32 India under the East India Company

D. Subramanyam Reddy

1.  Establishment of the Company rule over India:

1.1 Company and Collapse of Mughal Power:

After spreading over India and consolidating its position in the western, southern and eastern regions during later half of 17th century and taking advantage of the political disorders in the country, the English Company began coming out more openly to establish its position by territorial acquisitions. It became possible because, as Marx wrote, “the paramount power of the Great Mughal was broken by the Mughal Viceroys. The power of the Viceroys was broken by the Marathas. The power of the Marathas was broken by the Afghans (by Ahmed Shah in 1761), and while all were struggling against, all the Briton rushed in and was enabled to subdue them all”. In 1717, the Company could get, from the Mughal Emperor Farrukhsiyar, confirmation of the earlier exemption from payment of duties, and payment of only Rs. 30,000 per annum in Bengal. It was permitted to rent additional territories round Calcutta. The earlier exemption from duties in Hyderabad province was also retained. It could get exemption from payment of all customs and dues at Surat in return for annual payment of Rs.10,000. Existing rent for Madras was confirmed. Its coins were allowed circulation in Mughal Empire. During 1715-1722, it built a wall round Bombay. In 1717, it could take possession of the five towns near Madras from the Nawab of Arcot. In 1734, it secured Vepery and four other hamlets. And, its victorious march in India started from Bengal.

1. 2. Conquest of Bengal :.

In 1717, the Company secured from the emperor confirmation of the earlier privilege of trading without payment of dues in Bengal. It led to financial loss to the Government of Bengal. In 1756, the Nawab of Bengal Siraj-ud-daula, grandson of Alivardi Khan decided to force the English to pay the dues they used to pay before getting the privileged firman in 1717 and even tried to control the English in Bengal. All this ultimately led to the battle of Plasssey in 1757, murder of Siraj-ud-daula, proclamation of Mir Jafar as Subadar of Bengal. Soon after ascending the throne the new Nawab Mir Jafar who was a puppet in the hands of the British granted the Company the right to trade in Bengal, Bihar and Orissa. The Company also secured the right to revenue farming over a large tract of land known as the 24 Paraganas to the south of Calcutta. It also got compensation of Rs. 17, 70,000. In 1763, Mir Jafar was replaced by another puppet ruler Mir Khasim who granted new privileges to the Company.

1. 3. Control of Upper Gangetic Plain:

After the conquest of Bengal, the Company crushed the French power in India (Carnatic Wars) and then defeated the Nawab of Oudh at Buxar in 1764 and placed Oudh (Avadh) at the mercy of the English to serve as a bulWark against the incursions of the Marathas or of the Afghans into the newly acquired territories of Bengal, Bihar and Orissa. And, in 1765 the Company obtained from the Mughal Emperor a Charter making the Company the Diwan or Administrator of the Subah of Bengal.

1.4  Anglo-Mysore Wars:

The English now paid their attention to Mysore where Hyder Ali and, later, his son Tipu Sultan were becoming a source of danger to the rising power of the British in India. Naturally, it led to the Anglo-Mysore Wars. Hyder was originally an adventurer. He entered the service of Mysore and in a short period became the Prime Minister of Mysore and made himself dictator over the Hindu ruler of Mysore. Taking advantage of the political situation in the south, he increased his power and supplanted his patron. He extended the kingdom by conquering Bednore, Sunda, Canara and Gutti and even subjugated the palegars. Hyder‟s rapid rise and possible threat naturally led to the formation of an alliance among the Marathas, the Nizam of Hyderabad and the English against Hyder. In the First Anglo-Maratha War, Hyder was victorious. He devastated the Carnatic up to Madras. The Company concluded peace with Hyder in 1769. In the Second Anglo-Mysore War, which broke out in 1780, Hyder was defeated. Since Hyder died in 1782, the War ended with a peace with his son Tipu in 1783. Two more Wars were fought with Tipu as he was making alliance with the French. For this, the tripartite alliance between enemies of Tipu was formed and the Third Anglo-Mysore War of 1790-92 was fought. To avoid disaster, Tipu signed the Treaty of Seringapatnam in 1792 and surrendered half of his dominions to the alliance who distributed the spoils among themselves. Tipu also paid a huge War indemnity and even sent two of his sons as hostages to the English Company. In the Fourth Anglo-Mysor War, Tipu tried to regain his territories. For this, Tipu sent his emissaries to Arabia, Kabul, Constantinople, Versailles and Mauritius. To face this threat, the English revived the tripartite alliance. Though the Marathas were cool, the Nizam extended cooperation. In 1799, Tipu fell in Srirangapatnam. The English restored the old Hindu family to Mysore and concluded subsidiary alliance with the ruler, making him puppet of the British just as the Nizam of Hyderabad and Nawab of Oudh.

