17th Century India was a place of immense wealth, power and influence. Think of luxurious palaces adorned with gold and silks, war elephants basking in the lazy heat of the afternoon sun and bejewelled sultans weighed down by long patterned robes. Metropolis cities sprawl across the horizon – Mughal Lahore is bigger than London, Paris, Rome, Lisbon and Madrid combined, Agra boasts a population of 700,000 and the subcontinent contains 25% of all living humans. Flash forward a hundred years and the emperors are gone. Almost the entire landmass is under foreign control; not by a neighbouring Afghan conqueror, a Qing Dynasty warlord or even a European King… but by a company. One of the world‘s greatest economic superpowers under the thumb of a British trading firm: The British East India Company‘s rise and fall from power is one of the most economically rich tales history has to offer. In its 273 year long lifetime, the BEIC was responsible for the world‘s first mass bailout, the birth of consumer culture, an age of scientific enlightenment, multiple monopolisations and the subjugation of an entire empire. 

Our story begins in 1600 in Britain. This is not the mighty Britain we have come to know, however. At this point in time, the British Empire contribute a feeble 2% to global GPD (I would like to point out that we‘re currently only at 2.24% - our heyday is… long gone as you can see). The only ’colony‘ Britain has to speak of is a meagre strip of land across America‘s East coast – something hardly constituting to an empire. Yet, as we all know, the situation changes drastically. Meet Sir Thomas Smythe: merchant, politician and handsome beard-man. Alongside fellow merchants and businessmen, this fine gentleman establishes the BEIC in 1600 with the backing of the British Crown. Queen Elizabeth offers £70000 and a legal monopoly to the company, in exchange the BEIC must claim land in the name of Britain, which they do – quite successfully actually.  Now all may seem rosy for these chaps; they have a monopoly (which for you economic noobs out there, means that they have exclusive control of the supply over the service in which they provide), they have quite a considerable amount of money, and most importantly they have a cohort of men with lovely beards. Now of course things in history aren‘t as ‘rosy‘ as they seem. The legal monopoly that Queen Elizabeth offered might prevent competition from other British firms, but in a world where piracy is funded by the state, I severely doubt the other nations of the globe (namely the French and Dutch, both of which already had unsteady relationships with good ol‘ Britannia) will listen. Spoiler alert: they really didn‘t. Furthermore, India is ruled by perhaps one of the most powerful entities to exist at the time so our lads might have a hard time getting a foothold in Indian governance. I‘d like to remind you that whilst the entirety of Europe had been stabbing each other for the past few centuries, Asia had been doing… well the exact same actually except they experienced a couple economic golden ages on the way and had cooler swords. The point is, they were richer, they were more powerful and they were far more numerous than our boys in red. So how did they do it?

Dealing with Monopoly - Rising to Power

Initially, the monopoly for spice trade was held by the Spanish and Portuguese until the defeat of the Spanish Armada by the British Navy in 1588; opening the market, if you will, to any other potential traders. This gap was quickly seized by the Dutch who violently pushed any competition out of the East Indies, massacring British, Portuguese and Japanese merchants at Amboyna (present day Indonesia) in 1623. Not the happy start Smythe was looking for. Thus, the company increasingly turned its attention to Mughal India - Emperor Jehangir allowing the company to build small bases and factories along India‘s coasts to serve as trading outposts from which they controlled the trade of textiles, luxury goods and other produce (initially, the BEIC stayed out of the spice market for obvious reasons… cough cough having your traders beheaded cough cough). Now for a quick advertisement break! 

Are you the owner of a trading firm? Are you sick of having your merchants randomly slaughtered on trading missions? Do you think it sucks when your ship full of valuable gemstones sinks to the bottom of the Ocean? Me too. Consider this, intrepid business men and women - it’s the best thing since sliced bread… even though sliced bread hasn’t been invented yet (1928 if you’re curious). I present to you joint stock companies. Let the aristocracy buy shares in your company, let them cushion some of the blow for you. Just for the small price of reducing-your-power-and-letting-other-geezers-have-a-say-in-how-you-run-things you can protect yourself from the hazardous risks of plundering overseas nations.

