Britain, the East India Company and India

Do you know that the British East India Company was a private company that came to India with the purpose of trade? Yet a private company still need permission from their native homeland’s government. Explore the link between Britain, the middlemen- the East India Company, and India.

A royal charter; Image source: Institute of Directors

The British EIC received a royal charter from Queen Elizabeth on 31st December 1600. First things first- What is a charter? A charter is a document issued by a sovereign state (which is England in this case) to a corporate body ( which is the British East India company in this case) defining their rights and privileges. The rights and privileges that the British Monarch gave to EIC were that they could trade with India for 15 years, without facing any competition from other private companies of Britain. Their trade rights were exclusive!

With the advent of EIC in India, the subsequent charters’ by the Queen renewed their contract. As we know it, the officers of EIC had a good successful military campaign against the regional states of India. There was the Battle of Plassey, Anglo-Mysore wars, Anglo-Maratha wars, etc. All these battles especially the Battle of Plassey brought huge wealth to the EIC. Bengal was one of the richest presidencies even by the standards of the world!

You would find it interesting to know that even though they were amassing such a huge amount of wealth, the EIC asked for a big fat loan from the British parliament. The East India Company was on the verge of bankruptcy. Where did all the money go? Take a guess!

A secret committee report mentioned that the officials of the company were the ones who amassed huge wealth rather than the company accumulating wealth. In fact, this report said that they had enough money to be called ‘Nawabs of London’, an ironic terminology based on Nawabs of Bengal from whom they had taken the money.

When EIC asked for this loan, the British monarch decided that enough was enough and this private enterprise needed some regulating. British Parliament wasted no time in issuing one of its first regulations for EIC- The Regulating Act of 1773.

This Act made the Governor-General of Bengal, the Governor-General of India. Earlier the presidencies of Madras and Bombay were equal and independent to Bengal but now they were subservient to it. An executive council of four members was created who would assist the Governor-General. A Supreme court was established at Calcutta.

To curb the corruption, all the officials of the company had to state their property. They also had to mention how they acquired that money. Any private trade (personal trade) or acceptance of gifts from natives of India was prohibited.

However, this act failed to curb the corruption among the EIC officials because it had no mechanism in place to check the corruption. This is why a new law was passed by the British Parliament- Pitts India Act, 1784.

Through this law, the British Parliament decided to link with India directly instead of letting EIC do all the work. This established a joint rule. For the first time, the company's territory in India was called ‘British possession’.

A ‘Board of Control’ was set up that would fully control the civil, military, and revenue affairs of the company in India. Though, the British parliament failed to put in a transparent mechanism for checking corruption. Funnily enough, these board of control members had developed a close connection with officials and now they themselves became part of the corruption chain!

The Governors-General of India did truly amass huge wealth. When they retired, their lives were no less than that of a Nawab. This was a huge part of the drain of wealth India suffered from. On the other hand, East India Company was failing to show any sign of profit. We will see in the subsequent stories, how the Charter Acts after the Pitts India Act shaped the company’s future in India.

Until then stay tuned!