Published by EH.NET (April 2007)

H.V. Bowen, The Business of Empire: The East India Company and Imperial Britain, 1756-1833. Cambridge: Cambridge University Press, 2006. xiv + 304 pp. $90 (cloth), ISBN: 0-521-84477-0.

Reviewed for EH.NET by Santhi Hejeebu, Cornell College, Department of Economics and Business.

Huw Bowen’s The Business of Empire: The East India Company and Imperial Britain, 1756-1833 is must reading for students of British imperialism. Business of Empire, Bowen’s third major work on the topic, raises the question “what happened to the East India Company in London after it became an imperial power?” As the paramount political and military force in South Asia, the company acquired territory at the rate of roughly 10,000 square miles per year, or about twenty times the area of today’s England, in the course of a hundred years. In late Georgian London, by contrast, the company struggled to determine its own future. Parliament limited the rights of the company’s shareholders and gradually stripped the Court of Directors of its managerial decision-making. Significant authority drifted from owners and managers to the Board of Control. By 1813, the company had lost its monopoly of trade between England and India. By 1833, it officially stopped being a trader, a role it had largely forsaken. How the company adapted to such changing market and political realities lies at the heart of the book.

The author begins by casting the company as a legal entity, rather than viewing it through the lens of specific markets, technical or legislative processes, or specific groups of stakeholders. In so doing he creates boundaries for the organization that enable him to regard territorial conquest in South Asia as exogenous to the company’s institutional integrity. He makes clear his view that the firm was powerless to effect policy “on the ground,” that it was the absorber of shocks outside its control. He makes clear that it is sufficient to say that the company was in the “business of empire,” without ever assessing how or how much exactly it was either a business or an empire. Most importantly, Bowen makes clear his “a priori imagination,” to borrow from an old phrase from R.G. Collingwood, that the essential elements of this global organization were fully manifest between Whitehall and Leadenhall Street (occasional foray to the provinces excepted). Such a framework will give readers ample occasion to pause.

Chapters 2 and 3 describe the company’s complex relationships with the British state. In Chapter 2, Bowen attempts to place the company at “the centre of Britain’s imperial economy since the 1760s” (p. 41). Whatever “imperial economy” means, Bowen cites numerous contemporary sources that describe the company’s significance to it. Bowen describes how the company’s wars in South Asia regularly became national causes. With a standing army larger than that of many European nations at the time, with regular supplies of saltpeter, seamen, and financial resources, the company was recruited in Britain’s long contest against Napoleonic France. Chapter 3 describes how the problems of corporate governance led to ministerial regulation of the company from the 1760s to 1784. Numerous ballots, contested elections, high turnover rates among company directors, and finally the risk of losing possessions in India necessitated government intervention, according to Bowen. From 1784 to the 1820s, corporate decision-making power was unevenly shared between the Court of Directors and its “senior partner,” the Board of Control.

The prices and ownership of East India Company shares play a special role in the narrative. The author uses movements in the company’s share price and turnover as a metaphor for the relationship between the company and the state. The company’s share prices, Bowen suggests, were driven by speculation and factional politics among company shareholders. By implication, these factors also shaped the company’s relationship with the state. That insider trading and stock-splitting occurred during the 1760s is certainly undisputed. This does not imply, as the author asserts, that share prices best illustrate the company’s “defining institutional characteristics.” Such a creative interpretation of historical share prices is out of synch with the high degree of scholarship elsewhere in the volume.

Chapter 4 uses share ownership information more constructively. Share ownership is important for Bowen to the extent that it signals who benefited by having a material claim in the company’s imperial enterprise. He meticulously tracks all 3,000 odd owners of company shares in 1773 and a ten percent sample of stock accounts for various years from 1756 to 1830. He profiles changes in the size of the holding, the owners’ social titles by gender, and the geographic distribution of the owners’ places of residence. The absence of investors hailing from the Bristol, Glasgow, and Liverpool underscore the availability of alternatives investment opportunities. As Britain’s diverse, maritime economy thrived, the East India Company’s economic significance diminished.

