SOCIAL SCIENCES

METHOD 2
(ASSIGNMENT)

EAST INDIA COMPANY

SUBMITTED BY: ABID ALI KHOWAJA (05)
B.Ed. 1st Semester, 2012

SUBMITTED TO: DR. ABDUL SATTAR ALMANI

INTRODUCTION

The East India Company was a London-based trading organization. It acted as the vehicle for British commercial and imperial expansion in Asia. For more than two centuries, until its demise in the aftermath of the Indian Mutiny (1857-59), it dominated both trade and Empire. Today, not even the most powerful firm can compare in terms of longevity and wide-ranging economic, political and cultural influence. At one time, a tenth of the British exchequer's revenue came from customs duties on the Company's imports. Its armed forces were bigger than those of most nation states. Without it there would have been no British Empire. The Company also played a leading role in London's commercial, cultural and political life. Its employees included tradesmen, manufacturers, shipbuilders, soldiers, seaman, dock labourers, warehousemen and clerks. The Company itself had a huge influence on the development of the port of London. It was responsible for the establishment of docks, warehousing and even roads. The 'East India' lobby was a powerful voice in London's business and political life. For centuries, the Company held a monopoly of trade with the east.

ORIGIN AND DEVELOPMENT

Soon after the defeat of the Spanish Armada in 1588, London merchants presented a petition to Queen Elizabeth I for permission to sail to the Indian Ocean. The permission was granted and in 1591 three ships sailed from England around the Cape of Good Hope to the Arabian Sea. One of them, the Edward Bonaventure, then sailed around Cape Comorian and on to the Malay Peninsula and subsequently returned to England in 1594. In 1596, three more ships sailed east; however, these were all lost at sea. Two years later, on 24 September 1598 another group of merchants having raised 30,133 in capital, met in London to form a corporation. Although their first attempt was not completely successful, they nonetheless sought the Queen's unofficial approval, purchased ships for their venture, increased their capital to 68,373, and convened again a year later. This time they succeeded, and on 31 December 1600, the Queen granted a Royal Charter 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. For a period of fifteen years 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. Sir James Lancaster commanded the first East India Company voyage in 1601.
Sir James Lancaster

Initially, the Company struggled in the spice trade due to the competition from the already well established Dutch East India Company. The Company opened a factory in Bantam on the first voyage and imports of pepper from Java were an important part of the Company's trade for twenty years. The factory in Bantam was closed in 1683. During this time ships belonging to the company arriving in India docked at Surat, which was established as a trade transit point in 1608. English traders frequently engaged in hostilities with their Dutch and Portuguese counterparts in the Indian Ocean. The Company achieved a major victory over the Portuguese in the Battle of Swally in 1612. The Company decided to explore the feasibility of gaining a territorial foothold in mainland India, with official sanction of both countries, and requested that the Crown launch a diplomatic mission. In 1615 King James I sent Sir Thomas Roe as his ambassador to the court of Emperor Jahangir. The gifts that Roe gave on behalf of the King and his personal manners pleased the emperor and he granted the company trading rights as pleaded by the ambassador. Thus the company began to set up trading stations what they called 'factories' in the western and eastern coasts of southern India.
Symbol of East India Company

EXPANSION
In 1639 the local chief of Wandiwash by a grant empowered the English company to build a fortress at Madras and govern it as their own territory. Fort St. George was built at Madras, which became the headquarters of the company's business in India. The East India Company set its foot in Bengal in 1633 when a factory was established at Hariharpur on the Mahanadi delta. On 2 February, the English obtained a farman from Emperor Shahjahan permitting them to pursue trade and commerce in Bengal. The most important privilege was obtained from the Bengal governor Shah Shuja who permitted the English to have trade in Bengal without any customs duties in lieu of an annual lump sum of Rs. 3000 only. It was this unique privilege which would take the company to the political domination of Bengal in course of time. In the same year the English founded their factory at Hughli. Another factory was opened at Kasimbazar in 1658. In 1668, a new factory was opened at Dhaka, the capital of Bengal. Towards the end of the 17th century India became 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. The process of factory settlement was completed by the founding of Calcutta by Job Charnock in 1690 and from that time onward began the processes of establishing political dominance of the company in Bengal. The next step was

