The English East India Company was established by the British under Queen Elizabeth I. A group of merchants was granted the charter and trading rights to trade along the East India stretch extending from Africa to South America. It was a big monopoly because no other company was allowed to trade in that area aside from EEIC. The company was in existence for nearly 250 years and is often associated with the rise to glory and influence of Queen Elizabeth’s authority. It was not just created by the charter alone. However, it resulted from years of Britain’s desire to join the Easter trade routes due to the associated profits and the costs the country had to pay for trading through middlemen, especially Portugal, which had a direct link to the Eastern trade. The company had also been established because the country’s efforts to find an alternative route through voyages that directly connected Britain and the Eastern trade routes had been futile. The company joined the spice trade and dealt in cotton, silk, tea, and the slave business. Due to its trading rights, the company made cotton, textiles, spices, and tea readily available in England, with the investors enjoying large profits. EEIC transformed from a monopoly to a vast territorial empire in the Indian subcontinent in various including the charter that pulled political weight to their side, their company’s business strategy, the fall of the Portuguese hold on the trade, and its increased tax collection powers after the Battle of Plassey in 1757.
The company was a private corporation but used the support of the Queen as a political power to form allies among the rulers of the Indian communities. The company also had employees ready for battle, which came in handy in its expansion as they intimidated the Indian rulers, who saw an opportunity to extract bribes from the company’s officials, strengthening the EEIC against the French or Dutch. This relationship also created an opportunity for the company to build trading outposts in places where the rulers were corporative. In the end, these vast trading outposts created an opportunity for the company to control the surrounding regions, which accumulated to the vast empire’s creation. The company started collecting taxes in these areas for trading opportunities via the company contributing to increased wealth and power.
In most cases, such activities would require authorization from the Queen since the company is not a political entity or a state. Stern (2015, p. 427) establishes that as long as the company continued making profits and the board of governors was satisfied, the Queen did not interfere, making it easier for the company to use their trading outposts as administration centers which collectively made an empire. This mode of business was key for the transformation. With these increased resources by heavily taxing Indians and selling Indian products in other parts of the territory, the government looking out for the company’s interests could drive away the Dutch and the French, who were key competitors, thus, making the whole Indian region a trading center for EEIC.
Secondly, the company’s growth is attributed to the economic and financial prowess exhibited in the Battle of Plassey, where under the leadership of Robert Clive, the company entered into a war with Nawab of Bengal and his French allies in 1757. The Nawab complained about the taxes, while the French supported the Indians as a strategy to win Bengal in their competition with EEIC (Brunton, 2013, p. 80). The Nawab and the French were defeated, placing the company politically and economically on another level. Further, it increased the company’s taxation powers, especially in Bengal, which all contributed to the growth of the empire. The taxation system was not new in the Indian subcontinent, especially under the Portuguese, who had started it earlier; the only difference is that the company charged more, and people had to pay because it recruited the local rulers to manage the outposts. After the war, the position and office of a revenue collector were established, affecting other city-colonies like Madras, Bombay, and Calcutta, forming the foundation of the British Empire in India. Therefore, implementing tax was more accessible and effective as it used local rulers to explain, collect and give company. This created vast wealth to acquire more territories as the building blocks from a monopoly to an empire. Using the war as an example, the company also conquered other territories through force. In other instances, due to its power, the company made alliances with other territories. Further, because of its military prowess, the company started controlling some parts of the trade routes, especially the opium trade controlled in Bengal. It collected pass fees for traders who came for the commodity ad excise taxes on domestic sales, increasing the British revenue significantly (Deming, 2011, p.2).
Instead of security personnel, the company had an army to protect its interest. This army was recruited among the Indians, complemented by Englishmen, creating a big and powerful military force. This is also how it grew from a mere corporation to an empire, as its competitors could match the implied power the company had through the army. Using this powerful army, the company slowly and eventually subdued region after region until it controlled the entire Indian subcontinent. The company witfully made rulers sign property documents that they thought went to the Queen but legally became the company’s property. EEIC was owned by nearly half of the members of the parliament in England. Therefore, they did everything in their power, including creating and implementing British foreign policy to protect their interests in the company. Such support made the company triumph over business and territorial competitors leading to its growth.
