History’s Largest Hostile Takeover

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The British Empire was not built from Westminster; the government never drew up a master plan or a committee on world conquest. The empire was an exercise in trial and error, with private enterprises at the helm of its expansion. Nothing illustrates how the British evolved from merchants to masters more than the story of the East India Company, one of the earliest multinational corporations. With its governor, and in some ways human personification, Robert Clive, the Company used a combination of greed, corruption and extreme violence to go from being a second-rate piracy outfit to the rulers of a once mighty nation.

On New Year’s Eve 1600, the East India Company was given its royal charter by Elizabeth I. With it, the corporation obtained a fifteen-year monopoly on all trade from the ‘East Indies’. This was not a small group of islands like its Western equivalent, but covered everything between the Cape of Good Hope and the southern tip of Chile. To enforce its claims over such a large space, they were also permitted to raise an army. The East India Company had just been given carte blanche to act in half the world. The company had one final advantage; it was structured in a revolutionary way. Today, most corporations have share holders, but in 1600 the ‘joint-stock company’ was a recent innovation in Tudor England. Merchants were no longer limited by the size of their own coffers, but could raise almost limitless funds from investors to help finance their enterprises. Yet, for all the grand words of monopolies and army-recruitment, the East India Company was only mighty on paper. Its first years were far from auspicious. The company’s first voyages consisted merely of looting Portuguese shipping, and even this piracy occurred on a miniscule scale. The economic dynamo of this period was the catchily named Vereenigde Oostindische Compagnie (VOC for short). This was the Dutch version of the East India Company, and it was completely outplaying its British rival. A few years prior, the Dutch had effectively invented modern capitalism, and now the United Provinces were reaping its dividends. The VOC had used its generous funding to break into the Indian Ocean Spice Trade and had grown impossibly wealthy doing so. The VOC could raise £550,000 in capital – roughly the equivalent of £57 million today. In contrast, the British could raise a meagre £68,373 (£7 million in today’s money) and aspired, at best, to second place. This was hammered home when the Dutch attacked a British ‘factory’ (a warehouse where goods were stored) in Indonesia, torturing and killing ten people, and began a decade of war. Again, however, the ingenious financial systems of the Dutch gave the Netherlands the means to defeat both Britain and France. It was a blessing in disguise. The East India company retreated from Indonesia, and set its gaze on a far greater prize: the Indian subcontinent and its colossal textile industry. This time, good fortune was on the Company’s side, as while there is a finite amount of spices that an individual can consume, a fashion boom in Europe was driving the demand for cloth to unparalleled heights. 

As the first Company agents disembarked onto the subcontinent, they entered the realm of the Mughals. Along with China, India was a true world superpower. Despite the recent discovery of the Americas and the silver rush this had triggered, the Earth’s economic center of gravity still sat firmly in the Himalayas. The Mughal ruled over 150 million subjects, who collectively accounted for 23% of the world’s GDP. He was a powerful man, and was unwilling to tolerate foreigners when they proved themselves nuisances – especially when they were merely the economic agent of a small, distant nation of less than four million. So, the Company decided to butter up their hosts, something they became very good at.

Now came the Company’s boom. By the 1630s, trade with the subcontinent meant that the East India Company was outstripping the Dutch in even the pepper trade, a speciality of the VOC. Settlements began to appear all over India. Fort St. George, soon to become Madras, became so successful that it was minting its own coins by the 1670s; Bombay, originally ‘Bumbye’, had a population of 60,000 within three decades and in 1690, Calcutta, which would become the seat of imperial power in India, was founded. Ambitious men sailed to India poor, and returned to England the wealthiest men in the land. While the traditional nobility looked down their noses at the ‘nabobs’ with a uniquely aristocratic distaste for money, the Company had created a new merchant class. 

At home and abroad, it was clear to all that the East India Company was enjoying a meteoric rise – a rise facilitated by the decline of the once mighty Mughal Empire. Relentless warring with the Marathas, Persians and Afghans ensured that, despite ruling almost a quarter of the world’s economic activity, the Mughal was bankrupt. As his coffers began to empty, his authority vanished too. A vicious cycle set in, where regional governors became increasingly autonomous and stopped handing tax revenues over to Delhi, the Mughal capital. Without the funds to crush these treacherous governors, the Mughal had to accept the loss in taxation, further weakening him. As the Emperor grew weaker, more governors saw the opportunity for personal enfranchisement and a power vacuum set in. This power vacuum was to be ruthlessly exploited by a rising star in Company ranks: the rough and rotund Robert Clive.

Having enjoyed a meteoric rise, the East India Company was now confronted with two problems. The first came in the form of a new foe – Siraj ud-Daula. After the death in 1756 of the old Nawab (Indian prince), the intelligent, well-loved and well-respected Alivardi Khan, the situation in Bengal – where British trading was based – had become highly unstable. Khan had insisted on giving power to his grandson, Siraj, a man with (as one observer put it) the “worst imaginable” reputation. The second problem came from a much older rival of Britain – France. The Bourbon monarchs neither knew nor cared about trade and finance, but they were ever attentive to checking growing British power whenever they could. Events came to a head in 1756, when the bumbling actions of a man named George Washington in North America accidentally triggered the 18th Century’s world war. From Quebec to Prussia, and from the East Indies to the West Indies, British and French forces battled each other across the world. 

Throughout the 1740s and the 1750s, India had seen a series of skirmishes between British and French troops. It was in these that Robert Clive had made his name. Now, with tensions brewing in the subcontinent once again, Clive returned from a brief interlude in England, and the stage was set for a showdown. Siraj made the first move. He decided to either go big or go home – and he went pretty big. With astonishing speed, an army of 70,000 men marched on Calcutta. Thanks to the unique incompetence of one man, Governor Roger Drake, the British were woefully unprepared. Right up until the moment troops were seen near the outer defences, he maintained that there would be no attack. Without series fortifications, and fielding an army 551 strong, Calcutta unsurprisingly fell to Siraj’s host of 70,000. 