to extend the company's influence by purchasing the zamindari of Calcutta, Sutanuti and Govindapur, thus quietly laying the foundation of power. In 1798 a rival company was formed and it got parliamentary incorporation under the name of "General Society Trading to the East Indies". The establishment of Fort William in Calcutta and turning it an independent Presidency in 1700 followed these events. The two rival 'East India Companies' were amalgamated in 1702 with a new charter and a new name - 'The United company of Merchants of England Trading to the East Indies', though the popular name 'East India company' remained till the last days of the company. From the beginning of the eighteenth century, the company was turning everincreasing trade in Bengal. The number of ships coming to Bengal was increasing every year. This was also the time when Bengal had a great administrator in the person of Murshid Quli Khan. Under him the Bengal trade and commerce had witnessed remarkable development, particularly its foreign trade. The company tried to take advantage of the weakness of the centre after the death of Aurangzeb in 1707, but Murshid Quli was resolutely opposed to giving new advantages to the company while severely restricting the old privileges.
Flag of East India Company

The company was particularly indignant about the harassment that its officials suffered at the chowkis or customhouses. The tendency of the officers to have their private trade made duty free in the name of the company's dastak led to frequent conflicts. Quite often company's boats were halted for proper check of their goods. Murshid Quli Khan never yielded to the demands of the company for more privileges. The Calcutta Council then sent an embassy under John Surman to Emperor Farrukhsiyar with lavish presents. The Surman Embassy was warmly received by the emperor who was pleased to issue a farman, popularly known as farrukh Siyar's farman of 1717 (the date on the farman is December 30, 1716) which directed the Bengal Subahdar to give the following main privileges to the company: that in addition to the existing privileges the company was to be given zamindari right over the thirty eight mouzas adjoining the Calcutta settlement; that in case the goods belonging to the company and other English were stolen, attempts must be made to recover the goods failing which proper compensation must be given; that Madras rupees of Surat quality must pass in Bengal without any discount; that the original sanads must not be demanded;

 that all persons who might be indebted or accountable to the company should be delivered up to the Chief of the Factory; that a dastak given by the chief of the factory should exempt the goods from being stopped or examined by the chowkis; that the Subahdar should allow the company to coin money at the Murshidabad Mint. The company knew it very well that the Bengal Subahdar, as they knew him, would not be agreeable to abide by this charter of rights which was actually purchased from the needy emperor and which had undermined seriously the sovereign status of the kingdom. But they also knew that he had given them some legal basis of their extortionate trade and commerce in Bengal and fight for the realization of the privileges on legal grounds. The farman did not enumerate the articles to be covered by dastak. So the nawab's chowkis and the company officials were in confusion and the situation resulted in frequent conflicts, sometimes skirmishes. While the company officials saw that the nawab himself gave many orders to arrest and confine the breakers of law, the company even threatened reprisal. But Murshid Quli Khan avoided the direct confrontation. The death of Murshid Quli Khan in 1727 and subsequent capture of power by Shujahuddin Khan was an opportunity for the company to get their demands realized; especially the zamindari rights over thirty eight villages. Shujauddin more or less followed the footstep of his predecessor and very cautiously followed a policy of keeping the continuation of export trade undisturbed and at the same time avoid any confrontation with the company. But on the trade item of salt, which was claimed to have been duty free by the company but not so by the nawab, the relation between the company and the Subahdar got embittered to the point of a war which was somehow avoided at the mediation of Fatehchand, the Jagat Seth. The private trade under the cover of dastak was a major breach of trust between the company and the government. The company would not allow the chowkis to examine the cargo of boats on the legal ground that the imperial farman of 1717 exempted them of such examination. During Shujauddin Khan's period (1727- 1739) East India company's trade increased phenomenally in spite of very cold relation between the nawab and the English. With the expansion of trade and commerce grew the company's interest in Bengal. It became the company's policy to see a nawab at Murshidabad favorably disposed to it. Such a favorable disposition the company got, by default, during the regime of Alivardi Khan (1740-1756). Being constantly harassed by the Maratha raiders, Alivardi found it prudent not to create another front of harassment by taking strict measures against abuses and excesses of the East India Company. But Maratha incursions withered away at the accession of Siraj ud Daulah to the masnad. Siraj ud Daulah directed the English three conditions to observe if they were inclined to continue trade and commerce in Bengal: they must demolish the unauthorized fortification of Calcutta forthwith, they must stop abuses of dastak and they must abide by the law of the land.

