Company rule in India (sometimes, Company Raj, "raj," lit. "rule" in Hindi) refers to the rule or dominion of the British East India Company on the Indian subcontinent. This is variously taken to have commenced in 1757, after the Battle of Plassey, when the Nawab of Bengal surrendered his dominions to the Company, in 1765, when the Company was granted the diwani, or the right to collect revenue, in Bengal and Bihar, or in 1772, when the Company established a capital in Calcutta, appointed its first Governor-General, Warren Hastings, and became directly involved in governance. The rule lasted until 1858, when, consequent to the Government of India Act 1858, the British government assumed the task of directly administering India.
Although the British had earlier ruled in the factory areas, the beginning of British rule is often dated from the 1757 Battle of Plassey. Robert Clive's victory was consolidated in 1764 at the Battle of Buxar (in Bihar), where the emperor, Shah Alam II, was defeated. As a result, Shah Alam was coerced to appoint the company to be the diwan for the areas of Bengal, Bihar, and Orissa (this pretense of Mughal control was abandoned in 1827). The company thus became the supreme, but not the titular, power in much of the lower Gangetic plain. The Company also expanded from their bases at Bombay and Madras. The Anglo-Mysore Wars of 1766 to 1799 and the Anglo-Maratha Wars of 1772 to 1818 placed the Company dominant over much India south of the Sutlej River.
The company's dominance of India took two major forms. The first was the use of subsidiary alliances between the company and the local rulers, these agreements were essentially feudal in nature and under them the local rulers gave up much of their control on foreign affairs to the Company and in return had their independence guaranteed. This development created the Native States, or Princely States, of the Hindu maharaja and the Muslim nawabs. The second and less favoured method of control was the outright governance of areas; it is these parts of the subcontinent that are more properly called 'British India'.
At the turn of the 19th century, Governor-General Wellesley began what became two decades of accelerated expansion of Company territories. Prominent among the princely states were: Cochin (1791), Jaipur (1794), Travancore (1795), Hyderabad (1798), Mysore (1799), Cis-Sutlej Hill States (1815), Central India Agency (1819), Kutch and Gujarat Gaikwad territories (1819), Rajputana (1818), and Bahawalpur (1833). The annexed regions included the Northwest Provinces (comprising Rohilkhand, Gorakhpur, and the Doab) (1801), Delhi (1803), and Sindh (1843). Punjab, North-West Frontier Province, and Kashmir, were annexed after the Anglo-Sikh Wars in 1849; however, Kashmir was immediately sold under the Treaty of Amritsar (1850) to the Dogra Dynasty of Jammu, and thereby became a princely state. In 1854 Berar was annexed, and the state of Oudh two years later.
The East India Company also signed treaties with Afghan rulers and with Ranjit Singh to counterbalance Russian support of Persian plans in western Afghanistan. In 1839 the Company's actions brought about the First Afghan War (1839-42). However, as the British expanded their territory in India, so did Russia in Central Asia, with the taking of Bukhara and Samarkand in 1863 and 1868 respectively, thereby setting the stage for the Great Game of Central Asia.
|Governor-General||Period of Tenure||Events|
|Warren Hastings||20 October 1773–1 February 1785|| Bengal famine of 1770 (1769–1773)|
Rohilla War (1773–1774
First Anglo-Maratha War (1777–1783)
Second Anglo-Mysore War (1780–1784)
|John MacPherson (locum tenens)||1 February 1785–12 September 1786|
|Charles Cornwallis||12 September 1786–28 October 1793|| Permanent Settlement |
Third Anglo-Mysore War (1789–1792)
|John Shore||28 October 1793–March 1798|
|Alured Clarke (locum tenens)||March 1798–18 May 1798|
|Richard Wellesley||18 May 1798–30 July 1805|| Fourth Anglo-Mysore War (1798–1799)|
Second Anglo-Maratha War (1803 - 1805)
|Charles Cornwallis (second term)||30 July 1805–5 October 1805|
|George Hilario Barlow (locum tenens)||10 October 1805–31 July 1807||Vellore Mutiny (July 10, 1806)|
|Lord Minto||31 July 1807–4 October 1813|| Invasion of Java|
Occupation of Mauritius
|Marquess of Hastings||4 October 1813–9 January 1823|| Anglo-Nepal War of 1814 |
Annexation of Kumaon, Garhwal, and east Sikkim.
