The East India Company - Research Paper Example

?East India Company Brief Background The East India Company was formed in the year 1600 as a joint stock company by a group of traders who were looking to expanding trade opportunities. (Carter & Harlow, 2003) Initially trading was planned for the East Indies region however as events unfolded the Company saw itself trading more in India and China. However the Company’s trading practices were challenged by a rival English company in the late 17th century which led to the amalgamation of both companies. The new Company was formed in 1708 and was proclaimed as United Company of Merchants of England Trading to the East Indies. Under the new arrangement the Company was provided with an environment that favoured the creation of a monopoly. The Company was largely involved in the trade of commodities such as tea, silk, saltpetre, opium and indigo dye. The burgeoning trading enterprise eventually formed into a mega-corporation and was responsible for governance in India as well as for military expansion in India. (Ride, Ride, & Mellor, 1995) The Company loomed large on the British trading and political scenes for a good two and a half centuries. One of the most important time periods for the Company comprises of the Company’s amalgamation with the rival English company in the late 17th century to the impeachment of Warren Hastings. In between the company went from an ordinary trading enterprise to become the eventual master of India. A combination of human factors helped transform the Company into a behemoth that wielded power in both England and abroad alike. This paper attempts to analyse the subject period in the Company’s history to discover how the Company was able to achieve such a transformation. (Anderson, 1854) Expansion of the Company’s Influence By the mid 16th century the Company had establishments all across India including Bengal. Oliver Cromwell also supported the Company’s charter and this helped the Company fortify its position. The Company was also allowed by Charles II in 1670 to acquire territory, to mint money, to command troops and fortifications as well as to exercise criminal and civil jurisdictions in the acquired territories. Political manipulation by the Company had also begun by this period. Consequently the Company was allowed to trade in Bengal with no duties on the trade in 1717 by the Mughal emperor. The later part of the 17th century also saw trouble with the Mughal Empire although the Company acted diplomatically to convince the Mughal emperor for concessions. On the other hand the Company was able to expand into China as well and was able to establish a trading post at Canton in 1711 for trading silver and tea. (Gandhi, 1997) Forming Trade Monopolies Service for the Company allowed the officers to develop large estates and businesses. This in turn allowed the accumulation of political power for the officers of the Company. This political power was projected in the British parliament as a lobby for the Company. In contrast former Company employees who wanted to establish smaller private firms and trading enterprises were allowed to do so after a deregulation act in 1698. These people were termed as Interlopers pejoratively. Later these opposing groups tried to wrestle each other and were subsequently merged as mentioned before. The emerging Company was a tripartite venture between the original East India Company, the British government and private traders and former employees of the Company. The newly formed Company lent the Treasury a total sum of 3.2 million pounds in exchange for exclusive privileges for the next three years. (Dean, 2009) In the years that followed the Company’s lobby and Parliament were in constant battle. The lobby for the Company was looking for an establishment of a more permanent nature but the Parliament was reluctant to give the Company any more power. An act in 1712 helped to renew the Company’s status even though the existing debts were repaid. The Company gained strength with time and by 1720 the Company was processing around 15% of all imports from India which helped to reinforce the Company’s lobby in Parliament. An act in 1730 allowed the Company’s license to be extended to 1766. In due time the struggles between the British and French empires caught up and further helped to cement the Company’s position. Fearing the costs for war the British government allowed the Company greater rights. In 1742 the Company’s license was extended for India to 1783 in return for another loan amounting to 1 million pounds. The onslaught of the Seven Years War (1756-1763) diverted the attention of the British Crown to defence of its territorial holdings within Europe and North America. The war was conducted on Indian Territory between French forces and the Company’s army. The Law Officers of the Crown conveyed the Pratt-Yorke opinion in 1757 which differentiated overseas territories that had been acquired through conquest from those that had been acquired through private treaties. The