Europeans in India Part 8 The English East India Company Section I: Origins

Canberra, 5 March 2023

Before the 15th century, England was a backward agricultural country with no standing among the other kingdoms and States of the world. By the end of the 18th century, within a span of a mere three centuries, the same impoverished country had become the foremost political and economic power in Europe, a remarkable transformation by any standards. Opinions regarding this extraordinary rise of England into a world power vary across a broad spectrum of judgements, from being considered an enigma on the one end to attributing it to ‘private enterprise, courage and audacity of the English people’ on the other end. There is, however, general agreement that England’s astonishing rise started after the ‘defeat’ of the Spanish Armada in 1588.

Background

A detailed analysis of the staggering expansion of English power and influence overseas clearly brings out the fact that it was neither an accident nor brought about by the so-called inherent ‘audacity’ of the English people. It is seen as the natural culmination of successfully harnessing the prevailing social forces in Europe, which was predominated by the ‘spirit of conquest’. In the early part of the centuries being discussed here, Europe was going through what has been described as an Economic Revolution. This revolution was influenced by the fairly rapid increase in the wealth of almost all European countries, brought about mainly through the pursuance of overseas trade by adventurous merchants. This upheaval, or transformation in the circumstances of Europe, was spearheaded by the merchant bourgeoisie, who as a result, were rising in importance in the social milieu through their new-found wealth.

The quest for wealth, which became the primary vocation of the people of Europe, resulted in irrevocable changes to the socio-religious values in England. For example, ‘usury’—the payment to avail a loan—had been banned as unchristian by the Act of 1552. However, with the changing circumstances, the Act was repealed by the House in 1571. In addition, new and hitherto unknown socio-religious forces were on the rise, brought about by disparate factors connected through the thread of ‘exploration and conquest’. Gradually, scruples, ethics and morality—esoteric qualities and considerations at best—were pushed to the background as inconvenient social norms to be considered only when they would not impinge on the creation of wealth. The exploration of the Americas, the beginning of the looting and subsequent conquest of the Indian Ocean region, and the enforcement of slave trade in Africa, together signified the dawn of a wealthier era for the Europeans and England.

Rise of the Merchant Class

With the power of their new-found wealth, the merchants in England, and elsewhere in Europe, broke out of the control of the feudal aristocracy that had existed for centuries. In England, the towns broke away from feudal domination and started to be organised by merchants into Merchant Guilds. To start with, these guilds had fewer class distinctions and were somewhat egalitarian in character. By creating these guilds, the merchant class gradually shifted general prosperity and growth from petty productions into wholesale trade, which in turn facilitated the emergence of a new class of privileged merchants, wealthier and more influential than their predecessors. These merchants, at the apex of the hierarchy, went on to establish a ‘plutocracy of merchants’, who with the capital at their command, held sway over most of the production-based economy. In a slightly derogatory manner, the term ‘a nation of shop keepers’ could now onwards be applied to England.

In England, the concept of a merchant went through three discernible iterations. First, it embraced all who were involved in buying and selling, which included petty shopkeepers and minor craftsmen; second, by late 15th and the greater part of 16th century it applied to wholesalers and gradually started to exclude the craftsmen; and third, by early to mid-17th century, the term was exclusively used for the large and extensive dealers in goods. Explained on a different manner, the three divisions were the original guild merchants, then companies of merchants and third the merchant adventurers. The guild merchants consisted of small shopkeepers and artisans with no clear demarcation between the merchant and the manual craftsmen; the second iteration, of groups, started when a distinct separation of commerce from the crafts took place, creating a fellowship of dealers in petty wares; and the third, with the growing importance of foreign trade, the gathering of merchant adventurers, a grouping within which over a period of time the merchants were forbidden to be even retail shopkeepers.

The last two categories merged in an uneasy combination and produced the concept of a Company of Merchant Adventurers—for example a group that in 1407 established and constituted a registered company by a Royal Charter from King Henry IV that was given a monopoly for the export of cloth. Meanwhile, across Europe foreign trade was being seen as the key to economic growth. It was not surprising that the English merchant class also moved with the times. By mid-16th century, they were solidly entrenched in foreign trade and had spread out into the North Sea and the Mediterranean Sea. In 1553, the Russia Company was formed and two years later the company received the monopoly to own two ships corporately. Subsequently, the Russia Company received permission from the Tsar to conduct exclusive trade with Russia. In 1557, the Company representative went to Persia and Bokhara and ten years later obtained permission to trade across Russia with Persia, Kazan and Astrakhan.