The company was willing to go to any lengths for profit, which was the driver for its vast territorial empire. Tea was a valuable trading commodity at the time, especially in England. Thus, the company sought ways to enter and dominate the tea trade. The EEIC smuggled opium into China from its Indian colonies in exchange or in a bid to get over the tea trade in China. This is because China produced the highest quality, and tea was in demand in England, making it a perfect business opportunity for EEIC. However, the company did it through unconventional means by smuggling opium into China. This raised health concerns, among other issues with the Chinese that contributed to the opium wars. Like other wars, EEIC had superior military resources, thus defeating the Chinese and taking over the tea trade. This also meant that the company had some leverage on China influencing several trade decisions indicating its expansion further into the Chinese. Britain wanted bilateral trade with the Chinese as England’s demand for tea and silk was high compared to Chinese demand for British products.
Further, China did not conform to the Westernized ways of doing business. Thus, the war was a way of putting China in line and accepting bilateral trade relationships with the company as a representative of Britain. Therefore, forcing China into business with Britain was another reason for expansion. EEIC became the leading trader in tea, a commodity it does not produce, where the profits are added to the company’s existing resources.
Dalrymple (2019, p.7) explains that the company’s behavior and features as a sovereign state contributed to its expansion. This is evidenced by its military prowess, where the company had military and associated resources that questioned whether the company was a business entity or a state. The business outposts the company was its territory where it “combined the tights of private persons, such as to sue and be sued or contract debts, with features of sovereign public power such as the prerogative to wage war and conduct diplomacy, govern over people and places, or coin money” (Stern, 2015, p. 433). Such kind of power meant that the company, through the charter signed by the Queen, had implied sovereign power, which contributed to its growth. As established, there was little to no interference from the crown, where such power made it stronger to reign and acquire more wealth for its country and shareholders. This is evidenced in how in the end, Britain did not give power back to the Indians and other territories acquired by the company but instead took them on such British territories and colonies.
In the end, the British government, through the India Act, formalized the government’s involvement in the company. This meant that all its territories and the vast empire it had conquered as now under the government. The government held the company in check, and an accountability process emerged. This compromised the functioning of the company, including highlighting corruption in its operations and questions about commercial interests surpassing everything else, including the sovereignty of the Indians came to light. This was the beginning of the end which was made worse by the free trade ideology that compromised the functionality of the monopoly the company had become. Aside from economic failures, the company also failed to manage its territories. India revolted against the company’s insensitivity to their religion and the increased military use, which created frequent tensions which were not good for business; thus, the government intervened. Stern (2015, p. 440) explains that though EEIC dissolved many years ago, it created the idea of modern business especially conglomerates, where if unregulated, can have unimaginable power. The company’s impacts are felt today, with tea, pepper, and other products brought into the country by the EEIC still part of the English culture.
References
Brunton, Bruce. “The East India Company: Agent of Empire in the Early Modern Capitalist Era.” Social Education 77, no. 2 (2013): 78–98. https://www.socialstudies.org/system/files/publications/articles/se_77021378.pdf
Dalrymple, William. The anarchy: The East India Company, corporate violence, and the pillage of an empire. Bloomsbury Publishing USA, (2019):1–87. https://cdn.waterstones.com/special/pdf/9781408864371.pdf
Deming, Sarah. “The economic importance of Indian opium and trade with China on Britain’s economy, 1843–1890.” Economics Working Papers 25 (2011). 1–20. http://www.whitman.edu/Documents/Academics/Economics/Working%20Paper%20Contents/WP_25.pdf
Stern, Philip J. “The English East India Company and the Modern Corporation: Legacies, Lessons, and Limitations.” Seattle UL Rev. 39 (2015): 423–444. https://digitalcommons.law.seattleu.edu/cgi/viewcontent.cgi?article=2311&context=sul
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