By the beginning of the 19th century, the East India Company had become, as one of its directors admitted, “an empire within an empire”, with the power to make war or peace anywhere in the east.

The EIC had created a vast and sophisticated administration and civil service in India, and built much of London’s Docklands. Its annual spending in Britain — around £8.5m — equalled about a quarter of total British government annual expenditure. No wonder the Company now referred to itself as “the grandest society of merchants in the Universe”.

Its private armies were larger than those of almost all nation-states and its power encircled the globe; indeed, its shares were a kind of global reserve currency. As the parliamentarian Edmund Burke wrote: “The Constitution of the Company began in commerce and ended in Empire.”

The EIC was also the ultimate model and prototype for many of today’s joint-stock corporations. No blue plaque or memorial today marks the site of its former headquarters on Leadenhall Street in the City of London, which lies buried beneath the foundations of Richard Rogers’s glass-and-steel Lloyd’s building. But anyone seeking a monument to its legacy need only look around. For the EIC remains history’s most ominous warning about the potential for the abuse of corporate power — and the insidious means by which the interests of shareholders can seemingly become those of the state.

When people voice fears today about the power of corporations and the way global companies can find ways around the laws and the legislatures of individual nation-states, it is no accident that they sound like 18th-century commentators such as Horace Walpole, who decried the way that EIC wealth had corrupted parliament: “What is England now?” he asked, but “a sink of Indian wealth, filled by nabobs [with] . . . a Senate sold and despised.”

5899937 The First Subscription List for the English East India Company, 22 September 1599 (pen & ink on paper) by English School, (16th century); British Library, London, UK; © British Library Board. All Rights Reserved; English, out of copyright. PLEASE NOTE: Bridgeman Images works with the owner of this image to clear permission. If you wish to reproduce this image, please inform us so we can clear permission for you.
The first subscription list for the East India Company, from September 1599 © Bridgeman Images

For just as the lobbying of the Anglo-Persian Oil Company was able to bring down the government in Iran and United Fruit that of Guatemala in the 1950s; just as ITT lobbied to bring down Salvador Allende’s Chile in the 1970s and just as ExxonMobil has lobbied the US more recently to protect its interests in Indonesia, Iraq and Afghanistan, so the EIC was able to call in the British navy to enhance its power in India in the 18th century.

And just as Facebook today can employ Nick Clegg, the former UK deputy prime minister, so the EIC was able to buy the services of Lord Cornwallis, who surrendered Yorktown to Washington. The EIC, in other words, was not just the world’s first great multinational corporation, it was also the first to run amok and show how large companies can become more powerful, and sometimes more dangerous, than nations or even empires.


The history of the EIC began on September 24 1599. While William Shakespeare was mulling over a draft of Hamlet in his house downriver from the Globe in Southwark, a motley group of Londoners gathered barely 20 minutes’ walk north across the Thames in a rambling, half-timbered building off Moorgate Fields.

It was an unusually diverse cross-section of Elizabethan London that came that day to the Founders Hall. At the top of the social scale, hung with his golden chain of office, there was the stout figure of the Lord Mayor himself, Sir Stephen Soame. Accompanying him was the stovepipe-hatted Sir Thomas Smythe, a former auditor of the City of London who had made a fortune importing currants from the Greek islands and spices from Aleppo. A few years earlier “Auditor Smythe” had helped form the Levant Company as a vehicle for his trading voyages; this meeting was his initiative.

Beside these portly pillars of the City of London were many less exalted merchants hopeful of increasing their fortunes, as well as a scattering of ambitious and upwardly mobile men of more humble estate, whose professions the notaries dutifully noted down: grocers, drapers and haberdashers, a “clotheworker”, a “vintener”, a “letherseller” and a “skinner”, not to mention a few scarred soldiers and bearded mariners who described themselves, in the polite Elizabethan euphemism, as “privateers”.

