Early History of British East India Company in India

December 4, 2013

East India Company

The discovery of a sea route to India by Vasco Da Gama in 1498 paved the way for many mercantile companies from Europe-the English, Dutch, French, and Portuguese, to engage in a thriving and exploitative trading business.  The mercantile companies bought goods like silk, cotton and spices like pepper, cardamom, cinnamon and cloves at very cheap rates in India and sold them at high prices in the European markets and made huge profits in this manner.  By the last 1500s, there were many such companies from Europe doing this kind of business in India.

In 1600, the British East India Company obtained a royal charter from Queen Elizabeth I that enabled it to become the sole trading company in England to do business in India.  The charter thus enabled the British East India Company to pursue its vested interests in India free from all other competition from England.  The charter was also notable for making the British East India company the first joint-stock corporation in the world.  A joint-stock corporation consists of investors who invest in a company and are granted shares accordingly.  The shareholders can thereby benefit from a percentage of the profits according to the initial shareholding investment made.  The shares of the British East India Company were held by a group of rich English merchants and aristocrats.

In 1612, the Mughal emperor allowed the British East India company to establish a trading post in Surat in Gujarat.  Another trading post was established in Madras later.  In 1651, a “factory-like” trading post was set up in West Bengal which was a warehouse which stored goods for export.  The traders were known as “factors” and began to settle near the factory.  The company began to get a strong foothold over West Bengal by conniving with Mughal officials to give up land for trading purposes.  Kolkata was one of the villages that grew into a city during the expansion of the company in West Bengal. You can see that a very ruthless version of the multinational companies that exist today existed as far back as the 1600s.  Even though the charter enabled the British East India Company to have a monopoly in trade in India over other similar English companies, other European powers were also pursuing their vested interests in India.  All the companies were known as East India Companies like Dutch East India Company and so on because the Indian subcontinent was considered a significant part of the East Indies.  Rivalry, competition and greed led to armed conflicts along the trade routes as well as fortifications to protect trading posts in India in the 1700s and 1800s. The East India Company also engaged in conflicts with the local rulers and local people and was increasingly foraying into politics to further its interests.  This was how it slowly maneuvered itself into India and in connivance with the British royalty became a colonial and imperial force and plundered the Indian subcontinent for years to come.

photo credit: dasajev via photopin cc

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