The rule of empires : those who built them, those who endured them, and why they always fall (35 page)

slow to follow the Iberian lead in exploiting the opportunities of the

New World, the English Crown still followed the Spanish example of

relying on private speculative interests to take the lead in overseas

empire building. In the Western Hemisphere, the resulting North

American settlement and West Indian plantation colonies had their

own particular characteristics, but they were relatively similar to

their Spanish American counterparts. In Asia, however, the British

East India Company was an entirely different kind of semiprivate

imperial power. The Dutch East India Company, which conquered the

Spice Islands and southern Africa, was its only real peer. The EIC’s

Indian empire differed markedly from Britain’s colonies in the Americas, thereby making it diffi cult to speak of the larger British Empire

as a single integrated institution.

The English monarchs, who had far less autonomy after the Glorious Revolution of 1688 than their Bourbon Spanish counterparts,

were most concerned with forging the United Kingdom. English

imperial entrepreneurs fi rst focused primarily on founding settlement colonies in Ireland. Sixteenth-century speculators such as Sir

Walter Raleigh, who later made a name for himself in the Americas,

carved out “plantations” around the northern city of Ulster for English and Scottish settlers. Citing the Roman colonies in Britain as an

inspiration, they claimed land in Ireland by right of conquest and

depicted conquered Irish populations as uncivilized barbarians lacking the capacity to make proper use of fertile soil. Unlike the Welsh

and Scots, who eventually became Britons, Irish Catholics largely

remained inassimilable imperial subjects. As a result, when the Act of

Union created the United Kingdom in 1707, Ireland became a de facto

colony under the jurisdiction of the British Parliament.

Distracted by their Irish project and the Thirty Years’ War, the

cash-starved Crown left it to private commercial interests to take the

Company

India 179

lead in overseas expansion. It used the royal charter, which conferred

a monopoly over all British trade in a given region, to convince entrepreneurs to accept the speculative risks of foreign ventures. Over time,

these loose alliances of merchants gave way to joint stock companies

that spread the risk of foreign trade and investment by raising capital

collectively. Some of their shareholders were active traders, but others were passive investors seeking the greater profi ts of foreign commerce without leaving the safety of home. A court of directors and

central offi ce in London delegated the authority to negotiate trading rights and commercial treaties to company governors and factors

who established forts and trading stations (factories) in foreign lands.

Ideally, the companies exchanged European manufactures for spices,

textiles, slaves, and other commodities, but in Asian markets they

often had to buy the most desirable goods with precious metals. The

expense of maintaining a fl eet of armed merchant ships and fortifi ed trade settlements was considerable, but the most successful fi rms

used their monopolies to turn a profi t. Technically, their charters only

applied to rival British fi rms, but the courts of directors went to the

great expense of raising private armies in an effort to force foreign

rivals to respect them as well. The Crown played no role in directing

their activities, but the chartered company model gave it an extremely

cost-effective means of projecting imperial power overseas.

For their part, the courts of directors used their charters to raise

capital for a wide variety of endeavors. Founded in 1581 as one of

the fi rst joint stock companies, the Levant Company futilely tried

to develop a secure overland commercial route to Asia. In the west,

the Virginia, Plymouth, and Massachusetts Bay companies purchased

charters in the early seventeenth century giving them the right to

establish speculative settlement colonies in North America. Later in

the century, the Royal Company of Adventurers and the Royal African Company sought gold and then slaves in West Africa.

In the Americas, British charter holders and would-be empire

builders had to confront the formidable but precarious Spanish

Empire. Elizabeth I provided a measure of support for Francis Drake

and Thomas Cavendish, but often it took force to make up for the

Spanish, Portuguese, and French head start in the Western Hemisphere. Elizabeth therefore also quietly encouraged Drake and his

peers to raid Spanish shipping. Taking advantage of Spain’s growing

impotence, British imperial entrepreneurs followed in the wake of

180 THE RULE OF EMPIRES

these privateers to stake out settlement and plantation colonies in

the sugar-producing islands of the West Indies and the most promising regions of coastal North America. They purchased their charters

on the assumption that royally sanctioned monopolies on settlement

and trade would make them great lords in the New World.

Yet the Spanish imperial model was unworkable in North America

because the indigenous population was too sparse and vulnerable to

disease to play the role of exploitable subjects. After an initial period

of relatively peaceful coexistence, British settlers virtually wiped out

most coastal Amerindian societies through warfare and enslavement.

Still, the population of British North America grew from one hundred thousand to roughly two and a half million people between the

mid-seventeenth and eighteenth centuries.8 Taken as a whole, this

massive overseas migration of western Europeans and unwilling

African slaves produced an entrenched and expanding permanent

British population in the Western Hemisphere.

In the east, the chartered company system never produced permanent settlement colonies. Most Asian societies were far too powerful

and resistant to Old World diseases to suffer the fate of the Inkas.

