topics: |  history | india | bengal | british-raj |

detailed descriptive history of the events after charnock establishes the
calcutta offices of the company, during the Alivardi regime (ends before
plassey).  

Excerpts

ch2 The growth of the company in Bengal

The rebellion of Sobha Singh in 1696 secured for the Company the permission
to fortify Calcutta, while the purchase of the zamindari of Calcutta,
Sutinati and Govindpur in 1698 by the East India Company ensured to it a
definite revenue which was regarded by Sir Josia Child as the 'foundation of
power'.

These events were followed in 1700 by the creation, by the Company, of Fort
William as the seat of a Presidency, independent of Madras, with Sir
Charles Eyre as its first President and Governor, and the amalgamation in
1702 of the "old" and "new" English Companies under the style and title of
"The United Company of Merchants of England Trading to the East Indies".

The union of the two Companies had been consummated by the award of Earl
Godolphin in 1708-09.  From this time onward there followed a progressive
development of the East India Company's trade. Dividends were paid
regularly at a rate fluctuating between 5 and 10 per cent. From 5 per cent
in 1708-09 the dividend rose to 10 per cent in 1711-12, at which rate it
continued till 1722, when it dropped to 8 per cent in 1743, at which figure
it continued till 1755.

The development of the Company's trade is also evident from the number and
tonnage of ships despatched annually to the East. From an annual average of
eleven ships of about 800 tons despatched for the five years from 1708-09 to
1711-13, the number rose to twenty-one ships of about 490 tons in the
quinquennium from 1735 to 1740. While in 1708-09 out of ten ships despatched
from Britain only four were bound for the 'Coast and Bay', that is, the
eastern coast of India, in 1739-40 out of thirty-nine ships so despatched
nineteen were bound for the eastern coasts, and of these nineteen ships no
less than nine were specially earmarked for Bengal.

The Union of the two Companies and the administration of the 'rotation
government' from 1702 to 1709 coincided with a turning period in the history
of Bengal.  Four years before the final amalgamation of tbe two Companies
under the award of 1708-09, Murshid Kuli Khan, the Diwan of Bengal,
transferred his headquarters from Dacca to Murshidabad, which from 1704
became the centre of gravity in the financial administration of the
province. The death of Aurangzib, in 1707, at once let loose the forces of
disintegration, which gradually removed all elements of cohesion in the
Moghul Empire. p.17

Gerald Aungier, who became President at Surat and Governor of Bombay in 1669,
wrote a lengthy and striking despatch to the Directors in 1677, recommending:

	a severe and vigorous [policy to ensure the stability of the trade].
	Justice and necessity of your estate now require that in violent
	distempers, violent cures are only successful; that the times now
	require you to manage your general commerce with your sword in your
	hands.

the 1717 farman and use of the mint at murshidabad

[the farman allowed the company the use of the mint at murshidabad, but...]
Tbe use of the mint at Murshidabad was denied on the ground that the Nawab's
chief mutasaddi (the officer who operated it), was dangerously ill and
nothing could be determined in this regard till he recovered or was dead.
[Consultations, 18 July and 50 July 1717.]

An attempt to gain this and certain other privileges in 1724, even on the
offer of paying Rs 40,000 to the Nawab, met with little success.]

[this was primarily because the royal bankers, jagat seth & co, felt that
they would lose their monopoly on the mint]

ch.5 Overview (Some Conclusions)

English traders came to India early in the seventeenth century [during
Akbar's time].  The Company was still in an infant stage in the reign of
Queen Anne, when on the death of Aurangzib the once mighty Moghul empire was
tottering.  It was not till the reign of Queen Victoria that the whole of the
Indian sub-continent came under the Company's rule.

The period from 1704 to 1740 can be said to represent the early adolescence
of the East India Company in Bengal.  But the economic hold which the Company
had established in Bengal foreshadowed for it a promising future.

