13. The Bengal Bubble of 1769 almost terminated British control over India, nearly bankrupting the East India Company through the over-valuation of the conquering business enterprise
Robert Clive, Commander-in-Chief of British India, launched a campaign from 1756-57 to conquer Mughal Bengal for the East India Company, with the goal of not only acquiring the territory but also preventing French colonization of India. Successful on both accounts, Clive installed Mir Jafar as Nawab of Bengal to rule as a puppet government for the British company. Claiming the powers to control taxation in the region, the valuation of the East India Company skyrocketed, rising to £284 per stock by 1769. However, this was a dangerous overvaluation, with company expenditures escalating beyond control during this period.
In 1750, the Company employed 3,000 regular troops. To control its newfound possessions this number had increased to 26,000 by 1763, reaching 67,000 by 1778. Following attacks by Hyder Ali, Sultan of the Kingdom of Mysore, in 1769, in addition to the Bengal Famine of 1770 and public revelations regarding atrocities committed by the Company, stock values plummeted. By 1784, stock in the East India Company had dropped in value by over half to £122 causing a crash in the local textile industry. The incident was sufficiently serious that in 1784, with Pitt’s India Act, control over India was brought under the direct supervision of the British Government.