From Trade to Territory

A company that came to India to buy pepper and cloth ended up ruling the whole subcontinent. The English East India Company arrived as a trader in the 1600s, but over a single century (roughly from 1757 to 1857) it turned itself into the master of India. How a band of merchants became a government is one of the most important stories in modern Indian history. It is also a favourite in examinations.

The East India Company was set up in 1600, when Queen Elizabeth I of England granted it a charter giving it the sole right to trade with the East. A charter is an official document granting rights or powers.

The Company wanted the spices, cotton textiles and silk of the East, which sold at huge profit in Europe. Spices came mainly from the islands of South-East Asia. In India the great prize was Bengal. By the mid-1700s Bengal's staple exports were cotton textiles, silk, saltpetre and opium. Saltpetre is the key ingredient of gunpowder, and Europe's armies bought it eagerly. The Company set up trading posts called factories at places like Surat, Madras, Bombay and Calcutta, each a fortified warehouse. To trade without paying duties and to protect its goods, the Company began to fortify its settlements and recruit soldiers. That was the first step from commerce towards conquest.

The Company did not conquer a strong, united empire. As the Mughal empire declined in the early 1700s, a set of regional powers rose in its place. Some were successor states, carved out by Mughal governors who became independent in practice. Hyderabad was founded by the Nizam, a former Mughal noble. The Nizamat of Arcot in the Carnatic was likewise a Mughal provincial post that turned hereditary. It did not emerge out of Hyderabad. In Bengal, Murshid Quli Khan built an autonomous state and introduced the system of revenue farming, under which the right to collect land revenue was auctioned to contractors. Rohilkhand was set up by Rohilla Afghan migrants in the upper Ganga region, not formed out of territories occupied by Ahmad Shah Durrani, the Afghan invader.

Other states had older or independent roots. The Mysore Kingdom under the Wodeyars grew out of the fragmented Vijayanagara Empire after its decline. Under Haidar Ali and his son Tipu Sultan it became the Company's toughest enemy in the south. Tipu was the first Indian ruler to establish embassies in foreign countries on modern lines, sending missions to France and Turkey. He also gave money for the idol of Goddess Sarda at the Sringeri temple, a famous example of his patronage of a Hindu shrine.

The Marathas emerged as the strongest native power after the Mughal decline, but theirs was a loose confederacy of chiefs, not a united Indian nation with a national idea. After the execution of Sambhaji, Shivaji's son, in 1689, it was Raja Ram who streamlined the administration and kept Maratha resistance alive against the Mughals until 1700. Maratha official documents were written in the cursive Modi script. Two other rulers are exam favourites:

• Maharaja Ranjit Singh: the Sikh ruler of Punjab, who set up modern foundries at Lahore to manufacture cannons.
• Sawai Jai Singh of Amber: the astronomer-king of Jaipur, who had Euclid's Elements of Geometry translated into Sanskrit.

The turning point came in Bengal, the richest province of India. The Company clashed with the young Nawab of Bengal, Sirajuddaulah, for three reasons. It misused the duty-free dastak trade privilege, it fortified Calcutta without permission, and it sheltered the Nawab's enemies. Sirajuddaulah seized Calcutta, the episode tied to the alleged "Black Hole" incident, and open war followed.

On 23 June 1757 the two sides met at the Battle of Plassey. The battle was won not by superior fighting but by betrayal. Robert Clive forged a secret alliance with the Nawab's own disloyal men: the commander Mir Jafar, the banker Jagat Seth, Rai Durlabh and Omichand. Mir Jafar had been bribed to hold back his troops, and Clive's small force won easily. Sirajuddaulah was captured and killed. The Company made Mir Jafar the puppet Nawab. In return he paid the Company huge sums and gave it the zamindari of the 24 Parganas. Plassey was the Company's first great political victory. It gave the Company control over the wealth of Bengal, let it virtually monopolise Bengal's trade, and is regarded as the starting point of British political rule in India.

