The British East India Company was an English and later (from 1707) British joint-stock company formed for pursuing trade with the East Indies but which ended up trading mainly with the Indian subcontinent. The East India Company traded mainly in cotton, silk, indigo dye, salt, saltpetre, tea and opium. Shares of the company were owned by wealthy merchants and aristocrats. The government owned no shares and had only indirect control. The Company eventually came to rule large areas of India with its own private army, exercising military power and assuming administrative functions.
Company rule in India effectively began in 1757 after the Battle of Plassey and lasted until 1858 when, following the Indian Rebellion of 1857, the Government of India Act 1858 led to the British Crown assuming direct control of India in the new British Raj. The Company was dissolved in 1874 as a result of the East India Stock Dividend Redemption Act passed one year earlier, as the Government of India Act had by then rendered it powerless and out of date.
Its functions had been fully absorbed into official government machinery in the British Raj and its private army had been nationalised by the British Crown. In the modern era, its history is strongly associated with corporate abuse, colonialism, exploitation, and monopoly power.
Sir James Lancaster commanded the first East India Company voyage in 1601 Initially, the Company struggled in the spice trade due to the competition from the already well established Dutch East India Company. The Company opened a factory in Bantam on the first voyage and imports of pepper from Java were an important part of the Company’s trade for twenty years. The factory in Bantam was closed in 1683. During this time ships belonging to the company arriving in India docked at Surat, which was established as a trade transit point in 1608. In the next two years, the Company built its first factory in south India in the town of Machilipatnam on the Coromandel Coast of the Bay of Bengal. The high profits reported by the Company after landing in India initially prompted King James I to grant subsidiary licenses to other trading companies in England.
The Red Dragon fought the Portuguese at the Battle of Swally in 1612, and made several voyages to the East Indies. English traders frequently engaged
in hostilities with their Dutch and Portuguese counterparts in the Indian Ocean. The Company achieved a major victory over the Portuguese in the Battle of Swally in 1612. The Company decided to explore the feasibility of gaining a territorial foothold in mainland India, with official sanction of both countries, and requested that the Crown launch a diplomatic mission.
Jahangir investing a courtier with a robe of honour watched by Sir Thomas Roe, English ambassador to the court of Jahangir at Agra from 1615-18, and others In 1612, Sir Thomas Roe was instructed by James I to visit the Mughal Emperor Nuruddin Salim Jahangir to arrange for a commercial treaty which would give the Company exclusive rights to reside and build factories in Surat and other areas. In return, the Company offered to provide the Emperor with goods and rarities from the European market. This mission was highly successful as Jahangir sent a letter to James through Sir Thomas Roe.
View of East India House
In 1634, the Mughal emperor extended his hospitality to the English traders to the region of Bengal, and in 1717 completely waived customs duties for the trade. The company’s mainstay businesses were by then in cotton, silk, indigo dye, saltpetre and tea. The Company’s bright future, however, was rudely braked by the signing of the Treaty of Münster in 1648, which freed the Netherlands from Spanish control allowing it to turn its full attention to expanding its trade both in home and distant waters and enter a period recognized as Holland’s ‘Golden Age’. Mughal convoy piracy incident of 1695
In September 1695, Captain Henry Every, an English pirate on board the Fancy, reached the Straits of Bab-el-Mandeb, where he teamed up with five other pirate captains to make an attack on the Indian fleet making the annual voyage to Mecca. The Mughal convoy included the treasure-laden Ganj-i-Sawai, reported to be the greatest in the Mughal fleet and the largest ship operational in the Indian Ocean, and its escort, the Fateh Muhammed. They were spotted passing the straits en route to Surat. The pirates gave chase and caught up with the Fateh Muhammed some days later, and meeting little resistance, took some £50,000 to £60,000 worth of treasure.
The Mughal Emperor Shah Alam II and his allies fought against the British East India Company during his early years (1760-1764), he only accepted the protection of the British in the year 1803, after he was blinded by his enemies and deserted by his subjects. The Company continued to experience resistance from local rulers during its expansion. Robert Clive led company forces against Siraj Ud Daulah, the last independent Nawab of Bengal, Bihar, and Midnapore district in Orissa to victory at the Battle of Plassey in 1757, resulting in the conquest of Bengal. This victory estranged the British and the Mughals, since Siraj Ud Daulah was a Mughal feudatory ally. With the gradual weakening of the Marathas in the aftermath of the three Anglo-Maratha wars, the British also secured Ganges-Jumna Doab, the Delhi-Agra region, parts of Bundelkhand, Broach, some districts of Gujarat, fort of Ahmmadnagar, province of Cuttack (which included Mughalbandi/the coastal part of Orissa, Garjat/the princely states of Orissa, Balasore Port, parts of Midnapore district of West Bengal), Bombay (Mumbai) and the surrounding areas, leading to a formal end of the Maratha empire and firm establishment of the British East India Company in India. Hyder Ali and Tipu Sultan, the rulers of the Kingdom of Mysore, offered much resistance to the British forces.