NAM237719 Lord Robert Clive (1725-74) in General Officer's uniform, c.1764 (oil on canvas) by Gainsborough, Thomas (1727-88); National Army Museum, London; (add.info.: twice Governor of Bengal (1758-60 & 1764-67);); English, out of copyright.
'Lord Robert Clive in General Officer's uniform', by Thomas Gainsborough (1764) © Bridgeman Images

The group had gathered with one purpose: to petition the ageing Queen Elizabeth I, then a bewigged and painted woman of 66, to start up a Company “to venter in the pretended voiage to ye Est Indies and other Ilands and Cuntries thereabouts there to make trade”.

Unlike the Levant Company, which had a fixed board of 53 tightly knit subscribers, the East India Company was from the very first conceived as a joint stock corporation, open to all investors. Smythe and his associates had decided that because of the huge expenses and high risks involved, “a trade so far remote cannot be managed but by a joint and united stock”. Costs, after all, were astronomically high. The commodities they wished to buy were extremely expensive and they were carried in huge ships, which needed to be manned by large crews and protected by artillery masters and professional musket-men. Moreover, even if everything went according to plan, there would be no return on investment for several years.

The idea of a joint stock company was one of Tudor England’s most brilliant and revolutionary innovations. The spark of the idea sprang from the flint of the medieval craft guilds, where merchants and manufacturers could pool their resources to undertake ventures none could afford to make individually. But the crucial difference in a joint stock company was that the latter could bring in passive investors who had the cash to subscribe to a project but were not themselves involved in the running of it. Such shares could be bought and sold by anyone, and their price could rise or fall depending on demand and the success of the venture.

A few decades earlier, in 1553, a previous generation of London merchants had begun the process of founding the world’s first chartered joint-stock company: the Muscovy Company, or to give it its full and glorious title, The Mysterie and Companie of Merchant Adventurers for the Discoverie of Regions, Dominions, Islands and Places Unknown. Such a company was “one body corporate and politick” — that is, it would be a corporation, and so could have a legal identity and a form of corporate immortality that allowed it to transcend the deaths of individual shareholders, “in like manner”, wrote the legal scholar, William Blackstone, “as the River Thames is still the same river, though the parts which compose it are changing every instance”.


In retrospect, the rise of the EIC may seem almost inevitable. But that was not how it looked in 1599. For at its founding, few enterprises could have seemed less sure of success. At that time, England was a relatively impoverished, largely agricultural country, which had spent almost a century at war with itself over the most divisive subject of the time: religion.

In the course of this, in what seemed to many of its wisest minds as an act of wilful self-harm, the English had unilaterally cut themselves off from the most powerful institution in Europe, so turning themselves in the eyes of many Europeans into something of a pariah nation. As a result, isolated from their baffled neighbours, the English were forced to scour the globe for new markets and commercial openings further afield, and to do so they had no compunction but to use, for the first time in history, unbridled corporate violence.

1765844 The Trading Post of the Dutch East India Company beside the Ganges in Hooghly, Bengal, 1665 (oil on canvas) by Schuylenburgh, Hendrik van (c.1620-89); 203×316 cm; Rijksmuseum, Amsterdam, The Netherlands; (add.info.: The Dutch East India trading company (Vereenigde Oostindische Compagnie, VOC) flourished in the 17th and 18th centuries with an Asian capital at Batavia, now Jakarta, in Java and trading posts throughout Asia including Bengal headquarters at Hooghly. This canvas was commissioned by Pieter Sterthemius, first director of Hooghly trading post, and shows a visit to an Indian dignitary alongside trading and other local activities. Dutch East Indiamen navigate the Ganges River and at the upper right an act of religious self-castigation takes place.); Dutch, out of copyright.
'The Trading Post of the Dutch East India Company beside the Ganges in Hooghly, Bengal', by Hendrik van Schuylenburgh (1665) © Rijksmuseum, Amsterdam

The EIC had been authorised by its founding charter to “wage war” and had been using military and naval power to gain its ends since it boarded and captured a Portuguese vessel on its maiden voyage in 1602. But it was not until 1765 that the Company ceased to resemble a conventional trading corporation, dealing in silks and spices, and became something altogether more unusual.

