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You are here: UK History > Industrial Revolution > The East India Company
The East India Company (EIC) was a joint stock company that was founded in 1600 and dissolved in 1874. It was formed to encourage trade in the Indian Ocean, initially with the East Indies and then East Asia. The company seized control of large parts of the Indian continent and colonised parts of Asia and Hong Kong. At its height, it was the largest operation in the world and had its own armed forces, which was twice the size of the British army at the time.
Originally stylised as the Governor and Company of Merchants of London Trading into the East Indies, the company accounted for half the world’s trade during the mid 1700s and early 1800s, particularly in silk, cotton, sugar, spices, tea and opium. The company also ruled over the beginnings of the British Empire in India and eventually...Read More
The East India Company (EIC) was a joint stock company that was founded in 1600 and dissolved in 1874. It was formed to encourage trade in the Indian Ocean, initially with the East Indies and then East Asia. The company seized control of large parts of the Indian continent and colonised parts of Asia and Hong Kong. At its height, it was the largest operation in the world and had its own armed forces, which was twice the size of the British army at the time.
Originally stylised as the Governor and Company of Merchants of London Trading into the East Indies, the company accounted for half the world’s trade during the mid 1700s and early 1800s, particularly in silk, cotton, sugar, spices, tea and opium. The company also ruled over the beginnings of the British Empire in India and eventually came to rule large areas of the country. Company Rule in India began in 1757 after the Battle of Plassey and held for nearly 100 years before the Indian Rebellion, which led to the British Crown assuming control of India under the British Raj.
The EIC’s ships and properties were recognised by their flag, which began as a St George’s Cross in one corner and a series of red and white stripes. As the Acts of the Union took hold, it was changed to feature the more recognisable Union Flag. There is some debate about the number and order of the stripes in the field of the flag, over time, there were variations from 9-13 stripes. The company also had its own coat of arms.
The origins of the EIC can be traced back to Sir Francis Drake’s expeditions, where he returned with linen, gold, silver and spices which garnered British interests in the East Indies. After the defeat of the Spanish Armada, more English voyagers travelled the globe hoping to make their fortune and merchants in London petitioned Queen Elizabeth I for permission to sail into Indian waters. In 1591, James Lancaster financed the Levent Company, which became the first English expedition to reach India via the Arabian Sea.
A few years later in 1599, a group of merchants and explorers met to discuss a venture in the East Indies under Royal Charter. The group included a number of influential people, including Ralph Fitch, James Lancaster, Stephen Soame (who was Mayor of London at the time), Thomas Smythe, Richard Hakluyt and a variety of sailors who had travelled with Sir Walter Raleigh and Sir Francis Drake. After a year of investment and seeking the royal favour, a petition signed by 219 merchants and nobles was granted and the Governor and Company of Merchants of London trading into the East Indies was formed. For 15 years, the charter awarded the company a monopoly on English trade with all countries east of the Cape of Good Hope and west of the Straits of Magellan. Any traders operating in this area without a licence from the company had to forfeit their ships and cargo, which was split between the company and the crown, and face imprisonment.
Initially business was done by committee, with ten committees reporting to a Court of Directors. Initially meetings were held in the Nags Head Inn, opposite St Boltoph’s Church in Bishopsgate, London, before moving to East India House in Leadenhall Street.
Sir James Lancaster commanded the first East India Company voyage in 1601 aboard the Red Dragon, the result of which allowed for the setting up of two factories in the Spice Islands. On his return, Lancaster was knighted by Elizabeth’s successor, James I. The second voyage was commanded by Sir Henry Middleton. Initially, the trade in spices didn’t go well due to competition from the longer established Dutch East India Company. The British EIC opened a trading post on Java and this remained an important part of the company’s trade for over 20 years.
The high profits led James I to grant subsidiary licences to other English training companies, but in 1609, he renewed the East India Company’s Charter for an indefinite period under the proviso that it would end if trade was unprofitable for three consecutive years.
The EIC’s first Indian factory was established in 1611, with a second founded in 1615. That same year, the king sent Sir Thomas Roe to India to arrange a treaty that would give the EIC exclusive rights to reside and establish factories in return for providing the Emperor with goods from the European market.
It didn’t take long for the company to expand its commercial trading operations, eclipsing other large trading businesses across the world. By 1642, the company had 23 factories and settlements across India, and the Crown turned Bombay over to the company, which was shortly followed by Calcutta. The major factories became walled forts. By 1717, customs duties were completely waived for the English in Bengal and fierce competition with the Dutch United East India Company (VOC) resulted in the Anglo-Dutch Wars.
The first Anglo-Indian wars took place in 1686, when the company conducted naval operations against the governor of Bengal. This led to the siege of Bombay and subsequently, EIC was fined.
Within the first two decades of the 17th century, the Dutch East India Company (VOC) was the wealthiest commercial operation in the world. It had 50,000 employees worldwide and a private fleet of ships. The EIC was fiercely competitive with them, especially over spices from the Spice Islands, with wars breaking out four separate times.
In a bid to strengthen the power of the EIC, Charles II granted them the rights to autonomous territorial acquisitions, to mint money, command fortresses and troops, form alliances, make war, broker peace and to exercise civil and criminal jurisdiction over their areas.
The East India Company was involved in the slave trade from around 1620. The company ended trading in humans in 1834 after a number of legal threats from the British State and the Royal Navy in the form of the West Africa Squadron, which had discovered that the EIC’s ships had evidence of illegal slave trading.