The same year that the Russia Company was formed, the English merchants formed the Africa Company whose members very quickly grew rich on the back of a thriving slave trade. It is surprising that both England and Holland, the most religious countries in the world at that time, had absolutely no religious, ethical or moral qualms about carrying on with the slave trade and reaping the profits—hypocrisy at its unequivocal best.

‘… the lucrative enterprise they took up “to kidnap or purchase and work to death without compunction the natives of Africa.” About such “idyllic proceedings” as Marx described the “chief momenta of primitive accumulation, … the English and the Dutch, at that time the wisest and most religious nations of the world … had no more scruple … than they had about enslaving horses.”

—Karl Marx,

Capital: A Critical Analysis of Capitalist Production, Vol I. p. 775.

In 1578, the Eastland Company obtained a charter to trade through the Sound with Norway, Sweden, Lithuania, Poland and Finland, from the River Oder to Dantzick and Copenhagen. (The Sound, ‘Oresund’ in Danish, is a strait that demarcates the Danish-Swedish border, separating the two countries. The strait is 118 kilometres long and varies in width between four and 28 kilometres) In 1581, a letter of patent was issued to a group of four merchants to trade with Turkey, which was the embryo from which the Levant Company evolved. In 1600, the Levant Company morphed into the East India Company, coming off a logical sequence of events along with the growth of merchant capital in England.

While the English were forging ahead with their initiatives in the conduct of foreign trade, other nations were also setting up companies to monopolise trade in different commodities. The English companies, from the beginning strove to exclude competitors, normally functioning under the umbrella of a Royal charter. In short order, primary aim of the English companies became enshrined in stone—monopolise trade and make profit under any and all circumstances, and defeat all competition by all means available.

Birth of the English East India Company

Backdrop

The extraordinary wealth of India was known in Europe since the time of the Greeks and the Romans. In the Middle Ages trade between Europe and Asia was carried out through several routes. The eastern most was by way of Trebizond (Trabzon, traditionally called Trebizond in English, is a city on the Black Sea coast of north-eastern Turkey and the capital of the Trabzon province) north through the Rivers Don and Volga to the Baltic Sea. The second route was through the Persian Gulf, Baghdad and Aleppo to Constantinople (today’s Istanbul) and then to Venice and Genoa. The third route went through the Red Sea, then overland to the River Nile and sailed along the river to Alexandria where Italian ships awaited the shipments.

The commonality in all the three routes was that at some point in the transhipment the goods had to be carried over land on horse or camel back for considerable distances. Such transportation by land was not only prohibitively expensive, but also restricted the bulk that could be carried. Irrespective of the commodity, the per unit weight of cargo directly influenced the prices that were required to be paid at the end of the journey. The sea voyages were purely coastal in nature and dependent on the monsoons and trade winds—in Asia this coastal trade was the monopoly of the Arab sailors.

For Europe the East, epitomised by India, was the Eldorado of incredible richness and wealth. The belief was buttressed by the trade also being a one-way process—Europe had no goods to export and therefore had to pay in gold and silver for the commodities from the East. This one-way transaction diminished Europe’s store of bullion, while the Oriental traders and the European merchants made enormous profits. From an Indian perspective, external trade was mainly conducted through the sea routes that emanated from the western coast of the Peninsula, across the Arabian Sea and then through the Persian Gulf or the Red Sea. A land route through Bokhara existed but was never considered a successful enterprise mainly because of the risks involved in terms of marauding tribes of the interior and the sheer inaccessibility of the route. Basically, trade from the East revolved round Arab traders collecting wares from Indian coastal towns and ports and handing them over to European merchants in the Mediterranean ports or at the trade centres in Western Asia.

Trade with India – Changing Perceptions

The emergence of even small European countries as maritime powers, combined with the rise of the ‘merchant adventurers’ started a trend in the concept of foreign trade that altered the old norms. It increased the power and influence of the merchant class that led to an irresistible restlessness in various European countries, especially the ones that were impoverished and without real influence in the Western world. They had started to view foreign trade as the main source of acquiring wealth, with the help of which they could attempt to climb out of their situation of irrelevance.