Crown was given sovereignty over both kinds of acquisitions while the property of the former types was vested within the Crown. (Oxford Dictionary of National Biography, 2004) The Industrial Revolution further augmented the power of the Company within the British domain. Demand for Indian products saw an unprecedented increase in the years that the industrial base in Great Britain was expanding. This was especially necessary to maintain the British army and to sustain the British economy during various wars. Trade with India through the Company aided in supplying base raw materials and also encouraged greater efficiency in production processes. The Industrial Revolution helped to increase the standard of living in Great Britain and this in turn spurred overseas trade. The creation of a cycle of prosperity created greater demand and this in turn was augmented by the Company’s trading operations in the overseas territories. (Pechel, 1781) In half a century the Company was transformed into the single largest player in the British global market for trade. This allowed the Company far greater leverage in the government’s policies and processes which augmented the position of the Company as a political player. The increase in the financial position of the Company can be gauged from William Pyne’s The Microcosm of London where he states that the sales of the Company were around 5 million pounds in 1793 which went up to 7.6 million in 1801. Colonial Monopolies At the time of its creation the Company faced direct competition from the French and the Dutch while the Portuguese had been ousted earlier. As the Company’s political power and military power increased, so did the Company’s monopoly in the territories where it operated. The Company’s power boosted strongly after the Seven Years War (1756-1763) which effectively eliminated the French power within the Indian subcontinent. The Seven Years War helped to limit French ambitions in the overseas territories and also inhibited the influences of the industrial revolution in France. The Company’s military campaign against the French was spearheaded by the British general Robert Clive who was the Governor General. The French were commanded by Joseph Francois Deupleix. Clive managed to recapture Fort Saint George from the French. The breathing space allowed to the Company allowed the Company to take control of Manila in 1762. The position of the French was belittled in large amount. The Treaty of Paris (1763) limited the French power and control to smaller enclaves in Chandernagar, Karikal, Pondicherry, Yanam and Mahe. However the French were not allowed to keep any military presence within these territories. These enclaves were all part of the French empire for the next two centuries but all kinds of French ambitions were effectively razed to the ground. This provided two direct benefits to the Company. The Company did not have to invest greatly in military endeavours against the French. Furthermore, the Company did not have to face any major economic competition from the French. This had indirect benefits for the Company as well. The campaign allowed the Company to create, organise, train and discipline a military force. The confidence instilled from the victories also encouraged the Company to undertake more ambitious ventures. The Company effectively expanded within the Carnatic region by utilising Madras and Calcutta in Bengal. Other colonial powers were not able to challenge British authority and the Company’s influence in the Indian subcontinent region for times to come. Military Expansionist Efforts The takeover of the Company in India was not a particularly smooth experience. The Company was faced by military challenges from local rulers throughout its expansionist efforts. Clive also led a campaign against Nawab Siraj ud Daulah who was the last independent ruler of the Bengal. Bengal was particularly important to the Company’s strategy as it was a very large province and offered much greater revenue in comparison to other holdings in the Indian subcontinent. The British forces squared off against the Nawab’s forces in Orissa at the decisive Battle of Plassey (1757). While this victory helped to project British power and helped to make the Company the sole master of the Bengal region but there were certain drawbacks too. The Nawab was an ally of the Mughal king and the victory against the Nawab caused friction between the Company and the Mughal Empire. However the Mughal Empire could not provide a lot of resistance as it was already crumbling under its own decaying policies. The death of Aurangzeb was the final straw on the camel’s back and the Mughal Empire had begun to disintegrate as smaller local rulers had begun to assimilate power into their own hands. The Company’s position became unambiguous after the Battle of Buxar after which the Mughal ruler Shah Alam II relinquished all administrative rights over Bengal to the Company. The package also included Bihar as well as Midnapore. This also cemented Clive’s position in