Financial History Issue 132 (Winter 2020) | Page 39

BY DANIEL C. MUNSON   The Anarchy: The Relentless Rise of the East India Company William Dalrymple Bloomsbury Publishing, 2019 496 pages with notes A functioning capitalist system requires dissimilar component parts. Free-think- ing, ambitious business people are the necessary cog, but the rules of the game require a predictable and powerful arm to see those rules fairly enforced. William Dalrymple’s The Anarchy illustrates, in the case of the British East India Company, what happens when that enforcement arm takes over the game itself. The author, an India scholar, focuses on a specific period in the company’s long history: the gradual decline of the Mughal Empire during the 18th century, a descent into lawlessness precipitated by Muslim-Hindu battles and the sacking of Delhi by Persian mercenaries. Indian bankers found the anarchy unacceptable and made common cause with the British East India Company militia to promote commercial stability. By 1765, company forces had taken legal control of the vast Mughal Empire, placing its thousands of local Indian leaders and administrators under the control of a few hundred Com- pany men. A complicated historical tale can some- times be captured in a single biography. Robert Clive was a belligerent and impa- tient youth who joined the East India Company in the 1740s as a lowly clerk. He was sent to India, where martial scuffles revealed his leadership skills. His com- pany militia retook Calcutta from a war- lord and captured Mughal and French strongholds. Some 20 million people lived in these prosperous lands thus brought under company management, and Clive and his colleagues helped themselves to all they could extract. On returning to England he was vilified and caricatured a crass Nabob. Clive died in 1774—Dal- rymple argues by suicide—a wealthy but tortured man. The Anarchy is replete with financial history lessons. The expense of equip- ping a British ship for trade to south Asia was such that the East India was struc- tured as an early joint stock company to spread widely the costs and risks. Her ships required extensive provisions for the journey as well as silver and gold to buy cottons, dyes and tea, bullion per ship worth millions today. (Indian taxes later paid for these goods.) Londoners initially regarded the East India as simply an investment company, with an unobtrusive office that tallied profits and declared dividends. Company success encouraged leverage, and by the 1770s debts were such that a drop-off in revenue due to a severe drought and fam- ine along the Ganges caused red ink to spill in frightful amounts. Parliament—in exchange for regulatory authority—lent the needed money to an East India Com- pany that was by then, indeed, too big to fail. Parliament’s acquisition of oversight powers paved the way for Britain’s even- tual dismantling of the company. During the late 18th and early 19th centuries, members of Parliament often grumbled about the influence that East India money had over other members and, therefore, BOOK REVIEW over the entire country. Parliament modi- fied the company’s charter in 1833, cancel- ling its right to trade. Finally exasperated by the company’s vicious crack-down on the “Indian Mutiny,” or “Great Upris- ing,” of 1857, the company navy was dis- banded and the army folded into the British military. The reader is permitted to glimpse the primitive realities that required a com- pany militia in the first place. The Span- ish, Dutch and Portuguese developed the trade routes used by the British, and the Dutch East India Company was initially much stronger. Ships at sea robbed from one another with impunity; the Dutch even ventured up the Thames to attack British ships. Dalrymple’s skilled use of 17th and 18th century Indian and British source material produces detailed and interesting profiles of the region’s leaders. Emperors and warlords exhibit all the familiar character flaws, and their stories can remind the reader of classic tragedy. At the same time, this intricate history and its many players and place names requires diligence on the part of the reader. The “pillage” referred to on the book jacket really began in earnest with Clive’s military victories in 1757, pillage often committed by Britons acting without company sanction, pillage that resulted in handwringing by some company leaders. One such leader was Warren Hastings, perhaps the most interesting character in this often-troubling tale. A classically edu- cated and abstemious Englishman who loved India and mastered Indian lan- guages, he was appointed by Parliament to lead the company and rein in Clive-era excesses. Hastings nevertheless later used his skills to bully Indian royal families and extract huge sums. Legendary parliamentarian Edmund Burke fiercely objected and initiated impeachment proceedings against Hast- ings in the House of Commons, requir- ing—just as in the United States—evidence of “High Crimes and Misdemeanors.” Readers of The Anarchy can put them- selves in the House of Lords and decide whether to convict him.  www.MoAF.org  |  Winter 2020  |  FINANCIAL HISTORY  37