‘The Europe of the earlier Middle Ages, like the world of the twentieth century, had been a closed circle. But it had been closed, not by the growth of knowledge, but by the continuance of ignorance; and, while the latter, having drawn the whole globe into a single economic system, has no space left for fresh expansion, for the former, with the Mediterranean as its immemorial pivot, expansion had hardly begun. Tapping the wealth of the East by way of the narrow apertures of the Levant, it resembled, in the rigidity of the limits imposed on its commercial strategy, a giant fed through the chinks of a wall. … this narrow framework had been home. In the fifteenth century it was felt to be a prison. Expanding energies pressed against the walls; restless appetites gnawed and fretted wherever a crack in the surface offered room for erosion.’

—R. H. Tawney,

Religion and the Rise of Capitalism, pp. 77–78.

The 15th century Europe saw great advances being made in the art and science of shipbuilding and maritime navigation techniques, while at the same time merchants from several countries were making concerted attempts to end the monopoly that Venice and Genoa had on the Eastern trade. It was also the time when the traditional trade routes through West Asia were being threatened by the conquering southward march of the Turks. They overthrew the Arabs and captured Constantinople in 1453. Gradually trade started to dry up, becoming less in volume, while the risks involved in overland trade increased considerably.

This somewhat troublesome development, instead of acting as a deterrent, only whetted the merchant appetite for trade with India. The merchant class had witnessed first-hand that even a small quantum of trade with India had elevated feeble and inconsequential States into rich and powerful ones. Further, the profits from India-trade were seen to constitute a large part of the fortunes of even opulent countries. From a historic perspective, it could be gleaned that the mainstay of the power and dominance of the Grecian monarchies in Syria and Egypt was wealth from India; and in contemporary times it had raised the small and obscure Republic of Venice to the rank and influence of an extremely influential kingdom.

With the Mediterranean routes starting to be regularly interrupted by the last quarter of the 15th century, Western Europe increasingly started to become the seat of the Eastern trade. European nations went into developing maritime capabilities required to successfully conduct transoceanic voyages, almost on a war-footing. The ‘unclaimed’ wealth of the Orient was beckoning.

The efforts and the successes were readily visible—in 1492, Columbus reached the Americas during his attempt to arrive in India by the long route; and in 1497, Cabot sailed from Bristol, reached Cape Breton Island and thought it was the north-east coast of Asia, taking ‘possession’ of the island on behalf of King Henry VII. In 1498, Vasco da Gama rounded the Cape of Good Hope and reached the western shores of the Indian sub-continent. The reality of this voyage indicates that it cannot be counted as a commercial success, the only achievement being opening the sea-route around the cape at the tip of the African continent. However, Vasco da Gama returned from India with some amount of cargo, which was claimed to be worth sixty-fold the cost of the voyage. Irrespective of the veracity of this grossly exaggerated estimate, the effect in Western Europe was electrifying.

In one fell sweep, the Gama voyage had destroyed the monopolistic power of the Italian merchants—European centre of gravity for Eastern trade decisively shifted to the Atlantic shores. Without any delay the European nations set about establishing ‘direct trade relations’ with India.

Early Efforts of the English Merchants

Ever since the Portuguese opened the sea-route to the Indian Ocean, the English had been devising ways and means to first enter and then dominate the Indian trade. The first known attempt was in 1527. Robert Thorne, a merchant who had spent several years in Seville, Spain and had gathered a good understanding of the Portuguese trade with India submitted a project for approval to King Henry VIII. In his submission, Thorne elaborated the means by which English merchants could gain access to the somewhat restricted Indian trade and then develop it to equal or even surpass the then Portuguese position of eminence in the Indian Ocean.

Two voyages, a decade apart in 1527 and 1537, resulted from Thorne’s efforts. Both the voyages sailed to the north-west, since the Portuguese claimed exclusive rights to the passage to India around the Cape of Good Hope and defended this self-proclaimed right with force. The voyages ended as abject failures. Further attempts, during the reign of Edward VI, sailing to the north-east were slightly more successful and resulted in the birth of the Russia Company. In 1580, another attempt through the north-east, avoiding Portuguese embargo also failed.