The Fort William Council disregarded the nawab's orders at which the exasperated nawab attacked Calcutta and the English quickly fled away downstream of the Hughli river. In celebrating the victory Siraj ud Daulah renamed Calcutta as Alinagar after his grandfather. In his act against the English, Siraj ud Daulah had moral support from the French. It was the period of Seven Years War in Europe. To the British, the Alinagar action of Siraj ud Daulah was interpreted as a double defeat - defeat with the native nawab and with the French who supported him. Soon reinforcement came from Madras under the command of Robert Clive. Clive recaptured Calcutta (January 2, 1757) and stormed the Mughal port of Hughli in reprisal. A dialogue was soon opened with the Murshidabad Darbar faction secretly opposed to the young nawab. Jagat Seth was its leader. There followed a secret treaty with the conspirators confirming all the privileges and compensations claimed by the English. Mir Jafar, the recently sacked bakhshi of the nawab, was chosen to be the next nawab of Bengal. According to the terms of the treaty a sham battle took place at Plassey on June 23, 1757. Most of the nawab's army remained firmly still at the instance of Mir Jafar and other conspirators. Siraj ud Daulah was defeated and later slain by Mir Jafar's son, Miran.

BEGINNING OF THE END OF THE COMPANY

The battle of Plassey has been correctly interpreted in the eighteenth century European history as a British victory at one important front on the world theatre of battles fought overseas in the Seven Years' War by the two great rival powers- England and France. It was a defeat for Siraj ud Daulah and for his ally France at the same time. The East India Companys success in installing a puppet nawab on the Murshidabad masnad and ousting the French presence in Bengal had inaugurated informally the establishment of British political dominance in Bengal. In realizing their goal the company proceeded step by step. The 24-Parganas were obtained from the new nawab as a gift to the company immediately after Plassey. In 1760, three large and resourceful districts of Bengal (Burdwan, Midnapur and Chittagong) were acquired. The diwani or revenue administration of Bengal, Bihar and Orissa was acquired in 1765. From 1765 to 1772, the company shared revenue of Bengal but took no responsibility in administering it. On behalf of the company, Syed Muhammad Reza Khan managed diwani administration. This was the period when the company and its servants plundered the country's resources wantonly. The consequence was the collapse of the economy and collapse of law and order of the country. The famine of 1769/70, which decimated onethird of the Bengal population, was the result of the great ravage. The Bengal conquest by the company proved to be not only ruinous for Bengal, but also for the company itself. In a plundering mood the company and its servants became busier in enriching themselves. Consequently, ever since the Bengal conquest, the company, which used to declare hitherto attractive dividend every year, was running at a loss. The chronic losses forced the company at last to pray for a 'rescue loan' from government in 1771. The political considerations led parliament to grant a loan and at the same time interfere into the affairs of the company by enacting The Regulating Act, 1773.

Events towards the end of the company The Regulating Act of 1773 hinted at two parallel developments - gradual encroachment of government control on the company affairs and corresponding curtailment of power of the company until its complete abolition in 1858. The Regulating Act had defined how the affairs of the company including the governance of the new state had to be managed. Government reserved the right to interfere into the affairs of the company any time it felt necessary. It felt to interfere in 1784 by enacting a more elaborate law controlling the Indian affairs of the company. A permanent parliamentary committee called Board of Control was set up to oversee the affairs of the company. The members of the court of directors were barred from receiving gifts and presents from cadets whom they nominated to become members of the Civil Service in Bengal. A governor general, Cornwallis, was directly appointed by parliament with specific instructions to execute. Cornwallis, to the great disadvantage of the company, had formulated the mode of administration of the colonial state. Private trade and receiving gifts and presents on the part of officers were totally banned.

