1748-1763: The British East India Company in transition - from a trading company to a colonial power

Term Paper 2010 22 Pages

American Studies - Culture and Applied Geography



List of Illustrations

List of Abbreviations

1 Introduction

2 The BEIC as a mere trading company

3 Changed conditions for the BEIC

4 Determining years

5 Post-war time

6 Final years

7 Summary


List of Illustrations

Illustration 1: Portrait of Sir James Lancaster

Illustration 2: Joseph-Francois Dupleix

Illustration 3: Robert Clive

List of Abbreviations

illustration not visible in this excerpt

1 Introduction

When Vasco Da Gama landed the first time in India in 1498 he marked the beginning of the Portuguese monopoly in shipping to and from Asia which persisted during the entire 16th century.1 During this century the other European nations showed an increased interest in orientating at this area, but the motives were quite complex. One considered reason is simply a nationalistic one, namely that the nations wanted to outdo the Portuguese.2 Others wished to land in India for religious reasons to spread the Christianity and surround the Islamic powers of that region.3 Other factors behind the wish to go to the eastern seas were plunder and piracy. Furthermore there was an enormous interest and thirst for knowledge and adventure in that unknown area which led to some voyages.4

Due to the first travels there was a growing demand in the English society for the Indian goods like ceramics, silk, spices and precious stones, especially in the elite class. Beside that, these products symbolized a way to quick riches for the business men and intermediaries who handled with that merchandise.5 Therefore, after 1600 a growing number of countries, represented by chartered companies, tried to take part in the commercial venture of Indian trade.6 One of these trading companies was the British East India Company (BEIC), which was founded and provided with a royal charter that guaranteed the exclusive rights on trades with the East Indies to the company in 1600.7 During its history the BEIC passed through a significant change from a mere trading company to a territorial power.

The aim of this paper is to clarify the causes and the circumstances of this transition and how it influenced the companies’ following development. The first part will give a short overview over the initial years of the BEIC and its existence as a trading company.

2 The BEIC as a mere trading company

The BEIC was incorporated by a royal charter by Queen Elizabeth I under the title: the Governor and Company of Merchants of London Trading with the East Indies on 31st of December 1600.8 It was established with 125 shareholders, £72,000 of capital and is considered as one of the first jointstock companies.9 Through the charter the BEIC received the monopoly of trade for all places beyond the Cape of Good Hope and the Straits of Magellan for a period of fifteen years.10

illustration not visible in this excerpt

Ill. 1: Portrait of Sir James Lancaster

(Source: www.portcities.org.uk/london/ upload/img_400/BHC2828.jpg; accessed: 24.08.2010)

The company made its first voyages in 1601, led by James Lancaster, (see illustration 1), carrying six letters of introduction from the Queen to the sovereigns of the destination.11 These travels led the BEIC “to the islands of Sumatra and Java, where they encountered stiff resistance from Dutch and Portuguese trades”.12

Yet they were able to form a commercial treaty with the sovereign of Acheen (Sumatra) and to open their first rudiments of a factory in Bantam (Java). Due to the enormous demand for goods like clothes and calicoes on the continent of India the BEIC decided to extend its business activities to there.13 Hence in 1608 some companies’ ships led by Williams Hankins landed in Surat in the northwest of India, but he was unable to accomplish a treaty with the local sovereign about the establishment of a trading post.

During this time the BEIC had to deal with open hostilities by the other European traders during their voyages, but a defeat of the Portuguese in 1612 pleased the local sovereigns.14

So in 1615 Sir Thomas Roe arranged a commercial treaty with the Mogul Emperor Jahangir, which gave the BEIC the exclusive rights to reside and construct factories in the area of Surat in exchange for rare goods from Europe. However, the company opened their first “real” factory in Machilipatnam, a town in the Coromandel Coast of the Bay of Bengal. These landings gave the company access to goods, which were not controlled by the Dutch traders.15 With rates of return over 200 % on the capital all the travels of this time were highly prosperous.16 Also in 1615 the BEIC could repel another attack from the Portuguese on the English ships and in this way removed them permanently as a threat to the companies’ interests in India. Due to massive tensions with the Dutch traders, the company removed themselves from the Spice Islands and focused on their business on the Indian mainland in the 1620s.17 In 1639 the BEIC fulfilled the requirements of their extended trade activities and acquired its first territory in India. They bought a site near the town of Madras where they built a fortress called Fort St. George.18 Despite the unsuccessful years of the company in the middle of the 17th century, (between 1653 and 1657 the eastern trade didn’t yield any profit), Lord Protector Oliver Cromwell renewed the monopoly charter for the BEIC.19

Until 1668 the company could extend its trade activities and its power and establish new factories in Chittagong, Goa, Bombay, Madras and three little villages in eastern India called Gobindapore, Sutanati and Kalikuta (renamed Calcutta in 1690). The most important factories became the ones in Calcutta (Fort Williams), in Madras (Fort St. George) and in Bombay.20 In the end of the 18th century the company had to face some contrarieties in their home country.

