The First Imperialist: Clive and the Rise of Multinational Corporations

“Arms and the heroes signalized in fame,

Who from the western Lusitanian shore

Beyond even Taprobana sailing come

Over seas that never had traversed been before,

Dauntless in wars and dangers without name,

Achieving all of human force and more,

And midst a race remote in distant clime

New kingdom raised to future so sublime;”

Camoes, Os Lusíadas, Canto I.1 

The first Europeans to visit South Asia by sea in a thousand years were the Portuguese. A small fleet, led by Vasco da Gama, a minor member of the Portuguese gentry, arrived off the city of Calicut in the modern-day southwestern Indian state of Kerala in 1498 CE. Having set out with hope of obtaining favorable trade terms for Portugal, da Gama instead received a chilly reception from the local rulers. The Portuguese had brought what the local Malayali dynasts saw as mere trinkets to trade–feathered hats, corals, chests and metalwork.  The rulers were used to receiving gold and silver from their regular Arab, Persian, and Turkish contacts, in exchange for spices and the famous delicate cotton textiles of South Asia: chintz, calico, muslin. Without viable trade goods to offer for these spices and cloths, negotiations quickly broke down, and the Malayalis would end up chasing da Gama out of their territory, straight into contrary monsoon winds, which would trap da Gama against India’s coast for several months among the hostile locals before he could return home to Portugal. Despite this rather inauspicious beginning, news of his nautical achievement (without the mention of the accompanying entrepreneurial disappointment) quickly swept Europe: a viable sea route to India had been discovered, to the eternal consternation of da Gama’s Spanish rivals.

Portugal would quickly send out more fleets, well-armed with cannon to prevent any more failed negotiations. They would succeed in seizing trading concessions from local leaders and carving out depots and factories on the South Asian coast. These factories and depots were used to manufacture and store goods before shipping them back to Europe—the most famous of these enclaves, Goa, belonged to Portugal as late as 1961. Portugal would use these outposts as a springboard to advance even further east, soon controlling the city of Macau in southern China, the Molucca Islands in today’s Indonesia, and the Malaysian Peninsula. This inspired other European nations, and set the pattern for several centuries of European interaction with South Asia—skirt the coast of the Indian subcontinent, forge agreements with local rulers (often dictated to them from the decks of European men-of-war) to set up trading outposts, and finally, send out missionaries, bureaucrats, and governors to entrench European power. European forces—mostly native troops (called sepoys) commanded by European officers—would occasionally intervene in local conflicts, or conversely be used as pawns by the preexisting great powers in South Asia against other Europeans or their own native rivals. The vast interior—with its powerful Hindu and Muslim states—was unable to be conquered by the small European armies in India at the time.

Fig. 1: The fabrics in question, as depicted by a European (Renaldi) who visited the subcontinent. Our modern cotton clothing is a direct descendant.

Amidst all this, Portuguese writers were attempting to ennoble their rather anticlimactic voyage of discovery, aided by developing Renaissance ideologies and art forms. By far the most lasting monument was an epic poem, Os Lusíadas, penned by the humanist Luis de Camoes in 1572. Camoes had been sent as a clerk to the Portuguese entrepots of Goa and Macau as punishment for dueling a member of the royal household. In his spare time amidst the bustling wharfs, taverns, and brothels of 16th century India and China Camoes would write his masterpiece, combining classical references (his work reads as a Renaissance version of the Aeneid, with the Portuguese in the place of the Trojans) with the actual business of da Gama’s voyage—trading with India. Camoes was trying to frame India’s “discovery” as comparable to the great deeds of Antiquity, and to cast da Gama and his sailors as national founding heroes–after the fact. His poem would cast a romantic ideal over the whole sordid business of discovery and trade, a pattern followed extensively by later European arrivals. Most interesting for our purposes, he talked of new kingdoms being raised (see the last line of the extract that begins this essay). But that wasn’t really the case. The Portuguese, and the Dutch and French who followed them, established enclaves, fortresses, and factories, but failed to seize substantial territory outside of their islands of control–in fact they were often soundly beaten by the far larger native armies when they tried to do so, well armed with modern gunpowder weaponry. The shift from trading to control, the fulfillment of Camoes’s stanza about a future so sublime, would occur with the arrival of this essay’s main character: Robert Clive. 