Coins of east India Company

Under the pressure of the British private traders, the monopoly right of the company was greatly relaxed under the Charter Act of 1793. A definite amount of tonnage in the company's ships was kept reserved for the private traders. The Act redefined the company's status by declaring that the company's state in India belonged to the Crown and henceforth they would have to rule India on behalf of the Crown and the Board of Control was vested with the power of appointing the Governor General Lord Wellesley, who turned the company's Bengal state into an Indian empire, was appointed by the Board of Control. The colonial state became such an unwieldy affair and the Free Trade pressure groups became so influential that parliament took several decisions affecting the interests of the company. The most crucial of them was the abolition of the monopoly right of the East India Company by the Charter Act of 1813. India was thrown open to free trade. The company, as a commercial organization, was now required to operate under the market forces. Never used to compete within the Indian market, the East India Company became a sick organization commercially. Furthermore, the administrative branch to attract competent Britons to the commercial management of the company too pitiably overshadowed the commercial branch of the company.

Under the circumstances, the company's commercial activities were abolished under the Charter Act of 1833. Only its China trade was retained. Henceforth the company was purely an administrative body on behalf of the Crown. Its only privilege was to nominate cadets for the enrollment in the company's Covenanted Civil Service. This also was circumscribed by many limitations set by the Board of Control. Under the Charter Act of 1853, the company was shorn of the last vestige of its power and privilege; the Director's privilege to nominate cadets for company's Civil Service was abolished and the system of competitive examination for recruiting civilians on the basis of merit was introduced, instead. The East India Company, the builder of the British Empire in India and the largest corporate organization in Britain for two hundred years, was thus left with its shell only. For all practical purposes, the company became an irrelevant and burdensome body. The Sepoy Revolt of 1857 came as an opportunity for parliament to get rid of this nominal body and the British Government nationalised the Company. The Company lost all its administrative powers; its Indian possessions, including its armed forces, were taken over by the Crown pursuant to the provisions of the Government of India Act 1858.

ESTABLISHMENTS IN BRITAIN
Throughout most of these changes the basic structure of Company organization in East India House in the City of London remained largely unaltered, comprising a large body of proprietors or shareholders and an elected Court of Directors, headed by a chairman and deputy chairman who, aided by permanent officials, were responsible for the daily conduct of Company business. The Board of Control maintained its separate office close to the Government buildings in Westminster.

East India House, Leadenhall Street c. 1800

With the India Act of 1858 the Company and the Board of Control were replaced by a single new department of state, the India Office, which functioned, under the Secretary of State for India, as an executive office of United Kingdom government alongside the Foreign Office, Colonial Office,

Home Office and War Office. The Secretary of State was assisted by a statutory body of advisers, the Council of India, and headed a staff of civil servants organized into a system of departments largely taken over from the East India Company and Board of Control establishments, and housed in a new India Office building in Whitehall. The Secretary of State for India inherited all the executive functions previously carried out by the Company, and all the powers of 'superintendence, direction and control' over the British Government in India previously exercised by the Board of Control. Improved communications with India - the overland and submarine telegraph cables (1868-70), and the opening of the Suez Canal (1869) - rendered this control, exercised through the Viceroy and provincial Governors, more effective in the last quarter of the nineteenth century. It was only with the constitutional reforms initiated during the First World War, and carried forward by the India Acts of 1919 and 1935, that there came about a significant relaxation of India Office supervision over the Government of India, and with it, in India, a gradual devolution of authority to legislative bodies and local governments. The same administrative reforms also led in 1937 to the separation of Burma from India and the creation in London of the Burma Office, separate from the India Office though sharing the same Secretary of State and located in the same building. With the grant of independence to India and Pakistan in 1947, and to Burma in 1948, both the India Office and the Burma Office were dissolved.

REFERENCES
http://en.wikipedia.org/wiki/East_India_Company http://www.sscnet.ucla.edu/southasia/History/British/EAco.html http://www.bbc.co.uk/history/british/empire_seapower/east_india_01.shtml http://www.history.com/this-day-in-history/charter-granted-to-the-east-indiacompany http://www.marxists.org/archive/marx/works/1853/07/11.htm http://www.victorianweb.org/history/empire/india/eic.html http://www.economist.com/node/21541753 http://www.defence.pk/forums/military-history-strategy/21586-history-eastindia-company.html http://www.bl.uk/reshelp/findhelpregion/asia/india/indiaofficerecords/indiaoffice scope/indiaofficehistoryscope.html http://www.banglapedia.org/httpdocs/HT/E_0005.HTM