East India Companies
and Corruption
Chris Nierstrasz (University of Warwick)
Corruption and probity
English (EIC) and Dutch (VOC) East India Companies (1700-1800):
• Associated with corruption
• Profits and fortunes
• Companies and the state
Corruption and probity
Both the English (EIC) and Dutch (VOC) East India Companies were
strongly associated with corruption
EIC and Corruption: the Nabobs
EIC and Corruption: the Nabobs
‘In India, all the vices operate by which sudden fortune is acquired … Arrived in
England, the destroyers of the nobility and gentry of a whole kingdom will find
the best company in this nation, at a board of elegance and hospitality. Here the
manufacturer and the husbandman will bless the just and punctual hand, that in
India has torn the cloth from the loom, or wrested the scanty portion of rice and
salt from the peasants of Bengal, or wrung from him the very opium in which he
forgot his oppressions and his oppressor. They marry into your families; they
enter into your estates by loans; they raise their value by demand; they cherish
and protect your relations which lie heavy in your patronage.’
Edmund Burke speech in parliament (1783)
VOC and Corruption: the state
• Accronime VOC: ‘Vergaan Onder Corruptie’ or Perished under
Corruption
• Servants in Asia mismanaged the VOC monopoly in spices, while the
Dutch state had to nationalise VOC debts (1796)
Profits and Fortunes
Problem with defining corruption:
• East India Companies were not states, so those working for the
Companies did not hold a Public Office
• East India Companies were geared towards the pursuit of both profits
and fortunes
Profits and Fortunes
Company
Servants
Problems:
Problems:
• Had to motivate servants
without paying them
• Hard to control from Europe
• Servants protected by patrons
• Die at astonishing rates
• Depend on entrepreneurship for
fortune
• No capital to start their own
business
Profits and Fortunes
140000000
120000000
100000000
Invoice value of the Imports by
the VOC
80000000
Sales
60000000
Bills of exchange
40000000
exports of precious metals
20000000
0
Profits and Fortunes
EIC silver and bills of exchange
1600000
1400000
1200000
1000000
800000
Totaal bills
600000
Totaal silver
400000
200000
0
Profits and Fortunes
Quickest way to a fortune for a servant:
1) Spoils from war
2) Government
3) Private trade
Problem: Once fortune was achieved, the question was how to get
fortune home...
Profits and Fortunes
Company
Servants
Optimize profits:
Optimize fortunes:
Monopoly on trade
Private trade
Profits and Fortunes
Monopoly by definition limited, ‘left-overs’ left to private trade
Private trade
Problem for servant with private trade:
• Required investment capital
• Risk of losing money
• Took a substantial amount of time to make a fortune
• Possibilities for private trade related to company hierarchy
• Own interest vs. interest of the Company
Government
With the government of Asian subjects came possibilities of Paresse,
Hadat and other customary ‘rewards’ for favorable decissions
Government
Positive sides of income from Government:
• No investment capital needed
• No risk of losing money
Negatives:
• Takes a substantial amount of time
• Requires patronage who want their share when goal is achieved
Spoils of war
When Company went to war, possibility of spoils for servants who are
involved
Positive:
• Instant fortune on victory
• Enough to go home
• Capital for other exploits
Problem: the Company does not want to go to war, too expensive
Entrance of the State
VOC hardly any state support (One Naval squadron in
1783)
English state offered the EIC substantial support in the
form of the Royal Navy and armies from 1745 onwards
Profits and Fortunes
Who decided on war?
Servants
VOC
Profits and Fortunes
Who wanted war?
Servants
EIC
Army and Royal
Navy
Conclusion