On a last introductory note, if some of the names in this essay sound a bit antiquated (no one has ever heard of Taprobane, an ancient name for Sri Lanka), it’s important to remember the modern nation-states of Pakistan, Bangladesh, and India with their capitals, firm control, and clearly delineated borders didn’t exist yet. To the arriving Europeans, all of South Asia was India, the land of the Indus River (someone had evidently forgotten to tell them about the Ganges), a Greek name dating back to before Alexander’s own escapades on the subcontinent. Another name often used by Europeans and many locals, in imitation of the dominant Mughal Empire’s own use, was referring to all of South Asia as Hindustan, or simply Hind—this being, after all, the “Land of the Hindus”. Any chance of having Europeans call any region by its more common native name—Bharat for Hindu India, Bangla for Bengal—is slim. In this essay, I will use the modern terms interchangeably when talking about geographical areas as befits narrative flow, but I will also try to clearly define the often overlapping and confusing political entities that existed at the time.
Fig. 2: European trading posts in South Asia prior to Clive’s arrival. They are all scattered about the coast and rivers.

With the Portuguese having blazed the trail, other European powers eager to profit off the lucrative textile and spice trade sought to establish their own outposts. The French, Dutch, and even the Danish all dispatched factors and agents, setting up their own factories and forts. Unable (or unwilling) to finance the voyages entirely by themselves, European powers turned to a new financial technology emerging over the 16th and 17th centuries: the company. This would be the pattern Britain, a relative latecomer to South Asia, would follow once they realized the profit to be made off this trade. The Crown at the time was embroiled in war with Spain and its vassal Portugal, and unable to fund any voyages. Thus was created the British East India Company (abbreviated as the EIC) in 1600, during the reign of Queen Elizabeth I, who granted the founding merchants a monopoly on English trade with all of South Asia. This desire to create a trading company was sparked in part by the vast riches seized from the Spanish and Portuguese trading fleets returning to Europe—most notably the capture in 1592 of the Portuguese Madre de Deus, sailing out of Goa, valued at half of England’s annual imports—by privateers like Walter Raleigh and Francis Drake fighting Elizabeth’s war with Spain. Less epically, but more prosaically, the accounts provided by English merchants like Ralph Fitch travelling overland to the subcontinent also fanned interest. 

The Honorable Company, as it was often referred to, would eventually set up three main trading posts, guarded by forts and native sepoys, around the periphery of the quickly crumbling Mughal Empire: Bombay (modern Mumbai), Madras (modern Chennai), and Calcutta (modern Kolkata). In order to overcome its late start, the company copied several tactics from its competitors: the native sepoys of the French East India Company, the rutters (logbooks, containing navigational charts) captured from the Portuguese, and most of all, the structure of their powerful Dutch rivals: the Vereenigde Oost-Indische Compagnie (the VOC). The VOC was the largest and most valuable corporation in history, valued by some modern economists as being worth a stunning $7.9 trillion at their height in today’s dollars (Amazon, Apple, and Aramco take note). Their crucial innovation was that the VOC was a limited-liability joint stock company, where investment was spread out across a fleet of hundreds of merchant ships, coupled with trade depots (“factories”) in the pattern of Portugal and Spain set up across Asia—with plenty of cannon to back them up. Although founded two years after the British East India Company, their rival’s model of limited liability would influence all EIC ventures once they learned of the Dutch model. All of this—the trading posts, the epic poems inflaming public opinion, the involvement in local conflicts, the struggles between European powers in South Asia—serves as a set up to the story of Robert Clive. He, more than any other Briton, European, or South Asian, would change the nature of European colonialism in the region, turning to conquest instead of trade—and with his conquests, changing the very nature of British imperialism in the region.
Fig. 3: A British East India Company official smoking a hookah, attended by native servants. Some British transplants took to local customs more readily than others. This is a South Asian representation of a European–contrast this image with Fig. 1.

