History
The foundation years:
The Company was founded as The Governor and Company of Merchants of London
Trading into the East Indies by a coterie of enterprising and influential
businessmen, who obtained the Crown's charter for exclusive permission
to trade in the East Indies for a period of fifteen years. The Company
had 125 shareholders, and a capital of £72,000. Initially, however,
it made little impression on the Dutch control of the spice trade and
at first it could not establish a lasting outpost in the East Indies.
Eventually ships belonging to the company arrived in India, docking at
Surat, which was established as a trade transit point in 1608. In the
next two years, it managed to build its first factory (as the trading
posts were known) in the town of Machilipatnam in the Coromandel Coast
in the Bay of Bengal. The high profits reported by the Company after landing
in India (presumably due to a reduction in overhead costs effected by
the transit points), initially prompted King James I to grant subsidiary
licenses to other trading companies in Britain. But, in 1609, he renewed
the charter given to the Company for an indefinite period, including a
clause which specified that the charter would cease to be in force if
the trade turned unprofitable for three consecutive years.
Footholds in India:
Traders were frequently engaged in hostilities with their Dutch counterparts
in the Indian Ocean. Perhaps realizing the futility of waging trade wars
in remote seas, the English decided to explore their options for gaining
a foothold in mainland India, with official sanction of both countries,
and requested the Crown to launch a diplomatic mission. In 1615, Sir Thomas
Roe was instructed by James I to visit the Mughal emperor Jahangir (who
ruled over nearly 70 per cent of the subcontinent). The purpose of this
mission was 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 to the emperor goods and rarities
from the European market. This mission was highly successful and Jahangir
sent a letter to the King through Sir Thomas. He wrote:
Upon which assurance of your royal love I have given my general command
to all the kingdoms and ports of my dominions to receive all the merchants
of the English nation as the subjects of my friend; that in what place
soever they choose to live, they may have free liberty without any restraint;
and at what port soever they shall arrive, that neither Portugal nor any
other shall dare to molest their quiet; and in what city soever they shall
have residence, I have commanded all my governors and captains to give
them freedom answerable to their own desires; to sell, buy, and to transport
into their country at their pleasure.
For confirmation of our love and friendship, I desire your Majesty to
command your merchants to bring in their ships of all sorts of rarities
and rich goods fit for my palace; and that you be pleased to send me your
royal letters by every opportunity, that I may rejoice in your health
and prosperous affairs; that our friendship may be interchanged and eternal.
[3]
Expansion:
The company, under such obvious patronage, soon managed to eclipse the
Portuguese, who had established their bases in Goa and Bombay (which was
later ceded to the British as part of the dowry of Catherine de Braganza).
It managed to create strongholds in Surat (where a factory was built in
1612), Madras (1639), Bombay (1668) and Calcutta. By 1647, the Company
had 23 factories and 90 employees in India. The major factories became
the walled forts of Fort William in Bengal, Fort St George in Madras and
the Bombay Castle. 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 now in cotton, silk, indigo, saltpetre and tea. All the while
it was making inroads into the Dutch monopoly of the spice trade in the
Malaccan straits. In 1711, the Company established a trading post in Canton
(Guangzhou), China, to trade tea for silver. In 1657, Oliver Cromwell
renewed the charter of 1609, and brought about minor changes in the holding
of the Company. The status of the Company was further enhanced by the
restoration of monarchy in Britain. By a series of five acts around 1670,
King Charles II provisioned it with the rights to autonomous territorial
acquisitions, to mint money, to command fortresses and troops and form
alliances, to make war and peace, and to exercise both civil and criminal
jurisdiction over the acquired areas. The Company, surrounded by trading
competitors, other imperial powers, and sometimes hostile native rulers,
experienced a growing need for protection. The freedom to manage its military
affairs thus came as a welcome boon and the Company rapidly raised its
own armed forces in the 1680s, mainly drawn from the indigenous local
population. By 1689, the Company was arguably a "nation" in
the Indian mainland, independently administering the vast presidencies
of Bengal, Madras and Bombay and possessing a formidable and intimidating
military strength.
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