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East India Trading Company

The East India trading Company also known as East India Company was formed to pursue trade with the Southeast Asian countries but it ended up trading with India and china. It was one of the oldest, richest and most powerful trading companies ever. It mainly traded in silk, cotton, indigo dye, tea, saltpeter and opium. The company remained in power for over 250 years from 1600 to 1873.

The East India Company was chartered by Queen Elizabeth 1 on 31 December 1600 under the name of Governor and Company of Merchants of London trading with the East Indies to develop trade and commerce with the Asian countries. The chief reason for forming the company was to break the monopoly of Dutch in the spice trade. The company built its first factory in Machilipatnam on the Coromandel Coast of Bay of Bengal. It reported high profits which prompted King James 1 to renew the charter for an indefinite time including the clause which said that the company would cease to be in force if it reported losses for three consecutive years.

The company was frequently engaged in trade wars with its Dutch and Portuguese counterparts in the Indian Ocean. The British realized the cost of wars and decided to explore the possibility of gaining territorial foothold in the Indian mainland. Upon discussion with Sir Thomas Roe, Mughal Emperor Jahangir gave the Company exclusive rights to build factories and reside in Surat and other areas. And in return the Company vowed to provide the Emperor with valuables and goods from the European market.

Gaining from the patronage given by the Emperor, the company extended its commercial operations. It established its trading stations in Surat, Chennai (previously called madras), Mumbai and Kolkata. The company’s main business during this time was cotton, silk, tea, saltpeter and indigo dye. In 1978 it merged with the rival company formed by the parliament and came to be known as United Company of Merchants of England Trading to the East Indies. Beginning of industrial revolution saw the company racing ahead of its European rivals. The demand for Indian products increased in order to maintain the troops and the economy during the war. This led to a vicious cycle of prosperity, demand and production amongst the British traders. The company became the single largest player in the British market and as a result secured itself a decision making position in the British Parliament.

In the early 17th century the demand for saltpeter was running short in the European countries. Saltpetre was ideal for ballast of ships and had considerable commercial value so its export from India to Britain began. The period saw many European wars so the Company’s Saltpetre was sold in bulk and at favorable prices.

The major source of economic competition to the Company was put to rest after the British defeated the French in the Seven Years War. This defeat limited the French imperial ambitions but after the Treaty of Paris, they were allowed to maintain few trade pots without military presence. During its expansion the company faced resistance from the rulers of Bihar, Orissa and Nawab of Bengal. This led to the Battle of Plassey in 1757 in which the Britishers emerged victorious resulting in the conquest of Bengal. This was strained the relations of Britishers with Mughals and the celebrated rulers Haider Ali and Tipu Sultan gave them a tough time. Further the British secured Bombay and its surrounding areas after the gradual decline of the Maratha Empire. The British slowly and steadily secured the entire southern, eastern and western India. The Company’s coercive action, diplomacy and threats prevented the northern regions of Delhi, Rajputana, Oudh and Punjab to put up a united struggle against it. The Company also smuggled opium into china from Bengal. The First Opium War was as a result of China’s strict actions against smuggling opium by Britishers. But it eventually led to the British seizing Hong Kong and opening Chinese market to illegal opium trade.

The Company started losing control both politically and commercially from late 18th century onwards. Two acts of Parliament (1773, 1774) weakened its independence by establishing a regulatory board responsible to parliament, although it gave the Company ultimate authority in its domains. Further after the Sepoy Mutiny in 1857 the British government nationalized the company and in 1873 it stopped to exist as a legal entity.

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