Third Anglo-Maratha War (1817–1818)
|John Adam (locum tenens)||9 January 1823–1 August 1823|
|Lord Amherst||1 August 1823–13 March 1828|| First Anglo–Burmese War (1823–1826)|
Annexation of Assam, Manipur, Arakan, and Tenasserim from Burma
|William Butterworth Bayley (locum tenens)||13 March 1828–4 July 1828|
|William Bentinck||4 July 1828–20 March 1835|| Abolition of Sati |
Suppression of Thuggee
|Charles Metcalfe (locum tenens)||20 March 1835–4 March 1836|
|Lord Auckland||4 March 1836–28 February 1842|| First Anglo-Afghan War (1839–1842) |
Massacre of Elphinstone's army
|Lord Ellenborough||28 February 1842–June 1844|| First Anglo-Afghan War (1839–1842) |
Conquest of Sindh
|William Wilberforce Bird (locum tenens)||June 1844–23 July 1844|
|Henry Hardinge||23 July 1844–12 January 1848|| First Anglo-Sikh War (1845–1846) |
Annexation of Jullundur Doab
|Marquess of Dalhousie||12 January 1848–28 February 1856|| Second Anglo-Sikh War (1848–1849) |
Annexation of Punjab, NWFP, and Kashmir
Sale of Kashmir to Gulab Singh of Jammu
Second Anglo-Burmese War (1852–1853)
Annexation of Lower Burma
Annexation of Satara, Nagpur, and Jhansi under Doctrine of Lapse
Annexation of Berar and Awadh
Ganges Canal, Indian Railways, Telegraph in India
|Charles Canning||28 February 1856–1 November 1858|| Indian Rebellion of 1857 |
Liquidation of the English East India Company under Government of India Act 1858
Although Lord North himself wanted the Company's territories to be taken over by the British state, he faced determined political opposition from many quarters, including many in the City of London and the British parliament; the result was a compromise in which the Regulating Act—although implying the ultimate sovereignty of the British Crown over these new territories—asserted that the Company could act as a sovereign power on behalf of the Crown, while being concurrently subject to oversight and regulation by the British government and parliament. The Court of Directors of the Company were required under the Act to submit all communications regarding civil, military, and revenue matters in India for scrutiny by the British government. For the governance of the Indian territories, the act asserted the supremacy of the Presidency of Fort William (Bengal) over those of Fort St. George (Madras) and Bombay; it also nominated a Governor-General (Warren Hastings) and four councilors for administering the Bengal presidency (and for overseeing the Company's operations in India). "The subordinate Presidencies were forbidden to wage war or make treaties without the previous consent of the Governor-General of Bengal in Council, except in case of imminent necessity. The Governors of these Presidencies were directed in general terms to obey the orders of the Governor-General-in-Council, and to transmit to him intelligence of all important matters." However, the imprecise wording of the Act, left it open to be variously interpreted; consequently, the administration in India continued to be hobbled by disunity between the provincial governors, between members of the Council, and between the Governor-General and the Council. The Regulating Act also addressed the prevalent corruption in India: Company servants were henceforth forbidden to engage in private trade in India or to receive "presents" from Indian nationals.
William Pitt's India Act of 1784 established a Board of Control in England both to supervise the East India Company's affairs and to prevent the Company's shareholders from interfering in the governance of India. The Board of Control consisted of six members, which included one Secretary of State from the British cabinet, as well as the Chancellor of the Exchequer. Around this time, there was also extensive debate in the British parliament on the issue of landed rights in Bengal, with a consensus developing in support of the view advocated by Philip Francis, a member of the Bengal council and political adversary of Warren Hastings, that all lands in Bengal should be considered the "estate and inheritance of native land-holders and families ..." Mindful of the reports of abuse and corruption in Bengal by Company servants, the India Act itself noted numerous complaints that "'divers Rajahs, Zemindars, Polygars, Talookdars, and landholders"' had been unjustly deprived of 'their lands, jurisdictions, rights, and privileges'." At the same time the Company's directors, were now leaning towards, Francis's view that the land-tax in Bengal should be made fixed and permanent, setting the stage for the Permanent Settlement (see section Revenue settlements under the Company below). The India Act also created in each of the three presidencies a number of administrative and military posts, which included: a Governor and three Councilors, one of which was the Commander in Chief of the Presidency army. Although the supervisory powers of the Governor-General-in-Council in Bengal (over Madras and Bombay) were extended—as they were again in the Charter Act of 1793—the subordinate presidencies continued to exercise some autonomy until both the extension of British possessions into becoming contiguous and the advent of faster communications in the next century. Still, the new Governor-General appointed in 1786, Lord Cornwallis, not only had more power than Hastings, but also had the support of a powerful British cabinet minister, Henry Dundas, who, as Secretary of state for the Home Office, was in charge of the overall India policy. From 1784 onwards, the British government had the final word on all major appointments in India; a candidate's suitability for a senior position was often decided by the strength of his political connections rather than that of his administrative ability. Although this practice resulted in many Governor-General nominees being chosen from Britain's conservative landed gentry, there were some liberals as well, such as Lord William Bentinck and Lord Dalhousie.
