The Rise and Fall of British East India Company

The Rise and Fall of British East India Company

How a Multinational created an Empire 

By: Bikal Dhungel 

                                           

The world we live in has turned to be a complex playground. An individual is no more in a state of decision making for him anymore. Commercialized world, especially companies and corporations control the individuals in the society. For example it is virtually impossible to live today without a computer, without a mobile phone and without electronic devices in the kitchen. Obviously they have made our life easier but at the same time these companies know more about the individuals themselves, they know how to manipulate our choice and hence use it to generate profit because human minds are fragile. By this way, these corporations have grown so big, so powerful that among the top 100 economic entities in the world, 51 are corporations and only 49 are countries. General Motors is richer than Denmark and Wal Mart or Ford Motor is richer than Poland or Norway(1). Either this fact is positive or negative depends on their actions and contributions towards the society. 

Looking back to the history, Karl Marx published his famous masterpiece ‘The Communist Manifesto’ in the year 1848. The idea behind his work was to highlight the tyranny of companies against the workers with a vision to create decent working conditions at the beginning of Industrialization.  Marx had foreseen, if these companies grow powerful, they can control the labors for their own profit and might slowly grow to be too powerful to control the whole world. History also reveals the fact that Corporations and big financial institutions had the power to enslave mankind. Thomas Jefferson puts his famous speech “ I believe that banking institutions are more dangerous to our liberties than standing armies. If American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs”. 

At the same time, history books teach us about Colonization and that the sun never set in British Empire. In fact, the United Kingdom itself, as a country did not initially colonized India, neither South Africa nor the United States. It was the British East India Company that took over India which controlled the whole region including today’s India, Pakistan, Bangladesh, Sri Lanka and Myanmar. The Massachusetts Bay Company operated in the United States and British South Africa Company landed in the Cape Colony. Among them, the British East India Company was the most mysterious one. 

The British East India Company was founded in the year 1600. Originally, it was formed as a Joint-Stock Company whose intention was primarily to trade with East Indies. The company mainly traded tea, cotton, silk and also Opium. The relation between the company and then British Government was very cooperative, so in-turn, the government handled the company with privilege granting it the monopoly to trade in East Indies. Nevertheless, it was not the only company to trade these exotic regions of East Asia. The Dutch East India Company had long maintained its trade in the region. Additionally Spanish and Portuguese traders had been in business since over hundred years. The relationship between these traders was hostile in course of time. 

Soon after, the British East India Company discovered itself putting eye on India, which was later called to be ‘the bread basket of the British Empire’. Trading ports were created in Chittagong (today in Bangladesh), Goa, Bombay (Mumbai) and Calcutta. Factories throughout the country was also built.

India was ruled by the Mughals  in 16^th  and 17^th century.  Mughals are credited for bringing extra-ordinary forms of architectures in India, including the Taj Mahal and large pieces of arts and cultures. The most remarkable emperor of the Mughals was Shah Jahan, who ruled from 1628 to 1658 and whose name means ‘emperor of the world’. He kept the harem of 5000 women but was nonetheless sufficiently distraught at the death of his wife Mamtaz Mahal, that he had built in her memory the Taj Mahal, which is believed to have taken 20,000 workers 20 years to construct(2). 

Fascinated by the architectural buildings built by the British and the revenues they created for the rulers, Mughals completely waved the tax duties to British East India Company (BEIC). 

‘For Indians, goods were superior to anything the foreigners had on offer. One resource with the mughals lacked and the English had, however, was a powerful navy, and this was later to prove decisive in the English multinationals expansion. 

Calcutta was a booming city under BEIC and becoming increasingly a source of profit. It had become a relatively wealthy city, with opulent merchants houses springing up outside the company’s fort. In a similar way, other parts of Mughal Empire was flourishing and the peaceful trade between the British East India company and Mughals was a win win game, also for the British economy. 

 In 1717, the Mughal emperor Frauksiyar granted the company the right to trade in Bengal without paying the duty. This was in return of 3000 rupees a year. In the intervening years, one underlying force, for example, was the decline of the Mughal empire in the first half of the eighteenth century. This had made the political environment in which the company operated increasingly unstable, factious, and unpredictable- a situation found in many developing countries today. For this reason, the BEIC built its own army’. (3) 

The BEIC, to secure its rights to trade became increasingly involved in internal policies of India, including bad practices like bribing, threatening and even torturing people for corporate greed. The most important was the exploitation of natural resources disregarding human lives and environment. By this way, the relationship with the locals remained hostile. But this did not happen in a short time. For the first 6 decades, the East India Company was peaceful and operating peacefully, conflicts only arise after that and escalated more in the final years after a century. After a long period of mutual cooperation, as the company grew unethical, the army of BEIC itself soon launched a revolutionary group and vowed to fight the tyranny of a company. Conflicts arise in many places. This led to more repression. At the same time the decreasing power of Mughal Empire was having a negative consequences for BEIC which then thought to divert the game by switching the side, hence turned the attention against the Mughals. Soon after, the BEIC directly involved in the rebellion and wars throughout Indian subcontinent. 

