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3.1 - The Company Becomes the Diwan

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Appointment of the East India Company as Diwan

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Teacher
Teacher

Today, we're discussing a pivotal moment in history: the appointment of the East India Company as the Diwan of Bengal in 1765. Can anyone tell me what being a Diwan means?

Student 1
Student 1

Does it mean they were in charge of finances or tax collection?

Teacher
Teacher

Exactly! As the Diwan, the Company became the chief financial administrator. This role was crucial as it transitioned from a trading entity to governing the region. This required them to effectively manage agriculture and revenue. Why do you think this change was significant?

Student 2
Student 2

Because it allowed them to control the economy directly instead of just trading.

Teacher
Teacher

Precisely! This became especially important as the Company needed to ensure a steady revenue stream to cover its costs. Let's remember that 'D-I-W-A-N' stands for 'Direct Income from Weft And Net' to help us remember their main role.

Economic Implications and Famine

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Teacher
Teacher

After becoming the Diwan, the Company focused on increasing revenue. However, this had adverse effects. What do you think happened as a result of their policies?

Student 3
Student 3

I read that a lot of peasants were unable to pay their debts and taxes.

Teacher
Teacher

Correct! This led to a significant crisis, culminating in the 1770 famine that devastated Bengal. Ten million people died due to this disaster. Let's use 'F-A-M-I-N-E' as a mnemonic: 'Financial mismanagement Affects Millions Intensely, Neglecting Economics'. What do you all think about this economic crisis?

Student 4
Student 4

It sounds really severe. The Company didn’t care about the people suffering.

Teacher
Teacher

Exactly, and that reveals the disconnect between colonial policies and local realities.

Permanent Settlement

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Teacher
Teacher

Next, let’s explore the Permanent Settlement introduced in 1793. Who can explain what it entailed?

Student 1
Student 1

The rajas and taluqdars became zamindars under this system, right?

Teacher
Teacher

That's correct! The zamindars were expected to collect rent and pay a fixed revenue. Why might this be beneficial?

Student 2
Student 2

It could stabilize revenue for the Company and encourage zamindars to improve land productivity.

Teacher
Teacher

Exactly! However, it created issues, as many zamindars neglected land improvements. Remember 'Z-A-M-I-N-D-A-R' as 'Zero Action to Maintain Improvement, Now Do All Repairs' to help recall this challenge.

Shift to Other Revenue Systems

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Teacher
Teacher

As the Permanent Settlement faced challenges, new revenue systems emerged, such as Mahalwari and Ryotwari. Why do you think the Company needed these changes?

Student 3
Student 3

To ensure they were collecting enough revenue while managing local governance better.

Teacher
Teacher

Correct! Especially since conditions for peasants were worsening. The goal was to refine tax structures. We can remember 'R-Y-O-T' as 'Revenue Yielding Over Time' to highlight their fresh focus. What do you think happened to the peasant conditions in these new systems?

Student 4
Student 4

They likely still faced exploitation since the focus was on revenue.

Teacher
Teacher

Exactly right! Exploitation continued, leading to significant unrest.

Indigo Cultivation and Rebellion

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Teacher
Teacher

Lastly, let’s talk about indigo cultivation. The Company's demand for indigo led to serious peasant distress. Who wants to summarize what happened?

Student 1
Student 1

The Company forced ryots to grow indigo, and they were exploited for it.

Teacher
Teacher

Exactly! This oppressive system led to the 1859 Indigo Rebellion. Remember ‘I-N-D-I-G-O’ as ‘Intense Neglect Drives Indignant Growers to Outrage’ to encapsulate their feelings. Why do you think the ryots felt empowered to rebel?

Student 2
Student 2

They likely felt supported by zamindars and perhaps thought the British would help them.

Teacher
Teacher

Well said! This false hope fueled their uprising.

Introduction & Overview

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Quick Overview

In 1765, the East India Company was appointed as the Diwan of Bengal, transforming its role from a trading organization to the chief financial administrator of the region.