the Company who subsequently became Governor General. During these troubled times, the Company’s position was also challenged by both Haidar Ali and Tipu Sultan who ruled over the Kingdom of Mysore. These rulers had been on the French side during the wars but were eventually taken out in 1799 with the death of Tipu Sultan and with the fall of the Kingdom of Mysore. However all of these military victories had a large price that the Company’s officers paid. An estimate puts the number of retuning officers with the Company at 10%. (Holmes, 2005) Trade in Opium As trade with the Chinese increased in the 18th century, the trade deficit between the Company and the Chinese government increased substantially. The Qing dynasty in China traded with the Company and was paid in silver. The British saw the trade as depleting their silver reserves significantly so the Company came up with a novel system to offset the trade balance. The Company expanded its monopoly on the opium trade in Bengal with a change of policies in 1773 that focused on buying opium excessively. The Company’s contention was to trade with the Chinese by paying for goods in tea and opium in place of opium and silver. However trading opium was illegal in Chinese domains. This trade restriction meant that the Company’s vessels could not move any opium to China. The opium that was produced in Bengal was sold through the port of Calcutta on the predefined condition that the opium would be sent to China only. (Adam Matthew Publications, 2011) Even though the Chinese government had placed a ban on trading opium but Bengalese traffickers helped to smuggle opium into China. Agency houses established and supported by the Company were used to aid the smuggling process. Estimates placed the amount of smuggled opium at around nine hundred tonnes annually. This provided great financial advantage to the Company and produced huge disadvantages for the Chinese population in general. Opium addiction became a large problem for the Chinese as a large segment of the population was strictly dependant on opium. Regulation of Company Concerns The rapid expansion of the Company allowed it to gain greater leverage in financial, political and military affairs both in the British Crown and in the overseas territories. However the expansion was also associated with an overarching structure that was beginning to decay given the expanse of administration required and the decreasing efficiency of the Company’s operations. By the third quarter of the 18th century the Company was facing rising administrative problems especially within the annexed territories controlled by the Company. One of the greatest shocks to British audiences came in wake of the famine in Bengal in 1770. The famine decimated the local population and estimates place the loss at around one third of the total population of Bengal. As a direct consequence the administrative and military costs of operation in Bengal rose significantly as labour and labour productivity declined. The problem was augmented by an economic stagnation and overall trade depression in Europe. The Company was highly dependent on the European market for revenue generation and the depression in Europe posed decreasing revenues. Consequently the Company was stuck with two dilemmas that were rising costs of operations and decreasing revenues. Profitability was affected negatively. At one point the Company faced bankruptcy due to which the Company’s directors appealed to the British parliament for financial support. The Parliament eased the Company’s problems by allowing it greater freedom for trade in the New World. The Tea Act was passed in 1773 which provided the Company greater autonomy for managing its trade operation in America. The Company was exempted from tea taxes while the Company’s competitors still had to pay the tea tax. The American traders were dismayed with this act of the British parliament and tried to oppose it. The price of tea had gone down as a result of the removed taxes but the Americans argued that the enforcement of the act had still placed a tax that was not justified for any reason. This issue galvanised and united the Americans and the Boston Tea Party followed shortly where tea chests were thrown into the Boston Harbour. This was a major event that sparked the American Revolution. Within the context of these circumstances it is pertinent to note that the Company profited at the expense of the British Crown and empire. Subsequently a struggle ensued in the American colonies that caused the eventual cessation of the British Crown’s hold on the Americas. The Company was also affected in the longer run as it lost a large market with the loss of America. The British Parliament was already beginning to question the Company’s policies in the acquired territories and was looking to reform the Company’s practices. A series of Acts were passed over a number of years to this effect. (Farrington, 2002) East India Company Act (1773) The British parliament put in place a number of economic