1.5  Anglo-Maratha Wars:

At a time when the Anglo-Mysore Wars were going on, hostilities between the English and the Marathas began and went on upto the second decade of the 19th century, ending with the collapse of the Marathas and elimination of the most powerful rival of the English. The English got an opportunity, as elsewhere in India, to intervene in the internal affairs of the Marathas in 1775. There were two claimants to the post of Peshwa, the head of the Maratha Confederacy. The Bombay Government of the Company, considering it as an opportunity, entered into a treaty in 1775 to help one of them. This started the Anglo-Maratha War. In this War, however, the English could not make spectacular gains. They captured Ahmadabad and Gwaliar, but the War failed in its objective. The ally of the British retired on a pension, while Salsettee and some other islands fell into the hands of the Company under the peace of 1782.

Maratha power remained a headache for the English, and so a Second Anglo-Maratha War soon followed. Fortunately, for the English, the Peshwa was hard pressed by other Maratha Chiefs, and their internal quarrels finally compelled him to seek the Company‟s aid. A “Subsidiary Alliance” was concluded in 1802, and the Peshwa was placed on his throne with the help of British troops. The Company thus gained a foot-hold among the Marathas. But, the other Maratha chiefs, Sindhia, Holkar and Bhonsla were taken aback by this introduction of British power in their dominions. This led to the Second Anglo-Maratha War. General Wellesley, later called Duke of Wellington crushed the armies of Sindhia and Bhonsla in the battles of Assye and Argaon in 1803. Lord Lake triumphantly entered Delhi in the same year and defeated Sindhia‟s troops at LasWari. But, Holkar now joined in. Thus, the interminable War with the many-headed Maratha Confederacy continued. This alarmed the Directors of the Company, and so for the time being they adopted the policy of letting the Marathas alone.

The final offensive against the Marathas was undertaken in the second decade of the 19th century. Before doing this, the Company strengthened its position. During 1814-16, it brought the independent Nepalese Government into submission. By a treaty signed in 1816, it could extend its boundaries to the mountains bordering on Central Asia. Then, the War with the Pindaries, the auxiliary force in the Maratha armies and Pathan hordes, the military adventurers serving Rajputs or Marathas led to extension of British authority to Rajputana and Central India by early 1818.

Then came the third and final War with the Marathas. The Peshwa who had concluded subsidiary alliance with the Company in 1802 soon realised its implications. He threw off all disguise. The other Maratha Chiefs joined him. But, it was too late. The Peshwa was beaten off at Khirki, Bhonsla‟s army was defeated at Sitabaldi, and Holkar‟s army was crushed at Mehidpur. Peshwa‟s dominions were annexed in 1817, and formed into the Province of Bombay; Peswa was captured in the following year. He retired on pension. Sindhia, Holkar, Bhonsla and GaekWar were allowed to rule under the imperial power of the Company. As in all other kingdoms, they were also shorn of their political and military powers.

1.6 Remaining Indian Powers :

The next move of the British was to extend their paramountcy over Rajputana and Central India. This was easy. The lords of Rajputana who fought against the Mughals were now in bankruptcy. The dynastic quarrels, the aggressions of the Marathas, Pindaris and Pathans resulted in anarchy and ruin. When the Company vanquished the leading Indian powers the leading Rajput leaders readily acknowledged British supremacy. The whole of Rajputana and Central India fell under the control of the Company. There remained only the Sikhs in the Punjab, the Sindhis, the Pathans and Baloch tribes in the north-west, the Afghans beyond the Khyber Pass, and the Burmese and the Assamese to the east of the Brahmaputra. They were all brought under control and “friendly” ties were established with the Afghans. By the first Anglo-Burmese War of 1824-26, Assam, Cachar and Manipur became practically the protectorates of the Company; Sindh was conquered in 1843; the Punjab was annexed soon after the Anglo-Sikh Wars of 1848-52; the Company‟s authority over Burma was established in the later Wars during the second half of 19th century.

