The East India Company was the first major shareholder-owned multinational company (MNC).

It
found India rich and left it poor. When the company was established in 1600, in the reign of
Queen Elizabeth I, and for 150 years thereafter, there were no products England could export that the
East wanted to buy. Spices, textiles and luxury goods sailed west. Only money sailed east. It was the
ability to acquire land and control governmentservices that raised the fortunes of the Company -- and
broke India.
As the mighty and opulent Mughal Empire declined, the Company acquired land beyond its
vulnerable trading ports, extorted taxes, manipulated terms of trade in its favour, and built up a
private army. In 1757 Robert Clive fought and defeated the Nawab of Bengal. Later,
Lord Cornwallis defeated Tipu Sultan in the south. In both cases, and in many lesser incidents, the
Company's executive officers extorted huge ransoms and accumulated unimaginable wealth. This
wealth was obtained, not so much from its fashionable society customers back in England, as
from suppliers in India, from defeated rulers and from taxes imposed on the populace. India financed
its own impoverishment.
Under the Mughals, taxes had been collected through a complex pattern of mutual obligation. This was
too complex for the Company. At a stroke the zamindars, tax farmers under the Mughals, were
transformed into landlords, and Bengal's 20 million smallholders were deprived of all hereditary rights.
Just five years after the Company secured control of Bengal in 1765, revenues from the land tax had
tripled, beggaring the people. The devastating effects last to this day. These conditions turned one of
Bengal's periodic droughts, in 1769, into a full-blown famine. An estimated 10 million people, one
third of the population of Bengal, died. But, rather than organise relief efforts to meet the needs of the
starving, the Company actually increased tax collection during the famine. Granaries were locked, and
grain was seized by force from the peasants and sold at inflated prices in the cities.
The Company became feared for the brutal enforcements of its monopoly interests. For example, it
was infamous for cutting off the thumbs of weavers found selling cloth to other traders, to prevent
them ever working again. In rural areas two-thirds of a peasant's income was taken in tax, nearly
double that under the Mughals. Consumption of salt was forced well below the minimum prescribed in
English jails: the effect was to treat the people of India as sub-human, a class below the criminal. This
disgraceful control of an essential commodity was only withdrawn after Gandhi's famous Salt March in
1930. The Company's performance, through pursuing profit for its shareholders and its chiefs,
contrasted starkly with its claim, in the mid-19th century, that it ruled for the moral and
material betterment of India.
In Britain, so powerful was the Company's grip on politics, that attempts to control itsaffairs could
bring down a government. An attempt, led by Edmund Burke, to place the
Company's Indian possessions under Parliamentary rule led to the dismissal of the government. The
general election that followed was so generously funded by the Company that it secured a compliant
Parliament in which a tenth of the seats were held by `nabobs'.
Booty from India created this new class of `nabobs', the chief executive officers (CEOs) of Georgian
England. The nabobs themselves had no conscience about their wealth. Robert Clive, having extorted
a fortune after the battle of Plassey, defended himself at a House of Commons enquiry into suspected
corruption, saying that he was "astounded" at his own moderation at not taking more. Only a few
dissenting voices, like the Quaker, William Tuke, pointed to the humanitarian disaster that the
Company had wrought in India. But the case for reform was overwhelming and in 1784 the India Act

transferred executive management to a Board of Control, answerable to Parliament -- a kind of publicprivate partnership.
Although there were expressions of intent that the Company should promote a mission to make
Indians "useful and happy subjects," the underlying ethics of the public-private partnership remained
the same. By the 1850s, just 15,000 pounds sterling was being spent on non-English schools
compared with a military budget of 5 million pounds sterling. Railways were built to accelerate access
of British goods to Indian markets. Mill-made cloth brought from Britain shattered the local village
economies, which were based on the integration of agriculture and spinning. The great textile cities of
Bengal collapsed. The governor-general reported that "the misery hardly finds parallel in the history of
commerce. The bones of the cotton weavers are bleaching the plains of India".