The East India Company: The World's Most Powerful Corporation (The Story of Indian Business) Read Free Page A

trade facilities in Canton on the Pearl River. There it found its match in a cartel of Chinese merchants, the Co-Hong, who inflicted constant humiliation. China was the only source of tea and even arrogant monopolies learn to bend. Gradually the two monopolies began to trust each other—to the point that Co-Hong accepted the Company’s word for the number of tea chests that failed quality control in London.
    So millions of pounds of tea began to pass through the Company’s warehouses in Canton. The most popular varieties were four black teas—Bohea, Congo, Souchon and Pekoe—and three green teas—Singlo, Heyson and Bing. The tea travelled west on the Company’s ships to Britain and beyond. On the returnjourney, the ships picked up silver to pay for the tea. The huge export of silver created a balance-of-payments problem for Britain. In India, the answer to this problem had been Clive and after that the Industrial Revolution. But in China the Company became a drug-lord and reversed the flow of bullion by selling high-quality Patna opium. It encouraged peasants in Bihar and Bengal to cultivate opium, which it smuggled through third parties into China in chests branded with Company seals (chaap).
    As opium was illegal in China, the Company’s ships could not carry it. So it sold it in auctions in Calcutta from where it made its way to China. The drug was smuggled by independent agents, such as Jardine Matheson and Dent & Co., who established an intricate network of bribes at the Chinese customs (hoppo) who turned a blind eye to the contraband. The proceeds of the smuggled drug were deposited with the Company’s factory at Canton. By 1825, most of the funds needed to buy tea in China were raised through opium.
    So successful was the poppy crop that its growing rapidly expanded to central and western India, especially the Malwa territories of the Marathas, from where it was exported to Macao via Bombay. There were many reasons for the Maratha Wars and the control of opium trade was one of them. In 1838, when smuggled opiumapproached an amazing 1400 tons a year, the Chinese imposed the death penalty for opium smuggling and sent a Special Imperial Commissioner, Lin Zexu, to curb smuggling. This led to the First Opium War (1839–42) between China and Britain. China lost and had to cede Hong Kong to Britain under the Treaty of Nanking. A Second Opium War was fought by Britain and France against China from 1856 until 1860. China lost again.
    In the end, opium trade did great damage to China. According to some accounts 27 per cent of Chinese males in the 1870s were seriously addicted and in 1905, one in five males in China was reportedly an opium smoker. Millions suffered and died of addiction in the nineteenth century, which the Chinese call a ‘century of humiliation’. Only in 1907 did Britain finally agree to stop the export of Indian opium, and in 1911 its manufacture was abandoned in Bihar. It was Mao’s revolution in 1948, however, which finally cured China of its opium addiction.
The importance of being the East India Company
    Thomas Babington Macaulay, the English historian, essayist and politician, called the East India Company ‘the greatest corporation in the world’. Today we wouldnot use those words. We might call it the world’s most ‘powerful’ corporation, which it was during its 275-year life that extended from the mercantilist period of chartered monopolies to the industrial age of the modern corporation. We might also think about its tragic nature which created so much wealth but also did much damage. The East India Company’s story is a cautionary tale about the dangers of monopoly but it is also an inspiration as the pioneer of many corporate institutions that are a part of our modern world.
    Mercifully, as Tirthankar Roy points out, corporations do not invade countries today. It is a long way from 1612 when the Company defeated the Portuguese navy off the coast of Surat and won its first trade