Having sided with the French during the war, the rulers of Mysore continued their struggle against the Company with the four Anglo-Mysore Wars. Mysore finally fell to the Company forces in 1799, with the death of Tipu Sultan. The last vestiges of local administration were restricted to the northern regions of Delhi, Oudh, Rajputana, and Punjab, where the Company’s presence was ever increasing amidst infighting and offers of protection among the remaining princes. Coercive action, threats, and diplomacy aided the Company in preventing the local rulers from putting up a united struggle. The hundred years from the Battle of Plassey in 1757 to the Indian Rebellion of 1857 were a period of consolidation for the Company, which began to function more as a nation and less as a trading concern. A cholera pandemic began in Bengal, then spread across India by 1820. 10,000 British troops and countless Indians died during this pandemic. Between 1736 and 1834 only some 10% of East India Company’s officers survived to take the final voyage home.
The Destruction of Tea at Boston Harbor, 1773
Though the Company was becoming increasingly bold and ambitious in putting down resisting states, it was getting clearer that the Company was incapable of governing the vast expanse of the captured territories. The Bengal famine of 1770, in which one-third of the local population died, caused distress in Britain. Military and administrative costs mounted beyond control in British-administered regions in Bengal due to the ensuing drop in labour productivity. At the same time, there was commercial stagnation and trade depression throughout Europe. The directors of the company attempted to avert bankruptcy by appealing to Parliament for financial help. This led to the passing of the Tea Act in 1773, which gave the Company greater autonomy in running its trade in the American colonies, and allowed it an exemption from tea import duties which its colonial competitors were required to pay. East India Company Act 1773
By the Regulating Act of 1773 (later known as the East India Company Act 1773), the Parliament of Great Britain imposed a series of administrative and economic reforms and by doing so clearly established its sovereignty and ultimate control over the Company. The Act recognised the Company’s political functions and clearly established that the “acquisition of sovereignty by the subjects of the Crown is on behalf of the Crown and not in its own right.” Despite stiff resistance from the East India lobby in parliament and from the Company’s shareholders the Act was passed. It introduced substantial governmental control and allowed the land to be formally under the control of the Crown, but leased to the Company at £40,000 for two years.
Under this provision governor of Bengal Warren Hastings became the first Governor-General of Bengal, and had administrative powers over all of British India. It provided that his nomination, though made by a court of directors, should in future be subject to the approval of a Council of Four appointed by the Crown – namely Lt. General Sir John Clavering, The Honourable Sir George Monson, Sir Richard Barwell, and Sir Philip Francis. Hastings was entrusted with the power of peace and war. British judicial personnel would also be sent to India to administer the British legal system. The Governor General and the council would have complete legislative powers. The company was allowed to maintain its virtual monopoly over trade in exchange for the biennial sum and was obligated to export a minimum quantity of goods yearly to Britain. The costs of administration were to be met by the company. These provisions were initially welcomed by the Company, but with the annual burden of the payment to be met, its finances continued steadily to decline. East India Company Act 1784 (Pitt’s India Act)
The East India Company Act 1784 (Pitt’s India Act) had two key aspects: •Relationship to the British government: the bill differentiated the East India Company’s political functions from its commercial activities. In political matters the East India Company was subordinated to the British government directly. To accomplish this, the Act created a Board of Commissioners for the Affairs of India, usually referred to as the Board of Control. The members of the Board were the Chancellor of the Exchequer, the Secretary of State, and four Privy Councillors, nominated by the King. The act specified that the Secretary of State “shall preside at, and be President of the said Board”. •Internal Administration of British India: the bill laid the foundation for the centralised and bureaucratic British administration of India which would reach its peak at the beginning of the 20th century during the governor-generalship of George Nathaniel Curzon, 1st Baron Curzon.
East India Company Act 1793 (Charter Act)
The Company’s charter was renewed for a further 20 years by the Charter Act of 1793. In contrast with the legislative proposals of the past two decades, the 1793 Act was not a particularly controversial measure, and made only minimal changes to the system of government in India and to British oversight of the Company’s activities. East India Company Act 1813 (Charter Act)
The aggressive policies of Lord Wellesley and the Marquis of Hastings led to the Company gaining control of all India(except for the Punjab and Sindh), and the kingdom of Nepal. The Indian Princes had become vassals of the Company. But the expense of wars leading to the total control of India strained the Company’s finances. The Company was forced to petition Parliament for assistance. This was the background to the Charter Act of 1813 which, among other things: Indian Rebellion of 1857
The Indian Rebellion of 1857 resulted in widespread devastation in India and condemnation of the East India Company for permitting the events to occur. One of the consequences of the Indian Mutiny was that the British Government nationalised the Company. The Company lost all its administrative powers; its Indian possessions, including its armed forces, were taken over by the Crown pursuant to the provisions of the Government of India Act 1858. The Company continued to manage the tea trade on behalf of the British Government (and the supply of Saint Helena) until the East India Stock Dividend Redemption Act 1873 came into effect, on 1 January 1874. The Act provided for the dissolution of the company on 1 June 1874, after a final dividend payment and the commutation or redemption of its stock.