East India Company | History, John Company, Battle of Plassey, Definition, & Facts

Early activities

The company was formed to participate in the East Indian spice trade. That trade had been a monopoly of Spain and Portugal until England’s defeat of the Spanish Armada (1588) gave the English the chance to break the monopoly. Until 1612 the company conducted separate voyages, separately subscribed. There were temporary joint stocks until 1657, when a permanent joint stock was raised.

The company, which commanded its own army, met with opposition from the Dutch in the Dutch East Indies (now Indonesia) and the Portuguese. The Dutch virtually excluded company members from the East Indies after the Amboina Massacre in 1623 (an incident in which English, Japanese, and Portuguese traders were executed by Dutch authorities), but the company’s military defeat of the Portuguese in India (1612) won them trading concessions from the Mughal Empire. In 1615 English diplomat Thomas Roe finalized a trade agreement with Mughal emperor Jahangir, and the company settled down to a trade in cotton and silk piece goods, indigo, and saltpeter, with spices from South India. It extended its activities to the Persian Gulf, Southeast Asia, and East Asia.

Control of India

The company began establishing trading outposts and settlements. In 1639 a fortification was built on the southeastern coast and formed the first significant British community in India. It was gradually developed to become the city of Madras (now Chennai) and became the base for the company’s mercantile operations. Calcutta (now Kolkata), in Bengal, was founded in 1690; it eventually became the center of the company’s commercial and political power. Between 1701 and 1761 the company fought a series of wars with the French East India Company, which controlled significant portions of the southern and eastern regions. The British, however, were able to gain ascendancy by exploiting the political chaos caused by the disintegration of the Mughal Empire beginning in the 1700s.

The company’s transformation from a trading corporation to a colonial power began with the British victory in the Battle of Plassey in 1757. Company troops commanded by Robert Clive defeated the forces of Siraj al-Dawlah, gaining control of the lucrative and strategic region of Bengal. A second decisive victory in the Battle of Buxar (1764) extended the company’s influence over the region of Bihar. After this initial incursion into the political affairs of India, the company expanded British imperialist interests to other portions of the country. Over the next century much of Indian territory was brought under direct rule by military conquest. British victories in the Mysore Wars (1767–69; 1780–84; 1790–92; and 1799), the Maratha Wars (1775–82, 1803–05, 1817–18), and the Sikh Wars (1845–46; 1848–49) helped the company consolidate power in the south, the southwest, and the northwest. Princely states, principalities that formed a significant portion of the Indian subcontinent, were brought under indirect rule by strategic alliances. While the princely states were nominally autonomous, the rulers signed treaties agreeing to submit to the political authority of the company and granting it trade concessions. Over time several princely states were brought under direct rule, either by annexation, such as in the case of Awadh, or by the doctrine of lapse policy, such as with Jhansi.

The territories directly controlled by the East India Company were organized into the presidencies of Bengal, Madras, and Bombay. As the company’s influence extended geographically, acquired territory was formed into provinces, such as Punjab. Administrative power was vested first in governors of the presidencies. Later, by a series of legislation enacted by the British Parliament intended to increase government control over the company’s affairs, a single governor-general became the locus of power. The princely states were subjected to oversight by a company-appointed resident or agent.

Economic and social impact

The East India Company’s primary interest in India was commercial, and its economic policies centered on trade and revenue collection, which gradually drained first Bengal and then much of the subcontinent of its wealth. Exploitative mercantile schemes and concessions gradually destroyed Indigenous crafts and industries, such as textile manufacturing, and reduced India to the status of supplier of raw materials and consumer to the imported end product. The company was granted the diwani, or right to collect revenue, in Bengal, Bihar, and Orissa (now Odisha) by the Mughal emperor Shah Alam II after his defeat in the Battle of Buxar. Ruinous levels of taxation also impoverished India; the land tax was particularly severe in the princely states, which had largely agrarian economies. The company’s harsh revenue policies are regarded as a direct cause of a famine that devastated Bengal in 1770.

Several unified systems were instituted under company rule. These included a judiciary and a postal service. The construction of the first line in India’s vast railway network began in 1850. There were also seismic social shifts during this period—the spread of Christianity and access to education, especially educational activities by missionaries, combined with reform measures such as the abolition of sati (a Hindu custom in which a wife immolates herself after her husband’s death) significantly impacted the existing social order.

Role as enslavers

Beginning in the early 1620s, the East India Company began using slave labor and transporting enslaved people to its facilities in Southeast Asia and India as well as to the island of St. Helena in the Atlantic Ocean, west of Angola. Although some of those enslaved by the company came from Indonesia and West Africa, the majority came from East Africa—from Mozambique or especially from Madagascar—and were primarily transported to the company’s holdings in India and Indonesia. Large-scale transportation of enslaved people by the company was prevalent from the 1730s to the early 1750s and ended in the 1770s.

Tea trade

After the mid-18th century the cotton-goods trade declined, while tea became an important import from China. Beginning in the early 19th century, the company financed the tea trade with illegal opium exports to China. Chinese opposition to that trade precipitated the first Opium War (1839–42), which resulted in a Chinese defeat and the expansion of British trading privileges; a second conflict, often called the Arrow War (1856–60), brought increased trading rights for Europeans.

Decline and loss of power

The original company faced opposition to its monopoly, which led to the establishment of a rival company and the fusion (1708) of the two as the United Company of Merchants of England trading to the East Indies. The United Company was organized into a court of 24 directors who worked through committees. They were elected annually by the Court of Proprietors, or shareholders. When the company acquired control of Bengal in 1757, Indian policy was until 1773 influenced by shareholders’ meetings, where votes could be bought by the purchase of shares. That arrangement led to government intervention. The Regulating Act (1773) and William Pitt the Younger’s India Act (1784) established government control of political policy through a regulatory board responsible to Parliament. Thereafter the company gradually lost both commercial and political control. Its commercial monopoly was broken in 1813, and from 1834 it was merely a managing agency for the British government of India. It was deprived of that role after the Indian Rebellion (1857), and it ceased to exist as a legal entity in 1873.