The East India Company (EIC), formed in 1600, was England’s greatest ever Startup. Although not England’s first Company it was the first one to survive with a seminal place in global history. The reputation of the EIC always rose and fell with the politics of the time – and now is no different. With the “systematic denigration of British History” (to quote David Starkey) it is seen in a blackened light. However the reality is very different…
In the 17thC the EIC was the only one of the major European global trading nations to focus solely on trading and not conquest. The EIC disavowed all violence and for generations was involved in next to none of the imperialism that went hand-in-hand with trading by the leading European nations of Spain, Portugal and Holland. Thus: Sir Thomas Roe, English Ambassador to India, in a 1616 letter to EIC HQ:
“Let this be received as a rule – that if you will profit, seek it at sea, and in quiet trade; for without controversies, it is an error to affect garrisons and land wars in India.”
This contrasts notably with the practice of their far larger Dutch rival – the VOC. Jan Coen, two-time governor of the Dutch East Indies and founder of Batavia (Jakarta), wrote in 1614:
“Your Honours ought to know by experience that trade in Asia should be conducted and maintained under the protection and with the aid of your own weapons, and that those weapons must be wielded with the profits gained by the trade. So, we cannot carry on trade without war, nor war without trade.”
And this was no idle boast – 14,000 of the 15,000 inhabitants on the key Banda spice islands were killed by the VOC. In 1623 the VOC captured ten EIC sailors and tortured them to death in the infamous Amboyna massacre. You might think your business competitors are tough but they are not that tough.
The EIC lived for a phenomenal 274 yrs, although for the last one hundred it became a repurposed arm of the British State’s new-found imperialism post the Seven Years War (“World War 0” – it was fought on five continents) and the loss of its thirteen North American colonies. This was something that even Marx, no lover of the company, wrote about, yet something which is all but forgotten in contemporary accounts today.
As it lasted for such a long time and as there are amazingly more written records of the EIC’s governance in that period than the British State (!) it provides a unique insight into the development and development of the Board. Chartered Companies had a two-tier Board structure which, contrary to popular understanding, was an English invention exported to the Continent. In its early days it was super-democratic having one man, one vote – and it gave women the vote long before the State did. Company Governance has thus perversely gone from “pure democracy” in the 16thC to what one might call “colonialism” today – the power in FTSEs lying with so-called Non-Executive Directors – who have little connection with the company and are neither owner nor management. The near five centuries of governance history is all but unknown – Cadbury, who changed governance forever in the UK, notably completely misunderstood how it had worked back in the day when governance was at it’s best.
The history of governance is covered in Chapters 2 and 3 of Realpolitik, as unless we can understand yesterday we cannot truly understand today. The evolution of governance is well documented in the centuries of the EIC – one of my prized possessions is a 1909 reprint of the (in modern money) the EIC “Court of Committees” minutes from 1640-1643. This is essentially our Executive Committee today though in the 17thC a “Committee” was someone committed to execute duties on behalf of the owners (“Director” in our terms – an interesting change of vocabulary in itself). It was quite some time before Committee evolved to the modern meaning of a meeting whose purpose all too often is to fill-in time, avoid working and avoid making decisions.