The British in India (First Phase 1600-1740 A.D.)

The English venture to India was entrusted to the East India Company, to which on 31 December 1600, Queen Elizabeth I granted a royal charter addressed to “George, Earl of Cumberland, and 215 Knights, Aldermen, and Burgesses” under the name, ‘Governor and Company of Merchants of London trading with the East Indies’. The charter awarded the newly formed company a monopoly on trade with all countries east of the Cape of Good Hope and west of the Straits of Magellan for a period of fifteen years. The company included a group of London merchants and its nature was not comparable to the national character of that of the Dutch company. Its initial capital was less than one-tenth of the Dutch company. Its object was to trade in spices; and it was at first organised on a single-voyage basis. In the year 1657 a permanent joint stock system was established.

The company’s initial objective was the spices of the East Indies, and it went to India only for the secondary purpose of securing cotton textiles for sale to the spice growers. The British East Indian venture met with determined Dutch opposition, culminating in the massacre at Amboina in 1623 which was a major factor in leading the British to focus their energy on India subsequently.

The Rivalry between the English and the Portuguese

In India the English initially found the Portuguese enjoying Mughal recognition at Surat. The Portuguese command of the sea nullified the impact of the English embassy to the Mughal court of Emperor Jahangir. However, the English victory at Swally Hole in 1612 over the Portuguese, whose control of the pilgrim sea route to Mecca was resented by the Mughals, brought about a major change in the situation. The embassy of Sir Thomas Roe (1615-1618) to the Mughal court received a farman which granted the English the right to trade and to establish factories in return for functioning practically as the naval subordinates of the Mughal empire. This success in acquiring trading privileges in India, along with England’s exclusion from Indonesia by the Dutch in the same period, ensured that India, and not the Far East, would be the centre point of English activity in Asia henceforth.

In the 17th century the East India Company was engaged in a period of peaceful trading through factories operating under Mughal grants. This covered Surat and as well as Hooghly in Bengal. In the south the factory at Masalipatnam (1611) was moved to the site of Madras. The only exception to this arrangement was the island of Bombay; although independently held, its trade was small because the Marathas, who were locked in a continuous struggle with the Mughals, held the hinterland region.

Trading Pattern of the East India Company

The trade the British company developed differed radically from that of the Dutch.

• It was a trade in bulk instead of in highly priced luxury goods.
• The profits were a result of high volume rather than high margins.
• It worked in competitive instead of monopolistic conditions.
• It depended upon political goodwill instead of intimidation.

The English trade ultimately became more profitable than that of the Dutch, because of the smaller area covered, and, not needing to deploy armed forces to enforce monopoly helped reduce overhead costs. However it had to face its own difficulties.

• The Indians would take little other than silver in exchange for their goods, and the export of bullion was anathema to the concept of mercantilism, then England’s dominant political economic ideology.
• Lack of military power necessitated management of Asian governments instead of their coercion.
• Lack of home dominance meant that the Company often had to compromise and trust the hazard of fortune.

To solve the silver problem, the English developed a system of inter-country trade not unlike that of the Dutch, the profits of which helped to pay for the annual export of goods intended for England. The main features of the British trading system were that

• Madras and Gujarat supplied cotton goods, and Gujarat supplied indigo as well
• Silk, sugar, and saltpetre (used for gunpowder) came from Bengal
• A spice trade developed along the Malabar Coast from 1615 on a competitive basis with the Dutch and Portuguese
• Opium was shipped to East Asia, where it later became the basis of the Anglo-Chinese tea trade
• The merchants lived in factories (which were not manufacturing centres but trading houses) or in a collegiate type of settlement

Meanwhile the company also faced many difficulties on its home ground in England.

• There was continuous mercantilist disapproval and mercantile jealousy of the company’s monopoly.
• Government instability often threatened the company’s privileges.
• In 1635 King Charles I encouraged the rival Courteen Association.
• After the overthrow of the monarchy in England following the Civil War, Oliver Cromwell allowed virtually free trade with India until 1657 adversely affecting the Company’s interests.
• After the restoration of the monarchy under the later Stuarts, the company prospered, only to have its position weakened by conflict in India as well as by the Whigs’ Glorious Revolution of 1688-1689.
• The Whigs (a major political force in Britain in this period) also promoted a new company in 1698 , which, however, failed to oust the old one despite several years of struggle.
• In 1702 the government insisted on a merger between the two companies, which was completed in 1708-1709 under the name of the ‘United Company of Merchants of England Trading to the East Indies’. This was the body that later went on to lay the foundation of British rule in India.

By the beginning of the 18th century English commerce with India was nearly a hundred years old. Passing through many vicissitudes, the East India Company had evolved into a commercial concern matched in size only by its Dutch rival. By this time some 3000 shareholders subscribed to a stock of ‘3200000; a further ‘6 million was borrowed on short-term bonds; twenty or thirty ships a year were sent to Asia and annual sales in London were worth up to ‘2 million. By this time India had become the focal point of the Company’s trade. Cotton cloth woven by Indian weavers was being imported into Britain in huge quantities to supply a worldwide demand for cheap, washable, lightweight fabrics for dresses and furnishings. Twenty-four directors, elected annually by the shareholders ran the Company’s operations from its headquarters in the city of London.

However the Company still had many rivals and critics in Britain who in order to harass it, launched attacks on the export of bullion by the Company, as well as asking the government to limit the sale of cotton goods in England. In 1700 the sale of Asian silks and printed or dyed cottons in Britain was banned, but their trade continued for re-export to continental Europe. After 1700 the company found a new profitable line in the Chinese tea trade, whose imports increased more than 40 -fold by 1750 .

Relations of the Company with the Mughal Empire

The company had suffered a serious setback when it resolved, under the inspiration of Sir Josiah Child, to resort to armed trade and to attack the Mughals. However, Emperor Aurangzeb’s forces proved too strong for the Company, and the venture (1686-1690) ended in disaster. As a consequence of this fiasco the Company sought to safeguard its position in two ways. One was the foundation of Calcutta by Job Charnock in 1690-a mudflat that had the advantage of a deep anchorage-and the second was the construction of fortified factories surrounded by satellite towns. These were the responses, with Mughal consent, to increasing Indian insecurity. The Madras factory was already fortified, and Fort William in Calcutta followed in 1696. The company thus had, with independent Bombay, three centres of power in India.

For the next half century the company confined its relations with the Mughals, who had now spread to the deep south beyond Madras, to disputes over rights and terms of trade at local levels. Fresh privileges were obtained in Delhi but by using the stratagems of supplication and negotiations rather than by attempting to use force. The English factors gradually learnt the art of Indian diplomacy as they earlier had to learn the arts of Indian commercial management.

The Company’s main settlements, Bombay, Madras and Calcutta, were established in the Indian provinces where cotton textiles for export were most readily available. These settlements had evolved from ‘factories’ or trading posts into major commercial towns under British jurisdiction, as Indian merchants and artisans moved in to do business with the Company and with the British inhabitants who lived there.