The road to a complete monopoly
Trade monopoly:
The prosperity that the employees of the company enjoyed allowed them
to return to their country and establish sprawling estates and businesses
and obtain political power. Consequently, the Company developed for itself
a lobby in the British parliament. However, under pressure from ambitious
tradesmen and former associates of the Company (pejoratively termed Interlopers
by the Company), who wanted to establish private trading firms in India,
a deregulating act was passed in 1694. This act allowed any British firm
to trade with India, unless specifically prohibited by act of parliament,
thereby annulling the charter that was in vogue for almost 100 years.
By an act in 1698, a new "parallel" East India Company (officially
titled the English Company Trading to the East Indies) was floated under
a state-backed indemnity of £2 million. However, the powerful stockholders
of the old company quickly subscribed a sum of £315,000 in the new
concern, and dominated the new body. The two companies wrestled with each
other for some time, both in England and in India, for a dominant share
of the trade. But it quickly became evident, that in practice, the original
Company scarcely faced any measurable competition. Both companies finally
merged in 1702, by a tripartite indenture involving the state and the
two companies. Under this arrangement, the merged company lent to the
Treasury a sum of £3,200,000, in return for exclusive privileges
for the next three years—after which the situation was to be reviewed.
The amalgamated company became the United Company of Merchants of England
Trading to the East Indies.
What followed in the next decades was a constant see-saw battle between the Company lobby and the parliament. The Company sought a permanent establishment, while the Parliament would not willingly relinquish the opportunity to exploit the Company's profits by allowing it a greater autonomy. In 1712, another act renewed the status of the Company, though the debts were repaid. By 1720 15% of British imports were from India, almost all passing through the Company, which reasserted the influence of the Company lobby. The license was prolonged until 1766 by yet another act in 1730.
At this time, Britain and France became bitter rivals, and there were frequent skirmishes between them for control of colonial possessions. In 1742, fearing the monetary consequences of a war, the government agreed to extend the deadline for the licensed exclusive trade by the Company in India till 1783, in return for a further loan of £1 million. The skirmishes did escalate to the feared war, and between 1754 and 1763 the Seven Years' War diverted the state's attention towards consolidation and defence of its territorial possessions in Europe and its colonies in North America. The war also took place on Indian soil, between the Company troops and the French forces. Around the same time, Britain surged ahead of its European rivals with the advent of the Industrial Revolution. Demand for Indian commodities was boosted by the need to sustain the troops and the economy during the war, and by the increased availability of raw materials and efficient methods of production. As home to the revolution, Britain experienced higher standards of living, and this spiralling cycle of prosperity, demand and production had a profound influence on overseas trade. The Company became the single largest player in the British global market, and reserved for itself an unassailable position in the decision-making process of the Government.
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