Robert Clive, the rambunctious son of a London lawyer, was shipped to India as a clerk for the Company at its Madras outpost, for what would prove to be his first tour of South Asia in 1744. The Mughal Empire, which had dominated the subcontinent since its founder Babur’s great conquests in 1526, was falling rapidly at this point, bleeding territory to the expanding Hindu Maratha Empire in its West, and forced to cede entire provinces to independence-minded Muslim governors (holding various titles like  Nawab and Nizam), who still nominally owed fealty to the Mughal Emperor ensconced in Delhi. Taking advantage of the fragmented geopolitical climate, waged proxy wars amongst themselves and their local allies, reflections of the great conflicts sweeping continental Europe in the 18th century. These ties with local Rajas and Nawabs cut both ways however—Europeans could find themselves drawn into struggles between local states and pretenders. It was in these wars that Clive, originally just a clerk, tallying sums and inspecting goods, would find a new calling: that of a soldier. At the Siege of Arcot (in what is now the southeastern Indian state Tamil Nadu) in 1751, he led a few hundred men, a mix of British officers and sepoy troops, to victory against the Nawab of Arcot and his French advisers. This victory helped break the back of French power on the eastern seaboard of India, and made Clive a hero back home in Britain. He was recalled, toasted and feted around London, and referred to as the “heaven-born general”. 

With the outbreak of the Seven Years’ War in 1756, Clive would soon find himself back in India. What had ostensibly started as a European conflict quickly spanned the globe, as Britain and France duelled in Canada, the Caribbean, and India, each side aided by their local allies. In India, the French were supported by the powerful Nawab of Bengal, Siraj-ud-Daulah, who was on paper a Mughal vassal but in reality the independent ruler of the richest part of India: the lower Gangetic floodplain (modern Bangladesh and the modern Indian states of West Bengal and Bihar). Bengal was vastly wealthy for a variety of reasons–it had cotton and silk textile production, ample fertile farmland, a tremendous population, and was ideally located along Indian Ocean trade routes. Siraj resented the British presence in his opulent realm, centered around their trading post of Calcutta, and forbade the Company from repairing its fortifications around the city. With the outbreak of war against the French, the Company ignored Siraj’s proclamation, and raced to improve the battlements. Siraj, alerted to this activity, proved faster however, and swiftly captured Calcutta, throwing British prisoners into the infamous “Black Hole of Calcutta”, a damp and crowded prison that saw most of the European men perish quickly. In the face of this emergency (and with a public outcry back in Britain over the treatment of the imprisoned Company men) Clive was appointed commander of the relief force, and towards the end of 1756 recaptured Calcutta. Disobeying Company orders to guard their outpost, he then moved deeper into Bengal to engage Siraj and his French allies. 

Throughout the hot season of 1757, the opposing armies squared off. Clive had only a few thousand troops, the usual mix of British officers and sepoys, against the entire might of the Nawab—an army theoretically 50,000 strong, with French advisers. In light of this, Clive turned to treachery. He negotiated with several discontented officials in Siraj’s court, most notably Mir Jafar, a general who Siraj had demoted previously. Using several Sikh merchants as go-betweens, Clive secured a deal: Mir Jafar would become the new Nawab, and in return he would betray Siraj at the right moment in battle and pay the Company back for the damages suffered during the sack of Calcutta. The resulting Battle of Plassey was decisive but perhaps a bit anticlimactic. It was an all-day artillery exchange, with Mir Jafar withdrawing his infantry and cavalry at the crucial point, which coupled with a rainstorm destroying the Bengali’s gunpowder reserves, allowed Clive to sweep the field. Siraj was hunted down and killed by Mir Jafar, and French power and influence was again broken by Clive. 

File:Robert Clive and Mir Jafar after the Battle of Plassey, 1757 by Francis Hayman.jpg
Fig. 4: Robert Clive and Mir Jafar confer after their victory at the Battle of Plassey, while a war elephant gives a horse some side-eye. The standard of Great Britain flies over the scene.