The puppet Nawabs soon resented Company control. Mir Jafar's failures led the Company to replace him with Mir Kasim, the ablest of the Nawabs. Mir Kasim tried to assert independence. He shifted his capital from Murshidabad to Munger and reorganised his army and finances. Most importantly, he abolished all transit duties. This removed the Company's unfair dastak advantage over Indian merchants, and it enraged the Company. War followed. Defeated in Bengal, Mir Kasim fled and formed a triple alliance with Shuja-ud-Daula, the Nawab of Awadh, and the Mughal emperor Shah Alam II.

On 22 October 1764, at the Battle of Buxar, Major Hector Munro defeated the combined armies of the Nawab of Bengal, the Nawab of Awadh and the Mughal Emperor. Buxar was even more decisive than Plassey. It defeated not just a Nawab but the Mughal emperor himself, making the English a great power in northern India.

Buxar closed a chain of decisive 18th-century battles, and the order is testable. First came Ambur (1749) in the Carnatic, where a French-backed alliance defeated the Nawab of the Carnatic. Then Plassey (1757). Then Wandiwash (1760), where the English crushed the French in India. Buxar (1764) came last.

The reward was decisive. In 1765 the Mughal Emperor granted the Company the Diwani of Bengal, Bihar and Orissa, the right to collect the land revenue. This was the true beginning of Company rule. Now it could pay for its armies and its purchases out of Indian taxes. The Company had become not just a trader but a revenue-collecting power.

The Diwani came through the Treaty of Allahabad (1765), which Robert Clive concluded with Shah Alam II and the Nawab of Awadh. The emperor granted the Diwani of Bengal, Bihar and Orissa in return for an annual payment. Awadh was restored to its Nawab as a friendly buffer state.

Clive then set up the Dual Government. The Company held the Diwani (revenue). Through its right to nominate the deputy, it also controlled the Nizamat (police and justice). So the Company had power without responsibility, while the Nawab had responsibility without power. The system caused administrative breakdown and contributed to the terrible Bengal famine. Warren Hastings ended it in 1772, bringing Bengal under direct Company rule.

From its base in Bengal the Company spread across India by three main methods:

• Direct war: it fought and defeated rival powers, most importantly the rulers of Mysore (Tipu Sultan was killed in 1799) and the Marathas.
• The Subsidiary Alliance: devised by Lord Wellesley, an Indian ruler who joined had to keep a British army inside his state and pay for it. If he failed to pay, the British took part of his territory. The state lost its independence while keeping its throne. The system served three aims: it maintained a large army at the expense of Indian rulers, it countered the French threat in the age of Napoleon's wars, and it established British paramountcy over the states. Note that the subsidy paid for the British force stationed in the state. It was never a fixed income for the Company.
• The Doctrine of Lapse: devised by Lord Dalhousie, if a ruler died without a natural-born male heir, his kingdom "lapsed" to the Company. Satara (1848), Sambalpur (1849), Jhansi (1853) and Nagpur (1854) were annexed this way, and Awadh was taken in 1856 on the excuse of misgovernment.

Two other 18th-century battles are easy to confuse, so fix the pairings. At the Battle of Wandiwash (1760) the English East India Company defeated the French, ending French power in India. The Battle of Kharda (1795) involved no European power at all: the Nizam of Hyderabad was defeated by the Marathas.

Expansion also rolled on after the Maratha defeat:

• First Anglo-Burmese War (1824–26): the Company's first great war in the east, which pushed British control towards Assam and the Burmese coast.
• First Anglo-Sikh War (1845–46): fought against the Sikh kingdom after Ranjit Singh's death. The Sikhs lost, but Punjab survived for the moment.
• Second Anglo-Sikh War (1848–49): a separate, later war. It ended with Dalhousie annexing Punjab outright.

Conquest brought new neighbours too. After the grant of the Diwani in 1765, the Company's frontier reached the hills bordering the Bengal plains. There the British first came into contact with a mountain tribe: the Khasis.