As noted earlier, the Raja of Benaras was disposed off in 1794. The Nawabi of Surat was annexed in 1799 on the death of its Nawab, the Raja of Tanjore retired on pension, the Nawab of the Carnatic was made to retire on pension, the Nawab of Bengal was pensioned off earlier, the boy-Nawab of Farakkabad retired on pension. The kingdom of Benaras which formed part of Oudh was taken away in 1775, Kora and Allahabad had already been taken away earlier in 1765 and sold to the Nawab in 1773. In 1856, Oudh was annexed and the Nawab disappeared for good. During Dalhousie‟s time about 1,50,000 square miles of territory ruled by dependent princes was annexed. Gone were the Maratha realm of the Bhonsla family in Nagpur, the States of Satara, Jhansi and others. In 1853, cotton producing Berar was taken away from the Nizam of Hyderabad. Pensions of some of the earlier rulers were also reduced. Among them include ex-Peshwa, the nominal Nawab of Bengal, and the nominal Nawab of Carnatic. After the uprising of 1857-58, the Princes, Nawabs and Maharajas served as “show boys” of the British, while their “states” depended wholly on the British Residents imposed upon them. Thus, the Company emerged as the undisputed ruler of India by the middle of the 19th century.

2. Condition of the People under the Company Rule :

The British East India Company came for trade, got permission from the Mughals to trade, established trading settlements called factories on coastal areas, bought Indian goods and exported them to Europe and other countries, and thus got huge profits. Then, with the profits it got from trade in Indian goods, the Company raised armies, conquered Bengal in 1757, secured the revenue collecting right of Diwani in Bengal in 1765, got enormous revenue from trade and territorial taxes and finally used this revenue for elimination of rulers, tributaries, and chieftains and established the British authority, direct or indirect, as in Bengal Subha, coastal Andhra Sarkars, Ceded Districts of Andhra, Mysore, Carnatic territories, Nizams Kingdom, Maratha kingdoms, Punjab, Kashmir etc. Thus, the British secured both political and economic power. Then, they used this power for the plunder of India. Every product, trade, capital, land, salt and many more things began to be monopolized by the British. Agrarian reforms of the worst kind were introduced. The result was the breakup of the age – old union between agriculture and industry (handicrafts), and the consequent ruinization of different communities, ruralization of India and pauperization of Indians in the place of earlier balanced development of agriculture and industry which were providing full-employment. This situation naturally led to anti-British movements throughout the country. The communities which were affected by the British rule included :

• The artisan communities (manufacturing / Industrial)
• The trading and commercial communities
• The agricultural communities
• The village communities
• The tribal communities
• The ruling communities

2.1 The Artisan Communities :

The artisan community was ruined during the British rule like any other community. They were forced to work in the Company‟s factories. They were not allowed to work for other companies or individuals. They were forced to accept advances and produce goods for the Company alone and thereby get themselves transformed into bonded / debt-slaves of the Company. They were paid meager remuneration. They were forced to sell their goods at one-fourth of their value, sometimes even seized without payment. Their products were made to become monopoly of the Company since the establishment of British rule in 1757 till the introduction of laissez-faire or free trade policy in 1813. After 1813, the manufactures or machinofactures of England were allowed, under free trade, to flood the Indian markets. This led to unequal competition between machinofactures of England and handicrafts or manufactures of India and consequent destruction of native industry as well as of the age-old “union between agriculture and manufacturing industry” which was promoting inter-dependence or balanced development of industry and agriculture. This, in turn, crippled the centuries–old world famous native industry and contributed to the process of deindustrialization, gradual ruinization of artisan communities (or native industry), destruction of native know-how, and the consequent shift of several artisans to agricultural sector as tenants or sharecroppers or agricultural labourers . . . all causing overburden of agriculture, fall in per capita income and buying or spending capacity of people which, in turn, increased the frequency of artificial famines and starvation deaths, a sign of increasing ruralization.

