Friday, March 10, 2017

A desperate young fellow of a haughty, huffing, daring temper

From Empire: The Rise and Demise of the British World Order and the Lessons for Global Power by Niall Ferguson, starting page 21. A wonderful example of the primacy of logistics and human resources even back at the beginning of globalization, an unacknowledged 500 year process.
The much longer journey times between Asia and Europe made the East India Company's monopoly at once easy and hard to enforce. Compared with the North American trade, it was hard for smaller rival companies to compete for the same business: whereas hundreds of companies carried goods to and from America and the Caribbean by the 1680s, the costs and risks of the six-month voyage to India encouraged the concentration of trade in the hands of one big operator. But that big operator could only with the utmost difficulty control its own staff when it took them half a year just to reach their place of work. Letters of instruction to them took just as long. East India Company employees therefore enjoyed a good deal of latitude — indeed, most of them were wholly beyond the control of their London pay-masters. And since the salaries they were paid were relatively modest (a `writer' or clerk got a basic £5 a year, not much more than a domestic servant back in England) most company employees did not hesitate to conduct business on the side, on their own account. This was what would later be lampooned as 'the good old principles of Leadenhall Street economy — small salaries and immense perquisites'. Others went further, leaving the company's employ altogether and doing business exclusively for themselves. These were the bane of the directors' existence: the interlopers.

The supreme interloper was Thomas Pitt, the son of a Dorset clergyman, who entered the service of the East India Company in 1673. On reaching India, Pitt simply absconded and began buying goods from Indian merchants, shipping them back to England on his own account. The Court of the company insisted that Pitt return home, denouncing him as 'a desperate young fellow of a haughty, huffing, daring temper that would not stick at doing any mischief that lay in his power'. But Pitt blithely ignored these requests. Indeed, he went into business with the company's chief officer in the Bay of Bengal, Matthias Vincent, whose niece he married. Faced with a lawsuit, Pitt settled with the company by paying a fine of £400, which by now was small beer to him.

Men like Pitt were crucial in the growth of the East India trade. Alongside the official trade of the company, an enormous private business was develop-ing. What this meant was that the monopoly over Anglo-Asian trade, which the crown had granted to the East India Company, was crumbling. But this was probably just as well, since a monopoly company could not have expanded trade between Britain and India as rapidly without the interlopers. In-deed, the company itself gradually began to realize that the interlopers — even the wayward Pitt — could be a help rather than a hindrance to its business.

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