter-productive as to suggest collusion; and that eventually the Company in India was so successful in conducting its own reform that, by the time state intervention was formalized, the Company’s administration was well on the way to becoming a model of its kind and indeed the envy of Whitehall.