BOOK: John Keay, "The Honourable Company"

John Keay: The Honourable Company: A History of the English East India Company. London: HarperCollinsPublishers, 1991. 0006380727. xx + 475 pp.

My experience with this book was much like that with Keay's India: A History, which I read a couple of years ago (see my post from back then): I didn't enjoy reading it as much as I had hoped I would, not due to any fault of the author's, but simply because it turned out that I wasn't quite as interested in the subject matter as I thought I would be.

As so often happens with histories — and so rarely with fiction — there are too many persons for me to be willing to take the trouble to keep track of them all in my mind, so I often had only the vaguest idea of who this captain or that factor was and how exactly he fits into the story. What also confused me a little is that the story isn't told in a strictly chronological order, but sometimes jumps backwards a little to cover the same period but in a different geographical area; but I'm not saying that that's a bad idea — it's probably the best way to organize a book about a subject like this.

In fact the author, as far as I can tell, did an excellent job. His style is engaging and vigorous, he keeps the story moving along at all times, he has an eye for the illuminating anecdote, and he is generous with short but vivid quotations from primary sources, complete with their original wonky early modern spelling and everything. If I found the book a bit boring to read, it isn't his fault at all.

And he has clearly read widely, not only in the primary sources, but also in the work of the 19th- and 20th-century historians, with whom he often engages in minor polemics. It seems that many of these earlier authors, writing as they did in the heyday of the British Empire, of which India was of course the crown jewel, regarded the history of the East India Company as little more than an unimportant prelude to what really mattered, i.e. the British Empire in India as it emerged in the 19th century. They were interested in the Company only insofar as its activities led to the emergence of this Empire. With Keay it is precisely the opposite. You can see that he is writing a book about the East India Company and by golly, he is going to stick to that; he has very little interest in what the Company did or didn't make possible for the Empire, and he brings the story to a surprisingly sudden close as soon as the Company sinks into irrelevance in the early 19th century.

Not that there's anything wrong with that — actually I liked his approach, as the British Empire in India is probably covered a lot more often in a lot more other books, so by focusing on the Company itself he could cover some less familiar ground and increase the chances of bringing new information to the reader. I myself certainly knew almost nothing about the Company before reading this book, so from that point of view it made for a very informative read.

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It was not the first trading company in England, but it had some important innovations relative to earlier ones, such as the Levant Company (whose goal, by the way, had also been to import Far Eastern goods into England, except that it tried to do this overland across the Middle East rather than by sea; p. 13): those merely provided a regulatory framework within which its members “formed individual syndicates to raise capital and trade on their own account” (p. 27). By contrast, the East India Company itself raised capital from its members and then used it to operate trading voyages. But there was still one important difference compared to modern joint-stock corporations: the capital was raised for each voyage separately, and profits were likewise calculated and dividends paid out for each voyage separately. This had various downsides; e.g. after an unsuccessful voyage, it was hard to raise capital for the next one; and since voyages lasted several years and a new one was sent off before the last one had returned, they sometimes had agents representing several different voyages operating in some Eastern city at the same time and treating each other as rivals. The idea of having a stock of capital covering several voyages only came a few decades later (p. 99), and a permanent stock later still (p. 128).

As someone vaguely used to thinking of the East India Company as the entity whereby the British conquered the huge territory of India, I couldn't help being somewhat surprised by how modest its beginnings were. Its initial interests, in the early 17th century, were not so much in India but in the “Spice Islands”, the Banda archipelago in present-day Indonesia; and far from conquering (sub)continents, the best they could manage was to get some local sultan to grant them a plot of land for a “factory” (i.e. a trading agency and warehouse). They were mostly driven out of this early phase of the spice trade by the Dutch (pp. 50–1; the infamous Amboina massacre belongs to this period), and entered a period of decline (pp. 117–18). The Dutch had a much stronger naval presence in the Far East through their own East India Company, which was “a state venture” (p. 120), unlike the English one, which was mostly just an association of private merchants.

Another recurring problem that the English were facing was the balance of trade; they were importing spices and the like, but had to pay them with gold and silver since they couldn't export their own products there — unsurprisingly there wasn't much demand for woolen cloth in the sweltering jungles of India and southeast Asia (p. 74). Admittedly, this wasn't as much of a problem as some people feared at the time, since the English could recover some gold by re-exporting spices to other European countries at a profit (pp. 119–20). Their exports to the East really only began to grow in the early 19th century, by which time England was able to offer industrially produced (and therefore cheap) cotton cloth (p. 451).

