Mughal Tax break that cost India its freedom.jpg
The Mughal tax break that cost India its freedom

Exactly 300 years ago, Mughal Emperor Farrukh Siyar issued a farman that allowed the East India Company to conduct duty free trade, mint its own coins and the right to fortify its garrisons, allowing the English to establish colonial rule in India with relative ease.

It was a Mughal emperor who in 1717 paved the way for British colonial rule in India. This is how it happened.

Since the year 1600 the English had been trying to gain a foothold in India, but were not able to break the monopoly of the Portuguese and the Dutch. Most of the early embassies sent by the English monarch had returned home empty handed. A hundred and fifty years after its foundation, the East India Company was only a zamindar (landlord) at Chennai and Kolkata, and a mere trader at its inland factories.

But patience, being an English virtue, began to pay dividend – and a big one at that. By the 1650s the English had obtained exemption from road tax in the provinces of Agra, Awadh and adjoining areas. (From the beginning, the sole aim of the English was to avoid payment of the usual taxes and tolls there were paid by everyone else.)

In November 1715 an English embassy led by John Surman had a stroke of luck when one of its members, William Hamilton, a physician, managed to relieve the emperor Farrukh Siyar of severe pain in his groin.

Peter Auber quotes from the ‘Reports of the Embassy to Calcutta’ (volume I, page 20): “The Emperor celebrated his recovery by a public durbar, 30th November 1715, at which he rewarded Hamilton with a splendid poshak (gown), diamond rings, kalgi (crest) with precious stones, gold buttons set with jewels, a miniature gold set of medical instruments, and also an elephant, a horse and Rs 5000.”

However, the English hadn’t come for these trinkets. They hung around Delhi for two more years for the real prize. In April 1717 the embassy hit pay dirt when Farrukh Siyar issued three separate farmans (orders) for each of the three presidencies of Kolkata, Mumbai and Chennai. Other demands submitted by the embassy were covered by separate directives or hasb-al-hukums.

When the farmans reached Kolkata, Chennai and Mumbai the presidents and councils received it with regal honours – “151 guns from the fort and the broadsides of every vessel in the port roared forth their jubilant welcome”. Robert Orme, the official historian of the Company, called it the Magna Charta of the Company.

The celebrations were in proportion to the magnitude of the concessions won by a ragtag bunch of pirates from dirt poor England. In return for a paltry payment of Rs 30,000 per year, the farman gave the English a virtual carte blanche:

  • The right to export and import goods in Bengal without paying taxes.
  • Permission to purchase 38 villages surrounding the three already held by the company (Sutanuti, Gobindapur and Kalikata, the predecessor of modern Kolkata).
  • The right to keep a garrison and to further fortify Kalikata.
  • The right to issue dastaks (passes), which would ensure the free passage of goods under the name of the Company without being checked at the custom houses.
  • The right to mint gold and silver coins, which would be honoured throughout the Mughal Empire.
  • Complete freedom to establish factories at any place; the provinces were to provide the Company with assistance.
  • The company could retain its old privilege of tax exemption in Hyderabad province.
  • No increase in the company’s existing rent at Chennai.
  • Exemption from paying all customs and dues at Surat, hitherto obligatory.
  • The Company’s servants were permitted to trade but were not covered by the farmans. They were required to pay the same taxes as Indian merchants. (This would become a major bone of contention between the Mughal officers and the English.)

Inviting invasion

One doesn’t have to be a seasoned trade negotiator to see that the farmans were a sell-out. The Mughal Emperor – who was the great grandson of Aurangzeb – virtually invited the English to loot and colonise the country. The farmans became the catalyst that hastened the colonisation of Bengal and subsequently all of India. More importantly, during its initial foray into India, the English did not have to fight major wars – which would have incurred huge expenses and likely would have been refused by the Company’s HQ in London. India’s richest province landed in the Company’s lap solely due to the Mughal Emperor’s largesse.

It is appalling that the Mughals, who did not permit Hindus except their Rajput allies to bear arms, allowed armed English garrisons in key cities of the empire. Such an act would have been unthinkable by an English monarch, and it signalled to the foreigners that the Mughal core was collapsing and that India was up for grabs. “The concessions gave the Company an edge over its rivals, and, more importantly, gave it a cause to fight for. In consequence, the Company was transformed from avaishya (trading) organisation into akshatriya (territorial) one,” says Rajesh Kochar in ‘The Truth Behind the Legend: European Doctors in Pre-Colonial India’.