British political opinion was also shaped by the attempted impeachment of Warren Hastings; the trial, whose proceedings began in 1788, ended, with Hastings' acquittal, in 1795. Although the effort was chiefly coordinated by Edmund Burke, it also drew support from within the British government. Burke, accused Hastings not only of corruption, but—appealing to universal standards of justice—also of acting solely upon his own discretion and without concern for law and of willfully causing distress to others in India; in response, Hastings' defenders asserted that his actions were in concert with Indian customs and traditions. Although Burke's speeches at the trial drew applause and focused attention on India, Hastings was eventually acquitted, due, in part, to the revival of nationalism in Britain in the wake of the French Revolution; nonetheless, Burke's effort had the effect of creating a sense of responsibility in British public life for the Company's dominion in India.
Soon rumblings began to appear among merchants in London that the monopoly granted to the East India Company in 1600 to facilitate it to better organize against Dutch and French competition in a distant region, was no longer needed. In response, in the Charter Act of 1813, the British parliament renewed the Company's charter but terminated its monopoly except with regard to tea and trade with China, opening India both to private investment and missionaries. With increased British power in India supervision of Indian affairs by the British Crown and parliament increased as well; by the 1820s British nationals could transact business or engage in missionary work under the protection of the Crown in the three presidencies. Finally, in Charter Act of 1833, the British parliament revoked the Company's trade license altogether, making the Company a part of British governance, although the administration of British India remained the province of Company officers. The Charter Act of 1833 also charged the Governor-General-in-Council (to whose title was now added "of India") with the supervision of civil and military administration of the totality of India, as well the exclusive power of legislation. Since the British territories in north India had now extended up to Delhi, the Act also sanctioned the creation of a Presidency of Agra, later constituted, in 1936, as the Lieutenant-Governorship of the North-Western Provinces (current-day western Uttar Pradesh). With the annexation of Oudh in 1856, this territory was extended, and eventually became the United Provinces of Agra and Oudh. In addition, in 1854, a Lieutenant-Governor was appointed for the region of Bengal, Bihar and Orissa, leaving the Governor-General to concentrate on the governance of India.
In 1772, under Warren Hastings, the East India Company took over revenue collection directly in the Bengal Presidency (then Bengal and Bihar), establishing a Board of Revenue with offices in Calcutta and Patna, and moving the pre-existing Mughal revenue records from Murshidabad to Calcutta. In 1773, after Oudh ceded the tributary state of Benaras, the revenue collection system was extended to the territory with a Company Resident in charge. The following year—with a view to preventing corruption—Company district collectors, who were then responsible for revenue collection for an entire district, were replaced with provincial councils at Patna, Murshidabad, and Calcutta, and with Indian collectors working within each district. The title, "collector," reflected "the centrality of land revenue collection to government in India: it was the government's primary function and it moulded the institutions and patterns of administration.
In 1793, the new Governor-General, Lord Cornwallis, promulgated the permanent settlement of land revenues in the presidency, the first socio-economic regulation in colonial India. It was named permanent because it fixed the land tax in perpetuity in return for landed property rights for zamindars; it simultaneously defined the nature of land ownership in the presidency, and gave individuals and families separate property rights in occupied land. Since the revenue was fixed in perpetuity, it was fixed at a high level, which in Bengal amounted to £3 million at 1789-90 prices. According to one estimate, this was 20% higher than the revenue demand before 1757. Over the next century, partly as a result of land surveys, court rulings, and property sales, the change was given practical dimension. An influence on the development of this revenue policy were the economic theories then current, which regarded agriculture as the engine of economic development, and consequently stressed the fixing of revenue demands in order to encourage growth. The expectation behind the permanent settlement was that knowledge of a fixed government demand would encourage the zamindars to increase both their average outcrop and the land under cultivation, since they would be able to retain the profits from the increased output; in addition, it was envisaged that land itself would become a marketable form of property that could be purchased, sold, or mortgaged. A feature of this economic rationale was the additional expectation that the zamindars, recognizing their own best interest, would not make unreasonable demands on the peasantry.