In the south the toughest resistance came from Mysore. Haidar Ali, born in obscurity around 1721, rose through the Mysore army by sheer ability. He seized real power in 1761 and reduced the Wodeyar king to a figurehead. Though uneducated, he had a keen intellect and great energy. He saw that survival against the Marathas, the Nizam and the English needed a modern army. With French help he set up an arms factory at Dindigul and introduced Western training and artillery. He also controlled the rich trade of the Malabar coast. This alarmed the English.

Mysore and the Company fought four wars over three decades:

• First Anglo-Mysore War (1767–69): Haidar Ali outmanoeuvred the English and appeared before Madras, forcing the Treaty of Madras (1769) on equal terms.
• Second Anglo-Mysore War (1780–84): Haidar allied with the Marathas and the Nizam. He died in 1782 and Tipu continued the war. It ended with the Treaty of Mangalore (1784) on the basis of mutual restitution.
• Third Anglo-Mysore War (1790–92): Cornwallis defeated Tipu. The harsh Treaty of Seringapatam (1792) took half of Tipu's territory and held two of his sons as hostages.
• Fourth Anglo-Mysore War (1799): under Wellesley, the English stormed Seringapatam. Tipu died fighting on 4 May 1799. Mysore was returned to the Wodeyar dynasty under a subsidiary alliance.

Tipu Sultan (born 1750), known as the "Tiger of Mysore", was a warrior, reformer and innovator far ahead of his time. Notable facts:

• European-model army: he organised his forces on Western lines and built a navy under a Board of Admiralty.
• Rocket pioneer: he is called the pioneer of rocket technology in India, and he promoted sericulture and trade.
• Citizen Tipu: a lover of new ideas, he planted a "Tree of Liberty" and joined a Jacobin Club, a French revolutionary society, calling himself "Citizen Tipu".

Historians caution against two caricatures: the colonial one of Tipu as a bigot, and the modern one of him as a nationalist martyr. He was a strong ruler defending his own kingdom in his own age.

The Marathas were the last great Indian power capable of resisting the British. Their crushing defeat at the Third Battle of Panipat (1761) by the Afghan invader Ahmad Shah Abdali was a setback, but they regrouped within a decade. The confederacy was a league of great families under the nominal head of the Peshwa:

• The Peshwa: the head, seated at Poona.
• The Scindia: seated at Gwalior.
• The Holkar: seated at Indore.
• The Bhonsle: seated at Nagpur.
• The Gaekwad: seated at Baroda.

This division was their fatal weakness. The chiefs quarrelled among themselves far more than they united against the British.

The Company exploited Maratha succession disputes to fight three wars:

• First Anglo-Maratha War (1775–82): sparked when the English backed the pretender Raghunathrao through the Treaty of Surat. After a humiliating English surrender at Wadgaon, Warren Hastings recovered the position. It ended in the Treaty of Salbai (1782), giving twenty years of peace.
• Second Anglo-Maratha War (1803–05): the cornered Peshwa Baji Rao II signed the Treaty of Bassein (1802), accepting a subsidiary alliance. Scindia and Bhonsle fought to save Maratha independence. Both were defeated by Arthur Wellesley, later the Duke of Wellington, and signed the Treaties of Deogaon and Surji-Anjangaon.
• Third Anglo-Maratha War (1817–19): a final desperate rising by the Peshwa, Holkar and Bhonsle was crushed. The Peshwaship was abolished and the Maratha territories were annexed.

The Marathas were brave and numerous, yet they lost because:

• Division: the chiefs distrusted and fought each other, letting the English pick them off one by one.
• Weak leadership: Baji Rao II was weak and selfish at the crucial time.
• Inferior resources: they lacked the Company's steady finances, discipline and superior artillery.
• No broader vision: they never formed a united Indian front against the foreigner.

