Calcutta in 1776 was the headquarters of what Adam Smith called the most dangerous of all monopolies: the East India Company. Smith reviewed the Company’s record in The Wealth of Nations and found it both politically oppressive and economically ruinous. The Company had a legal monopoly on selling any Indian goods in markets across the British Empire. This restricted Indians from selling their own goods on the global market and pushed prices down. Buying cheap and selling dear this way increased Company profits but devastated India’s economy.
Trading barriers caused shortages and contributed to famine: it was because of the “mercantile company which oppresses and domineers in the East Indies,” Smith wrote, that in the “fertile country of Bengal, three or four hundred thousand people die of hunger in one year.” The Company’s interests as a profit-seeking enterprise directly contradicted its duties as a sovereign: to improve the quality of life for the Indians it ruled over. Smith concluded that “if the trading spirit of the English East India Company renders them very bad sovereigns, the spirit of sovereignty seems to have rendered them very bad traders.”
Within months, Smith’s Wealth of Nations was circulating among East India Company officials in Calcutta. The Wealth of Nations appears in the catalogued library of George Bogle, a Company civil servant and private secretary to the Governor-General of Bengal, as early as November 1776. Dr Hugh Blair wrote to Sir John Macpherson in Calcutta that same month referencing the book. Company officials were reading Smith’s devastating critique of their own institution almost as soon as it appeared.
The Company was also a machine for patronage and nepotism. Smith himself was not above it: his letters show him writing to Henry Dundas to advance the career of his nephew Patrick Ross through the Company’s ranks — a small illustration of how thoroughly the institution had embedded itself in the networks of British public life. Smith used these contacts in Company service to get information about what was happening in India that was not public knowledge in Britain, informing his devastating assessment of Company misconduct.
Main image: Map of the East Indies, Herman Moll, public domain