Standard

The appointment of the East India Company as the Diwan marked a significant shift in its operations, forcing it to manage the revenue system of Bengal diligently while facing economic crises. Through efforts such as the Permanent Settlement introduced in 1793, the Company sought to stabilize taxation but faced multiple challenges, including conflicts with zamindars and the oppression of ryots, ultimately altering agrarian structures in Bengal.

Detailed

The Company Becomes the Diwan

On August 12, 1765, the Mughal Emperor appointed the East India Company as the Diwan of Bengal, marking a crucial transition from acting as mere traders to becoming the chief financial administrators of a vast territory. Robert Clive accepted this appointment, signaling the Company’s new role in organizing revenue resources and the administration of land.

The initial focus of the Company remained on maximizing revenue without establishing a regular assessment system. The Bengal economy began to falter under pressure, leading to peasant distress and artisan decline. This economic turmoil culminated in the catastrophic famine of 1770, resulting in the deaths of ten million people.

Recognizing the need for agricultural improvement, the Company implemented the Permanent Settlement in 1793, which aimed to create a stable revenue system by fixing tax amounts indefinitely, empowering zamindars to collect rent from peasants. However, the system soon exposed significant flaws: zamindars often did not invest in land improvements, leading to widespread peasant hardships.

As economic demands evolved, new revenue systems like Mahalwari and Ryotwari replaced the Permanent Settlement, reflecting attempts to enhance revenue collection while addressing the issues arising from zamindar passivity. Despite these adjustments, peasants faced severe exploitation as British officials pressed for the cultivation of cash crops such as indigo, leading to significant unrest and eventual rebellions.

In summary, this section illustrates the complexities of colonial administration in Bengal, exploring how the Company’s tax policies and agricultural strategies greatly affected the local economy and peasantry.

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Audio Book

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Appointment of the East India Company as Diwan

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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. But in the painting above, the event is shown as a majestic occasion, taking place in a grand setting. The painter was commissioned by Clive to record the memorable events in Clive’s life. The grant of Diwani clearly was one such event in British imagination.

Detailed Explanation

On August 12, 1765, the Mughal emperor officially designated the East India Company as the 'Diwan' or chief administrative authority for Bengal. This marked a significant shift in power as the Company transitioned from being a trading entity to a governing body. The event likely occurred in a humble setting—Robert Clive’s tent—though artistic interpretations depicted it as a grand ceremony, emphasizing its importance in British history.

Examples & Analogies

Imagine a local business receiving a government contract to manage city services. Initially, they may be focused on their core business, but gaining such control means they also need to handle complex administration tasks, much like how the East India Company had to begin managing land, taxes, and local governance.

Duties as Diwan: Revenue Administration

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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 organising 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.

Detailed Explanation

As the Diwan, the East India Company was responsible for financial administration in Bengal, meaning they had to oversee land management and revenue collection. This role required them to strategize in order to maximize income to cover their operational costs while also maintaining their trading interests, such as buying and selling goods effectively.

Examples & Analogies

Consider a large retail chain that expands to become a regional distributor. They not only have to sell products but also ensure their supply chain is efficient and profitable, balancing costs and revenue similar to how the Company had to manage land and finances.

Understanding Local Powers

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Over the years, the Company also learnt 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.

Detailed Explanation

The Company recognized the importance of local rulers who had previously held authority in Bengal. They understood that for effective governance, it was crucial to maintain a balance of power without completely displacing these local elites. This required a careful approach to governance to ensure stability.

Examples & Analogies

Think of a new principal in a school who wants to implement changes. Instead of overriding existing teachers who have long-held positions of influence, he seeks to work alongside them for smoother transitions and acceptance of new policies.

The Revenue Collection Dilemma

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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.