The Fort William Consultations, which flow from 1704 to 1740 without a break,
give us a glimpse of the activities of the East India Company and its
influence on the economy of Bengal at this formative period. Even in the
seventeenth century, the English had found that the farman or charter granted
by one Emperor might be disregarded by his successor and that the imperial
furman was not always regarded as sacrosanct by the provincial rulers. This
naturally gave an element of uncertainty and instability to their position as
traders.

The uncertain political conditions in eastern India brought home to them the
necessity of having a fortified settlement whose permanence and stability
could be assured by the possession of estates yielding a steady supply of
revenue. Hence the purchase of zamindari rights over the "Calcutta towns" and
the construction of Fort William were valued by them because they ensured a
regular income and facilitated the movement of their trade.

Early in the eighteenth century, the English had realized that, despite the
tottering condition of the empire, the name of the great Moghul commanded
con· siderable awe and respect all over India. The unhelpful attitude of
Nawab Murshid Kuli Khan in Bengal caused them to approach the imperial
authorities at Delhi to get a consolidated farman embodying their rights and
privHeges. The farman of 1717 conferred on them powers which, in modern
parlance, would be regarded as "extra territorial."  The fortification of
Calcutta and the acquisition of zamindari rights had given them military
security and legal status. The farman of 1717 recognised all existing
privileges enjoyed by the Company and conferred on them some new ones, which
placed them in a superior commercial position over all other merchants,
Indian and foreign. It remained the sheet-anchor of the Company's rights in
Bengal till the battle of Plassey.

The Company had to face powerful opposition in the execution of the
provisions of the farman.  Both Murshid Kuli Khan and Shuja-ud-din Khan, the
Subahdars of Bengal, put obstacles in their way. The exuberance of the
Company's servants, on the other hand, led them many a time to exceed its
provisions and precipitate awkward situations of conflict with the
Government, out of which they could extricate themselves only on payment of
heavy fines.

The presence of the European rivals of the English -- the Dutch, the French
and the Ostenders [Austrians], enabled the Nawab to play off one against the
other to his advantage.  But ultimately the English emerged triumphant. The
Ostend competition, so dreaded by them, was never, in fact, a serious
menace. Though there was no love lost between the English East India Company
and the Dutch and the French Companies trading in India, the position of the
English was certainly strengthened by the prolonged hostility of the French
and the Dutch, which was a prominent feature of international politics in the
17th and 18th centuries.  Political developments in Europe sometimes
compelled the English to conceal their anti-Dutch attitude in India and to
remain content to watch their rivals wear each other out.

During the war of the League of Augsburg [nine years' war], Pondicberry was
captured by the Dutch, but it was restored to the French by the Peace of
Ryswick (1697) [also restored Saint-Domingue or Haiti].

The English East India Company had also to cope with the opposition of the
banking and trading communities in India led by the house of Jagat Seth. The
right of coining money at the Murshidabad mint was denied them by the Nawabs
of Bengal mainly at the instance of Jagat Seth, who, as the banker of the
Government, regulated the supply of bullion and the coining of money at the
mint. The use of the mint by the English Company, which carried on an
extensive trade in Bengal, would naturally be detrimental to those having
vested interest in the mint.

Denied the privilege of coining money at the Murshidabad mint, the English
met with no better success in their attempt to secure the circulation of
Madras rupees in Bengal according to the terms of the farman. The provision
of the farman permitting the circulation of Madras rupees in Bengal would
have been an advantage to the English, as they had a mint of their own at
Madras where they coined rupees.  But here also their interests came into
conflict with those of the shroffs, and, particularly, of Jagat Seth, who
controlled and regulated the batta or the discount rate for different types
of rupees.  The batta problem remained unsolved for a long time, even after
Plassey.

As time passed and the English gained greater stakes in Bengal, they resented
more and more the restrictions under which they had to carry on their
trade. In their opinion, those restrictions were not justified in terms of
the farman. These economic and financial considerations played a large part
in moulding their policy for forty years prior to the battle of Plassey and
had a decisive influence in the treaties that were made by them with
Siraj-ud-daula and Mir Jafar Khan in 1757.

