In early modern Europe, the most powerful incentive for overseas exploration were the riches to be gained by trade. These riches led countries to sponsor trading companies and sent the entrepreneurial abroad. In the case of British merchants, clerks, and soldiers in India, there were opportunities to earn fortunes nearly unachievable at home. British trade in India created an entirely new social class, the nabobs, who often rose from modest means to acquire great wealth in the East. When they brought this wealth back with them to Britain, they opened up a world of political problems for the very firm that enabled their riches, the East India Company.

British East India Company

           The British East India Company was formed in London in 1600 as a joint stock company. Once chartered, it was given a monopoly on British trade with India, where it bought goods to ship back to Europe and sell for a profit. It was initially just a private company but its conquests and acquisition of several rights in India made the Company virtually a state-within-a-state by the mid-1700s. Increasingly concerned with defending its assets in India, the Company formed an army and built fortifications. From its headquarters at India House on London’s Leadenhall Street, the Company effectively ruled an overseas empire.

Nabobs

           To administer its trade in India and its partial governance of it, the Company hired hundreds of Englishmen and sent them to India. A trained, locally situated administration was essential to running operations a year’s travels away from headquarters. Though not necessarily extravagantly paid, these ‘servants’, as Company employees were known, were able to use their positions to capture riches while in India. Those Brits who earned great fortunes in the service of the East India Company abroad came to be called ‘nabobs’, a corrupted transliteration of nawab, a royal title held in Mughal India. They also became the exemplars of an uncouth nouveau riche class created by British trade.

Part of an 1811 caricature of some ‘nabobs’, published by William Holland on 11 Cockspur Street, London

           There are many stories of the wealth which Company employees could wring out of their posts. As just one example, ship masters were paid just £60 per voyage to and from the subcontinent but were given cargo space on vessels to carry private shipments of commodities for their own profit. They were often also enriched by supplying their own vessels at marked-up prices. In all, a ship commander could allegedly make as much as £12,000 on a 14-18 month voyage though £4,000 to £5,000 would have been an achievable and more typical sum.

           Not everyone could be a ship captain and such work was highly sought after, as the money involved would suggest. Lucrative posts at the East India Company were bought and sold; becoming a commander of a ship might cost a man as much as £10,000. Even to be appointed a writer, a rather junior post, a prospect would have to hand over as much as £4,000 to a Company director who was himself looking to extract a private fortune from his position. Virtually all new hires had to be approved by a director. 

           That said, this could be a deadly way to earn a fortune. Many died of disease or war in India and Bengal. It was, unsurprisingly, not always an honest fortune either. Company employees often earned their riches by smuggling goods and accepting kickbacks from suppliers, though otherwise in less unscrupulous side-businesses as trading for one’s own account, tax farming, or banking.

“India is a sure path to competency. A moderate share of attention, and your being not quite an idiot are (in the present situation of things) ample qualities for the attainment of riches.”

One notable nabob, Richard Barwell, in a 1765 letter to his father

Transferring a Fortune

           What was a nabob to do with the fortune he acquired in India? One option: he could lend his riches out in India at high rates of interest, often to the East India Company itself. Indeed, the Company routinely had to borrow money in India to stock ships with cargo to sell in London. The relative lack of European goods sold in India meant the Company became a perpetual debtor in India while holding large surpluses in Britain. So, some nabobs became creditors to their employer, lending it the rupees they earned locally. However, most nabobs did not seek to live out the rest of their lives abroad; they looked to retire back in Britain. Thus, most wanted to transfer their wealth back home.

           To do that was not as straightforward as might be thought. Money could be transferred by purchasing bills of exchange from their employer, the East India Company. These bills could be purchased in India and redeemed in London. However, with legislation passed in 1773, Parliament limited the ability of the Company to sell bills of exchange, likely in order to limit its borrowing and some of the corruption in India along the way.

           In any case, many avoided official channels of transferring money in order avoid fees and more importantly, to keep their wealth a secret. In the 1770s, the Company was under mounting political pressure, partly as a result of its own troubled finances as well as its supposed mismanagement and acceptance of corruption. So, it was increasingly uneasy with employees acquiring illicit riches. For the nabobs, an alternative was to bring the money home in the form of commodities but this route was blocked by the Company’s monopoly on trade.

           Thus, to transfer money, some turned to purchasing bills issued by foreign trading companies in India, such as that of the Dutch or French. Others sent diamonds back home for sale in London; the Company’s monopoly did not extend to diamonds. Indeed, Thomas Pitt, the Governor of Madras, was among the first to use diamonds as a way of trafficking wealth back to England. Pitt purchased a single 400-carat diamond in 1702 for £24,000 and had it send back home. Back in Europe, Pitt later sold the gem to Philippe II, the Regent of France, for £135,000. Still another route consisted of advancing ship captains with funds for them to supply their vessels in India against obligations to pay back the advance in London. A less respected way was smuggling money out on ships illegally operating outside the East India Company monopoly.

Lord Clive

           One of the most famous men in India’s 18th century history was Robert Clive. A clerk turned army captain turned Governor of Bengal, Lord Clive transferred £280,000 to Britain from India between 1755 and 1759. Most of this wealth was received in the form of a bribe from the new Nawab of Bengal, Mir Jafar, who paid Clive 16 lakh rupees, or about £175,000, for his support in Bengal. Clive also received a jaghire, or annuity, of £27,000 a year and other members of his inner circle also received substantial sums from Mir Jafar. Now one of the most successful, and the most famous, of nabobs, Clive brought his wealth back home to Britain through the purchase of £41,000 in East India Company bills, £230,000 in Dutch East India Company bills, and £30,000 in diamonds.