In the early days, the Company occasionally paid dividends in kind, i.e. in pepper instead of money. Investors with the right connections could then try to increase their profit by exporting this pepper to the Continent instead of selling it in England (p. 64).

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I was interested to learn that the three great cities from which British influence eventually spread into India — Madras, Calcutta, Bombay* — which are of course even greater cities now — aren't actually ancient Indian cities as I imagined; their history pretty much begins with the Company. Around 1640 they built a fort near a village called Madraspatnam, and the city of Madras grew out of that (pp. 68–9). Similarly, in 1687 they built a factory and base near a village called Kalighat, and Calcutta grew out of this (p. 156). Bombay seems to have been started by the Portuguese and was a settlement of no particular importance when its territory came under English rule as part of a dowry when Charles II married a Portuguese princess; the Company leased it from him in 1668 (p. 130).

[*This is also why, even in the 19th century, you still found British India divided into three “presidencies”: Bengal, Bombay, Madras. In the old Company days, a “president” was the chief factor (agent) in a given region; pp. 48, 99.]

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One of the most important features of the Company was its monopoly on the import of goods into England from areas east of Africa. But this did not prevent various rivals (or “interlopers” as they seem to have been called) from trying to get a piece of the action. Whenever the Company's royal charter came up for renewal, there were debates on whether it would not be better for the country if the monopoly were abolished (pp. 170, 174–8). One William Courteen managed to get a charter for a rival company trading to Portuguese ports in the East in 1636 (p. 122), but it soon came to nothing. Later interlopers tried to get around the monopoly by acquiring charters from increasingly implausible European countries such as Austria, Poland, and Sweden (pp. 237–9).

It was easier to rival the Company in “country trade”, i.e. trade that started and ended in the East without reaching Europe at any point, as this doesn't seem to have been covered by its monopoly. The Company also allowed its employees to be involved in this (“private trade”) as a way to supplement their otherwise miserably low salaries (p. 172).

Eventually critics of the Company's monopoly and its corrupt business practices got the Parliament to approve a “New Company” (p. 182; in 1698), but the Old Company avoided getting shut down thanks to successful counter-lobbying, so that for a time both companies existed (p. 190); they merged in 1708 (p. 212).

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Initially the Company was content to be just a trading company, but towards the end of the 17th century it began taking an interest in acquiring bits of territory and building fortifications, as India was increasingly unstable due to the Moghul Empire disintegrating (pp. 141–2, 243). They even had a short war against Aurangzeb, the last really powerful ruler of that empire, but they were easily defeated (p. 146). From one of his successors, Farrukhsiyar, the Company managed to obtain a farman or decree conferring various important trading rights and privileges upon it (in 1716; pp. 229, 232), an important step towards the expansion of their influence. (Keay comments that “the Company's timing had been impeccable”, as earlier emperors were too strong and would not have issued such a farman while the subsequent ones were too weak to do so; p. 231.)

For example, the farman exempted the Company from internal customs duties, but the Company interpreted this so broadly that it even began selling “passes” conferring this exemption upon any other merchant who cared to buy a pass (p. 235). Once the Company got strong enough to enforce this interpretation, they were able to deprive the nearby Nawab (governor) of Bengal of much of his revenue.

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As the various European countries were often at war with one another, this also spilled into their emerging colonies in other parts of the word. Here in this book we repeatedly find the English fighting against nearby French or Dutch outposts, and usually succeeding in capturing some of their territory, but they were then often obliged to return it at the end of the war under the terms of the peace treaty concluded between their governments back in Europe.

From the middle of the 18th century, these wars also sped up the transformation of the Company from a mostly private trading organization focused on commerce to a mostly government-like organization focused on holding territory and gathering revenue (pp. 272–3). For example, there was a lot of fighting against the French near Madras as a result of the War of the Austrian Succession. As there was by then no firm Indian state in control of the area, both the British and the French often allied with opposite sides in various local power-struggles and were rewarded with “territories and revenues [. . .] not by right of conquest and at the expense of their enemies but by right of cession and at the expense of their allies” (p. 287–9). By then European armies were definitely better than Indian ones in various technical and organizational ways, having made much progress in the past one or two centuries (p. 291).