The West Africa Squadron, or the Preventative Squadron, was set up by the British crown and was part of the Royal Navy. The goal was to suppress the Atlantic Slave Trade by patrolling the coast of West Africa. It was formed in 1808 after the British Parliament passed the Slave Act of 1807.
The EIC started selling opium to Chinese merchants in the 1770s in exchange for porcelain and tea, which caused a series of opioid addiction outbreaks across China in 1820.
The ruling Qing Dynasty outlawed the opium trade twice, once in 1796 and again in 1800, but the EIC and British merchants continued to sell it anyway. The Qing took measures to prevent the EIC from selling opium, destroying thousands of chests of the drug that were already on Chinese soil, leading to the first Opium War of 1839. The war saw a succession of British naval attacks along the Chinese coast over the course of several months.
Under the Treaty of Nanjing in 1842, the Qing were forced to give the British merchants the right to sell opium as well as special treatment and had to cede territory to the British, including Hong Kong.
The Industrial Revolution in Britain saw the nation surge ahead of others in Europe and led to a higher demand for Indian commodities. The ever-growing cycle of production had a huge influence on overseas trade and made the EIC the single largest player in the global market.
The EIC began to trade in saltpetre, a primary ingredient in gunpowder in 1672 under the governance of Sir John Banks, a businessman from Kent who had previously negotiated an agreement between the king and the EIC. He began his career in a syndicate arranging contracts for the navy and had friends who had amassed a substantial fortune through the EIC and Indian trade.
In 1672, he arranged a contract which included a loan of £20,000 and £30,000 worth of saltpetre, also known as potassium nitrate, for the king, to be sold at auction. The following year, he negotiated another contract for 700 tons of saltpetre between the king and the company, so high was the demand from the armed forces that the sales often went untaxed.
The EIC massively exacerbated the Great Bengal Famine of 1770 and their actions led to shortfalls in expected land values for the company. That year, their shares fell significantly, but rose up again by 1772, even so, this still left partners liable for millions in debt. As the information became public, 20-30 banks across Europe collapsed, bringing about the British Credit Crisis of 1772-3. In India alone, the EIC had debts of £1.2 million.
In 1773, the directors asked for a government loan and access to the tea market in the Americas, both of which were granted. This gave them the competitive advantages over other tea importers in America, which in turn eventually led to the Boston Tea Party in 1773, This was when protestors boarded British ships, threw the tea overboard and prevented the unloading of tea in three other colonies. In Boston, the governor refused to allow the tea to be returned to Britain. This was one of the incidents that led to the American War for Independence.
In the aftermath of the Indian Rebellion of 1857, the British government nationalised the company. The British government took over the company’s Indian possessions, its administrative powers, machinery and armed forces. The company had already divested itself of its commercial trading assets in India in favour of the UK government, which assumed their debts. These continued until WWII when they were finally extinguished by the government. The company remained in existence however, continuing to manage the tea trade on behalf of the British government until the East India Stock Dividend Redemption Act of 1873. This provided the formal dissolution of the company.
As well as having bases across India, the EIC had a number of properties and bases in England. The company’s headquarters in London was found at East India House in Leadenhall Street. It was formerly an Elizabethan mansion, known as Craven House before the company occupied it in 1648. It was remodelled throughout the 1720s into the 1800s and was finally demolished in 1861. The site is now the headquarters for Lloyds of London. Prior to moving its headquarters to Leadenhall Street, they were based at the home of Sir Thomas Smythe in Phipot Lane on Fenchurch Street.
In 1607 the EIC began building its own ships, leasing a yard on the Thames at Deptford. By 1614, they had outgrown this space and acquired an alternative at Blackwall. Though this site was sold on, the EIC continued to build and repair their ships there.
In 1803, an Act of Parliament, promoted by the EIC, established the East India Dock Company, which aimed to establish a new set of docks primarily for ships training with India. Existing docks at Brunswick Dock, which was part of the Blackwall site, became an Export Dock, while a new Import Dock was built to the north. Later, they would merge with the West India Dock Company. The docks would be taken into the ownership of the Port of London authority in 1909 and were officially closed in 1867.
Another element of the EIC was the East India College, which was founded in 1806, originally at Hertford Castle, and then at Hertford Heath. The college was for the training of clerks in the company’s service. It was closed in 1858 and the buildings were repurposed as a public school in the 1860s. Another training centre, the East India Company Military Seminary was founded in 1809 near Croydon and was to train officers for service in the company’s army. The government took it over in 1858 and it became the Royal Indian Military College before being closed and redeveloped after the 1860s. The Royal India Asylum in Middlesex was founded so that EIC staff who were certified insane in India would be cared for. Initially, it was based at Pembroke House in London as a private asylum run by Dr Rees as part of a business agreement. Later, the India Office opened its own asylum in Middlesex. One property that outlived the company itself is the East India Club, which was formed in 1849 for officers of the company. It still exists today as a gentleman’s club and can be found in St James’ Square, London.
The ships owned by the East India Company were called East Indiamen or Indiamen and unlike ships in the navy were prefixed with HCS, which stood for Honourable Company’s Service. During the Napoleonic Wars, the EIC ships would arrange for letters of marque, so they could take cargo and other treasures without being accused of piracy.
The company had its own navy, which often accompanied the Royal Navy on expeditions and even took part in naval battles, including the Battle of Pulo Aura which is their most notable victory. The EIC’s ships were so large and well built, that the Royal Navy would buy them to convert into war ships.
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