War broke out in many places. Through the battle of plassey, the BEIC controlled Bengal. Through British Marathas war, the British secured Ganges – Jamuna region as well as Delhi, Agra, Gujrat, and Bombay. Finally the Indian Rebellion of 1857, led by the sepoys of BEIC  ended the rule of Mughals and Marathas marked the end of BEIC as well. The Sepoys were the Indian soldiers mainly from the Punjab region, which had been annexed in 1849. The sepoys liberated imprisoned soldiers in Meerut, near Delhi killing British citizens in process.

Soon after, Delhi was seized and encircled and the last Mogul , Bahadur Shah II was proclaimed emperor of India.  British seat in Lucknow were retaken by the British in 1857. In the wake of rebellion, The Gurkhas with the British massacred the Indians which proved the loyalty of Gurkhas towards the British. ( 4) 

 The rebellion marked an interesting full stop of the rules. There were no real victors. The Mughals and some rulers of some parts fought against the powerful BEIC on whose side there were Gurkha Soldiers led by Jung Bahadur Rana, the Kingdom of Nepal, and over 20 principal states where the company was ruling. 

When the East India Company dissolved in 1858 in the wake of Sepoy Rebellion, the British crown took over the government of India, which was put under the rule of British viceroy, and Queen Victoria assumed the title of ‘ Empress of India ‘ in 1876. The last Mughal, Bahadur Shah II was captured and imprisoned. ( 5)However, the Sikhs and the Gurkhas remained independent of British rule. 

From 1858 onwards India became a direct British Colony until its independence in 1947. Unfortunately, the deeds of British Government had not been improved than that under British East India Company. When the British wanted to divide the Bengal region to form a province with a muslim majority, there were attacks against the British, boycotts, and revolt. Because the bellious Bengals had become a danger for the viceroy, the seat of government was moved from Calcutta to Delhi in 1911.(6) 

In the second half of the century, the British continued the development of administration and infrastructure. Revenues gained from property taxes, the Opium monopoly and a salt tax was sent to London while the Indian people suffered under the ruthless exploitation of their country. Millions lost their lives in famines including the British. 

However, the rule of BEIC and the British Government have brought  many positive changes in the Indian sub continent. Two indigenous practices: ‘Saati’ and the ritual assassination of thugs were banned. Western style administration and education system was brought but it also led to the emergence of an Indian intellectual class that soon began to demand democratic rights. The construction of enormous railroad network was opened in 1853, to open up the interior of the country, better roads and postal system. A unified national legal system and a single currency were also introduced. At the beginning of the 19^th century the need for qualified Indian workers led to the introduction of western educational institutions where Indians qualified as officials, lawyers and teachers. In 1857, Universities opened in Madras, Bombay and Calcutta and a wealthy few came to Britain to study. India was a patchwork of 500 separately governed territories which the British appropriated piece by piece during the wars against the Maratha confederation. (7)

At the same time, Indians were also not the innocents. An over-exited account of the mutiny was published in London in 1858 gave graphic descriptions of the horrors allegedly committed by crazed Indians, which apparently included forcing English parents to eat the flesh of their children. These awful stories will not be forgotten as long as England exists. (8)

By this way, a company that was for peaceful trading grew to be more powerful than a country  in course of 150 years which in turn left a legacy that will never be forgotten till there are humans. Things can never be recovered but a lesson learnt from it should be kept in mind so that there will be no such events taking place in the future.

Sources:

 

(1)  http://www.nexuslearning.net/books/ML-WCG-East/14-4.pdf

(2)  - http://www.corporations.org/system/top100.html

(3)  Empires of Profit : Commerce, Conquest and Corporate Responsibility, Daniel Litvin, page 4-11

(4)  Visual History of the World, the National Geographic, page 393

(5)  Visual History of the World, the National Geographic, page 414

(6)  Visual History of the World, the National Geographic, page

(7)  Visual History of the World, the National Geographic, page 393,414

(8)  Empires of Profit: Commerce, Conquest and Corporate Responsibility, Daniel Litvin, page 4-11

The Idea of Microcredit and its Impact

The Idea of Microcredit and its Impact

By: Bikal Dhungel

What is Microcredit? 