Moreover, the British East India Company was surprisingly impotent

when its representatives fi rst arrived in Asian waters. Its royal charter gave it a monopoly on all British commerce east of the Cape of

Good Hope, but the EIC’s 218 original stockholders were so severely

undercapitalized that they had to share the costs of trading stations

in the Spice Islands with Dutch partners. Further east, the Chinese

refused to admit EIC ships to their ports, and in Japan Company traders ineptly tried to sell coarse English woolens to the silk-wearing

Japanese. Prospects with the Company were so bad during this early

period that its directors recruited many of their clerks and accountants from orphanages and charity schools.9

The Dutch, conversely, were the dominant western power in Asia

for most of the seventeenth century. Emerging from the Thirty Years’

War as an expansionist commercial power, the Dutch Republic organized Amsterdam-based companies trading with Asia into the Dutch

East India Company. Chartered in 1602, the VOC had considerably

more leeway than its European rivals in fi ghting wars and conducting

diplomacy. Its fortifi ed trading settlements in the Spice Islands and

commercial contacts with Mughal India gave it the lead in capturing

the lucrative long-distance trade with Europe.

Company

India 181

The Dutch East India Company guarded its advantages jealously

and was often ruthless in its pursuit of profi t. For a time it tolerated

the EIC’s fumbling attempts to gain a portion of the pepper trade,

but it lost patience with the British when they interfered with Dutch

interests. Things turned ugly in 1623 when the VOC executed ten

to fi fteen of the EIC’s employees on the island of Ambon. Unable to

stand up to the Dutch militarily, the EIC turned its attention to the

South Asian subcontinent, where no European company was strong

enough to monopolize trade with the Mughal Empire or the independent rulers of southern India.

The Company fi rst realized India’s economic potential when it

captured a Portuguese ship loaded with high-quality South Asian

textiles. In 1608, it set up its fi rst trading station at Surat, in western India, and opened another three years later at Masulipatam, on

the southern coast. While these factories gave the EIC entry into the

well-established Indian Ocean textile trade, it sought more direct

access to the weavers in the interior to avoid the higher costs on the

coast. But the Portuguese initially convinced the Mughal emperor

Jahangir to deny the Company trading privileges on the grounds that

it was just a minor power. It was only when the EIC’s naval forces

destroyed a rival Portuguese fl eet, thereby demonstrating its usefulness as an ally, that the Mughals granted the British full access to

Indian markets.

The Company initially purchased textiles to trade for spices in

Indonesia, but it soon realized that there was a market for these fabrics in Europe. By the 1660s, its annual imports to Britain amounted

to over four million square meters of cloth with a total value of nearly

three-quarters of a million pounds. The East India Company sold

most of this material at London auctions, but riots by English weavers in the 1690s led the Crown to impose protective tariffs on Asian

textiles. In 1721, it allowed the Company to import only high-quality

printed Indian calicos for reexport to Europe. These restrictions led

the EIC to diversify into trading in indigo and saltpeter.

The increasing importance of the Indian trade led the Company

to seek more permanent bases on the subcontinent. In the south, the

EIC shifted from Masulipatam to a small fi shing village that grew

into Madras. Company offi cials also abandoned Surat for the island

of Bombay, which Charles II acquired from the Portuguese as part

of the dowry for his marriage to Catherine of Braganza. In Bengal,

182 THE RULE OF EMPIRES

the Company established its original factory on the upper Hugli

River, but Mughal pressure forced it to shift to the more strategically

located coastal villages that became Calcutta. The court of directors in

London appointed a council of merchants to run each of these trading

stations, which came to be known as presidencies.

The Company’s footprint in India was originally quite small, with

each presidency rarely having more than one hundred employees. EIC

traders therefore relied heavily on Indian brokers and middlemen to

serve as translators and provide information on markets, weights and

measures, and currency. In Bengal, the most important of these local

brokers became salaried Company employees responsible for overseeing a network of rural agents who in turn contracted with weavers

and farmers to supply textiles, raw silk, indigo, opium, and a range

of other commodities. These lower-ranking Indian intermediaries did

not work directly for the Company and made their money largely on

commissions.

Similarly, the EIC’s European salary levels were so low that the

court of directors allowed its employees to support themselves through

private trading. The most senior offi cials had the privilege of exporting goods on Company ships, but the royal monopoly on commerce

with metropolitan Britain forced them to concentrate on Southeast

Asian and Chinese markets. This tied the East India Company into

larger Asian trading networks. Over the course of the seventeenth

century, these offi cial and private trading initiatives also drew the

East India Company ever deeper into the affairs of the subcontinent.

Seeking to cut out the middlemen who drove up prices, Company

employees became more involved in Indian commerce, investment,

and local politics. Many favored their private interests in undertaking ventures that did not have the approval of the court of directors

in London.

The breakdown of Mughal authority in the 1730s and rising tensions with the VOC and the French Compagnie des Indes, which was

a signifi cant force in southern India, opened the way for the Company to become a territorial Indian power. Plassey was actually a side

note to the Seven Years’ War, a largely European confl ict that took

on a global dimension when France and Britain became involved.

Forced to protect its commercial interests in India, the British government stiffened the EIC’s small army, which consisted largely of

hired Indian soldiers, with regular frontline regiments. The court of

Company

India 183

directors would have preferred to remain neutral during the confl ict

with the French, but this vital metropolitan backing provided the

means for Clive and other ambitious employees to compete with the

Bengali
nawabs
and other regional powers.

The Company’s resulting Indian empire looked nothing like the

British settlement colonies of the Americas. The New World territories were technically the property of the Crown, which meant

that monarchs had the prerogative of intervening directly in their

affairs. This was in sharp contrast to the private empire in India that

answered to the EIC’s two thousand proprietors (shareholders owning more than fi ve hundred pounds’ worth of stock) who elected the

managing court of directors. This governing body was hardly the sort