What happened after the battle is the crucial part, and what sets Clive apart from so many other Oriental “adventurers”. With other European contenders out of the way, and the independent Siraj slain, Clive secured the right to collect the Bengali tax revenue for the Company from the Mughal Emperor, called the diwani. With control lost over the economy of Bengal, Mir Jafar was soon simply an ineffectual puppet, dangling from Company strings, and cut loose and replaced (a moral lesson on the rewards of treachery–once unreliable, always unreliable). The first EIC Governor-General of India, Warren Hastings, was sent to Calcutta in 1774–even if actual Company control was a small fraction of the subcontinent, the title showed loftier aspirations. The Honorable Gentlemen of the East India Company became the practical governors of millions of Bengalis, from their capital of Calcutta, as Mughal control, always weak, withered further. Imperialism had replaced the mercantilism of earlier ages, as the Company realized that just as much profit could be made from territorial control as from trade. There was no need for pesky negotiation on costs per bale when the fields of cotton could themselves be controlled. Europeans had finally succeeded, as Camoes had foreseen, in establishing a kingdom in India. The Company’s armies would soon swell, composed of sepoys drilled in the European style and led by British officers, to at their height number 260,000, twice the size of Britain’s own army. The “original corporate raiders”, the Company would use these huge forces to sweep forwards from their footholds in Bombay, Madras, and Calcutta, until even the Mughal Emperor was a dependent of the Company. The Company would come to encounter resistance across India as they pushed out, particularly from the Marathas, Mysore, the Sikh Empire, and Afghanistan–but disunited, all would fall over the decades, with the exception of Afghanistan. Britain was here to stay.
Fig. 5: Robert Clive and family, at home in Britain. Noticeable is the Bengali maid, and the copious amount of makeup Clive is wearing to cover up the tan he received serving in South Asia—thus showing face whitening cream has a longer history than you would think in the subcontinent.

Interestingly, many in Great Britain decried these events, spearheaded by Edmund Burke, the father of conservatism. They complained that the Company was “a state in the disguise of a merchant”, bloated, corrupt, and able to buy off Parliament. They were absolutely right. This is what the multinational corporatism of the Company, and the success of Clive, unlocked. A quarter of the members of Parliament held EIC stock, and wealthy returning merchants—like Clive—used their newfound fortunes to buy seats in Parliament from the “Rotten Boroughs” of Georgian Britain (these would be fixed with the famous 1832 Reform Bill). They formed a lobby within Parliament arguing for continued expansion in India, and for bailing out the Company whenever it ran into financial trouble—which due to the wars it was waging was rather frequent. These returning merchants were known as “Nabobs”, a corruption of Nawab, and soon shortened to Nob (Nob Hill in San Francisco is named after some local nobs). The EIC, uniting politics, imperial expansion, and stockholder dividends, was one of the first truly modern multinational corporations—a corporation empowered by a corrupt government to wage war, govern the lives of millions of human beings, reap vast revenues, and receive copious bailouts whenever it ran into trouble. 

Eventually both Clive and the EIC would go too far. Clive had made many enemies in both Britain and India with his greed, sense of importance, and personal aggrandizement, and would be dragged in front of an inquiry in 1773. He was rather hilariously exonerated, but would later die in mysterious and seedy circumstances—either taking his own life, or suffering an opium overdose (remember the company official in Fig. 4, smoking a hookah–many Company officials got high off their own supply). The Company would eventually suffer a huge mutiny by its own sepoy armies in 1857, allied with rebellious rajas (and one princess, Lakshmi Bai, the Rani of Jhansi). While eventually defeated, it was clear in the eyes of the British government (and more importantly, the public) that no bailout could save the company this time. All of what is today South Asia was annexed to the British Crown, and the British Raj was born. The Company withered, and within a few decades, died. The original corporate raiders were broken up for spare parts. Their once-great colonial holdings would be formally integrated into the British Empire, the largest the world has ever seen.  

There are no corporations or companies today quite analogous to the East India Company. After all, Walmart does not have a fleet of aircraft carriers, or Amazon battle tanks. But it is clear that companies, and their desires for resources, whether natural or technological, have influence over government policy still. They have their lobbies and revolving doors, their own states within states. We frequently cast aspersions in our own political system on their motives, and seek to break them up or bail them out, dragging in their CEOs to be grilled by Congress. To understand all of this, it’s worth casting our eyes back, to Robert Clive, and what he accomplished in Bengal in 1757. He changed a system of trade depots and overseas factories, into an empire of expansion and conquest, not carried out by any government, but by a board of directors far away across the sea in London. 

Header image credit: Matt Buck on Flickr

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