2.2 The Trading and Commercial Communities:

The Indian merchant communities could not buy goods directly from the producers as the Company maintained monopoly in Indian trade during 1757 and 1813. They had to buy goods only from the Company and that too at a higher price, resulting in lower profits. They were forced to become either (a) the underlings of the Company or its servants engaged in private trade or private British merchants, or (b) give up their traditional trading profession, or (c)  become petty intermediaries between the British and the native producers, or (d) shift to agricultural sector as farmers of revenue or as landless class of tenants or share croppers or agricultural labourers and live in poverty. On the other hand, the heavy taxation in England on the world–famous Indian hand-made manufactures exported to England, and the little or no taxation on the British machine–made machinofactures imported into India resulted in the decline of export trade in Indian manufactures and increased the import trade in British manufactures ( in the unequal trade under the so called free trade policy from 1813) and thereby reduced trading opportunities to the natives and resulted in destruction of the native trading communities. At the same time efforts were made to increase the raw material export trade, particularly agricultural commercial produces needed for British industry in England. The discriminatory policies in tariff and the customs duties, in tax on sale and, later, in goods transport rates in railways also ruined the native trading communities. This again resulted in shift of several native traders or businessmen to agriculture sector as tenants or sharecroppers or agricultural labourers resulting in overburden of agriculture, fall in per capita income and buying capacity, growth of artificial famines and starvation deaths. This kind of ruinization of trading communities, in turn, delayed the emergence of an independent native merchant bourgeois or middle class and growth of capitalist economy for a long period.

2.3 The Agricultural Communities :

The Company changed slowly but steadily from that of peripheral, littoral aliens to that of colonial rulers. And, the Indian economy began to change from primarily self–subsisting one to a colonial one, oriented toWards the needs of the British economy and subject to the vagaries of the emerging world market. The transformation of the Company into the supreme landlord under the new land revenue systems (the Zamindari, Ryotwari, Mahalwari, Malguzari etc), the imposition of heavy agricultural taxation called „rent‟, the British demand for supply of agricultural produces at nominal or no price, monetization of economy, commercialization of agriculture, neglect of great ancient and medieval irrigation systems / works and their transformation into historical ruins resulted in discontent among the peasantry.

Soon after the Company‟s authority was firmly established agrarian reforms began to be introduced in different parts of the country. The major agrarian reforms or capitalist contract system of land revenue included : (a) the Zamindari System or the Permanent Settlement of Land Revenues introduced in Bengal Presidency, northern portion of Madras Presidency and Benaras, (b) the Ryotwari System introduced in Baramahal, Ceded Districts (now called Rayalaseema), ex-and non-zamindari territories of Madras Presidency, Bombay Presidency, Coorg, Assam and eastern Punjab, and (c) the Mahalwari System of northern India. With regard to the permanent settlement the earlier aristocratic zamindars were replaced under this system, by the newly created moneyocratic zamindars who came mostly from the commercial and money lending classes. Similarly, under the Ryotwari the existing age-old traditional owners of land were replaced by the Pattadari proprietary landlords who constituted mostly of the heads of the villages, castes, religions, sects etc. And, in the Mahalwari territories the headman of the village, and all others in the village were denied of the ownership right over the land which they held for centuries as in Ryotwari territories.

All these revenue systems which had reestablished and strengthened existing landlordism on a new basis aimed at :

• Transformation of the Company into a supreme landlord in India
• Securing of regular and increased income to the Company
• Transformation of India into a purely agricultural country, a raw material supplying country (particularly agricultural produces) to the British industry in England and a market place for British industrial / manufactured / machinofactured goods,
• Creation of a class of loyal supporters to the British rule as, for example, the Zamindars holding transferable and saleable proprietory rights (not ownership right) in the permanently settled, Zamindari territories and the pattadari ryots having transferable and saleable proprietary right (not ownership right) in the Ryotwari territories,
• Reducing of competition from native moneyed class to the Company, in trade and commerce and later in modern industry by diverting them to agricultural sector as farmers of revenue or rent and moneylenders or usurers,
• Reclamation of more and more waste and forest land for extension of cultivation and increased production so as to get, at a cheaper rate, the agricultural commercial produces or raw materials for the British industry in England and also to secure income to the government in the form of taxes,
• Arresting the growth of modern industry in India so as to increase import of the British machinofactures into India for higher profits,
• Destruction of the existing native industry and diversion of artisans to agricultural sector causing over-burdening of agriculture, but facilitating availability of labour at a cheaper rate for agriculture so as to get agricultural produces at a cheaper rate for the British industry in England, and
• Finally, introduction of capitalist or semi-capitalist land tenure systems.