Detailed Explanation

Despite its role as a Diwan, the Company prioritized its trade goals over establishing a systematic revenue collection framework. They aimed to minimize expenses and maximize profits by purchasing locally at lower prices. Their revenue strategies led to a doubling of the value of goods bought, indicating a successful trading approach despite a lack of formal revenue policies.

Examples & Analogies

Imagine a startup that finds success by selling seasonal goods at a market without formal budgeting. They quickly grow popular, but without solid financial practices in place, they may face problems managing their finances, akin to how the Company approached revenue without a structured system.

Impact of Economic Crisis

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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 from rural areas regularly were unable to pay the dues that were being demanded from them.

Detailed Explanation

The aggressive purchasing strategies of the Company adversely affected the local economy. Artisans could not sustain their livelihoods due to low prices set by the Company, leading to migration from rural areas and widespread financial distress among peasants, showcasing the negative impact of exploitative economic practices.

Examples & Analogies

Consider a local farmer who must sell his crops at prices dictated by a larger grocery chain rather than market conditions. If the prices are too low, he may not make enough to sustain himself, leading to abandonment of his land, similar to how local artisans left due to economic pressures.

The Famine and Its Consequences

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Then in 1770, a terrible famine killed ten million people in Bengal. About one-third of the population was wiped out.

Detailed Explanation

The culmination of economic pressure and inadequate agricultural practices led to a devastating famine in Bengal in 1770, highlighting the vulnerability of the local population under the Company's administration. The massive death toll exemplified the catastrophic outcomes of both poor governance and exploitative economic policies.

Examples & Analogies

This situation can be likened to a community relying heavily on a single crop for food, such as a corn-growing village. If a drought hits, there could be mass starvation among the villagers, demonstrating how dependency and poor management can lead to severe consequences.

Definitions & Key Concepts

Learn essential terms and foundational ideas that form the basis of the topic.

Key Concepts

  • Transition from Trade to Governance: The East India Company evolved from a trading body to a regional administrator.

  • Impact of the Permanent Settlement: This fixed revenue system aimed to stabilize finances but created challenges for zamindars and peasants.

  • Economic Crises: The Company faced significant challenges in managing Bengal's economy, leading to famine and unrest.

Examples & Real-Life Applications

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Examples

  • The appointment of the East India Company as the Diwan marked a critical shift in colonial administration, pushing it into governance.

  • The Permanent Settlement altered agricultural relationships and introduced issues of zamindar control over peasants.

  • The Indigo Rebellion illustrates the severe exploitation faced by peasants converting land from food crops to cash crops.

Memory Aids

Use mnemonics, acronyms, or visual cues to help remember key information more easily.

🎵 Rhymes Time

  • In Bengal, the Diwan made the call, collecting revenue for all. But the peasants faced great strife, leading to famine loss of life.

📖 Fascinating Stories

  • Once upon a time in Bengal, a powerful Company became a ruler, yet as it collected taxes, the people's suffering grew, leading to dire events.

🧠 Other Memory Gems

  • Remember P-E-R-M-A-N-E-N-T for revenue fixed, easing governance hardships.

🎯 Super Acronyms

D-I-W-A-N

  • Direct Income from Weft And Net signifies the main function.

Flash Cards

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Glossary of Terms

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  • Term: Diwan

    Definition:

    The chief financial administrator appointed to oversee revenue collection and governance in a particular region.

  • Term: Zamindar

    Definition:

    Landowners recognized under the Permanent Settlement responsible for collecting rent from peasants.

  • Term: Permanent Settlement

    Definition:

    A system implemented in 1793 which fixed the revenue amount permanently and recognized zamindars.

  • Term: Mahalwari

    Definition:

    A revenue assessment system involving village headmen in the collection of taxes per village.

  • Term: Ryotwari

    Definition:

    A system where the collection of revenue was made directly from the ryots (cultivators) rather than through zamindars.

  • Term: Indigo

    Definition:

    A cash crop cultivated for dye production that became a primary focus for the Company due to its global demand.