The revolution in Bengal was the product of a number of unrelated causes. The imminence of the Seven Years’ War prompted the British to send out Clive with a force to Madras in 1755. Succession troubles in Bengal combined with British mercantile incompetence to produce a crisis at a moment when the French in south India were still awaiting reinforcements from France.

ʿAlī Vardī Khan—the nawab and virtual ruler of Bengal—died in April 1756, leaving his power to his young grandson Sirāj al-Dawlah. The latter’s position was insecure because of discontent among his officers, both Hindu and Muslim, and because he himself was at the same time both headstrong and vacillating. On an exaggerated report that the British were fortifying Calcutta, he attacked and took the city after a four-day siege, on June 20, 1756. The flight of the British governor and several councillors added ignominy to defeat. The survivors were held for a night in the local lockup, known as the Black Hole of Calcutta; many were dead the next morning.

News of this disaster caused consternation in Madras. A force preparing to oust Bussy-Castelnau from the Deccan was diverted to Bengal, giving Clive an army of 900 Europeans and 1,500 Indians. He relieved the Calcutta survivors and recovered the city on January 2, 1757. An indecisive engagement led to a treaty with Sirāj al-Dawlah on February 9, which restored the company’s privileges, gave permission to fortify Calcutta, and declared an alliance.

This was a decisive point in British Indian history. According to plan, Clive should have returned to Madras to pursue the campaign against the French; but he did not. He sensed both the hostility and insecurity of Sirāj al-Dawlah’s position and began to receive overtures to support a military coup. The chance of installing a friendly and dependent nawab seemed too good to be missed. Having taken this decision, Clive chose the right candidate in Mīr Jaʿfar, an elderly general with much influence in the army. In so acting, Clive was probably influenced by the example of Bussy-Castelnau at Hyderabad; for six years Bussy-Castelnau had maintained himself with an Indo-French force, sustaining the nizam, Ṣalābat Jang, and maintaining French influence in the largest south Indian state with outstanding success. This system of a “sponsored” Indian state, controlled but not administered, was the one Clive had in mind for Bengal.

The prospects for success seemed good. The event, however, proved otherwise, and there were reasons for this not realized at the time. The chiefs were so lacking in vigour that they made little resistance to British encroachments. External danger could come from only one direction and source—the Mughal authority—and that was at the moment in dissolution. While Bussy-Castelnau had no French merchants to satisfy, the British merchants in Calcutta were ready and eager to exploit the situation. And, because the British company’s government was made up entirely of merchants, it is easy to understand why the sponsored state of 1757 became the virtually annexed state of 1765.

Before breaking with Sirāj al-Dawlah, Clive took the French settlement of Chandernagore, which the nawab left to its fate lest he need British help to repulse an Afghan attack from the north. The actual conflict with Sirāj al-Dawlah, at Plassey (June 23, 1757), was decided by Clive’s resolute refusal to be overawed by superior numbers, by dissensions within the nawab’s camp, by Mīr Jaʿfar’s failure to support his superior, and by Sirāj al-Dawlah’s own loss of nerve. Plassey was, in fact, more of a cannonade than a battle. It was followed by the flight and execution of Sirāj al-Dawlah, by the occupation of Murshidabad, the capital, and by the installation of Mīr Jaʿfar as the new nawab.

Clive now controlled a sponsored state, and he played the part with great skill. His position was prejudiced at the outset by the nawab’s failure to find the expected hoarded treasure with which to fulfill his financial promises to the British. The nawab therefore looked for financial support toward his Hindu deputies, with whom saving was second nature. Clive had therefore to intervene repeatedly. In 1759 he defended Patna from attack by the heir to the Mughal throne, ʿAlī Gauhar (later Shah ʿĀlam II), who hoped to strengthen his position in the confused world of Delhi politics by acquiring Bihar. Clive also had to deal with the Dutch, who, hearing of Mīr Jaʿfar’s restiveness and alarmed by the growth of British power in Bengal, sent an armament of six ships to their station at Chinsura on the Hooghly River. Though Britain was at peace with the Netherlands at the time, Clive maneuvered the Dutch into acts of aggression, captured their fleet, defeated them on land, and exacted compensation. They retained Chinsura but could never again challenge the British position in Bengal.

