Formation of British East India Company - [December 31, 1600]

31 December 1600

The British East India Company was formed.


What happened?

On 31 December 1600, the British East India Company received a Royal Charter from the British monarch Elizabeth I to trade with the East Indies. The company went on to colonise the Indian subcontinent.

The East India Company played a crucial role in modern Indian history. It is important to know more about it for the IAS exam.

Background

British East India Company Facts

  • The East India Company (EIC) was also known as the Honourable East India Company or simply, the John Company informally.
  • It was a joint stock company established with the purpose of trading with the East Indies. The company was initially set to trade with maritime Southeast Asia but it ended up trading with China and India.
  • It was originally chartered as the “Governor and Company of Merchants of London trading into the East Indies”. Its shares were owned by aristocrats and rich merchants of Britain.
  • Although started as a trading company, it paved the way for the creation of the British Raj in India.
  • It mainly traded in cotton, indigo dye, silk, salt, saltpetre, opium and tea. Saltpetre was an ingredient in gunpowder.
  • The original Royal Charter was given to “George, Earl of Cumberland, and 215 Knights, Aldermen, and Burgesses”. The charter gave the company a monopoly to trade with all countries east of the Cape of Good Hope and west of the Straits of Magellan for an initial period of 15 years.
  • The company’s first voyage to India was commanded by Sir James Lancaster in 1601 and returned in 1603. During this voyage, the company’s first factory was set up at Bantam in the island of Java in Indonesia. Surat, as a trade point of transit was established in 1608.
  • In 1608, a voyage under Sir William Hawkins arrived and the ship commanded by him became the first ship to set anchor at Surat. Hawkins was an envoy in the court of the Mughal Emperor Jahangir for two years during which time he tried to obtain trade concessions but in vain.
  • Within 1610, the first company factory in south India was set up in Machilipatnam (in modern-day Andhra Pradesh) along the Coromandel Coast.
  • The company was generating huge profits from its India trade.
  • The EIC was engaged in frequent battles with the other European players like the Portuguese and the Dutch, who had established themselves earlier in the subcontinent.
  • In 1612, the Battle of Swally (Suvali in Surat) was fought between the company forces and the Portuguese. The company had a decisive victory, and this led to the rise of the EIC as a paramount force in India, and also to the end of Portuguese dominance.
  • After this, the company decided to try its hand in getting a territorial base in mainland India. In 1612, Sir Thomas Roe was sent as a representative of the British king James I to the court of Jahangir. Roe was successful in securing exclusive rights to reside and set up factories in Surat and in some other areas for the company.
  • Slowly, the company dominated other European players and established trading posts in Surat in 1619, Madras in 1639, Bombay in 1668 and Calcutta in 1690. The chief factories became the walled forts of Fort St. George in Madras, Fort William in Bengal and the manor house Bombay Castle.
  • Through a series of acts around the year 1670, the company gained rights to acquire territory, mint money, command fortresses and troops, form alliances, indulge in war, and exercise civil and criminal jurisdiction over their acquired territories. This greatly enhanced the company’s powers.
  • In Bengal, the Mughal Emperor completely waived off customs duties for trade for the company in 1717. The company led by Governor General Robert Clive was able to gain dominance over the French who were restricted to a few ports in the country.
  • The company was also employing Indians in its army and by 1763, it had about 67000 troops. They became a major force in India and used extensively by the company for political purposes. Each of the presidencies of Bengal, Madras and Bombay had their own infantry, cavalry, artillery and horse artillery units. They also had a navy.
  • EIC frequently interfered in the internal politics of the subcontinent and played one local ruler against the other.
  • In the Battle of Plassey in 1757, the Nawab of Bengal was defeated by the British and a British puppet was placed on the throne.
  • Company rule effectively started with the Battle of Buxar in 1764 when the Nawab of Bengal surrendered the diwani rights of Bengal, Bihar and Orissa to the company and Robert Clive was made the Governor of Bengal.
  • The Regulating Act of 1773 brought about several administrative reforms to the company and made Warren Hastings the first Governor-General of Bengal with control over the other two presidencies.
  • Several other acts were passed throughout the years till 1853 in order to regulate and administer the company’s possessions in India.
  • The Revolt of 1857 was primarily brought about because of the company’s apathetic policies and corruption it indulged in India. This also ended the company’s rule over India and the control went directly into the hands of the British government through the Government of India Act 1858.
  • The company’s possessions, military and administrative powers were all transferred to the government.
  • After that, the company continued to look after the British government’s tea trade until 1874 when it was finally dissolved.
  • Started as a trading company, the EIC managed to literally hand over India to the British crown.
Also on this day

1501: The first Battle of Cannanore. 1738: Birth of Lord Cornwallis, 3rd Governor-General of India.

See previous ‘This Day in History’ here.

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