and administrative reforms on the Company through the Regulating Act of 1773. This Act enabled the parliament to exercise its control over the Company and to establish its authority over the Company’s affairs. The Act was also significant because it recognised the Company’s various political functions. This Act was not achieved with ease in the Parliament as the pro Company lobby put up stiff resistance to this Act. This Act put in place substantial control of the government over the Company’s policies and practices. The land of the Company was placed under the control of the British Crown and was leased out to the Company at an annual rate of forty thousand pounds for a period of two years. (Bowen, 1991) Furthermore Warren Hastings who was the governor of Bengal was instated as the first Governor General of Bengal and was provided with total administrative control of India. This in turn laid foundation for total British government over the entire sub continent. The Governor General’s appointment was nominated through the court of directors which would be subject to the approval of the Council of Four that were appointed by the Crown. (Anthony, 2007) East India Company Act (1784) This Act was more popularly known as Pitt’s India Act and was based on two major precepts. The first percept was based on the relationship between the British government and the Company while the second percept was based on the internal administrative affairs of India. As far as the relationship between the British Crown and the Company is concerned, the Company was put in direct subordination. The Act espoused a Board of Commissioners for the Affairs of India which was better known as the Board of Control. The board was composed of the Chancellor of the Exchequer, the Secretary for State and four Privy Councillors who were nominated by the Crown and the Secretary for State was the President of the Board. (Carruthers, 1996) As far as the internal administration of the Company was concerned, a centralised bureaucratic system composed of British officers was put in place. This Act came under great criticism as soon as it was passed and was considered a failure by many. The boundaries between the Company’s power and the governmental control were still ambiguous and subjective in nature. The government interfered in the affairs of the Company because it felt compelled to respond to humanitarian problems of the local population within the annexed territories. Act of 1786 This Act increased the powers of the Governor General in certain specialised circumstances. The Governor General was allowed to overrule the powers and opinion of the Council and to subsequently act on his own initiative. The Governor General could also jointly hold the office of the Commander in Chief of the military forces. The powers of the Crown and the Company were differentiated clearly. The Company was clearly made a subsidiary of the Crown and the Company continually expanded its influence into new territories through all kinds of means. The Company was effectively made a limb of the Crown and was provided total governmental support for expansion. (Bowen, Lincoln, & Rigby, 2003) Bibliography Adam Matthew Publications. (2011). EAST INDIA COMPANY FACTORY RECORDS. Retrieved September 1, 2011, from Adam Matthew Publications: http://www.ampltd.co.uk/collections_az/EIC-Factory-1/description.aspx Anderson, P. (1854). The English in Western India; being the early history of the factory at Surat, of Bombay, and the subordinate factories on the western coast. Bombay: Smith Taylor and Company. Anthony, F. (2007). Britain's Betrayal in India: The Story of the Anglo Indian Community. London: The Simon Wallenberg Press. Bowen, H. V. (1991). Revenue and Reform: The Indian Problem in British Politics, 1757–1773. Cambridge: Cambridge University Press. Bowen, H. V., Lincoln, M., & Rigby, N. (2003). The Worlds of the East India Company. Rochester: Brewer. Carruthers, B. G. (1996). City of Capital: Politics and Markets in the English Financial Revolution. Princeton: Princeton University Press. Carter, M., & Harlow, B. (2003). Archives of Empire. Raleigh: Duke University Press. Dean, P. (2009). Unangry Squark. Times Literary Supplement 24 . Farrington, A. (2002). Trading Places: The East India Company and Asia, 1600–1834. London: British Library. Gandhi, M. K. (1997). Hind Swaraj and other writings. London: Cambridge University Press. Holmes, R. (2005). Sahib: the British soldier in India, 1750-1914. London: HarperCollins. Oxford Dictionary of National Biography. (2004). Charles Pratt. Retrieved September 1, 2011, from Oxford Dictionary of National Biography: Oxford Dictionary of National Biography Pechel, S. (1781). An Historical Account of the Settlement and Posession of Bombay by the English East India Company, and the Rise and Progress of the War with the Mahratta Nation. London: W. Richardson. Ride, L., Ride, M., & Mellor, B. (1995). An East India Company Cemetery: Protestant Burials in Macao. Hong Kong: Hong Kong University Press. Read More