Tuesday, February 18, 2020

Imperial plunder (2020)

Book Review from the February 2020 issue of the Socialist Standard

The Anarchy: The Relentless Rise of the East India Company. William Dalrymple, Bloomsbury, 2019

Of all the many Indian words which have entered the English language (bungalow, dungarees, khaki, pyjamas, etc.), one of the first was Hindustani slang for plunder: loot. By the late eighteenth century it was in common usage in Britain. Its introduction can be directly attributed to the East India Company (EIC), founded as a joint-stock company in London in 1600. The creation of joint-stock companies played an important part in the early stage of British capitalism. Merchants and other businesses could accept investors who had the cash but were not involved in the running of the business. Shares could be bought by anyone and their price could rise or fall depending on demand and the success of the business. The EIC started as a trading company, mainly with India, but with investors eager for dividends it took on a more aggressive role. By 1765 it had become so powerful it overthrew India’s Mughal Empire, and began the systematic looting of that country using its own private army. At 200,000, it was twice the size of the British army, and had more firepower than any state in Asia.

According to Dalrymple’s detailed study, by the late eighteenth century the EIC had become ‘the most advanced capitalist organisation in the world.’ It ruled most of India from a boardroom in the City of London, and Robert Clive was its manager in India. Dalrymple describes him as ‘a violent, utterly ruthless and intermittently mentally unstable predator’. But he was successful in enriching its investors. Clive returned to Britain with a personal fortune, then valued at £234,000, making him one of the richest men in Europe who had not inherited wealth. He transferred to the EIC £2.4 million (about £262 million today), seized from the Bengal treasury.

The EIC’s reach was global. To the east it transported opium to China, and in due course fought the Opium Wars in order to secure its profitable monopoly in narcotics. To the West it shipped Chinese tea to America where its dumping in Boston harbour triggered the American War of Independence. One of the principal fears of those who wanted independence from British rule, in the run up to the war, was that the EIC would loot the Americas in the same way as it had done India.

The East India bubble soon burst after the looting and the resulting famine in India led to massive shortfalls in revenue. Huge debts accrued and the Bank of England had to bail out the EIC with a series of loans, culminating with a request to the British government for £1.4 million in 1772 (£147 million today). As the EIC generated nearly half Britain’s trade, it was judged to be too big to fail. As Dalrymple puts it, ‘the world’s first aggressive multinational corporation was saved by one of history’s first mega-bailouts’. As a result of this bailout a process of state interference began in the running of the EIC, ending with its nationalisation in 1858. Having served its purpose in establishing a large part of Britain’s empire, the EIC was dissolved in 1874 and its remaining functions transferred to the British state. As Edmund Burke wrote: ‘The Constitution of the Company began in commerce and ended in Empire’.
Lew Higgins

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