The Battle of Plassey, which was the landmark event heralding British rule in India, happened just 40 years later.

War for empire

The farman plunged Bengal into a crisis. The provincial government was reeling because of the depletion of its treasury. Making a bad situation worse was the large scale corruption that followed.

The president of the Bengal factory granted his dastak not only to the Company’s goods, but also to the goods of the Company’s servants, who traded largely on their own account, and were allowed by their masters to do so in many articles, since the salaries paid to them were miserably low. Basically, the officials of the Company were misusing the dastaks to evade taxes on their private trade.

Incredibly, the Company also began to levy duties on Indian goods entering Kolkata, which was under English control. Indians were witnessing the first glimpses of European colonialism.

The Company’s servants began to earn large commissions from the native merchants merely by extending to them to the protection of the president’s dastak. The volume of the goods thus entrusted to them for transport rose rapidly, and the Company further improved its gains by increasing its own shipping. In the first ten years after the grant of the farman, the Company’s trade increased to 10,000 tons. The importance of Kolkata grew so much that by 1735 it had a population of 100,000.

Although the Mughal Emperor had sold his country down the river to foreigners, his minions in Bengal were not prepared to roll over and play dead.

The subedar of Bengal refused to recognise the validity of the president’s dastak in the internal trade of the province, or in goods passing up or down by land. On water, however, the Company was strong, and the effect of the farman was to enable them to quickly monopolise the entire riverine and inter-provincial trade of Bengal. “The Emperor, his ministers and his courtiers, it may be noted in passing, could not possibly have realised that their farman would thus enable a foreign company to engross so high a proportion of the trade and shipping of the richest province of the empire,” writes B.K. Thakore of Deccan College, Pune, in his book ‘Indian Administration to the Dawn of Responsible Government – 1765-1920’.

All the Nawabs after 1717 were strictly against the royal farman and wanted to trade with the English on the same basis as in old days – that is, without any privileges. However, the tipping point that led to a direct clash was English fortification in Bengal without the permission of Nawab Siraj-ud-Daula.

Siraj-ud-Daula responded by first seizing a couple of English factories and then capturing Fort William in Kolkata in 1756. The British despatched a strong naval and military force from Chennai under Robert Clive and Admiral Watson. On June 23, 1757, the rival forces met each other in Plassey. A major part of the Nawab’s army led by Mir Jafar and Rai Durlabh did not participate in the fighting. A handful of the Nawab’s forces fought under the leadership of Mir Madan and Diwan Mohan Lal were defeated. The Nawab tried to flee but was captured and put to death. Mir Jafar was proclaimed the Nawab of Bengal.

Had the encounter at Plassey been a real battle, there was no doubt that the Bengal army of 62,000 men would have steamrolled the 3000 mixed British-Indian troops. However, there was very little actual fighting. Over 35,000 troops defected to the British side and watched the battle from the sidelines. It is ironic that the richest Indian province fell into Britain’s lap after a mere skirmish – without a fight. (In contrast, in Stalingrad – a city that was in complete ruins – the Russians fought for every street, lane, house and floor.)

The easy English win at Plassey had far-reaching consequences for India. First up, it signalled to the Europeans that India was ripe for colonisation and could be easily conquered through a mix of guile and treachery. If at all, the English had doubts whether tiny Britain could conquer India, those doubts were belied. Secondly, Bengal’s vast revenues and resources helped the English to organise a strong army that conquered the rest of the country – one kingdom at a time.

Blunder or connivance?

One must never attribute to malice what can be explained by stupidity. But could the great grandson of Aurangzeb be that stupid? It is likely that the cunning Mughals anticipated the rise of the Hindus, especially the rampant Marathas. In this backdrop they may have wanted to deny the Hindus by passing on India’s reigns to the Europeans.

The Mughals were a notoriously racist people who despite having made India their country retained an aversion for its people. Babur, the founder of this empire, asked that his tomb be built in Afghanistan because he hated India and did not want to be buried there. Two centuries after making India their home, the House of Timur spoke Turkic – not Hindustani – within the palace. The official language of the Mughal court was Persian – another foreign language. The Timurid princes and princesses continued to seek brides and grooms from their Uzbek homeland. Almost till its dying moments, the core of the Mughal Dynasty comprised fresh Turkic immigrants from Uzbekistan. Indian Muslim converts were not considered fit to be trusted and were in fact equally detested as the Hindus.

