I remember once reading in a book where an Indian character says to the other: do you know how the British built their Empire? One teaspoon at a time.
I’ve just finished reading the Anarchy by William Dalrymple. The expression is true, it was one tea spoon at a time, but there were a couple of other factors as well.
I was keen to read about this history and look at it through the lens of strategy, risk, corporatism, antifragility (themes I’m exploring at the moment) and there are some incredible clues.
Some notes whilst it is still fresh in my mind and I suspect that I’ll be writing more about this
- Most people are aware that there was a British rule (colony) in India. I think many have no clue how this came about, I certainly didn’t.
- It all started off as a trading company – the East India Company, a venture that started in 1500. Note that India gained its independence in 1947. So what happened in those 450 years?
- The EIC’s intention was to trade in spices. The risk was enormous – transporting gold across and ocean to buy spices (in the face of storms, shipwrecking or piracy)
- The formation of a company of shareholders was created – this is the key thing! This concept didn’t exist before and the concept survives to this day. The shared risk meant that this costly and risky operation could take place by sharing the risk.
- The first endeavour survived and was hugely successful. This meant the revenue could fund further trades.
- In order to secure merchant trading, outposts are created (i.e. a fort and harbour protected with canons).
- Eventually the British East India Company settled in Calcutta.
- The EIC employed mercenaries to secure the forts.
- When attacked, the EIC was able to fight back and in some cases actually was able to take over more area.
- The Europeans (through incessant fighting of each other) developed the leading military equipment.
- But it was the strategy that was key. European military strategy was far more advanced, better trained and disciplined armies than the charging Indian recruits.
- This meant a small army of a few thousand men could defeat an army of tens of thousands.
- The EIC was also employed as an army for hire by existing Indian princes aiming to settle their own disputes or take over other parts of the subcontinent.
- The company was effective in the first instance because were effectively pirates. They had one goal (profit) and had free reign to achieve that goal in whichever way was necessary, so long as they could maintain a return to the shareholders. I think this is another key point.
- Pirates don’t make good statespeople or Governments. Eventually, the EIC was directly responsible for the Bengali famine (in the 1700s) by not keeping enough food reserves for droughts that happen every few years in the area. The local population knew this and prepared for it (resiliance), but the EIC didn’t know and evidently didn’t care too much either, the EIC was too focussed on creating profit.
- The famine outraged the UK population and Parliament so much that the Government began increasing oversight of the company by the UK Parliament, but the Parliament didn’t fully take over the EIC for another hundred years or so.
- In the meantime, as the EIC gained wealth, it gained forceful power.
- However, although British military strategy was superior to Indian strategy, this advantage didn’t last forever. The Indian princes employed French and German officers and mercenaries to train their armies and often lead them.
- Gains for the EIC became ever difficult. The EIC started facing loses as well.
- For the first 200 or years or so, the EIC controlled only 10% of India, known as Bengal.
- Then, in a short period of 50 years, the EIC was able to take over the entire nation. This was largely to do with an increased military force but it was also opportunistic: The other Indian states were constantly warring against each other (Mughals, Marathas, Tippu), and in this chaos the EIC was able to defeat sufficient forces until there was a critical mass of power. At that point, threats, diplomacy and bribes sufficed to take over the rest of the country.
- Outraged by the lack of accountability, the British Government eventually took over the EIC with a Government act (in the early 1800s) and this became the British Raj until 1947.
In summary:
- The British in India spanned a period of 450 years. It was certainly one teaspoon at a time. There were two other elements: military strategy and opportunism.
- It was the ability to take a shared risk as a corporation – and to ability take high risk bets.
- The legacy of the EIC can be seen everywhere from the tea we drink to the formation of the USA. One of it’s key legacies – for better or worse – is the concept of a corporation which can summon huge sums to take on daring and risky endeavours, and then upon the success of this vast win, start accumulating even greater control.
- It was the ability to have a singular focus as a company and take whatever risks and means necessary to fulfil this aim.
It will be further interesting to look at the parallels with some of today’s companies!