However, these expectations were not realized in practice, and in many regions of Bengal, the peasants bore the brunt of the increased demand, there being little protection for their traditional rights in the new legislation. Forced labor of the peasants by the zamindars became more prevalent as cash crops were cultivated to meet the Company revenue demands. Although commercialized cultivation was not new to the region, it had now penetrated deeper into village society and made it more vulnerable to market forces. The zamindars themselves were often unable to meet the increased demands that the Company had placed on them; consequently, many defaulted, and by one estimate, up to one-third of their lands were auctioned during the first three decades following the permanent settlement. The new owners were often Brahmin and Kayastha employees of the Company who had a good grasp of the new system, and, in many cases, had prospered under it.
Since the zamindars were never able to undertake costly improvements to the land envisaged under the Permanent Settlement, some of which required the removal of the existing farmers, they soon became rentiers who lived off the rent from their tenant farmers. In many areas, especially northern Bengal, they had to increasingly share the revenue with intermediate tenure holders, called jotedars, who supervised farming in the villages. Consequently, unlike the contemporaneous Enclosure movement in Britain, agriculture in Bengal remained the province of the subsistence farming of innumerable small paddy fields.
The zamindari system was one of two principal revenue settlements undertaken by the Company in India. In southern India, Thomas Munro, who would later become Governor of Madras, promoted the ryotwari system, in which the government settled land-revenue directly with the peasant farmers, or ryots. This was, in part, a consequence of the turmoil of the Anglo-Mysore Wars, which had prevented the emergence of a class of large landowners; in addition, Munro and others felt that ryotwari was closer to traditional practice in the region and ideologically more progressive, allowing the benefits of Company rule to reach the lowest levels of rural society. At the heart of the ryotwari system was a particular theory of economic rent—and based on David Ricardo's Law of Rent—promoted by utilitarian James Mill who formulated the Indian revenue policy between 1819 and 1830. "He believed that the government was the ultimate lord of the soil and should not renounce its right to 'rent', i.e. the profit left over on richer soil when wages and other working expenses had been settled." Another keystone of the new system of temporary settlements was the classification of agricultural fields according to soil type and produce, with average rent rates fixed for the period of the settlement. According to Mill, taxation of land rent would promote efficient agriculture and simultaneously prevent the emergence of a "parasitic landlord class." Mill advocated ryotwari settlements which consisted of government measurement and assessment of each plot (valid for 20 or 30 years) and subsequent taxation which was dependent on the fertility of the soil. The taxed amount was nine-tenths of the "rent" in the early nineteenth century and gradually fell afterwards. However, in spite of the appeal of the ryotwari system's abstract principles, class hierarchies in southern Indian villages had not entirely disappeared—for example village headmen continued to hold sway—and peasant cultivators sometimes came to experience revenue demands they could not meet. In the 1850s, a scandal erupted when it was discovered that some Indian revenue agents of the Company were using torture to meet the Company's revenue demands.
Land revenue settlements constituted a major administrative activity of the various governments in India under Company rule. In all areas other than the Bengal Presidency, land settlement work involved a continually repetitive process of surveying and measuring plots, assessing their quality, and recording landed rights, and constituted a large proportion of the work of Indian Civil Service officers working for the government. After the Company lost its trading rights, it became the single most important source of government revenue, roughly half of overall revenue in the middle of the 19th century; even so, between the years 1814 and 1859, the government of India ran debts in 33 years. With expanded dominion, even during non-deficit years, there was just enough money to pay the salaries of a threadbare administration, a skeleton police force, and the army.
In 1796, under pressure from the Company's Board of Directors in London, the Indian troops were reorganized and reduced during the tenure of John Shore as Governor-General. However, the closing years of the 18th century saw, with Wellesley's campaigns, a new increase in the army strength. Thus in 1806, at the time of the Vellore Mutiny, the combined strength of the three presidencies' armies stood at 154,500, making them one of the largest standing armies in the world.
As the East India Company expanded its territories, it added irregular "local corps," which were not as well trained as the army. In 1846, after the Second Anglo-Sikh War, a frontier brigade was raised in the Cis-Sutlej Hill States mainly for police work; in addition, in 1849, the "Punjab Irregular Force" was added on the frontier. Two years later, this force consisted of "3 light field batteries, 5 regiments of cavalry, and 5 of infantry." The following year, "a garrison company was added, ... a sixth infantry regiment (formed from the Sind Camel Corps) in 1853, and one mountain battery in 1856." Similarly, a local force was raised after the annexation of Nagpur in 1854, and the "Oudh Irregular Force" was added after Oudh was annexed in 1856. Earlier, as a result of the treaty of 1800, the Nizam of Hyderabad had begun to maintain a contingent force of 9,000 horse and 6,000 foot which was commanded by Company officers; in 1853, after a new treaty was negotiated, this force was assigned to Berar and stopped being a part of the Nizam's army.