Compare the benevolence shown by Farrukh Siyar towards the English to his hatred for his Hindu subjects. (Farrukh Siyar was chosen to be the emperor by the Sayyid Brothers, the two kingmakers who enjoyed the support of the Marathas.) In February 1718 – just four months after his infamous farmans – the Sayyid Brothers made a treaty with Maratha ruler Shahu I who was allowed to collect sardeshmukhi (an additional 10 per cent levy on top of the 25 per cent chuath tax collected from a province) in the Deccan. Plus he received Berar and Gondwana. In return, Shahu I agreed to pay one million rupees annually and maintain an army of 15,000 horses for the Sayyids. When Farrukh Siyar learned about it, he remarked angrily: “It was not proper for the vile enemy to be overbearing partners in matters of revenue and government.”

Farrukh Siyar may have wanted to make the English strong even as Maratha might was growing in the south. Ramakrishna Mukherjee comments in ‘The Rise and Fall of the East India Company’, “With the connivance of the Mughal Emperor, the Company emerged as a strong power.”

A second factor that may have worked on Farrukh Siyar is flattery. Not having the ability, knowledge and character to rule independently, he was easily swayed by emotions. Perhaps the English were aware of it. On one occasion the President of Fort William in his petition for redress, called the Emperor “absolute monarch and prop of the universe”, and compared himself to “the smallest particle of sand with his forehead at command rubbed on the ground”.

A third factor is the Mughal fear of the Company’s strength at sea. Essentially barbarians from the plains of Central, the Mughals remained fixated on land power and in the process ceded control of the sea to the European powers. This was perhaps the first time in India’s history that the leading power of the day left its coastline completely undefended.

The European powers could therefore apply pressure at sea to get things done their way on land. In fact, in 1717 the English withdrew their factory from Surat, leading to considerable alarm at the Mughal court in Delhi. “For it was remembered that the last withdrawal of the kind had been followed by the Company’s fleet preying upon Mogul shipping wherever found throughout the Indian seas.”

That the English embassy waited two long years is suspicious, but even more curious is why the Mughal court did not dismiss them summarily as they did with previous embassies. Perhaps the emperor was watching the developments in the Deccan where the Marathas were preparing for a final assault that would overthrow the decadent house of Timur.

Which begs the question – if the Mughal Empire was allowed to limp along at the sufferance of the Marathas why didn’t they use their considerable influence in the Mughal court to stop or strike down Farrukh Siyar’s rash farmans.

The answer could be hidden in Jadunath Sarkar’s book Shivaji and His Times (1919). According to the historian, “The chief defect of the Marathas, which has disastrously reacted on their political history, is their lack of business capacity. This race has produced no great banker, trader, captain of industry, or even commissariat organiser or contractor….”

The Marathas may have not understood the significance of the farmans. Being an empire whose expansion strategy worked at multiple levels – raids, taxation and full-on invasion – the Marathas never imagined Bengal would fall into English hands without a fight.

To be sure, Peshwa Madhav Rao was urging the Maratha chiefs such as Mahadji Scindia – who was in charge of dealing with northern affairs – to quickly expand the Maratha Empire into Mughal space. However, Scindia, who had taken large amounts of money from the Mughals, was in no rush to dispose of this decadent dynasty and end its charade of empire.

With the benefit of hindsight it may be argued that the Maratha policy of letting the Mughal Empire die a slow death – rather than despatch it to the netherworld with one deft slice of the sword – allowed the British to move into Delhi.

End of a lowlife

Farrukh Siyar was not only incompetent, but like most members of the Mughal dynasty he was vain too. Forgetting that he lived at the pleasure of the Sayyid Brothers and by extension the Marathas, he started plotting against them. At any rate, it was rare for a Mughal emperor to die a natural death. In fact, the emperors who followed Aurangzeb had exceedingly short and sad lives.

By the end of 1718, one of the Sayyid brothers marched from the Deccan to Delhi with 10,000 troops under Peshwa Balaji Vishwanath. On February 28, 1719, after a night-long battle, Farrukh Siyar was deposed, imprisoned and blinded. During his imprisonment the former emperor was served bitter, salty food and deprived of water. He passed the time by reciting verses from the Koran, and on April 29, 1719 the great grandson of Aurangzeb was strangled to death by unknown assailants.

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