Thank you imaginary advertisement man. As you can see, sharing the risks of dangerous expeditions might be a good idea and thus the concept of shareholders and the stock exchange was born - another amazing economic consequence of the BEIC’s rise to power. Moving on, our favourite company swiftly grew in wealth. It turns out that rich europeans really really liked fancy smelly stuff and tasty plants so they got pretty loaded. Now with incredible amounts of money comes power… among other things… and the BEIC began to play an increasingly important role in subcontinental Indian politics. Mughal authority over the years had begun to decline, partly because this guy called Aurangzeb persecuted a bunch of ethnic groups and then people, for quite apparent reasons, stopped liking him.  As a result of this, loads of small little Indian kingdoms popped up across India, many of which began fighting for dominance in areas where Mughal control was unstable. Now it was this very instability that turned our ickle wickle company into a full-on military powerhouse. It became apparent that the support of some of these princes may be rewarded with generous sums of money and increased power. Suddenly the BEIC and indeed their European counterparts began to ally themselves to various local rulers, many of which sported rather exquisite jewelled turbans and handsome moustaches - a good pairing with our handsome beard men. The BEIC started to grow an army, which at it’s height consisted of 260,000 professionally trained soldiers. Soon, the British East India Company had grappled partial control of various coastal provinces and minor kingdoms. By 1729, 15% of imports from India passed through the BEIC and by 1765, after a series of battles with the French-supported Nawab of Bengal, they had gained the authority to tax the people of the richest and most populous Indian state. But that wasn’t enough. The sum contents of the  Bengal treasury were looted, a fortune worth over £250 million in today’s currency, and punted down the Ganges to British strongholds - a fate soon to be shared by the rest of India…

Financial Crisis (Numero Uno)

Following the BEIC’s success in Bengal, the British established a puppet regime under Mir Jafar - a military general who previously sided with the natives before essentially pulling an uno reverse card and betraying them to the British. A bit of a beta move if you ask me, but Jafar’s betrayal allowed for the BEIC to greatly increase their influence over India and this became increasingly obvious to shareholders back at home. Stock prices swelled and swelled until they valued a sum £284 in 1769. However, this overvaluation of shares didn’t spell well for the company in the long run. By 1772, the bubble had burst with devastating consequences. Now before we get into why this was such a bad thing to happen, let’s first take a look at why the bubble formed in the first place. A bubble refers to the rapid growth of market value (typically assets) and are caused by continued rising of prices for a particular item above its real value. Eventually the price rate becomes unsustainable and the bubble bursts causing prices to plummet. The growth of power in India caused such an escalation in share price which led to the eventual crash in 1772. 

Okay so where does that leave the company? Well, the BEIC was left with debts of £1.5 million and another £1 million in unpaid tax to the Crown. But that wasn’t it. Knowledge of the crash resulted in the collapse of 30 banks across Europe, multiple attacks on BEIC holdings in India and famines across their territories. The company was forced to ask for a bailout, applying to the Bank of England for a £400000 loan and then another £300000 the following fortnight. The company were successfully bailed out in 1773, but at the price of losing their autonomy. The British government were granted joint reign over the company’s land and the ability to regulate the BEIC in exchange for the reduced bailout sum of £200000. But, this wasn‘t the only problem the company faced. The British East India Company was rife with corruption. In many cases it operated more like a well-organised gang rather than a financial institution. Most of the money made would be siphoned off into the pockets of those in charge - only a little of the profit making its way to the company itself. It‘s funny we mention gangs actually as Robert Clive, the man responsible for the acquisition of Bengal under the Treaty of Allahabad, originally came from a gang himself and the sentiment stuck. Quite a large proportion of the Bengal loot went straight into his wallet quite miraculously… its almost like he just took it!  Clive came out of it with as fortune of £234000 which made him the richest self-made man in the entirety of Europe. Just before we move on to another famous corrupt gentleman, I‘d like to draw your attention to the fact that this is more money than was given to the entire company in 1773 - Clive wasn‘t just slipping the occasional coin every now and then; this is full scale embezzlement on steroids.