A huge number of former company officers who became quite wealthy during their service wanted to establish private trading firms in India. Since they and their fellows (ambitious tradesman and interlopers) obtained some political power, a deregulating act was passed in 1693. This act gave the right to all Englishmen to trade with the East Indies and annulled the rights of the almost 100 year’s old charter.21 In 1698 a new charter was passed incorporating a new joint-stock trading company by the name the English Company trading to the East Indies.22 In the following years the two companies competed in England and India for dominance in the trade. Under financial and strategically pressure the two companies merged in 1708 and became the United Company of Merchants of England Trading to the East Indies. For their exclusive trading privileges which would last until 1726, they had to pay a loan of £3,200,000 to the government.23 In the next decades the union of the two East India Companies accomplished a very successful economic performance with constant dividends and stocks of prime security.24 Besides they started to garrison their forts in India with forces of Sepoys as a precaution measure for the commencements of changed circumstances that occurred in the middle of the 18th century in India.25

3 Changed conditions for the BEIC

During the middle of the 18th century the BEIC had to face changed circumstances in India, whereby two aspects were playing a major role: the destabilization of the Mogul power and a change of strategy from France in India.26

The causes for the decline of the Mogul power are quite complex. One explanation can be found in the policies from the Mogul Emperor Aurangzeb. Several of his measures led to worsening of relations between Muslims and Hindus. The rift between the two religions undid the cohesion that developed since Emperor Akbar and so threatened the foundation of Mogul power.27 One reason for the destabilization of that system was the decadence and the degradation of the character and quality of the Emperors who succeeded Aurangzeb. For instance did the size and importance of harems increased after 1707 and the new Moguls had a greater interest in luxury than their precursors.28 Another cause for the Moguls decline was the effective operation of the jagir-system. The demands out of this system resulted in an increased pressure on the peasantry and land owners (zamindars), which led to broad rebellions.29 A further explanation for the decline originates from the fact, that the Empire, which based on military goodwill, needed steady victories in the field to maintain the loyalty of the military and the administrative elite. However after the military disaster against die Marathas in the 1660s many aristocrats started to doubt their future in the imperial system and so precipitating the decline. In Golconda, which was annexed by the Moguls in the 1680s, a part of the Deccani elite was unwilling to be assimilated into the Mogul system and Golconda was never fully integrated into the empire.30 One thesis considers the rise of regional power-groups and nationalities in India as one reason for the Mogul decline, since these groups subverted and shattered the unified empire.31


1 (cf. Bruijn & Gaastra 1993, p. IX)

2 (cf. Lawson 1993, p. 2)

3 (cf. Scammell 1989, p. 68)

4 (cf. Lawson 1993, p. 2)

5 (cf. Lawson 1993, p. 2f)

6 (cf. Bruijn & Gaastra 1993, p. IX)

7 (cf. Mill 1826a, p. 21f.)

8 (cf. Bowen & Lincoln & Rigby 2002, p. 1)

9 (cf. BEIC 2010)

10 (cf. Mill 1826a, p. 21f)

11 (cf. BEIC 2010)

12 (cf. Brown 2010, p. 16)

13 (cf. Mill 1826a, p. 22f)

14 (cf. Brown 2010, p. 16)

15 (cf. BEIC 2010)

16 (cf. Mill 1826a, p. 25)

17 (cf. Brown 2010, p. 17)

18 (cf. Lucas 1915, p. 65)

19 (cf. Lawson 1993, p. 40)

20 (cf. BEIC 2010)

21 (cf. Mill 1826a, p. 110ff)

22 (cf. Mill 1826a, p. 122)

23 (cf. Mill 1826a, p. 129f)

24 (cf. Lawson 1993, p. 64)

25 (cf. Brown 2010, p. 20)

26 (cf. Lawson 1993, p. 82f)

27 (cf. Ali 1978, p. 175)

28 (cf. Berger 1990, p. 60)

29 (cf. Habib 1963, p. 317ff)

30 (cf. Pearson 1976, p. 221)

31 (cf. Pearson 1976, p. 221)


ISBN (eBook)
ISBN (Book)
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Institution / College
Martin Luther University
Commonwealth British East India Company BEIC Indien Kolonialzeit




Title: 1748-1763: The British East India Company in transition - from a trading company to a colonial power