Political Concerns

           In the 18th century, the British economy was being transformed by trade as a new mercantile class began to rival the aristocratic landed interests in power. One might think therefore that the society was increasingly conditioned to experiencing the force of quickly-gained commercial wealth. Nonetheless, as nabobs transferred their riches to Britain, they created a host of political problems. The importation of their wealth was accused of everything from raising prices to unduly influencing public policy. Regarding the latter of these, it is true that some nabobs did convert part of their fortunes into political influence, buying estates so they could hold seats in Parliament.

           The number of nabobs in Parliament grew from twelve in 1761 to twenty-seven in 1780. They were keen on protecting their riches and interested in Indian affairs, forming something of an East India lobby in Parliament. Lord Clive, for example, was willing to assist the Prime Minister, George Grenville, in returning proper administration to the East India Company if he helped Clive protect his annuity given to him by Mir Jafar. At the time, many saw Clive’s annuity as an undue private enrichment paid for with British lives and treasure in India.

           Among the nabobs in the legislature was Thomas Rumbold who was said to have made £1 million as governor of Madras. He used some of that fortune, however big it really was, to purchase a £100,000 estate back in England and acquired a parliamentary seat for himself and his son. At the time, England was full of ‘rotten-boroughs’, parliamentary districts with so few voters that a single landowner could essentially control the seat. Then there was Thomas Pitt who had shipped the 400-carat diamond to England; he too became a Member of Parliament. He was also the grandfather of William Pitt the Elder, who tried unsuccessfully to bring greater government supervision to the Company, and great-grandfather to Pitt the Younger who succeeded in doing just this in 1784.

           Beyond political influence, there was also a certain amount of resentment of the nabobs’ riches, extraordinary in its extent and in many cases mysteriously earned. Their taste for conspicuous consumption augmented this resentment as did the nabobs’ reputation for poor taste and manners. The question at hand was whether Britain was being taken over by a wealth corruptly got and whether this nouveaux riche class was worthy of buying estates next door to Britain’s aristocracy. Further, if they were as corrupt as rumored, would the nabobs’ ascendency threaten British moral and constitutional virtues.

           Towards the end of the 18th century, political interest in the East India Company reached its peak and the company came under unprecedented scrutiny. Caught in the center of this controversy was Warren Hastings, the Governor of Bengal, who made a fortune of £200,000 while abroad. Long before acquiring these riches, Hastings was born into a relatively poor family and joined the East India Company as a clerk. When it came to newfound wealth, the erstwhile Prime Minister, Lord North, thought Hastings modest for limiting his India-derived riches to just £200,000. Nonetheless, his wife was noticed at a party wearing diamonds worth £20,000, an amount that could satisfy the purchase of an entire estate in the country.

           Considered another unseemly nabob, Hastings later became the defendant in a multi-year impeachment trial, in which he was eventually acquitted. His trial became the focus of the Company’s greatest critics. The role of the Company and its abuses in India were more often the topic of discussion, rather than Hastings’s own conduct. Indeed, the Hastings impeachment trial was just one of several parliamentary inquiries into the Company in the mid-to-late 18th century. This controversy was partially a consequence of the nabobs’ riches and the end result was increased parliamentary control over the company, which changed the course of India’s history.

“That they had sprung from obscurity, that they had acquired great wealth, that they exhibited it insolently, that they spent it extravagantly, that they raised the price of every thing in their neighbourhood, from fresh eggs to rotten boroughs, that their liveries outshone those of dukes, that their coaches were finer than that of the Lord Mayor, that the examples of their large and ill-governed households corrupted half the servants in the country, that some of them, with all their magnificence, could not catch the tone of good society, but, in spite of the stud and the crowd of menials, of the plate and the Dresden china, of the venison and the Burgundy, were still low men; these were things which excited, both in the class from which they had sprung and in the class into which they attempted to force themselves, the bitter aversion which is the effect of mingled envy and contempt.”

Thomas Babington Macaulay on the nabobs, in Critical and Historical Essays, 1848

Lesson

           Needless to say, the nabobs were a disliked people. Resentment of their economic and political power, their display of this power, the speed with which it was earned, and its questionable origins all fostered this scorn. Were they rightfully disreputable though or rather the victims of jealousy from a waning aristocracy no more deserving of their power than the nabobs themselves? Most likely they were both. Regardless though, the nabobs were an embodiment of the way Britain changed in the 18th century. This change, from an agrarian to a mercantile nation, was already underway by the time the nabobs earned their wealth in India but even if not the root cause of this transformation, they nonetheless became its ignoble exemplars. 

More from the Tontine Coffee-House

           Learn about an indigo bubble in India and the role of the British East India Company’s political and financial difficulties in bringing about the Crisis of 1772. Also consider subscribing to this blog’s newsletter here.

Further Reading

1.      Brown, Ryan. “The British Empire in India.” Ashland University, Ashbrook Statesmanship Thesis, 2010.

2.      Kindleberger, Charles Poor. A Financial History of Western Europe. Oxford University Press, 1993.

3.      Lawson, Philip, and Jim Phillips. “‘Our Execrable Banditti’: Perceptions of Nabobs in Mid-Eighteenth Century Britain.” Albion, vol. 16, no. 3, 1984, pp. 225–241.

4.      Nechtman, Tillman W. “A Jewel in the Crown? Indian Wealth in Domestic Britain in the Late Eighteenth Century.” Eighteenth-Century Studies, vol. 41, no. 1, 2007, pp. 71–86.

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