Clive left Calcutta on February 25, 1760, at the height of his fame and aged only 34, looking forward to an English political career. The nawab was completely dependent on the British, to whose trade it seemed that the rich resources of Bengal were now open. But the prospect was less brilliant than it looked; and for this, and for the troubles that ensued in the next few years, Clive had a direct responsibility. Two measures undermined the plan of a sponsored state, leading to the company’s bankruptcy on the one hand and to the virtual annexation of Bengal on the other. The first of these was an understanding with Mīr Jaʿfar, not mentioned in the actual treaty, that personal domestic trade (i.e., trade within India) of company employees would be exempted from the usual tolls and customs duties. The company’s trade with Europe had since 1717 been exempt from such taxes, but the application of such concessions to individual employees—or to anyone, for that matter, who held an exemption pass (dastak)—was a fiscal disaster, since the pass system was widely abused. Local Indian traders were soon unable to compete against rivals with such an advantage, and the company itself was soon out-positioned by its own employees (who received little compensation from the company and relied on their own entrepreneurial skills to make ends meet.) From free trade many company employees passed to intimidation, employing agents who used the British name to terrorize the countryside and infringe on the company’s monopoly.

The second measure was the acceptance of gifts. This was not forbidden by the company and was, in fact, a recognized custom; but it opened the floodgates of corruption. On the strength of rumours regarding the vast sum of the Murshidabad treasury, large amounts were paid to the armed forces and to the company leaders following the city’s capitulation. In addition, Clive obtained a further Mughal title and then claimed a revenue assignment, or jāgīr, for its upkeep, which was worth a large annual sum. In the context of contemporary values these grants equaled nearly one-fourth of the average annual Bengal revenue and represented some 6 percent of the then annual revenue of Great Britain. With such a vigorous opening of the floodgates, it is not surprising that the other servants of the company asked for more almost as a matter of right and that the company’s directors in London, with relatives and connections on the spot, preferred verbal denunciations to any resolute or sustained action. The effects became speedily apparent when in fact the Murshidabad treasure turned out to be only a fraction of its rumoured value, so that (as Clive later admitted to a parliamentary enquiry), the nawab had to sell jewels, goods, and furniture to meet his obligations. The results of these measures unfolded in the next decade and continued to be felt for a generation.

The period of disorder, 1760–72

The departure of Clive signaled the release of acquisitive urges by the company’s Bengal servants. These urges were so strong that the governor, Henry Vansittart (served 1760–64), found himself unable to control them. Under the company’s constitution, he had only one vote in a council of up to a dozen and could be overruled by any knot of determined men. During these years, a body of British merchants, long separated from British standards and social restraints, suddenly found themselves with real but undefined authority over the whole of a large and rich province. It is not surprising that they thought mainly of getting rich quickly.

The first step was the deposition of the nawab Mīr Jaʿfar on the grounds of old age and incompetence. He was supplanted by his son-in-law, Mīr Qāsim, after the latter had paid a large gratuity to the company and to Vansittart personally. In addition, he ceded to the British the districts of Burdwan, Midnapore, and Chittagong. Both sides wanted power, and both sides were short of money. The nawab had lost substantial land revenue and the lucrative tolls on the British merchants’ private trade; the company was receiving no remittances from Britain, because the directors considered that Bengal should pay for itself. A clash was inevitable.

Mīr Qāsim removed his capital to distant Munger where he could not be so easily overseen, asserted his authority in the districts, and raised a disciplined force under an Armenian officer. He then turned to the company and negotiated a settlement with Vansittart, by which the company’s merchants were to pay an ad valorem duty of 9 percent, against an Indian merchant’s duty of 40 percent. At this the Calcutta council revolted, reducing the company’s duty to 2.5 percent and on salt only. The breach came in 1763, when Mīr Qāsim, after defeat in four pitched battles, murdered his Indian bankers and British prisoners and fled to Avadh. The next year Mīr Qāsim returned with the emperor Shah ʿĀlam II and his minister Shujāʿ al-Dawlah to be finally defeated at the Battle of Buxar (Baksar). That conflict, rather than Plassey, was the decisive battle that gave Bengal to the British.