The British introduction of capitalist contract system of agreements for payments of Peshcush (tribute) under permanent settlement and for „rent‟ (not „sist‟ or revenue) under Ryotwari system, and the consequent removal of age-old, inalienable and traditional ownership right to land called the hereditary occupancy right to land (equal to present day permanent patta / title–deed or ownership right) of millions of peasants and of the village communities and the bestowing of the landed right or contracted proprietary right, not ownership right, on the Zamindars (under the Zamindari system) and the Pattadari ryots (under Ryotwari system), for the contracted peshcush and rent respectively, resulted in the creation of a semi-feudal and semi-capitalist landlord class or proprietors of land (of course, bigger landlords under Zamindari system and smaller landlords under Ryotwari) and the concentration of landed property in the hands of these landlords. This, in turn, led to the transformation of freely available land into a scarce and valuable commodity or private property, and the birth and growth of large mass of landless class . . . . the tenants, sharecroppers, agricultural labourers, etc.

On the otherhand, the total monetization of economy or the insistence of payment of rent only in the form of money without corresponding increase of coins in circulation resulted in shortage of coins and forced the peasants to buy coins from sahukars on payment of a commission for each coin, incurring permanent loss (apart from heavy taxation). Monetization also facilitated easier drain of India‟s capital and wealth to England.

On the otherhand, the higher rate of Peshcush fixed and collected under permanent settlement led to collapse and auctioning of several Zamindaries in places like Northern Sarkars and oppression of Zamindari ryots. A far higher rate of rent collected under Ryotwari, sometimes even adding to it the former abwabs or illegal exactions and using torture methods for collection, resulted in greater oppression and impoverishment of Ryotwari ryot than the ryot in Zamindari territories . . . . the land tax collected per lakh of population was Rs. 10 lakhs in Zamindari Bengal, Rs. 17 lakhs in Ryotwari Bombay, while it was Rs. 23 lakhs in Ryotwari Madras. All this ultimately left very little income in the hands of both the Zmindari and Ryotwari peasant. This in turn, forced him to take loans, mostly for food, at an exhorbitant „rate‟ of interest from the newly emerging usurers or money lending class (just as the new landlord class). This led to :

• Exploitation of peasantry by moneylenders,
• Impoverishment of peasantry,
• Failure in repayment of loan,
• Transfer and concentration of land in the hands of rapidly increasing number of moneylenders,
• The birth and growth of another new class of money-minded non-agriculturist landlords (or parasitic landlords) from out of the traditional non-bourgeoisie money lending class and others and, finally, disintegration of the small peasant economy.

These changes, in turn, acted as disincentive to agricultural production, and caused deterioration of agriculture, pauperization of ryots, occurrence of artificial famines, and thereby contributed to the de-peasantisation process in the form of growth of landless class like the tenants, sharecroppers, agricultural labourers etc. Thus, the peasant of British period took birth in debt, lived in debt, and died leaving debt to his successors under the dual oppression of the money-minded capitalist state and of the money lending private finance-capitalist.

Similarly, the British policy towards the inam or remuneration in the form of land for the services rendered to the society or the state also led to wide-spread discontent among the people and their active participation in several of the anti-British rebellions. An inam, in general, means gift of land to individuals or institutions with or without permanent and hereditary right to occupation of land and total or partial exemption from payment of land revenue for discharging a particular service to the society, reserving to the grantee the right to resume or take back the land granted only in case of failure to discharge the intended service which never used to happen. But, the British government which at first kept away from interference, in matters of inam tenures, slowly began interfering and, in some regions, even resuming of the age-old privileged inam lands and bringing under regular and heavy rate of taxation or rent. Naturally, all this led to the anit-colonial movements as for example in Chittoor in 1801-1805 and in Koilkuntla in 1846, both in the present Andhra Pradesh.