Nowadays, with history as a discipline being largely dominated by the woke movement, the prevailing view of British presence in India seems to be that promoted by the Indians themselves, according to which India had been a land of peace and plenty until the evil Britons showed up in Bengal, did nothing but plunder it for the next two or three centuries, and turned it into a land of poverty and famine. So I was quite interested to see a different view here in Keay's book. The way he presents things, government, either that of the Moghuls or of the various local rulers that followed in the wake of the decline of the Moghul empire, was already focused more or less entirely on tax collection, with nobody at any point in the ruling hierarchy having any notion that the purpose of the government might be to do anything for the people paying all those taxes. “Government was simply a euphemism for oppression under the imperial sanction of Moghul authority” (p. 292); “Moghul government amounted to little more than revenue management” (p. 377). In view of this, it isn't exactly obvious that the Company was oppressing or plundering its territories any worse than their previous Indian rulers had done.

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In Bengal, the Company's abuse of the customs exemptions got it into conflicts with the Nawab of Bengal, who even captured Calcutta at one point (1756; the Black Hole of Calcutta belongs to this episode, p. 304). Later there was also fighting with the French as a result of the Seven Years' War (pp. 311–14, 339–44); the French were largely pushed out of India. The British supported a palace coup against the Nawab of Bengal and, after defeating his forces in the Battle of Plassey, the new Nawab (and the subsequent ones) was little more than their puppet (pp. 316–19, 370–2) and much of his revenues went towards paying the various sums he had promised to the British in exchange for their support. Robert Clive and other prominent British officials became fabulously wealthy in the process (p. 320–1).

As a result of all this, the Company was now practically in control of Bengal and acted more like a government than a business there (p. 331), but they were still doing a lot of trading elsewhere, notably in China, as the English were becoming a tea-drinking nation (p. 349). But the Company as a business wasn't terribly prosperous despite all this; revenues from Bengal weren't as high as had been hoped, maintaining its armies and administrators there was expensive, it was hard to export anything to China to balance out the imports of tea from there, and meanwhile the shareholders were pressing the Company to pay out increasingly high dividends (pp. 367, 378).

Traditionally the Company had been under the control of its directors who were mostly interested in trade, but now its “nabobs” (high-ranking employees who got rich in the process of territorial expansion) had the upper hand (p. 380). The general public in Britain got the impression that the Company's administration of its Indian territories was corrupt and oppressive (p. 382), and it was not far from there to the idea that the British government would do a better job of it. The government gained an increasing influence over the Company, partly by lending it money, partly by suitable provisions being inserted in various acts of parliament (pp. 384–5).

Even at this late stage, the Company was still involved in all sorts of interesting activities. We find it sending missions and expeditions to Tibet (pp. 423–4), Vietnam (pp. 425–8), Penang (p. 429), and New Guinea (p. 441). In an effort to finally find something to export to China, it even sponsored an expedition to Alaska, as there was apparently a great demand for otter furs in China. This led to the interesting question of whether Alaska counts as east or west of England for the purposes of the Company's monopoly; but then the question became moot as the Government founded a new “King George Sound Company” (pp. 432–4).

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By 1785, the Company could be described as “a quasi-state department” (p. 391), at least in its role in administration of territories in India. As a trading company it continued for a few more decades; its monopoly was watered down in 1793 (p. 439) and abolished for the India trade in 1813 (p. 393) and for the China trade in 1833 (p. 456). But even this last step, in a sense, was just a formality; for example, it had been possible to bypass its China monopoly by trading in two steps, first between London and Singapore (which counted as India trade and was thus free of monopoly) and then between Singapore and Canton (which counted as “country trade” and thus also free of monopoly); p. 454. Part of the pressure for abolishing the monopoly came from British textile manufacturers, who by then could mass-produce cheap cotton goods and felt that the Company had effectively been using its monopoly to protect Indian weavers from this competition (pp. 451–2).

The Company was “finally wound up” in 1873 (p. 393), but what exactly it was doing between the loss of its monopolies and this final winding up, Keay does not tell us; perhaps it was doing nothing at all.

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Apropos of nothing in particular: Captain William Heath, who visited Canton in the late 17th century, writes: “The abominable sin of sodomy is tolerated here, and all over China, and so is buggery, which they use both with beasts and fowls, in so much that Europeans do not care to eat duck except what they bring up themselves, either from the egg or from small ducklings.” (P. 206.) Talk about secret sauce :))))