In the Indian Rebellion of 1857 almost the entire Bengal army, both regular and irregular, revolted. It has been suggested that after the annexation of Oudh by the East India Company in 1856, many sepoys were disquieted both from losing their perquisites, as landed gentry, in the Oudh courts and from the anticipation of any increased land-revenue payments that the annexation might augur. With British victories in wars or with annexation, as the extent of British jurisdiction expanded, the soldiers were now not only expected to serve in less familiar regions (such as in Burma in the Anglo-Burmese Wars in 1856), but also make do without the "foreign service," remuneration that had previously been their due, and this caused resentment in the ranks. The Bombay and Madras armies, and the Hyderabad contingent, however, remained loyal. The Punjab Irregular Force not only didn't revolt, it played an active role in suppressing the mutiny. The rebellion led to a complete reorganization of the Indian army in 1858 in the new British Raj.
After gaining the right to collect revenue in Bengal in 1765, the Company largely ceased importing gold and silver, which it had hitherto used to pay for goods shipped back to Britain. In addition, as under Mughal rule, land revenue collected in the Bengal Presidency helped finance the Company's wars in other part of India. Consequently, in the period 1760-1800, Bengal's money supply was greatly diminished; furthermore, the closing of some local mints and close supervision of the rest, the fixing of exchange rates, and the standardization of coinage, paradoxically, added to the economic downturn. During the period, 1780-1860, India changed from being an exporter of processed goods for which it received payment in bullion, to being an exporter of raw materials and a buyer of manufactured goods. More specifically, in the 1750s, mostly fine cotton and silk was exported from India to markets in Europe, Asia, and Africa; by the second quarter of the 19th century, raw materials, which chiefly consisted of raw cotton, opium, and indigo, accounted for most of India's exports. Also, from the late 18th century British cotton mill industry began to lobby the government to both tax Indian imports and allow them access to markets in India. Starting in the 1830s, British textiles began to appear in—and soon to inundate—the Indian markets, with the value of the textile imports growing from £5.2 million 1850 to £18.4 million in 1896. The American Civil War too would have a major impact on India's cotton economy: with the outbreak of the war, American cotton was no longer available to British manufacturers; consequently, demand for Indian cotton soared, and the prices soon quadrupled. This led many farmers in India to switch to cultivating cotton as a quick cash crop; however, with the end of the war in 1865, the demand plummeted again, creating another downturn in the agricultural economy.
At this time, the East India Company's trade with China began to grow as well. In the early 1800s demand for Chinese tea had greatly increased in Britain; since the money supply in India was restricted and the Company was indisposed to shipping bullion from Britain, it decided upon opium, which had a large underground market in China and which was grown in many parts of India, as the most profitable form of payment. However, since the Chinese authorities had banned the importation and consumption of opium, the Company engaged them in the First Opium War, and at its conclusion, under the Treaty of Nanjing, gained access to five Chinese ports, Guangzhou, Xiamen, Fuzhou, Shanghai, and Ningbo; in addition, Hong Kong was ceded to the British Crown. Towards the end of the second quarter of the 19th century, opium export constituted 40% of India's exports.
Another major, though erratic, export item was indigo dye, which was extracted from natural indigo, and which came to be grown in Bengal and northern Bihar. In late 17th and early 18th century Europe, blue apparel was favored as a fashion, and blue uniforms were common in the military; consequently, the demand for the dye was high. In 1788, the East India Company offered advances to ten British planters to grow indigo; however, since the new (landed) property rights defined in the Permanent Settlement, didn't allow them, as Europeans, to buy agricultural land, they had to in turn offer cash advances to local peasants, and sometimes coerce them, to grow the crop. The European demand for the dye, however, proved to be unstable, and both creditors and cultivators bore the risk of the market crashes in 1827 and 1847. The peasant discontent in Bengal eventually led to the Indigo rebellion in 1859-60 and to the end of indigo production there. In Bihar, however, indigo production continued well into the 20th century; the centre of indigo production there, Champaran district, became the staging ground, in 1917, for Mohandas Karamchand Gandhi's first experiment in non-violent resistance against the British Raj.
The railroads did not break down the social or cultural distances between various groups but tended to create new categories in travel. Separate compartments in the trains were reserved exclusively for the ruling class, separating the educated and wealthy from ordinary people. Similarly, when the Sepoy Rebellion was quelled in 1858, a British official exclaimed that "the telegraph saved India." He envisaged, of course, that British interests in India would continue indefinitely.