“Innovation will be born out of problems”. Fritz Henkel, a man in his late twenties in a place called Düsseldorf, Germany was tired to see the long washing days of women. Lots of time and energy was invested to wash. He invented washing detergent powder which made it easier to wash cloths, to wash without much effort. His family business expanded through that and today Henkel is a global player. In the meantime, there is washing machine and we do not need to wash cloths ourselves today. The problem of long washing days do not exist today due to the innovative idea of Fritz Henkel. 

A similar story of a Bangladeshi man, Mohammad Yunus changed the world for better. A man, who went to the United States with a Fulbright Scholarship to study Economics, came back to his country Bangladesh after the completion of studies. Soon, he discovered people suffering in poverty. While collecting data about the poor, he discovered that village women have been exploited by the Mahajans (Village lenders). The women bought Bamboo from the Mahajans with 5 Takas, work out the Bamboos and sell the finished products back to them with 5.5 Takas. By this way, the poor women had a daily income of 0.5 Takas which was barely enough to survive. Additionally, these women had children. They needed cloths, enough foods and shelter. Yunus was told that the Mahajans were misusing the women and those who work for Mahajans become poorer in fact and were in a debt trap. Yunus collected data about such women in the village and found out that there were 42 of them who owned altogether $ 27 to the Mahajans. Paying this $ 27 would eventually free them from the debt trap. He lent the $ 27 from his own pocket. An idea arises in his mind. If he could lend like this to poorest of the poor, their life could be improved. Especially in Bangladesh there was no scarcity of poor people who were in need of such credits. By this way, the revolution of Microcredit started.

Grameen Bank was launched (Grameen means rural in Bengali too), a bank created by Mohammad Yunus, provides credit to the poorest of the poor in rural Bangladesh, without any collateral. In the year 1976, as mentioned in the official website of Grameen Bank, Professor Yunus launched an action research project to examine the possibility of designing a credit delivery system to provide banking services to the rural poor. In June, 2011, it had 8.37 million borrowers, 97 percent of whom are women. It had 2,565 branches that provide services in 81,379 villages, covering more than 97 percent of the total villages in Bangladesh23. Grameen Bank is owned by the poor. Its objectives were (1):

i) To extend banking facilities to poor men and women

ii) To eliminate the exploitation of the poor by money lenders

iii) To create opportunities for self-employed for the vast multitude of unemployed people in rural Bangladesh

iv) To bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves

v) To reverse the age-old vicious circle of “low income, low saving and low investment”, into virtuous circle of “low income, injection of credit, investment, more income, more savings, more investment, more income”. 

Grameen Bank, through its variety of programs, is contributing a lot to eradicate poverty. It is actively working in various sectors through a vast range of Grameen branches like Grameen Shakti, Grameen Trust, Grameen Communications etc and its collaborating with famous international corporations like German Chemical Company BASF, French DANONE etc.

Grameen Bank and Mohammad Yunus were awarded with a Noble Peace Prize in 2006 because poverty is a great threat to peace and they both were committed to end it. Though a bank, but also a philanthropic institution in some degree, Grameen Bank accepts no donor money and loans.

Grameen Bank regards education as the strongest tool capable of eradicating poverty. Hence, Grameen has a reputation of a grantor of education to the most vulnerable in the country by its scholarship scheme and student loan. Outstanding children of Grameen borrowers, especially girls are granted scholarship. Up to October 2011, scholarships amounting to $ 3 Million have been awarded to 1, 33,031 children25. Additionally, 49,000 students got educational loan for higher education. Furthermore, there are over 30 Grameen networks that provide different services as independent companies and contribute a lot to generate gains for the people. The most wonderful part of Grameen Bank is the features exclusively provided for beggars. No bank in the history ever did that. Traditional banking system regarded this as a fallacy, giving loan to somebody with no collateral. Some unidentified sources claim that there are over 25 Million beggars in South Asia, as much as the combined population of Denmark, Sweden, Norway and Finland. This presents a huge picture of the degree of extreme poverty. Hence, helping them to stand of their own is not only an act of humanity but also a great deed that no one ever did in the history of universe. Most of the beggars in Bangladesh are disabled, blind, retarded people and old people. This group is called ‘struggling members’. Over 111,398 beggars have joined the program and today over 20,000 have already stopped begging. 