These events had been viewed with growing alarm in London. The news of the Mīr Qāsim campaign coincided with the victory of Clive’s faction in the company over that of Lawrence Sulivan. Clive used it to appoint himself governor with power to act over the head of the council; he intended an administrative reformation and a political settlement. He arrived in May 1765 to find that the British victory at Buxar had placed Shah ʿĀlam in his hands but had created a situation of deep confusion in other respects. Mīr Jaʿfar had been restored to power but soon died; his second son succeeded him after bestowing lavish gratuities to the company. The British merchants and their agents were the unresisted predators of the Bengal economy, and no one knew the next step to take.

Clive acted with extraordinary vigour. Within four days of arrival he had set up a Select Committee; and, when he left less than two years later, he had effected another revolution. Turning to India’s political situation, Clive had to decide where to stop. No one barred his way to Delhi, and he could at that moment have turned the whole Mughal Empire into a company-sponsored state. But he realized that Delhi was easier to have than to hold. He fixed his frontier at the borders of Bihar and Avadh. Shah ʿĀlam was given the districts of Kora and Allahabad, and he settled in the latter city, with a tribute (or subsidy) from Bengal that was nearly 10 percent of its estimated revenue. Shujāʿal-Dawlah received back Avadh, with a guarantee of its security, in return for paying the troops involved and a cash indemnity. These two were to be buffers between the company and the Marathas and possible marauders from the north.

Clive’s next step was to settle Bengal’s own status. The Mughal emperor still had much influence, though little power; his complete disfavor might therefore have done the company more harm than good. Clive’s solution was to obtain from Shah ʿĀlam the “dewanee,” or revenue-collecting power, in Bengal and Bihar (the company was thus the imperial divan [dīwān] for those two provinces). The nawab was left in charge of the judiciary and magistracy, but he was helpless because he had no army and could get money to raise one only from the company.

This was Clive’s system of “dual government.” The actual administration remained in Indian hands, and for superintendence Clive appointed a deputy divan, Muḥammad Riḍā Khan, who was at the same time appointed the nawab’s deputy. The chain was thus complete. The company, acting in the name of the emperor and using Indian personnel and the traditional apparatus of government, now ruled Bengal. The company’s agent was Riḍā Khan; the success of the experiment turned on his efficiency and the extent of the governor’s support.

Within the company, Clive enforced his authority by accepting some resignations and enforcing others. Gifts amounting to a value of more than 4,000 rupees were forbidden, and those between that figure and 1,000 rupees were only to be received with official consent. The regulation of private trade was more difficult, for the company paid virtually no salaries. Clive formed a Society of Trade, which operated the salt monopoly, to provide salaries on a graduated scale; but the company directors disallowed this on the ground of expense, and two years later they replaced it by commissions on the revenue, which cost the company more. Finally, Clive dealt with overgrown military allowances with equal vigour, overcoming a mutiny headed by a brigade commander. He used a legacy from Mīr Jaʿfar to start the first pension fund for the Indian army.

Clive left Calcutta in February 1767. His work—diplomatic, political, and administrative—was a beginning rather than a complete settlement. But in each direction, instead of looking back to the past, it reached out to the future. This creative period exacted a heavy price. Clive was pursued to England by his enemies, who launched a parliamentary attack, which, though triumphantly repulsed in 1773, led to his suicide the following year.

It is worth noting how the company’s servants so enriched themselves at that time that they undermined the economy of Bengal, and those who returned to Britain became a byword for ostentation. Apart from the great political prizes already mentioned, it must be remembered that all the company’s servants were engaged in private trade on their own account. Their new authority and the company’s power enabled them to exploit their trade with little hindrance. They had the means of using intimidation (through their agents) against Indian rivals such as the indigo growers and Indian police, customs, revenue, and judicial officials. Presents and bribes were the price Indians had to pay for freedom from harassment. They were able, through their connection with the administration, to arrange virtual monopolies for particular articles in particular districts, fixing a low purchase price as well as a high selling price. They could arrange commissions on revenue collection, mercantile transactions, and any form of commercial activity. What was not done through agents could be arranged through intermediaries, who also, of course, had their own compensation. Thus, a man could make a fortune, lose it in Britain, return for another, lose it again, and return for a third. It is significant that from the time of Clive’s second governorship lamentations increased that the opportunities for quick fortunes were slipping away.