People's Democracy

THE EAST INDIA COMPANY AS A BUSINESS ORGANISATION

IN focussing on the East India Company’s political and military activities from the eighteenth century onwards we frequently tend to lose sight of the fact that the East India Company was after all a private business concern. This determined its structure and objectives. The company existed primarily to earn profits for its shareholders. The shareholders earned dividends right till the end of the company’s rule and even beyond. It may be mentioned that the East India Company was finally dissolved in 1874 with no loss to the shareholders. The company’s continuing profitability was reflected in its share prices between 1833 and 1858. Throughout this period shares were quoted at prices ranging from ₤200 to ₤300, well above the nominal price of ₤100. This was the period after the company had lost its exclusive right to import tea from China — the final commercial privilege that it had to surrender. But even this surrender represented a gain. It cost the Indian people an increase from 10 to 10.5 per cent in the guaranteed dividend payable to the shareholders. The dividend had been guaranteed by the British state in lieu of the flow of tribute from India. Commenting on the guaranteed dividend Marx had observed in 1858:

It is generally known that the commercial existence of the East India Company was terminated in 1834, when its principal remaining source of commercial profits, the monopoly of the China trade, was cut off. Consequently, the holders of East India stock having derived their dividends, nominally, at least, from the trade-profits of the company, a new financial arrangement with regard to them had become necessary. The payment of the dividends, till then chargeable upon the commercial revenue of the company, was transferred to its political revenue. The proprietors of East India stocks were to be paid out of the revenues enjoyed by the East India Company in its governmental capacity … [‘The Approaching Indian Loan’, New-York Daily Tribune, February 9, 1858].

We need to bear in mind that despite all the changes that had taken place in the structure of governance at the level of the metropolis, i.e., in the mode by which the Indian empire was governed from London, several features which had their origin in the company’s interior organisation as a business enterprise, survived till the mid-nineteenth century. Thus, for instance, the shareholders, of whom over a thousand had the right to vote in the early nineteenth century, were a fairly powerful body whose resolutions were ‘supposed to be respectfully attended to by the Directors, and even by the Legislature’. The shareholders comprising the Court of Proprietors elected the all-powerful Court of Directors and declared the dividend. Actual governance and the execution (and usually initiation) of policy was in the hands of the elected Court of Directors comprising twenty-four directors —reduced to eighteen after 1853 —, all with executive functions. Finally, the Court of Directors retained the important privilege of appointing administrative personnel in India. Whereas the Board of Control supervised, on behalf of the British parliament, the company’s political and military functions, the company’s own establishment was vital for the entire decision-making process. John Dickinson had noted in the mid-nineteenth century that the sheer volume of paper work made the Company’s vast clerical establishment, with its access to information and matters of detail, indispensable to colonial governance:

When a dispatch arrives from India, it is referred, in the first instance, to the Examiners’ Department, to which it belongs; after which the Chairs confer with the official in charge of that department, and settle with him the tenor of a reply, and transmit a draught of this reply to the Indian Minister, in what is technically called P.C., i.e. previous communication. [...] The Chairs, [...] in this preliminary state of P.C. depend mainly on the clerks. [...] Such is this dependence that even in a discussion in the Court of Proprietors, after previous notice, it is pitiable [...] to see the chairman referring to a secretary who sits by his side, and keeps on whispering and prompting and chaffing him as if he were a mere puppet, and [...] the Minister at the other end of the system is in the same predicament. [...] In this stage of P.C., if there is a difference of opinion on the draught it is discussed, and almost invariably settled in friendly communication between the Minister and the Chair; finally the draught is returned by the Minister, either adopted or altered; and then it is submitted to the Committee of Directors superintending the department to which it belongs, with all papers bearing on the case, to be considered and discussed, and adopted or altered, and afterward it is exposed to the same process in the aggregate Court, and then goes, for the first time, as an official communication to the Minister, after which it undergoes the same process in the opposite direction.[India, Its Government under a Bureaucracy, London, 1853]

Marx, writing in 1853, the year in which the company’s charter came up for renewal, perceptively remarked that, ‘When the East India Company was only a commercial association, they, of course, requested a most detailed report on every item from the managers of their Indian factories, as is done by every trading concern. When the factories grew into an Empire, the commercial items into ship loads of correspondence and documents, the … [Company’s] clerks went on in their system, which made the [Court of Directors] and the Board [of Control] their dependents; and they succeeded in transforming the Indian Government into one immense writing-machine’. [‘The Government of India’, New-York Daily Tribune, July 20, 1853]