In that year, in the Mughal fort of Allahabad, the young Mughal emperor Shah Alam, exiled from Delhi and defeated by EIC troops, was forced into what we would now call an act of involuntary privatisation. He was forced to issue an order to dismiss his own Mughal revenue officials in Bengal, Bihar and Orissa and replace them with a set of English traders appointed by Robert Clive — the new governor of Bengal — and the directors of the Company, whom the document describes as “the high and mighty, the chief of illustrious warriors, the English Company”.

The collecting of Mughal taxes was henceforth subcontracted to a powerful multinational corporation — whose revenue-collecting operations were protected by its own private army. Within a few months, 250 company clerks backed by the military force of 20,000 locally recruited Indian soldiers had become the effective rulers of the richest Mughal provinces. An international corporation was, for the first time, transforming itself into an aggressive colonial power.

Using the looted wealth of Mughal Bengal, before long the EIC was straddling the globe. Almost single-handedly, it reversed the balance of trade, which from Roman times on had led to a continual drain of western bullion eastward. The EIC ferried opium east to China, and in due course fought the opium wars in order to seize an offshore base at Hong Kong and safeguard its monopoly in narcotics. To the west it shipped Chinese tea to Massachusetts, where its dumping in Boston harbour led to the American war of Independence. Indeed, one of the principal fears of the American patriots in the run-up to the war was that parliament would unleash the EIC in the Americas to loot there as it had done in India.

By 1803, when the EIC captured the Mughal capital of Delhi, and within it, the now sightless monarch, Shah Alam, sitting blinded in his ruined palace, the Company had trained up a private security force of about 200,000 — twice the size of the British army — and marshalled more firepower than any nation-state in Asia. In just over 40 years they had made themselves masters of almost all the subcontinent, whose inhabitants numbered 50 to 60 million, succeeding an Empire where even minor provincial nabobs and governors ruled over vast areas, larger in both size and population than the biggest countries of Europe. Now almost all of India south of Delhi was by then effectively ruled from a boardroom in the City of London. “What honour is left to us?” asked a Mughal official, “when we have to take orders from a handful of traders who have not yet learned to wash their bottoms?”


We still talk about the British conquering India, but that phrase disguises a more sinister reality. For it was not the British government that began seizing chunks of India in the mid-18th century, but a dangerously unregulated private company headquartered in one small office, five windows wide, in London, and managed in India by a violent, ruthless and mentally unstable corporate predator — Robert Clive. India’s transition to colonialism, in other words, took place under a for-profit corporation, which existed entirely for the purpose of enriching its investors.

Historians propose many reasons for the EIC’s astonishing success: the fracturing of Mughal India into tiny, competing states; the military edge of more advanced European soldiers; and the innovations in governance, taxation and banking that allowed the Company to raise vast sums of ready money at a moment’s notice. For behind the scarlet uniforms and the Palladian palaces, the tiger shoots and the polkas at Government House lay the balance sheets of the Company’s accountants, with their ledgers laying out profit and loss, and the Company’s fluctuating share price on the London Stock Exchange.

he Mughal Emperor Shah Alam Reviewing the Troops of the East India Company at Allahabad With General Barker, by Tilly Kettle. In 1771, Barker was despatched to Allahabad to try and stop Shah Alam returning to Delhi but found him ‘deaf to all arguments’. The Emperor had long found life in Allahabad as a puppet of the Company insupportable, and now he yearned to return home, whatever the risks. Photo courtesy of Trustees of Victoria Memorial Hall, Kolkata
'The Mughal Emperor Shah Alam Reviewing the Troops of the East India Company at Allahabad With General Barker', by Tilly Kettle (1771) © Victoria Memorial Hall, Kolkata

Yet perhaps the most crucial factor of all was the support that the EIC enjoyed from the British parliament. The relationship grew more symbiotic throughout the 18th century until eventually it turned into what we might today call a public-private partnership. Returned nabobs such as Clive used their wealth to buy both MPs and parliamentary seats. In turn, parliament backed the Company with state power: the ships and soldiers that were needed when the rival French and British East India Companies trained their guns on each other.