The demoralised condition of the rulers was visible to a careful observer as
early as 1732, when Anupchand, the vakil of the English at Delhi, drew their
attention to the miserable plight of the court, which was 'drowned in
luxury', and of the King and nobility whom he branded as cowards.  This was
revealed on the occasion of the invasion of Nadir Shah in 1739; when the
Nawab of Bengal and his advisers made a shameful betrayal of their weakness
by their ready acknowledgment of the authority of the conqueror, who was
about a thousand miles away from Bengal, and even went on to coin siccas in
his name at the Murshidabad mint.

The English themselves were extremely nervous at the time of Nadir Shah's
invasion. They had realised the inherent weakness of the Bengal
Government. By 1740 they felt strong enough to tell the Government that the
security of str~tegic points like Patna was dependent on their armed
strength. But, as a rule, they avoicded any military conflict with the
Government of the day. They followed the advice of the Directors of the
Company, who, in their letter of 21 February 1728, recommended the Council of
Fort William to maintain friendly relations with the Nawab of Bengal and not
to do anything to annoy him; but if at any time the occasion should arise,
the Council were advised "to appear resolute to insist upon, defend and
preserve their grants and privileges at the cheapest rate possible".

Much has been written about the private trade and the abuses of dastaks
practised by the Company's servants.  In the preceding pages, we have seen
that the Company's servants were not the only sinners. The Moghul nobility
were no less greedy in this. respect. As the Riyazu-s-salatin tells us, goods
purchased in the garb of 'sauda-i-khas' or private trade by high Government
officials were sometimes resold to the merchants and passed into the market
as 'sauda-i-am' or public transactions on behalf of the Government.

The Nawab and the Company differed in their interpretation regarding the
nature of the goods covered by the provision of the farman, which gave the
Company the right to carry on trade free of customs. The Company's servants,
no doubt, very often exceeded the privilege.  None the less, it must be
admitted that the vigilance of the Nawab and the disciplinary measures taken
by the Company kept these abuses under control in the first half of the
eighteenth century.

Bengal, in the early eighteenth century, enjoyed a prosperous foreign
trade. The abundance of her agricultural products and the excellence of her
manufactures left little score for the import of articles from outside.  The
traffic of international trade was, therefore, rather one-sided. The excess
of exports over imports had to be paid for by bullion, which flowed into
Bengal in increasing quantities as her trade with foreign countries and with
Europe grew in volume.

"Europe bleedeth to enrich Asia", wrote Sir Thomas Roe, early in the
seventeenth century.  The truth of this statement was fully illustrated in
the first half of the eighteenth century, when Bengal had a continuous excess
of exports over imports in the European trade.  The mercantile theory of
economics, which was then current in Europe, did not favour the idea of the
flow of specie out of a country.  This explains the anxiety of the East India
Company to pay for their Bengal goods by articles manufactured in England,
particularly by the woollen products known as broadcloth.  But they had
little success in their efforts, and the demand for bullion continued
throughout the period.

Bengal textiles and calicoes had established such a grip on the English
market that laws had to be passed by the English Parliament against their
importation.  These restrictive measures, however, had little adverse effect
on industry in Bengal, as the English merchants carried on a lucrative
re-export trade to Europe. The industries of Bengal, therefore, held their
own in the world market till after the first half of the eighteenth century,
when they had to acknowledge defeat before the mechanised system of
production evolved in the West.

Though we find references to production based on a factory system (for
example, the karkhanas) in Moghul India in the works of Indian and foreign
writers, the economy of Bengal was essentially based on a system ot almost
self-sufficient villages where the cultivator and the weaver pursued their
eternal avocation with the little money that filtered into their hands
through a number of middle-men who stood between them and the big
merchants. Society, which was insular in nature, failed to take notice of the
changes which were taking place in other parts of the world. The caste-system
with all its rigours operated against the mobility of labour and the progress
of society from that of status to contract.

