The East India Company established company rule in India in 1757, and it lasted till 1858. In 1857, after a major rebellion in which over 100 000 Indians were killed, Lionel, Mayer’s grandson, decided to dissolve the East India Company and put an end to the Maharajahs’ power by establishing the British Raj or Crown rule which lasted till 1947.
In 1930, Mohandas Ghandi led a revolt that galvanized the country, but it was short-lived. Nevertheless, after many subsequent years of haggling in the halls of power, both in India and London, it was agreed, in 1947, that two republics should be created, that of Pakistan (mainly Muslim) and that of India (mainly Hindu). That agreement later caused more religious tensions and more bloodshed, but nonetheless, there was an Indian general election in 1951. The Indian National Congress won a landslide victory, at which time Jawaharlal Nehru became the first democratically elected Prime Minister of the country. Religious tension remained high, but politically, India and Pakistan were working democracies and would never look back.
China, on the other hand, was a much more complicated matter. It was the biggest, most populated country in the world, had no permanent borders, no army, no national identity, no national pride, no economy to speak of, and was ruled by warlords. So, in 1947, with India on the verge of becoming a democracy and Europe on the verge of signing the Treaty of Rome, it was time to transform China into what was to become the world’s second largest market economy.
It was Lionel who had started the process way back in 1853 when he decided to use Japan, a country that was totally isolated from the west, to do his bidding. That year, American Commodore Matthew Perry sailed into Edo (Tokyo) Bay with four battleships, two of which were powered by steam. The Japanese marveled at this awesome technology that was totally unknown to them. However, their admiration would have been tempered if they had known that this impromptu visit was meant to usher in the end of an era, the Tokugawa shogunate.
In 1854, the Convention of Kanagawa was signed forcing the Japanese to open their ports and trade with the U.S. In 1868, the City financed the Meiji restoration, a political movement that gave Japan a constitutional monarchy, which meant that the City now controlled its monetary system and could allow credit to flow in. The Meiji restoration ushered in modernization and westernization, and as expected, the Japanese played the game of fukoku kyokei, a game that turned their country into a rich and aggressive military power. Japan’s power grew, and the proud Samurais, not satisfied with their colonial status, developed a warring culture that would spread beyond its borders.
However, Japan had no raw materials to speak of and was dependent on the US for oil, rubber, and iron. In other words, because it was vulnerable, it could easily be controlled. Japan was encouraged to expand and become the most important military and economic power in Asia. It grabbed Manchuria, Taiwan, and parts of Northern China in 1894, defeated Russia in 1904, and took possession of Korea in 1910. By 1929, it was an empire, and its expansionism knew no bounds. When Emperor Hirohito defied America by refusing to retreat from China, the US turned a blind eye and didn’t retaliate. Instead, the US slowed down the flow of raw materials for the world to see, but not enough to stop Showa expansionism. Japan had a job to do, and that was to clean up the warlords in China.
WWII was the time chosen to destroy the Japanese empire that had by then finished its work in China. The City then proceeded to the next step, which was securing China’s borders. China had Russia and Mongolia to the north, the Himalayas to the west and the Pacific Ocean to the east, but the South China Sea border had a few leaks. After the war, England returned to Hong Kong, Chiang Kai-shek took charge of Taiwan in 1949, and in 1950, after a longer than expected war, North Korea became a buffer zone between China and Japan. After the Indochina war that led to the creation of a nationalist Vietnamese government in 1975, the Southern Chinese border was sealed. However, for good measure, in the 1970’s, the City allowed both Pakistan and India to develop the nuclear bomb. China was now effectively contained, and the process of unification could continue.
As early as 1934, the City had found the man who would help get the job done. Mao Tse-tung had caught the City’s attention when he was elected Chairman of the Soviet Republic of China, which, at the time, consisted only of a small communist controlled mountainous area in Jangxi province. The City started financing Mao after his famous Long March in 1935 when he evaded the Nationalist troops at the head of some eight thousand men, becoming a Chinese hero in the process. With the City’s help, Mao Tse-tung went on to fight Chiang Kai-shek’s Nationalists, and in 1949, the Nationalists were forced to retreat to Taiwan, and Mao became President of the People’s Republic of China. From 1949 to 1958, Mao organized the peasants into collectives. He followed that up with his disastrous Great Leap Forward in 1958, when at least twenty million Chinese peasants starved to death. It was only after the purges of the Cultural Revolution, when the Red Guards went through China with a fine-tooth comb waving the Little Red Book and forcing everybody to follow the party line that the country started responding to one authority, Mao’s Communist Party. It was time to turn it into a market economy.
The City was so confident that China would turn out the way it did, that immediately after WWII, in 1945, it gave China a permanent seat in the UN Security Council along with France, Russia, U.S.A., and the UK. In 1964, it allowed it to join the nuclear club, and in 1980 it opened the first of several Special Economic Zones in Shanghai.