But the Company always had two targets in its sights: one was the lands where its business was conducted; but the other was the country that gave it birth, as its lawyers and lobbyists and MP shareholders slowly and subtly worked to influence and subvert the legislation of parliament in its favour. Indeed, the EIC probably invented corporate lobbying. In 1693, less than a century after its foundation, the Company was discovered for the first time to be using its own shares for buying MPs, annually shelling out £1,200 a year to prominent MPs and ministers. The parliamentary investigation into this, the world’s first corporate lobbying scandal, found the EIC guilty of bribery and insider trading, and led to the impeachment of the lord president of the council, and the imprisonment of the Company’s governor.

Though other companies, such as Cecil Rhodes’ British South African Company, acted as Pied Piper in the march towards exploitation and empire, the EIC’s conquest of India almost certainly remains the supreme act of corporate violence in history. For all the power wielded today by the largest corporations — whether Walmart or Google — they are tame beasts compared with the ravaging territorial appetites of the militarised EIC. Yet if history shows anything, it is that in the intimate dance between the state and the corporation, while the latter can be regulated, it will use all its resources and power to resist.

517584 East India Docks by W Daniel, 1808, India 19th century; (add.info.: East India Docks by W. Daniel, 1808, India 19th century. u000d u000d u000d u000dArtwork-location: London-Greenwich, National Maritime Museum); De Agostini Picture Library / G. Nimatallah; out of copyright.
'East India Docks' by W Daniel (1808). The East India Company transformed London's standing in the world © De Agostini Picture Library

The 400-year-old question of how to cope with the power and perils of large multinational corporations remains today unanswered: it is not clear how a nation state, especially a fragile or impoverished one, can adequately protect itself and its citizens from corporate aggression. No contemporary corporation could get away with duplicating the sheer military might of the EIC, but many have attempted to match its success at bending state power to their own ends. The biggest modern corporations run sophisticated lobbying operations very like those of the EIC, which, in the case of ExxonMobil, is, according to journalist Steve Coll, staffed by “20 former senators, representatives, legislative aides and others under contract”.

Thankfully, however, there is no exact modern equivalent. Corporations have frequently conspired to make weak governments fall but no modern corporation claims sovereignty over any nation. Neither ExxonMobil nor Shell possesses regiments of infantry, cavalry and artillery, though both have a small army of private security guards. The latter, as Coll has pointed out, earned in one year $228bn in revenues, more than the gross domestic product of Norway; had it been a country, it would have been the world’s 21st-largest economy. Indeed, with such revenues flowing in perhaps today the most powerful corporations do not need their own armies: they can rely on governments to protect their interests, guard them and bail them out, just as the US did, for example, with ExxonMobil in Iraq. As recent American adventures in Iraq have shown, our world is far from post-imperial, and quite probably never will be.

Instead, empire is transforming itself into forms of global power that use campaign contributions and commercial lobbying, multinational finance systems and global markets, corporate influence and the predictive data harvesting of the new surveillance-capitalism rather than — or sometimes alongside — overt military conquest, occupation or direct economic domination to effect its ends.

Four hundred and twenty years after its founding, with a corporate mogul sitting in the White House, attempting to use his dollars to buy whole nations, and with a former chief executive of ExxonMobil recently serving as secretary of state, the story of the East India Company has never been more current. As Edward, First Baron Thurlow remarked during the impeachment of EIC Governor Warren Hastings, “Corporations have neither bodies to be punished, nor souls to be condemned. They therefore do as they like.”

William Dalrymple’s ‘The Anarchy’ is published on September 10. The writer will be speaking at the FT Weekend Festival next Saturday

This article has been amended since original publication to reflect the East India’s contribution to British trade in the early 19th century

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Asia’s role in British imperial trade / From Professor Julian Hoppit, History department, University College London, London WC1

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