The Treaty of Bassein (1802) is often said to have "given the English the key to India". It placed British troops permanently in Maratha territory and tilted the balance decisively. After 1818 the British were supreme over almost all of India.

To hold this vast territory the Company built new institutions.

Its army was mostly made up of Indian soldiers called sepoys, led by British officers. This colonial army became one of the largest in the world.

For administration, British territory was divided into units called districts. Each district was headed by a Collector, whose main job was to collect revenue and keep order. He was helped by Indian officials, the police and the courts. A new legal system was set up, with a Supreme Court and a separation of criminal and civil law. Through these tools a foreign trading company came to govern the lives of millions of Indians.

At the top of the structure stood the Governor-General. Warren Hastings was the first Governor-General of Bengal, taking office in 1773. Robert Clive never held this office; he had been Governor of Bengal. The Charter Act of 1833 then enlarged the post into the Governor-General of India, with authority over all British territories. William Bentinck was the first Governor-General of India.

Keeping order produced one famous campaign. In the 1830s Captain William Sleeman led the suppression of the Thugs, hereditary gangs who strangled and robbed travellers on the roads. The operation showed how far the new administration's police power could reach.

Not every state was annexed. At independence India still had about 562 princely states, covering two-fifths of the country. They ranged from tiny Bilbari, with a population of 27, to Hyderabad, as large as Italy. British policy towards them moved through distinct phases, each tracking the growth of British power:

• Struggle for equality (1740–65): starting with the Anglo-French rivalry, the Company asserted itself with the capture of Arcot (1751) and at Plassey. With the Diwani of 1765 it became a real political power.
• Ring Fence (1765–1813): reflected in Warren Hastings's wars, this policy aimed at creating buffer zones to defend the Company's frontiers against the Marathas and Afghans. Organising Awadh's defence to protect Bengal is the classic example.
• Subsidiary Alliance: Wellesley's system extended the ring fence. Besides keeping and paying for a British force, an allied state surrendered its foreign relations. Hyderabad, Awadh and the Marathas all accepted it, establishing British supremacy.
• Subordinate Isolation (1813–57): the theory of paramountcy, the Crown's overriding authority over the states, began to develop. States surrendered all external sovereignty but kept their internal administration. Residents, the British envoys at princely courts, shifted from diplomats into controlling officers, and the British began insisting on prior sanction for successions. The phase ended with the Doctrine of Lapse, through which Dalhousie annexed eight states, including Satara and Nagpur.
• Subordinate Union (1857–1935): the Crown took over in 1858 and rewarded the states' loyalty during the Revolt. Annexation was abandoned ("punish or depose but not annex") and the right to adopt an heir was recognised. Any fiction of equality ended when the Queen took the title Kaiser-i-Hind (1876).
• Chamber of Princes (1921): on the recommendation of the Montford reforms, the constitutional reforms of 1919, a Chamber of Princes (Narendra Mandal) was set up as a purely consultative body.
• Butler Committee (1927): asked to define the murky relationship between the Crown and the states, it held that paramountcy must remain supreme and that states should not be handed to an Indian government without their consent. It left paramountcy deliberately undefined.

• The federation that never started: the Government of India Act, 1935, the last major colonial constitution, proposed an all-India federation. The princes would join the central legislature, but states holding half the total states' population had to accede first. That threshold was never met, and the plan was dropped after war broke out in 1939.
• The endgame: as the British left, the states tried to position themselves as a sovereign "third force". The June 3 Plan, the 1947 partition plan, and Attlee's statement made clear they were free to join either dominion. But Mountbatten refused to give them sovereign status.
• Patel and Menon: Sardar Patel headed the States Ministry, working with V.P. Menon. They asked rulers to accede on just three subjects: defence, communications and external affairs. The states had no real independent control over these subjects anyway. By 15 August 1947, 136 states had joined. The holdouts, Junagadh, Hyderabad and Kashmir, were brought in soon after. A gradual merger then made the states part of one uniform political set-up, completed by the Seventh Amendment in 1956.