Now, however, Siraj had to face a far more aggressive commander than Drake. Robert Clive had recently arrived in India, bringing with him three regiments of the Royal Artillery. By 2 January 1757, Calcutta was back in Company hands, taken in a bold and dangerous attack. During the fighting, Siraj had nearly been killed. Shaken to his core by his near death experience, he sued for peace. In the terms of the Treaty of Alinagar, the Company was exempt from taxes, had the right to use fortifications and could even mint its own coins – effectively a licence to print money. Twenty miles upstream from Calcutta was the French settlement of Chandernagar. Clive led a force, which had now swelled to 2,700, to the city. The navy, under Admiral Watson, sailed down the river, bombarded the city and forced its 700 defenders to admit defeat. The fall of Chandernagar was a serious blow to French prospects in India because, as one official noted, “the principal place of commerce of the French Company, the sole port where our ships could shelter, was now closed for a long time.”

Now Clive heard of a conspiracy to do away with Siraj once and for all, masterminded by the king-making bankers of Bengal, known as the Jagat Seths (“bankers of the world”), and to install Mir Jafar as Nawab. For their assistance in the project, the Company was offered the modern-day equivalent of well over £400 million to help in the project. The Company had struck gold. After writing to Siraj, accusing him (falsely) of breaking the terms of the Treaty of Alinagar, Clive marched against the Nawab to fulfil his end of the deal. The two forces met at Plassey. Upon arriving at the battlefield, Clive could see that he was completely outnumbered, with Siraj commanding a host twenty times the size of his. With his huge numerical advantage, Siraj had begun to encircle Clive. The British had only one ace up their sleeve – Mir Jafar, the man they were plotting to install as Nawab, was a trusted commander of Siraj and was leading a large part of the army. 

On 23 June 1757, Siraj opened with an artillery barrage. It looked like Clive’s ambitions would end at the mango groves of Plassey, until thunderstorms emerged as Britain’s salvation. The British, adept at dealing with all forms of bad weather, made sure that the fuses for their cannon didn’t get soaked. The Mughals did not. Assuming that the British artillery was unworkable, the Mughals launched a massive cavalry assault. They assumed wrong. The British unleashed a calamitous cannonade, and the cavalry were wiped off the face of the Earth. As Siraj was starting an orderly withdrawal, Mir Jafar fell back in headlong retreat. It was now a rout.

Siraj briefly escaped, but once he was given up by dissenting locals his fate was sealed. Now the Company had unrivalled power in Bengal, India’s richest province at the time. Mir Jafar was installed as Nawab as a Company puppet. The first issue for this “prince of little capacity,” as one contemporary described Mir Jafar, was mustering the funds to pay Clive for his services. The Company received its due, of which Clive would personally pocket £25 million in today’s money.

What followed was a game of political musical chairs – and the Company was the last man sitting. Mir Jafar fell out of favour with the Company for working with the Dutch. Thus he was deposed and replaced with his son, Mir Qasim. He also angered the Company, by passing legislation that removed the corporation’s competitive edge over other trading organisations. In what was quickly becoming a tradition, the Company decided to depose a third ruler. Meanwhile, Emperor Shah Alam II was attempting to reverse the Mughal Empire’s decline, and began to reassert control from Delhi.

The Company was at war, and it would triumph once again. At the Battle of Buxar in 1764, the skilful and ruthless commander, Henry Munro, defeated a force roughly six times larger than his, which was led by Shah Alam II and Mir Qasim. At one point matters had seemed bleak, as a Mughal cavalry attack punctured the British line, but a daring attack won Munro the day. Recognising the military dominance of the Company, Shah Alam II sought its protection. A century prior the Mughal had dictated terms to the Company, now Shah Alam was given a fairly modest pension of 2.6 million rupees and, in return, the Company was granted Diwani, or the right to collect taxes in Bengal. This gave the Company “a veneer of Mughal legitimacy,” as one historian has put it.

For an enterprise designed solely to make profit, being able to tax their subjects was a dream come true; and the Company wasted no time in making the most of it. Bengal, once the richest province in India, was looted for all it was worth. Thomas Macaulay, a politician, would later say that the Company looked on Bengal “merely as a Buccaneer would look on a galleon.” Yet this obsession with maximising profit would have tragic consequences when the absurd levels of taxation helped trigger the Bengal famine, which led to the unnecessary deaths of ten million Indians. Company directors back in London only started to take an interest in the famine when financial fortunes took a turn for the worse. By July 1772, the Company needed a bailout first of £400,000, then a further £300,000. By August, the Company needed an extra £1 million. 

Clive had resigned by this stage and handed over the reins of power to Warren Hastings, an intellectual and well-meaning man. The famine and the Company’s financial downturn dealt a blow to this privately-run imperial enterprise’s reputation. In 1785, the smooth-tongued MP, Edmund Burke, led impeachment proceedings against Warren Hastings. The trial would drag on for seven years, and Hastings was acquitted in the end. The Company would dominate India until 1858, when lowering profit margins and the Sepoy Rebellion led to the British government assuming direct control of its lands. Westminster had effectively nationalised a subcontinent. Soon after, in 1874, the Company collapsed.

Dalrymple, W., 2019. The Anarchy. Bloomsbury

Ferguson, N., 2004. Empire. Penguin

Tharoor, S., 2016. Inglorious Empire. Penguin