The English finally made up their mind to defy the Portuguese and in 1582 and 1596 sent two expeditions via the Cape of Good Hope to China. However, both the expeditions ended in failure and were absolute fiascos. The first breakthrough actually came in 1580 when Captain Francis Drake returned on completion of his round the world voyage—sailing via New Hampshire and returning through the Cape of Good Hope. The second round the world voyage, 1586–88, was also successfully completed. The English merchants in the meantime had instituted the Levant Company to trade through the Mediterranean and the Russia Company was already active in Persia.

The Merchant Adventurers had also started to send out men to explore the possibilities of trade with the Orient. In February 1583, a Levant Company financed group, led by Ralph Fitch, set out as an embassy to the Mughal ruler Akbar’s court with a letter from Elizabeth I. In Ormuz, the group was intercepted and taken captive by the Portuguese on charges of heresy, the English men being protestants, and transported to Goa where the Inquisition was active. Fitch and two colleagues managed to escape and reached Fatehpur Sikri. Although they did not manage to get a formal audience with Akbar, they witnessed the splendour of the Mughal Court at its finest.

Fitch then sailed down the River Ganga all the way to Hubli and then continued eastward, travelling overland to Burma and Thailand. From Thailand he visited Malacca, noting the vital strategic importance of the Malacca Straits to a maritime nation, both for trade and in terms of security. He returned to England via Ceylon, Cochin and Basra, having been travelling for eight years. Fitch had witnessed first-hand the opulent prosperity of the Indian sub-continent and the Indian Ocean kingdoms—he reported that even small towns, such as Pegu, were relatively larger than London. Being an astute observer, he came back with a wealth of information, mainly details of trade and its nuances, which was studied by the London merchants for the next decade.

While Fitch was still on his foray in the East, in 1584–85, war had been declared between England and Spain. Spain tightened its hold over the Straits of Gibraltar, Sicily, Sardinia and Naples, directly threatening the English Levant Company and its trading activities. The English were forced to seek new routes to continue their trade. The impetus was sufficient for the English to run the Portuguese gauntlet at the Cape of Good Hope and to break into Portuguese holdings on the west coast of Africa and the Indian Ocean region.

Forming the Company

The successful Dutch expedition to India in 1595 acted as a catalyst for the English Merchant Adventurers to initiate actions to form their own company. In 1599, an association with 101 shares, the total value amounting to 30,133 Pound Sterling, with the share prices varying from 100 to 3000 pounds, was created. The association petitioned the Queen for ‘a warrant to fit out three ships, and export bullion, and also for a charter of privilege.’ There were 217 share holders and the first Governor, and ‘Committee-Men’ (Managing Committee) were nominated in the charter. Their successors were elected annually by the share-holders. All important decisions of the Governor and the Committee were submitted to the ‘General Courts’ (General Body) consisting of all subscribers to the Company.

Meanwhile, Queen Elizabeth I had sent an embassy under John Mildenhall to Akbar. The embassy reached Agra in 1603 and returned to London in 1607 with a firman (royal decree) from Jahangir, who had succeeded Akbar, favouring the English for trade with the Mughals.

On 31st December 1600, a Royal Charter was issued to the Company, granting it many exclusive privileges. The most important of the ‘concessions’ in the charter were:

• Prohibiting the rest of the community from trading within the limits assigned to the Company;
• Granting the Company the power to issue licences for trade at their pleasure;
• Empowering the Company to export 30,000 Pound Sterling in gold and silver in every voyage that was undertaken; and
• Exempting taxes for English goods for the first four voyages and for Indian goods for the duration of the charter.

The Charter was valid for 15 years, with the caveat that if the trade was found to be not advantageous to the country it could be annulled with a two-year notice. It was renewable mutually at the expiry of the first term for another 15 years. Even though functioning under a Royal Charter, the merchant bourgeoisie retained exclusive control of the operations of the Company. They categorically rejected outright a government suggestion of employing ‘gentlemen’, even though their existence was based on the favour of the Crown and the Lords. From the very beginning the merchants ensured a clear demarcation between the execution of commercial activities and the laying down of broad policy. The Company remained linked to the monarchy from the earliest days, Queen Elizabeth I herself being one of the share-holders.

Thus began the career of the infamous English East India Company. With the first ship sailing out to India on 2nd May 1601, an epic had begun—and epic that would bring untold misery to millions of people on the Indian sub-continent, while providing unmeasured wealth to an almost impoverished country on the other side of the globe. On the back of Indian wealth, an England—devoid of all scruples and without a touch of humanity—would rule supreme as the foremost world power for almost two centuries.

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