In this blog, we are going to learn how the company becomes the diwan. On 12 August 1765, the Mughal emperor appointed the East India Company as the Diwan of Bengal. The actual event most probably took place in Robert Clive’s tent, with a few Englishmen and Indians as witnesses. The grant of Diwani clearly was one such event in the British imagination. As Diwan, the Company became the chief financial administrator of the territory under its control.
Now it had to think of administering the land and organizing its revenue resources. This had to be done in a way that could yield enough revenue to meet the growing expenses of the company.
A trading company had also to ensure that it could buy the products it needed and sell what it wanted. Over the years the Company also learned that it had to move with some caution. Being an alien power, it needed to pacify those who in the past had ruled the countryside and enjoyed authority and prestige.
Those who had held local power had to be controlled but they could not be entirely eliminated. How was this to be done? In this blog, we will see how the Company came to colonize the countryside, organize revenue resources, redefine the rights of people, and produce the crops it wanted.
Revenue for the Company
Let us dig deeper and understand the revenue of the company after the company becomes the diwan.
The Company had become the Diwan, but it still saw itself primarily as a trader. It wanted a large revenue income but was unwilling to set up any regular system of assessment and collection. The effort was to increase the revenue as much as it could and buy fine cotton and silk cloth as cheaply as possible. Within five years the value of goods bought by the Company in Bengal doubled.
Before 1865, the Company had purchased goods in India by importing gold and silver from Britain. Now the revenue collected in Bengal could finance the purchase of goods for export. Soon it was clear that the Bengal economy was facing a deep crisis.
Artisans were deserting villages since they were being forced to sell their goods to the Company at low prices. Peasants were unable to pay the dues that were being demanded from them. Artisanal production was in decline, and agricultural cultivation showed signs of collapse. Then in 1770, a terrible famine killed ten million people in Bengal. About one-third of the population was wiped out.