Now, an arguably even more curious case of corruption within the BEIC was that of Warren Hastings. Appointed to Governor General of the company in 1772, Hastings got involved in multiple dubious acts over the course of his career in India (it‘s somewhat hard to not engage in questionable behaviour if you are part of an organisation that has invaded and seized parts of another nation anyway, but this man was exceptionally good at it). There was your standard corruption and embezzlement of course: taking bribes, seizing assets - you know the deal, but Hastings also managed with a side of extortion and murder too. To top it off when the British government discovered his misdemeanours and impeached him in a trial that lasted 7 years (the longest in the entirety of history might I add), he was simply acquitted of all charges. Poof - gone, just like that.

Chillies Aren’t Actually Indian

So that‘s cool and all, but enough history just for now. You may be asking what did the East India Company actually do? We have heard all about their sneaky political alliances and clever land-grabbing ploys, but what did the East India Company sell - they are a company after all? The common misconception is that they simply ran about ransacking temples, dumped all the loot in a boat and sent it on its merry way back to Britain where it could be sold to fat aristocrats who liked to go on walking holidays in Austria and shoot pigeons. Now, while some of that is true; considerable amounts of revenue were generated by introducing England and indeed the rest of the Western World to the various riches of the East, the BEIC‘s trade worked both ways. Once the British had seized control of the coasts and major trading ports, they didn‘t just control trade out of India to Britain, but all trade into India on a global level as well as with partners other than Europe. I‘m sure if you payed attention in history you will have a rough understanding of what India offered to the wider world in terms of produce: tea (which by the way is a Chinese invention, not an Indian one), sugar, gold, silver, gemstones, textiles, cotton and various spices that I‘m sure you‘re familiar with. But there was also a lot going into India as well. Silk and porcelain for example, which were exchanged with the Chinese for Bengal Cotton, silver and later opium (we‘ll get onto China‘s addiction to Opium in a later section). The BEIC was also responsible for maintaining trade with Indonesia and other asian powers from which other spices such as nutmeg, lemongrass and cinnamon were found in abundance. These spices being crucial to Indian cuisine as you will know if you have ever eaten a curry - if for whatever absurd reason you haven‘t, please please correct that by the way. In fact, one thing synonymous with Indian food and sometimes Indian culture itself is the fiery heat of the chilli pepper, which grew natively in the Americas and didn‘t find its way to the Old World until well after Columbus‘s famous voyage. If you think about it, the exchange didn‘t stop at the economic level either. Religion, ideas, culture, music and even disease found themselves being ferried around the world at a rate never seen before.

Imperialism is a stain on our collective history as a species, that is for certain. Yet, even with its harsh and despicable nature, it did one thing to bring us together. That is,  our insatiable hunger for more, connected the world and its peoples in ways that had never been seen before. This is can be seen in the sudden bursts of vibrance seen in the markets of Northern Europe. Observers were quick to comment of the floods of spices, sugar, textiles and jewellery being brought to ports across the continent. Some noted that each month new patterns of cloth and dress were brought from abroad, each time starting a fashion craze over the new textiles. Last month’s goods were ‘out’ and the new clothing was ‘in’.  As we can see, not much has changed there. But, as these goods continued to pour into the country, they became more and more accessible. Fuelling developments in technology such as the steam engine and spinning frame, they became cheaper and cheaper to make. Soon, not only the rich were fawning over these exotic treasures from far-away lands, but the middle and working classes too. From Barcelona to Bombay, Shanghai to Sydney; the nations of our world were tied together with trade. And although at immense cost, this trade brought better standards of living and higher qualities of lives to many parts of our planet. Eventually, through revolution and revolt, this very exchange of goods has become more ethical and fairer on those involved. Though we are not there yet, the modern economy has (for the most part) separated itself from the horrors of the past and strived forwards to connect and satisfy the human population.

When we think of the power of firms nowadays, a few names pop into mind: Google, Apple, Microsoft and Amazon (as I’m sure you know, Huawei have made multiple appearances in recent headlines too). It can be scary to think of the immense influence these tech giants have on our daily lives. The way we shop, eat, enjoy ourselves and even think have all been influenced greatly and it may feel like we are slowly becoming slaves to a market that doesn’t value our needs. I would like to disagree. Each day, our desire for a better, greener, safer, cleaner world pushes for investment and innovation within the market. Things have never been as good as they are now. Though reform and rethought is needed in several areas of the economy, I see for a future with an ever blossoming relationship between corporation and consumer. And if you ever feel down about it, well… at least they didn’t steal your country.