2.4 The Village Communities :

There existed two types of villages in India. They were : (a) the republican type (or communistic type with collective management of land and collective responsibility for tax payment) and (b) the non-republican type ( or severalty / individual type). There were 12 ayagars (or baraballuti) or servants in every village. The village servants were allowed to hold or tradition permitted them to hold (a) mirasi in office or hereditary property (right) in office, and (2) mirasi in land or hereditary property (right) in land, and in some cases (3) mirasi in grain or hereditary property (right) in grain as remuneration for their service to the village. In fact, everyone in the village whether office holder or non-office holder, or peasant or non-peasant held land on some tenure or the other and with tax exemption or tax concession or on full tax payment and at the same time pursued his traditional and hereditary profession. In case of heavy taxation they migrated to places of moderate taxation in or outside their kingdom.

Every village had a council called Sabha or Panchayat. It composed of representatives of different castes, religions, sects etc. The council acted as a democratic body (during the Chola period the representatives were elected by the people). The councils enjoyed administrative, revenue, judicial and police powers. In the republican type of villages they even had the power to distribute and redistribute the village lands periodically among the inhabitants of the village to bring about economic equality among them. There existed union of agriculture and industry (handicrafts). In other words, there was balanced agricultural and industrial development. All this was promoting full-employment to villagers. Goods of daily need and some semi-luxury goods needed for minimum comfort of man were produced, mostly for domestic use, not for sale in the market for profit, thereby achieving village self-sufficiency. The surplus production alone was pumped out for sale in the nearly town. Goods were generally exchanged between or among villagers. The villages were centres of hard-working people, centres of production of goods and services, centres promoting work culture, abodes of peace, non-violence and charity and also centres of all kinds of knowledge workers or arts . . . . music, dance, drama, singers, sculptors, architects etc. The villages provided security of life, livelihood and property to all and thereby promoted happiness and contented life.

But, the British struck at the heart of the social system . . . . the Indian village. They dissolved the village communities by blowing up their economical basis but also by their commercial enterprises. They were denied of their right to distribute and redistribute land and also the age-old right to free use of pastures and forest land in their proximity. The collective control over the village land was removed and land was transformed into private and state property. The power of the village councils to settle disputes among villagers was removed and a new judicial system was introduced. The Company governments began appointing village servants and fix their remuneration. The patta system and direct contract with ryots for the rent to be paid to the government under Ryotwari weakened the village communities. The headman and the accountant were now forced to function under remote control and made answerable to superior law and law courts. All this led to discontent among the people.

2.5 The Tribal Communities:

The age–old agrarian order and identity of the tribal communities was disrupted by the Company government. The introduction of the concept of private property eroded the system of joint ownership of land and increased tensions in land relations. The colonial state also began tightening its control over forest zones for revenue purposes, particularly from 1870s.

2.6 The Drain of Capital and Wealth :

The tributes and the gifts got from the native rulers, the profits earned in trade and spoils, the revenue secured through heavy taxation and all the incomes of the Europeans in the form of salaries, pensions, profits in private trade, and the „home charges‟ etc., were pumped out to England to serve the interests of the mother country England and India was starved of the capital. All this prevented the accumulation of capital in the hands of the natives for investment in the development the country and thereby caused the development of underdevelopment in India. As the famous English orator Edmund Burke said “Every rupee of profit made by an Englishman is lost forever to India”. It seemed to be the policy of the Company “to make hay while the sun shines”. To quote Robert Clive, “let us get what we can today, let tomorrow take care for itself”. All this shows the policy of the Company government in India.

Naturally, all this led to discontent among the people . . . . the proprietary peasants, tenants, share-croppers, agricultural labourers, trading communities, artisans and the adivasis or tribals along with the dispossessed rulers, chieftains and losers of privileges . . . . and resulted in rebellion against the British in different regions of the country.

3. Summary :

The British East India Company‟s success in establishing its authority over India through War and diplomacy turned India into a colony, serving the interests of the Mother Country, England. The net result was exploitation and oppression of different sections of people in India society.

Web links

• https://en.wikipedia.org/wiki/Company_rule_in_India
• https://www.google.co.in/search?biw=1024&bih=639&noj=1&q=1857+revolt&oq=1857&gs_l=
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• https://www.sscnet.ucla.edu/southasia/History/British/EAco.html
• https://en.wikipedia.org/wiki/East_India_Company
• http://www.parliament.uk/about/livingheritage/evolutionofparliament/legislativescrutiny/parliament-and-empire/parliament-and-theamerican-colonies-before-1765/east-india-company-and-raj-1785-1858/