When the officials of the East India Company acquired control over Bengal in 1765, they had little intention of making any innovations in its administration.
They only desired to carry on their profitable trade and collect taxes for remission to England. From 1765 to 1772, in the period of the Dual Government, Indian officials were allowed to function as before but under the overall control of the British Governor and British officials.
The Indian officials had responsibility but no power while the Company’s officials had power but no responsibility. Both sets of officials were venal and corrupt men.
In 1772 the Company ended the Dual Government and undertook to administer Bengal directly through its own servants. But the evils inherent in the administration of a country by a purely commercial company soon came to the surface.
The East India Company was at this time a commercial body designed to trade with the East. Moreover, its higher authority was situated in England, many thousands of kilometers away from India.
Yet it had come to wield political power over millions of people. This anomalous state of affairs posed many problems for the British government.
What was to be the relation of the East India Company and its possessions to the government in Britain? How were the Company’s authorities in Britain to control the great multitude of officials and soldiers stationed in far away India?
How was a single center of control to be provided in India over the far-flung British possessions in Bengal, Madras and Bombay.
The first of these problems was the most pressing as well as the most important. It was also closely interwoven with party and parliamentary rivalries in Britain, the political ambitions of English statesmen, and the commercial greed of English merchants.
The rich resources of Bengal had fallen into the hands of the Company whose Directors immediately raised dividends to 10 per cent in 1767 and proposed in 1771 to raise the rate further to percent.
The Company’s English servants took advantage of their position to make quick fortunes through illegal and unequal trade and the forcible collection of bribes and ‘gifts’ from Indian chiefs and zamindars. Clive returned to England at the age of 34 with wealth and property yielding £40,000 a year.
The Company’s high dividends and the fabulous wealth brought home by its officials excited the jealousy of other sections of British society.
Merchants kept out of the East by the monopoly of the Company, the growing class of manufacturers and, in general, the rising forces of free enterprise in Britain wanted to share in the profitable Indian trade and the riches of India which the Company and its servants alone were enjoying.
They, therefore, worked hard to destroy the Company’s trade monopoly and, in order to achieve this, they attacked the Company’s administration of Bengal.
They also made the officials of the Company who returned from India their special target. These officials were given the derisive title of nabobs’ and were ridiculed in the press and on the stage.
They were boycotted by the aristocracy and were condemned as the exploiters and oppressors of the Indian people. Their two main targets were Clive and Warren Hastings. By condemning the ‘nabobs’, the opponents of the Company hoped to make the Company unpopular and then to displace it.
Many ministers and other Members of Parliament were keen to benefit from the acquisition of Bengal. They sought to win popular support by forcing the Company to pay tribute to the British government so that Indian revenues could be used to reduce taxation or the public debt of England.
In 1767, the Parliament passed an act obliging the Company to pay to the British treasury £400,000 per year. Many political thinkers and statesmen of Britain wanted to control the activities of the Company and its officials because they were afraid that the powerful Company and its rich officials would completely debauch the English nation and its politics.
The parliamentary politics of Britain during the latter half of the eighteenth century was corrupt in the extreme. The Company as well as its retired officials bought seats in the House of Commons for their agents.
Many English statesmen were worried that the Company and its officials, backed by Indian plunder, might gain a preponderant influence in the government of Britain.
The Company and its vast empire in India had to be controlled or the Company, as master of India, would soon come to control British administration and be in a position to destroy the liberties of the British people.
The exclusive privileges of the Company were also attacked by the rising school of economists representing free-trade manufacturing capitalism.
In his celebrated work, The Wealth of Nations, Adam Smith, the founder of classical economics, condemned the exclusive companies:
Such exclusive companies, therefore, are nuisances in many respects; always more or less inconvenient to the countries in which they are established and destructive to those which have the misfortune to fall under their government.
Thus, reorganisation of the relations between the British state and the Company’s authorities became necessary and the occasion arose when the Company had to ask the government for a loan of £1,000,000.