There was no dearth of capital in Bengal, though there was little indication
ol any capitalistic enterprise. There were indeed fabulously rich bankers,
who maintained branches in and outside the province. Their drafts and letters
of credit were negotiable even beyond the boundaries of India. But the
indigenous banking system was over-dependent on the credit of particular
individuals or families, and did not adapt itself to the principle of joint
stock that had given so great a stimulus to the contemporary commercial
enterprise in England.

The economy of Bengal was ill balanced. Wealth was confined to the hands of a
small minority lacking in enterprise and impervious to the necessity of
developing the potential resources which were present in the country in
abundance.  A few middle-men clustering round the settlements of foreign
traders made fortunes, and the ruling nobility made a show of their wealth at
the Court and darbar, but the people, as a whole, were poor, though not so
poor in comparison with the people of Europe, as now.

There was no enlightened middle class.  to form the backbone of a healthy
social system.

Certain aspects of the activities, or rather the lack of activity, of the
people of Bengal may be discussed to show their want of willingness and
capacity to recognize facts and to adjust themselves to changing
circumstances. The undoubted superiority of European ships, which were far
ahead of Indian ships in the quickness of movement and efficiency of
transport in carrying foreign and coastal trade, was easily
noticeable. Though this was evident ever since the coming of the Europeans,
no attempt was made by the Moghul Emperors or by the semi-independent
Subahdars of Bengal to build up a navy or to improve their merchant marine so
as to match the naval and maritime superiority of the Europeans, which indeed
seemed to have been taken for granted.  For more than one hundred years
before the battle of Plassey, the patrolling of the waters of the Bay of
Bengal by the ships of the East India Company and other European powers made
no impression on the rulers and people of Bengal...

Another feature that strikes a modern student was the lack of scientific
approach that characterised the thoughts and activities of the Government and
the people. In spite of the vast superiority of the manufactures of Bengal,
particularly of textile products, little attempt seems to have been made,
while the country had not yet become politically dependent, to import or
encourage scientific talents to improve the techniques of production. The
English had occasionally to complain against the French, the Dutch, the
Swedes, imitating the1r way of producing cettiin articles marketable in
Bengal, but never against the Indian manufacturers. Both the Government and
the people appeared to be indifferent to the changes that were taking place
in the world outside. This spirit of self-satisfaction was fatal to economic
progress.

No attempt at improving the economy of Bengal on an organised scale by her
rulers and people is visible in contemporary records. This atmosphere of
complacency brought about a condition of stagnation and contained in truth,
the seeds of economic and political decay.

Contents

Preface  								 ix
   I. Introduction : Bengal at the turn of the century  		  1

  II. Trade relations of the English East India Company 		 10
	  (I) The Growth of the Company in Bengal
	 (II) The farman of 1717 and Murshid Kuli Khan
	(III) The working of the farman, 1727 to 1740

 III. Other European traders 						 69
	The Portuguese
	The Dutch
	The French
	The Danes
	The Ostenders

IV. Mints and currency  						 96
	The role of the house of Jagat Seth

V. Markets and trade      						124
	Internal and inter-provincial trade
	Private trade
	Foreign trade
	Trade in saltpetre, broad-cloth, etc. silk, cotton goods,

VI. General Economic condiitions 					168
	Conditions of peace
	Arts and industries
	Means of communication
	Standard of life and social contributions of the Company

VII. Some Conclusions  						210

Appendices 								210
	  I. Subahdars of Bengal, 1700-17-40 				218
	 II. Governors of Bengal Presidency, 1700-1740 			219
	III. Bibliography 						220
	 IV. Photostat copy of the farman of 1717 			226
	  V. Map of Bengal, 1779 					226
	 VI. Map of the "KASIMBAZAR ISLAND" - 				226

Index    								227