Monday, February 18, 2013

East India Company


The East India Company had its origins at the beginning of the 17th century under the royal charter, titled Governor and Company of Merchants of London, by Elizabeth I, in order to compete with Portuguese traders in India and the Far East.  By 1708, the original joint-stock company had merged with a competing firm to create the Honorable East India Company.  The company amassed wealth in a variety of trade areas that included opium, cotton, tea, indigo, and silk.  By 1740, the company “was purely a commercial enterprise, which imported and exported from its factories in India”, and by the middle of the eighteenth century controlled the opium producing regions of Bengal and Bihar [1]  As the company expanded its territorial control over Mysire, Hyderabad, Punjab and the Mahratha states through a display of superior technological arms, “other Indian princes chose to preserve their independence by seeking an accommodation with the Company through unequal treaties, in which they agreed to surrender revenues” [ 2]  By 1815, the East India Company “owned the most powerful army in India and governed, directly and indirectly, Bengal, much of the upper Ganges basin and extensive areas of eastern and southern India”, and by  the turn of the 19th century, became “principally dependent on land taxes collected from the provinces it ruled” [3]  The private company found the most colonial success in the decentralization of Indian rule “where the central authority of Mughal emperors was dissolving” [4].

War, conquest and expansion also was a lucrative business which generated “profits, most of which found their way into the hands of soldiers” instead of making it “on to the Company’s reckoning sheets”[5]  The obvious difference between enlisting in the Royal military and the private Company military in India was that a man could acquire a handsome “nest egg for retirement or to provide an annuity for the families at home” more easily under the enlistment of the private sector.

The export profits in Opium were also immense until, in 1799, China, under emperor Kia King, banned the importation and cultivation of opium.  Prior to the Chinese ban on opium, it appears that the East India Company attempted to keep their ships out of the direct Opium trade into China by inserting middle men opium agents, who would buy it from company owned producers and processors. [6]  After the turn of the century, medical studies showing the benefits of opium became popular and opium exports were shifted toward Europe and the United States.

The accumulating wealth and military power of the East India Company was a growing concern within the British government and it appears that some of the Company’s overall profits were utilized in the form of bribes to Parliament and the Bank of England, “The power the East India Company had obtained by bribing the Government, as did also the Bank of England, it was forced to maintain by bribing again, as did the Bank of England. At every epoch when its monopoly was expiring, it could only effect a renewal of its Charter by offering fresh loans and by fresh presents made to the Government.” [7] 

With the loss of the American colonies after the Revolutionary War, bribes were no longer enough as the British Empire looked to rebound from their lost North American revenues.  After all, the British had accumulated a great level of debt from the American Revolution and the Seven Years War before that.   The India Bill was introduced in 1783 by Charles Fox and was defeated, but the following year a modified version was passed and from that point forward the British Empire began to slowly take control of the East India Company.  The Company finally ended trade in 1873.

[1] James, Lawerence.  The Rise and Fall of the British Empire (New York: St. Martin’s Griffin, 1994), 123.

[2]  James, Lawerence.  The Rise and Fall of the British Empire (New York: St. Martin’s Griffin, 1994), 128-29.

[3] James, Lawerence.  The Rise and Fall of the British Empire (New York: St. Martin’s Griffin, 1994), 123.

[4] James, Lawerence.  The Rise and Fall of the British Empire (New York: St. Martin’s Griffin, 1994), 124.

[5] James, Lawerence.  The Rise and Fall of the British Empire (New York: St. Martin’s Griffin, 1994), 130.

[6] Opium Throughout History. Frontline.  Public Broadcasting System, WGBH, 1998.  Accessed on Monday, February 18, 2013 from http://www.pbs.org/wgbh/pages/frontline/shows/heroin/etc/history.html

[7] Marx, Karl.  The East India Company-Its History and Results.  New-York Herald Tribune, June 24, 1853.  Accessed on February 18, 2013 from http://www.marxists.org/archive/marx/works/1853/07/11.htm

“The events of the Seven-Years-War transformed the East India Company from a commercial into a military and territorial power[122]. It was then that the foundation was laid of the present British Empire in the East. Then East India stock rose to £263, and dividends were then paid at the rate of 12 1/2 per cent. But then there appeared a new enemy to the Company, no longer in the shape of rival societies, but in the shape of rival ministers and of a rival people. It was alleged that the Company’s territory had been conquered by the aid of British fleets and’, British armies, and that no British subjects could hold territorial sovereignties independent of the Crown. The ministers of the day and the people of the day claimed their share in the “wonderful treasures” imagined to have been won by the last conquests. The Company only saved its existence by an agreement made in 1767 that it should annually pay £400,000 into the National Exchequer.  But the East India Company, instead of fulfilling its agreement, got into financial difficulties, and, instead of paying a tribute to the English people, appealed to Parliament for pecuniary aid. Serious alterations in the Charter were the consequence of this step. The Company’s affairs failing to improve, notwithstanding their new condition, and the English nation having simultaneously lost their colonies in North America, the necessity of elsewhere regaining some great Colonial Empire became more and more universally felt. The illustrious Fox thought the opportune moment had arrived, in 1783, for bringing forward his famous India bill, which proposed to abolish the Courts of Directors and Proprietors, and to vest the whole Indian government in the hands of seven Commissioners appointed by Parliament. By the personal influence of the imbecile King [George III] over the House of Lords, the bill of Mr. Fox was defeated, and made the instrument of breaking down the then Coalition Government of Fox and Lord North, and of placing the famous Pitt at the head of the Government. Pitt carried in 1784 a bill through both Houses, which directed the establishment of the Board of Control, consisting of six members of the Privy Council” – Karl Marx, New York Herald Tribune (June 24, 1854)

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