This program has provided the beggars an opportunity to improve their lives. It has indeed improved. It helped the poorest of the poor people to live in their own, without begging. There is no popular word than ‘Grameen’ in Bangladesh today. This name made Bangladesh known in the whole world through the Noble Prize. The four basic principles Discipline, Courage, Unity and Hard Work have shaped people’s life for better. The famous sixteen principles of Grameen Bank became a role model for the whole South Asia which has a strong bias of culture which is hindering their economical development. Hence, teaching them how to start a small business was the good idea instead of distributing them foods to eat for a day.

Microcredit in Developed Countries: 

Microcredit is not only the story of developing countries. It has reached the developed countries as well. This scheme is helping small scale enterprises. The ‘La Caixa’ bank, based in Barcelona, Spain was the first ‘Microbank’ in Europe with a start capital of 51 million Euros in 2007 (2). The trend was followed by other banks of Eastern Europe mainly Bulgaria and Croatia. Also the German ‘Sparkassen’ are helping Small and Middle class Enterprises (SMEs).

The saving banks in Europe, with a strong commitment, have helped or contributed to set up various schemes that assist young people, women, and migrants, to integrate, or re-integrate, in the social and economic life of their communities (3).

Lloyds TSB of the UK has over has 600,000 SME customers and helps in the start-ups of 100,000 businesses every year, 60% of whom are one person, self-employed business (4). In this Microcredit scheme, Lloyds TSB is supported by the British Government. It is aimed to those start-ups which cannot raise capitals in the financial markets. The loan amount is as little as 5000 British Pounds or more.

One can claim that a similar form of Micro-credit existed in Europe before, like that of German KfW Banks (Kreditanstalt für Wiederaufbau) but the form as it works now is what makes Microcredit of today different than from the past i.e. lending money even without collateral.

Microcredit in Africa

In Africa, Microcredit is a huge success too. But experts still claim that the degree of success as that of South Asia cannot be reached in Africa or has not been realized yet due to various reasons. Africa is diverse and this makes development complicated. Microcredit has helped it to better its conditions but significant changes cannot be seen in the overall situation of poverty. ‘Microfinance is not a panacea for poverty and related development challenges, but rather an important tool in the mission of poverty eradication. Poverty is a multi-dimensional problem embedded in a complex and interconnected political, economical, cultural and ecological system. While microfinance alone does not improve roads, housing, water supply, education, and health services, it can play an important role in making these and other sustainable contributions to the community' (5). Research reveals that there is a need of change in operational efficiency in the Microfinance in Africa like targeting more number of women, mobilizing people in rural areas, strengthening the campaign of Microfinance etc. These are also some policy advices to the responsible authorities. However, change cannot be visible in a short time. We need to wait to see how Microcredit has changes Africa from the time during the absence of such schemes. Nevertheless, in a wide range of countries, it has indeed brought some positive changes in the increase in income, reduction in vulnerability etc (Wright, 2000: UNICEF). 

Final Remarks 

The idea of distributing Ration Card in Nepal is good in short term but in long term, it will worsen the problem we face today. It makes people lazy by giving them more intention not to work. Governmental efforts should focus on teaching them how to fish instead of giving a fish. For the group of people who are mentally or physically unable to stand on their own, should be given such cards so that their life is secured. For the remaining, the idea of Microcredit will be the most effective way forward. We should learn from Bangladesh. 