Chapter 5 explores the work of the company’s senior executives, the directors. Bowen describes their long working days, the endless toil and serious commitment demanded of persons of such responsibility. In return, directors received a modest annual allowance and enjoyed the prestige and privileges of their offices. Central among these was the patronage system by which directors selected the personnel destined for plum postings in India. Beneath the directors was a staff of senior managers, accountant-generals and examiners, who headed various departments. These men were supported by small armies of clerks, writers, and warehousemen.

Chapter 6 portrays the company bureaucracy in London as an information hub committed to better management of its own affairs and, more broadly, “to the advancement of the nation’s knowledge and learning” (p. 153). He describes the directors’ demands for commercial intelligence, for detailed and orderly financial accounts, and for close monitoring of diplomatic and military affairs. What did the directors do with all the data? Over time, they learned to collect it more effectively and to convey it to Parliament and the public at regular intervals. The company’s ranks in India included Sanskrit grammarians, cartographers, botanists and many others whose scholarship did not immediately bear upon the company’s bottom line. Control over the company’s “paper empire,” Bowen maintains, enabled directors to project control over their physical empire.

As is widely known, the company’s imperial strategy in India arose on the initiative of senior employees in India. Thus the relationship between directors in London and “servants” in India is central to the story of how East India Company changed after imperial rule. The author attempts in Chapter 7 to identify the directors’ general “guidelines for those in India who were charged with responsibility for the administration, defence, and economic development of an extended territorial empire” (p. 196). Unfortunately, Bowen’s search for such tenets did not bear fruit. He repeats the directors’ platitudes and wishful thinking regarding the personal conduct of their overseas employees. However, nothing close to managerial principles of the hybrid firm-state is clearly articulated. In the absence of clear incentives and operating guidelines from London, local knowledge drove managerial decisions. In chapter 7 Bowen repeats his view that company directors were impotent to control events in India. He believes that, after the tumultuous 1760s, the directors were ultimately able to limit the worst excesses of overseas servants through better training, education, and higher starting salaries.

Trade still formed a part of the company’s operations through 1833. The classic bullion-for-goods exchange was over and, from 1765, the company’s goals were aimed at generating and transferring wealth from India to Britain (p. 258). The company’s textile trade was severely eroded by advances in British-made cloth and the growth of private trade with India. The tea trade withstood competition from large-scale smuggling after the company coordinated its plans with the government. These developments are the subject of chapter 8.

In chapter 9, Bowen attempts to make the case for the economic significance of the company. He calculates the total employment and total “expenditures” generated by the East India Company. The author desires to know the value-added to the British economy by the East India Company. This tantalizing question demands much more conceptual clarity than it was accorded, however. If workers owed their livelihoods to the company, then in the absence of the East India Company, they would have depended on another source. The “expenditure” data on Table 9.4, likewise, should be treated with great caution. They reflect cash payments including the translation of cash into other types of assets, such as goods and bullion for export. “Expenditure” thus does not signal the market value of resources actually consumed by the company in a specific period of time. The author needs a rigorous framework for measuring the economic impacts of the corporation in order to persuade the reader that the company was an economic juggernaut.

Indeed, the total absence of any social science discourse on the range of topics covered in the book is disappointing. The story of the company’s institutional transition is complicated and multifaceted. It needs sharp conceptualization, which is not synonymous with the “narrow economic history” the author scorns. Topics central to the corporate governance literature, for example, would move Chapter 3 beyond its description of “factionalism.” The discussion of patronage in chapter 5 is ripe domain for sociological concepts such as social capital and social network theory. The point is that Bowen’s thick description of historical processes would be clearer and more consistent if they were presented in frameworks used to describe similar processes at different moments in history. However painstakingly collected, the facts never speak for themselves. They need an explicit theory to give them cadence.

While not a social scientist, Bowen writes in the illustrious tradition of C.H. Philips, P.J. Marshall, and K.N. Chaudhuri. His focus on factionalism within the “little Parliament,” the Court of Proprietors, his enormous fidelity to a wide range of company, Parliamentary, and private sources, and his determined excavations of financial data, bring to mind earlier works of economic and political history. Indeed, his knowledge of archival sources is encyclopedic. He cites an impressive 104 (mostly primary) sources per chapter on average. Business of Empire will prove an invaluable reference work for generations to come.

Santhi Hejeebu has published several articles relating to the English East India Company. Her current project examines the company’s financial reporting system, 1756-1778.