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British East India Company

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British East India Company

In 1600, a group of London merchants, led by Sir Thomas Smythe, petitioned Queen Elizabeth I to grant them a royal charter to trade with the countries of the eastern hemisphere. And so, the ‘Honourable Company of Merchants of London Trading with the East Indies’ – or East India Company, as it came to be known – was founded. Few could have predicted the seismic shifts in the dynamics of global trade that would follow, nor that 258 years later, the company would pass control of a subcontinent to the British crown. How did this company gain and consolidate its power and profit? In the following write-up, the writer gives an insight into one of history’s most powerful companies, and its rise to political power on the Indian subcontinent, and also its journey till its dissolution.

Formation
British East India Company (EIC) was formed as a Private Corporation on December 31, 1600, by the orders of Queen Elizabeth I to counter the monopoly of traders of Spain and Portugal in the Indian spice trade. It was the time in Britain when only 3 percent of global products were manufactured there. At that time, the Mughal Emperor Akbar ruled India and he was the richest ruler in the world. According to an estimate, the net assets of Akbar were equivalent to worth 13.5 billion dollars. EIC was established to trade in the Indian Ocean region. The Royal Charter was initially granted for 15 years.

EIC’s start of trade in India (1608)
Company ships docked at Surat in Gujarat in 1608. In 1609, King James I renewed the company’s charter for an indefinite period. The Company established its first factory in India on the Andhra coast in the Bay of Bengal in 1611. Second factory was established in Surat a few years later.
James I sent Sir Thomas Roe, an English diplomat, to the court of Mughal Emperor Nur ud Din Salim Jahangir for convincing him to grant more concessions to the company. Roe resided at Agra court for three years from 1616 to 1619 and became favourite of Jahangir. Roe got permission to establish trading port at Surat and established relationship between EIC and Mughals.

The company established its trading posts in Surat (1619), Madras (1639), Bombay (1668) and Calcutta (1690).
In 1634, the Mughal Emperor Shah Jahan became more generous to the English traders and extended their area of trade to the region of Bengal.

By 1647, the company had 23 factories, many of which were fortified. With the passage of time, the British EIC grew in its influence, gaining more and more military capabilities and fortified areas to launch its operations. In 1717, the customs duties were completely waived for their trade.

Competition with Dutch EIC
There existed a fierce competition between the British EIC and the Dutch EIC over the monopoly in spice trade that escalated into Anglo-Dutch wars which were a series of military conflicts in 1652-1654, 1665-1667, 1672-1674 and 1780-1784.

Anglo-Mughal War (1686-1690)
It was the first Anglo-Indian war on the Indian Subcontinent. It occurred in 1686 when the EIC’s naval forces came in clash with the Governor of Bengal, Shaista Khan. The Mughal Emperor Aurangzeb Alamgir intervened and the EIC was defeated. In 1689, the Mughal fleet, commanded by Sidi Yaqub, besieged the company fort in Bombay — Fort William. After a year, famine broke out due to the blockade, and the company surrendered. This is also called as Child’s War after Sir Josiah Child who led the Company in the Anglo-Mughal war. Emperor Aurangzeb seized all the factories of the company and arrested the persons belonging to EIC.

After this crushing defeat, the company was compelled to pay heavy fine.

Mughal Convoy piracy (1695)
In September 1695, an English pirate Henry Every attacked a Mughal fleet, which was returning from annual pilgrimage to Makkah, and looted around 500,000 pounds worth of treasure. It was the richest ship ever taken by the pirates. It had serious consequences for the EIC as the Emperor Aurangzeb closed four factories of the company and arrested its officers.

During mid-17th century and earlier 18th century, the British EIC accounted for half of the world trade.

The products company traded in were: Cotton, Silk, Indigo dye, Sugar, Salt, Spices, Tea, Opium and Saltpetre.
It has been reflected in the EIC’s archives that the company was involved in slave trade as well.
English traders frequently engaged in military conflicts with their Dutch and Portuguese counterparts.

Death of Aurangzeb Alamgir (1707)
Aurangzeb Alamgir is considered the last effective Mughal emperor. His death created a vacuum in the Indian Subcontinent, and different stakeholders came up in to fill that vacuum. EIC benefited from this situation as well, and recruited the local soldiers into its army.

Battle of Plassey (1757)
The British EIC under the leadership of Robert Clive gained decisive victory over the Nawab of Bengal, Siraj ud Daula and his French allies in the battle fought on June 23, 1757. This victory was due to defection of Mir Jafar, the Commander-in-Chief of Nawab of Bengal. It was because of this victory that British EIC gained control over Bengal.

Laying the foundation of British rule in India
Owing to victory in this battle, British EIC started ruling over India. In August 1765, EIC defeated the Mughal Emperor Shah Alam II – His influence was limited to the extent of Delhi only. It was the time when Mughal Emperors were just puppets and the real ruler of India was EIC.

Over the next hundred years, the company was able to rule over most of the Indian Subcontinent, Burma (today’s Myanmar) and Afghanistan.

According to an estimate, the company and the Britain took 45 trillion dollars from India from 1765 to 1938.

Bengal Famine (1770)
This catastrophic famine continued for four years from 1769 to 1773 and exposed the apathy of EIC towards the starving people. The Company increased its taxes and showed no mercy to the dying population. As many as 10 million people died of famine.

Resistance from Mysore
EIC faced tough resistance from Hyder Ali – Sultan of Mysore kingdom in Southern India – and his son Tipu Sultan who succeeded his father in 1782 and allied with the French to defeat the Company in two battles. Finally EIC succeeded in defeating Tipu Sultan who was martyred in 1799.

EIC’s powers curtailed
In 1813, the British parliament curtailed the monopoly of the company. In 1834, the trade privileges of the company were further curtailed.

First Opium War (1839-1842)
The Anglo-Chinese war was a series of military conflicts between Britain and Qing dynasty of China between 1839 and 1842 on the issue of opium trade as the British EIC was involved in opium trade and Qing dynasty imposed sanctions on that. The British navy defeated China in this war. EIC occupied Hong Kong port as well.

War of Independence (1857-1858)
An uprising started in the year 1857 by the local Hindus and the Muslims against the authoritarian rule of the company in India. This was mutiny from the perspective of the ruling company but it was called as the War of Independence by the natives.

Though the war failed, it led to the dissolution of the British EIC and compelled the British to reorganize army, rethink their administration style and revamp the governance system in India.

Government of India Act (1858)
The British Parliament passed the Government of India Act, 1858, which liquidated the British EIC which had been ruling under the auspices of the British parliament. By this Act, the power to rule India was transferred from EIC to the British Crown.

East India Stock Dividend Redemption Act (1873)
The British Parliament passed East India Stock Dividend Redemption Act, 1873, by which the British EIC was formally dissolved in 1874. By this time, EIC had already ceased to exist as its governmental functions were transferred to the Crown and its military comprising 240,000 soldiers had already been transferred to the Crown to be incorporated into the Indian army.

In his book ‘The Anarchy’, noted historian William Dalrymple has stated that it is a unique example in history that a private company owned an army and navy, and with the help of its military capability, it enslaved 20 million people.

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