How can we explain Britain's long rule in India beyond the cliches of 'imperial' versus 'nationalist' interpretations? In this new history, Roderick Matthews tells a more nuanced story of 'oblige and rule', the foundation of common purpose between colonisers and powerful Indians.

Peace, Poverty and Betrayal argues that this was more a state of being than a system: British policy was never clear or consistent; the East India Company went from a manifestly incompetent ruler to, arguably, the world's first liberal government; and among British and Indians alike there were both progressive and conservative attitudes to colonisation. Matthews skilfully illustrates that this very diversity and ambiguity of British-Indian relations also drove the social changes that led to the struggle for independence.

Skewering the simplistic binaries that often dominate the debate, Peace, Poverty and Betrayal is a fresh and elegant history of British India.

Here is an excerpt from Peace, Poverty and Betrayal:

The East India Company (EIC) had a long, troubled history. Founded in 1600, it had recurring structural problems with trade in the East—competitors, costs and markets. Its original difficulty was that it could buy in the East but not trade; in India and China, people would sell commodities but they did not want European goods in return.

The EIC had its best trading years from 1714 to 1740, years of international peace, but war with France from the 1740s onwards drew it into power politics. It then played a central role in the British conquest of India as a military and governmental vehicle, though the transition was slow and somewhat confused. The Company’s income rose relentlessly after it became a revenue collector in Bengal in 1765, but its expenses also expanded enormously, and it could only find regular profit in the tea trade with China.

This roller-coaster history has been narrated often and well, especially by John Keay, 1 but for current purposes we must understand that after 1757, when the Company’s ‘Direction’ took on governmental responsibilities, the EIC cannot be simply characterized in commercial terms. As a Company of ‘sovereign merchants’, it became an anomaly; contemporaries regularly referred to it as such. It became less and less like a commercial company, and to insist that it was is to miss all the subtlety and interest in its status and nature.

It has recently become fashionable to demonize the EIC. In 2012 the main charges were vigorously set out by Nick Robins.2 His main points were that the EIC single-mindedly pursued ‘personal and corporate gain’, and found itself ‘ruling over large swathes of India for a profit’.3 

These accusations are very general, and can only carry weight if they are confined to a period of something like 1757–72, during which a great deal of malfeasance went on in Bengal. But even then, the charges are misdirected; they could only accurately relate to the large-scale embezzlement perpetrated by the EIC’s servants, which the Company was unable to control and from which neither it nor its shareholders drew any benefit. On the contrary, during those years the Company was seriously harmed, both financially and politically, by the depredation. It began to lose its autonomy as a result, and never fully regained it.

Any picture that we draw of the EIC must take into account at least the following facts and factors. From 1767 it was under close governmental supervision, and after 1784 its business activities in India steadily declined. In 1813 its commercial accounts were entirely separated from its governmental exchequer, and by 1833 it took no part in trade. By then it was an administrative shell.

After 1784 the EIC was not in any respect truly like a privately owned company; it was effectively a government. And, like all governments, it was primarily concerned with its own welfare and preservation.

The EIC certainly became an extractive state, setting its tax demands high and collecting them with rigour. But the motivation was not personal greed. After 1767 the British government itself was extracting money from the EIC, at the rate of £400,000 per annum. The Company, in its turn, was naturally keen to raise funds in Bengal to appease the politicians, and thus maintain its chartered privileges. It was also given an additional, unacknowledged responsibility of supplying what politicians called a ‘tribute’ from India, which meant shipping goods to London which had been paid for with Indian tax revenues, in order to realize cash. This was a neat way of taking wealth out of India without removing bullion, but it was also a process that took no account of commercial concerns, and acted effectively as a cap on profitability.

In reality, the EIC was in a weak position in London; it relied on Parliament for the continuation of its monopoly trading privileges. At the same time it was an insecure institution in India, and had to fight hard for its very existence. In both theatres, it was motivated primarily by self-preservation. There was little profit in trade with India after 1757, and the largest part of the money that went to individuals was not funnelled through the Company. By the end of the 1760s the Company was Rs 10 million in debt in Calcutta.

The EIC was a hybrid creature which evolved out of necessity. In its mature form it ranks as the third great British institutional compromise, after the creation of the Anglican Church in the sixteenth century and the limited monarchy in the seventeenth. The crucial compromise that the EIC represented was that, after 1765, its continued existence avoided the question of who owned Bengal. It was important that it fell neither to the British Crown, which was thus denied the extra patronage and revenue, nor to the Company, so that individuals could not enrich themselves unsupervised.

To confuse the EIC with a private company is to fall into the trap designed by John Robinson, adviser to Prime Minister William Pitt the Younger. Under Pitt’s India Act of 1784 the Company retained its outer form as a commercial body but ceded control of its governmental responsibilities to a Board of Control, consisting of politicians. This allowed politicians to take credit when they chose, or to leave any blame with the directors.

Pitt’s Act was only one of a series of significant developments in both Britain and India, stretching from 1757 to 1793, by which the EIC became a complex, multi-purpose institution held together only by its name. The structure, function and nature of the organization changed dramatically, and any account that fails to understand this risks lapsing into inaccuracy, anachronism and absurdity.

The EIC struggled to make regular profits after 1757. The move into government produced revenue but brought massive expenses too, and the British national treasury was repeatedly obliged to bail out the Company. £1.4 million was advanced to the Company in 1773. Another £4 million was loaned in 1810–12, largely because of Richard, Marquess Wellesley’s expansionist wars. Indeed, so straitened was the Company’s mercantile arm by the financial demands of the ‘territorial Company’ that it was unable to pay the excise on its tea imports on fifteen occasions between 1804 and 1813.4

After 1757 the Company moved into government in India; after 1784 it was absorbed into government in Britain. By then it had ceased to be a commercial body in any real sense of the word. Nor was it private. Once a year a government minister presented an India budget which was then voted through Parliament. More specifically, the parts of the Company that drove territorial expansion had little connection with the parts that controlled its dwindling mercantile activities.

The historian CH Philips, who spent a lifetime studying the EIC, wrote: ‘it should be noted that the senior directors of the Company, who managed its political business, were concerned only in a minor degree with its commercial affairs.’5

By the 1790s the Company did its business through around a dozen separate committees. There were no merchant princes making decisions fuelled by greed. How, might we ask, was greed in play when the directors were paid fixed salaries, and the Company’s dividend was capped, by statute, at 8 per cent in 1784, and then at 10.5 per cent in 1793? How could holding land ‘for profit’ make any sense when in the same year the Company voluntarily fixed its own rental income from Bengal at the permanent figure of Rs 286 lakhs? How could a Company single-mindedly chasing profits contrive to be £40 million in debt by 1828?

To read more, get a copy of Peace, Poverty and Betrayal here: https://www.amazon.in/dp/9354227325/