It has been over three decades now since Microcredit was launched for the first time. Since 13th October 2006, the date when Muhammad Yunus and Grameen Bank were jointly awarded the Nobel Peace prize, it is known to most of the world (6). Since that day the scheme has been embraced by Banks and Institutions around the world. In fact, Microcredit has changed the lives of millions of people in the whole world and it is continuing to change their daily lives. Looking back to the history of economic development, it is the ‘western world’ that took a giant leap towards prosperity. However, the poorest parts remained the same. Microcredit played as an important tool to take the developing world in the path of progress. The first step to enter this process of progress is to involve in this movement. By making oneself independent, even the poorest among the poor could be lifted from the current level. Microcredit has given them a chance, first of all to be independent, then to learn skills, then make their living and finally to better the lives of their children by educating them. The second generation of Micro borrowers is already the story of miracles. From the country of its origin, to the countries that embraced this idea, the progress is still continuing. The most important achievement Microcredit reached is the empowerment of women in countries where human rights especially women’s right are dire. Giving so much independence through entrepreneurship is one of the greatest achievements towards equality of sexes. It has also contributed in the welfare of countries. A big question goes if the vast amount of poor people is the result of policies of the individual countries or the countries are poor due to the vast amount of poor people. Microcredit, in the short term enabled the poor people to stand up of their own and helped them to step in the ladder of development ignoring the situation of the particular country. In the long term, the big role should be played by the local governments by building infra-structures, providing a room for education, improving demographical factors as well as human development. In the absence of this, due to various reasons like political instability, climate changes, the long path created by Microcredit schemes will find no sustainability. Governments have the bigger part to play in sustainable development. It should strengthen its advantages like Tourism or Trade which will create places for Microcredit to thrive when the citizens can involve in business practices that best suit them. The revolution of Microcredit has been the revolution of the century. It has improved the lives of hundreds of millions beyond the national boundaries. Grameen Banks collaboration with every sector like IT, tele-communication, consumer goods, education etc shows that the program is not only about lending, it is much more than just lending. Microcredit in the other hand is another slap in the face of the doubters of capitalism. The so-called ‘greedy transnational companies’ lined up to provide funds to the Microcredit institutions, like DANONE, BASF etc in the form of social business which does not generate any profit or re-use the profit for the goodness of poor. By this way, the transnational companies presented themselves as ethical companies. Consequently, people in developed world rewarded such companies by choosing to buy their products because they were ethical, they were caring about the vulnerable and they were helping the poor to stand up on their own. In the other hand, the firms which were not considering such facts and embrace the practices like child labor, environmental harms etc are being punished by the consumers who reject their products. So, the firms that are doing social businesses are being able to raise their profit. This created further incentives to the firms to be ethical. As a result of these successful models, microcredit internationalized in a fast pace. Even though in other parts of the world, there are not always positive effects of Microcredit, it has indeed improved the situation which could not have been there in its absence. Even wealthy countries embraced the idea and widened the small scale lending. Hence, Microcredit has become international and touched the people all over the world virtually. It is now important to consider how the scheme can be made long lasting and credible in every country. The future challenges that it is going to face should be stopped by any means. Developing countries are more vulnerable to it than developed countries. Global challenges continue to exist. The rising price of Food has endangered the very survival of farmers in developing countries who are the main borrowers of Microcredit. It can have disastrous effects if the farmers cannot pay back the debts due to the high food prices. They will be pushed further into the debt traps. The ones who will be affected by this are the already vulnerable farmers who might face miserable conditions. Another factor is climate change. Due to floods, it can result in crops-shortfalls, or it can simply destroy the farms which are the lifelines of farmers. Somewhere in the world, we are regularly observing the damages caused by climate change that have devastating effects. Such things should be forecasted in time in order to stop the worst things happen. There is a high danger of micro borrowers default in their debt in a large number if the responsible authorities do not act in time. Microcredit is important, it should remain and it should be supported. Its vast effects in many phases of human life are priceless. Microcredit is the weapon of mass prosperity as Kofi Annan puts it, “Where once the poor were commonly seen as passive victims, microfinance recognizes that poor people are remarkable reservoirs of energy and knowledge. And while the lack of financial services is a sign of poverty, today it is also understood as an untapped opportunity to create markets, bring people in from the margins and give them the tools with which to help themselves.” This enlightening story of our generation, the story of Microcredit, first started by Professor Yunus then embraced by others is the symbol of our age, that, for the first time in human history, we have paved the way of prosperity, for all. We cannot be responsible for all the problems we face today but we can say proudly that we have lifted billions of people from poverty, we have helped them to grow, we have given them a chance, we have heard their voices, we have taken care of them and we have made their world better. A model that aims to create a world without poverty has changed a lot in a short time. This model is going to be remembered by the generations that come, generation of our children, our grand children and their children. They will be thankful for our generation and will thank for our courage for achieving these phenomenal deeds. Muhammad Yunus aimed to put poverty into the museum, and this will be fulfilled if our generational story keeps on going like it is today. 

Distributors of Ration Card should take a lesson that it is not sustainable. The time and energy that is spent on it should be spent on discovering entrepreneurship instead if they are really concerned with putting poverty in the Museum as Professor Yunus campaigns.

Sources: 

(1)    - http://www.grameen-info.org/index.php?option=com_content&task=view&id=26&Itemid=175

(2)    http://www.microbanklacaixa.com/deployedfiles/microbank/Estaticos/PDFs/Informe_impacto_microcreditos_2011_en.pdf

(3)    http://www.esbg.eu/uploadedFiles/Publications_and_Research_%28ESBG_only%29/brochure%20screen%20view.pdf , Page 4

(4)    http://www.wsbi.org/uploadedFiles/Publications_and_Research_%28ESBG_only%29/Perspectives%2050%281%29.pdf Page 20 , Page 20

(5)    http://www.un.org/esa/africa/microfinanceinafrica.pdf Page 4

(6)    http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/0,,contentMDK:21153910~pagePK:2865106~piPK:2865128~theSitePK:223547,00.html