But, while the Company’s enemies were many and powerful, it was not without powerful friends in the Parliament, moreover, the king, George III, was its patron.
The Company therefore fought back. In the end, the Parliament worked out a promise which ‘he interests of the Company and of the various influential sections of British society were delicately balanced.
It was decided that the British government would control the basic policies of the Company’s Indian administration so that British rule in India was carried on in the interests of the British upper classes as a whole.
At the same time the Company would retain its monopoly of Eastern trade and the valuable right of appointing its officials in India. The details of Indian administration were also left to the directors of the Company.
The first important parliamentary act regarding the Company’s affairs was the Regulating Act of 1773. This Act made changes in the constitution of the Court of Directors of the Company and subjected their actions to the supervision of the British Government.
The Regulating Act soon broke down in practice. It had not given the British government effective and decisive control over the Company.
The Act had also failed to resolve the conflict between the Company and its opponents in England who were daily growing stronger and more vocal.
Moreover, the Company remained extremely vulnerable to the attacks of its enemies as the administration of its Indian possessions continued to be corrupt, oppressive, and economically disastrous.
The defects of the Regulating Act and the exigencies of British politics necessitated the passing in 1784 of another important act known as the Pitt’s India Act. This Act gave the British government supreme control over the company’s affairs and its administration in India.
It established six commissioners for the affairs of India, popularly known as the Board of Control, including two Cabinet Ministers.
The Board of Control was to guide and control the work of-the Court of Directors and the Go placed the Government of India in the General and a Council of three, so that get the support of even one member, was to be made to serve the interests of all sections of the ruling classes of Britain.
The Company, having saved its monopoly of the Indian and Chinese trade, was satisfied. Its directors retained the profitable right of appointing and dismissing its British officials in India. Moreover, the Government of India was to be carried out through their agency.
While the Pitt’s India Act laid down the general framework in which the Government of India was to be carried on till 1857, later enactments brought about several important changes which gradually diminished the powers and privileges of the Company.
In 1786, the Governor-General was given the authority to overrule his Council in matters of importance affecting safety, peace, or the interests of the empire in India.
By the Charter Act of 1813, the trade monopoly of the Company in India was ended and trade with India was thrown open to all British subjects.
But trade in tea and trades with China were still exclusive to the Company. The government and the revenues of India continued to be in the hands of the Company.
The Company also continued to appoint its officials in India. The Charter Act of 1833 brought the Company’s monopoly of tea trade and trade with China to an end.
At the same time, the debts of the Company were taken over by the Government of India, which was also to pay its shareholders a 10’/2 per cent dividend on their capital. The Government of India continued to be run by the Company under the strict control of the Board of Control.
Thus the various acts of Parliament discussed above completely subordinated the Company and its Indian administration to the British Government.
At the same time, it was recognised that day- to-day administration of India could not be run or even superintended from a distance of 6,000 miles. Supreme authority in India was, therefore, delegated to the Governor-General-in-Council.
The Governor-General, having the authority to overrule his Council on important questions, became in fact the real, effective ruler of India, functioning under the superintendence, control and direction of the British government.
The British created a new system of administration in India to serve their purposes. But before we discuss the salient features of his system, it would be better if we first examine the purposes which were designed to serve, for the main function of the administrative remora’s country is to accomplish the aims and objects of its rulers.
The chief aim of the British was to enable them to exploit India economically to the maximum advantage of various British interests, ranging from the Company to the Lancashire manufacturers.
In 1793, Lord Cornwallis, the Governor-General, defined two primary objectives for the Bengal government. It must ‘ensure its political safety and it must render the possession of the country as advantageous as possible to the East India Company and the British nation’.
At the same time India was to be made to bear the full cost of its own conquest as well as of foreign rule. An examination of the economic policies of the British in India is, therefore, of prime importance.