East India Company: #1 - Origin Story

How could a single private company, the East India Company (EIC), have conquered all of India? If you’re looking for a simple answer, then avoid William Dalrymple’s The Anarchy. But if you like superbly researched, insanely detailed narratives (even if they are super-long), then the book is just for you.

Right in the introduction, Dalrymple sets the expectations straight:

“It is always a mistake to read history backwards… (It’s only) in retrospect, the rise of the company seems almost inevitable.”

So he starts at the beginning. Formed in 1599, it was a time when England was a “relatively impoverished” country. Those who invested in the company were “mariners and adventurers”, men better at piracy and looting than the “far more demanding skills of long-distance trade”. The success of the Dutch with their private company model made the British feel, “Huh, maybe we can do it too”.

The British Crown had few expectations of success when the dominant players were Spain, Portugal and Holland, but were attracted by the possibility of tax revenue. So they issued a royal charter to make the proposition attractive: no custom duties (first 6 voyages), a monopoly on trade to the vaguely defined East Indies (15 years). Since nobody expected much, the charter was quite vague and its interpretation would be changed by the EIC over the next 150 years…

When they landed in India, they established Fort St George near what is now called Madras. They declared the area a no-customs zone for 30 years, thus making it into magnet for artisans and traders, soon becoming a city of 40,000. As long as trade happened, the EIC’s profits grew exponentially. But when recurring tiffs over trade happened, it hit profits leading to the first attempt by the EIC to take on the Mughals… and suffer a crushing defeat. The Mughal emperor eventually forgave them in 1690 and restored their trading privileges.

Given that Aurungzeb was a religious bigot, he alienated the Hindus. And so they would rise in revolt, which he would then put down viciously setting off another round of resentment. Thus, by the time Aurungzeb died in 1707, the backbone of his army (Rajputs) was barely on the Mughals’ side anymore, the military campaigns were bleeding the empire, and the insurgent Marathas had gotten better with “practice” at resistance and guerilla warfare:

“(The Mughal empire) shattered and fragmented like a mirror… leaving in its place glinting shards of mosaic of smaller and more vulnerable successor states.”

And:

“As authority disintegrated, everyone took measures for their own protection and India became decentralized and disjointed.”

A succession struggle after Aurungzeb didn’t help matters. Anarchy is never good for trade. As the risks to their profits rose, the EIC wondered if it had to now play a very active (read military) role in establishing stable rule for Bengal, the area they operated in…