The East India Company
|The final years|
Involvement in politics
Although originally formed just to trade, the Company realized that it needed to secure and protect its trading posts at Surat, Madras, Bombay and Calcutta. It therefore began to buy land from the Indian rulers on which to build its settlements. It also created its own army and navy to protect them.
By the mid-18th century, the Mughal Empire was in a state of collapse. At that time, the Company was engaged in a battle with the French for supremacy in India. It found itself becoming involved in local power politics. Squabbling Indian rulers began to depend on Company troops and on the gold and silver the Company used to purchase their trade goods.
Ruler of Bengal
After the conquest of Bengal the Company changed its traditional commercial policy based upon the exchange of exported British goods and bullion for Asian products.
Instead, the Company focused on the collection of territorial taxes and customs duties in northeast India.
The right to collect these had been granted by the Mughal Emperor Shah Alam II in 1765. This event both confirmed British military supremacy in the region and, in effect, made the Company the ruling power in Bengal, India’s richest province.
Thereafter, Indian tax revenues were used to purchase Indian and Chinese commodities for export to Britain.
To collect the taxes, the Company created a large military and civil administration. It had, in effect, become an imperial power.
Company and State
However, when it became clear that the Company's directors were failing to control the costs of conquering and running vast regions of India, government attitudes changed. Opponents of the Company also denounced the 'nabobs'. These were Company servants who were returning from the East with vast fortunes. Most were suspected of corruption in India.
When the Company revealed it had a large deficit in 1771 and asked for loans from the state, its opponents in Parliament set out to curb its rule in India.
In 1773 a Regulating Act made Calcutta the seat of government under a Governor General. He was to be answerable to a Secretary of State in London.
The India Act of 1784 set up a Parliamentary Board of Commissioners for the Affairs of India. This further increased the state's involvement.
The end of the monopoly
In 1813 the Company lost its monopoly of Indian trade, although it retained control of the Chinese trade. By 1833 even that was abolished after a campaign by the supporters of free trade. Although it continued to operate as a commercial company, its main role from 1833 was as the British government's imperial agent in India.
The British state continued to support the Company right up to the Indian Mutiny of 1857-59. Then, as a result of the bloodshed and disruption, it became clear that the Company’s involvement in governing what had become a vast Empire would have to cease.
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