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East India Company

East India Company

It is strange, very strange that a joint-stock society of traders [...] should be trusted with the sovereignty of a larger population, the disposal of a larger clear revenue, the command of a larger army, than are under the direct management of the Executive Government of the United Kingdom.

- Thomas Macaulay, East India Company employee (1833)1

This quote sums up the bizarre history of the East India Company. Originally set up as a commercial organisation to trade in spices with India, the Company ended up ruling most of the territory of India until 1858. This means that it governed more 'British' subjects than the British government! But how, and why, did this Company develop in such an unusual way?

British East India Company

So, what exactly was the British East India Company? Originally, it was set up as a corporation by a royal charter issued by Queen Elizabeth I in 1600. The charter allowed a group of merchants from London to set up this corporation to travel to the East Indies in search of riches.

Corporation

A legal organisation created by individuals and shareholders to make a profit.

Royal charter

A formal authorisation issued by a monarch.

However, historian Philip Stern argues that it is misleading to view the East India Company as a purely economic organisation. After all, within a very short time of arriving in India, the EIC was performing many of the activities you would expect a state government to organise. Among them, the EIC:

  • Created and administered laws
  • Collected taxes
  • Protected its employees and subjects
  • Inflicted punishment
  • Controlled territories where it regulated religious and cultural life
  • Conducted diplomacy
  • Was a colonial proprietor
  • Waged war
  • Made claims to rule over land and sea
  • Commanded obedience from the people who lived under its rule.1

East India Company Coat of Arms of the British East India Company StudySmarterFig. 1 - Coat of Arms of the British East India Company.

Colonial Proprietor: a person or organisation that owned colonies and usually acted like an independent sovereign over those colonies.

Colony: a territory subject to foreign rule.

For this reason, Stern argues that the East India Company should not be seen as a mere financial trading company. He argues instead that we should see the Company as:

A form of early modern government [...] an early modern empire [...] a Company-State.2

East India Company: History

Let's take a look at the meteoric rise of this powerful Company-State from its inception to its time as ruler of most of India.

East India Company: Expansion

The story of the East India Company begins in 1600, when the company was formed by Queen Elizabeth I. From its very beginning, the company became financially wealthy and successful from its trading missions to India.

A turning point occurred in 1757, when the British were invited by an Indian named Mir Jafar to fight on his behalf against the ruler of Bengal. The British and Jafar's forces won a decisive victory at the Battle of Plassey, and Mir Jafar granted the East India Company a chunk of territory in return.

This was the start of the East India Company's territorial conquest of India. Between 1757 and 1818 the company conquered huge swathes of India, either through direct annexation or by 'alliances' with neighbouring provinces. Under these 'alliances', local rulers were forced to cede authority in exchange for the cultural benefit of still being 'seen' as the ruler. The following maps show the expansion of territory (shown in pink) ruled by the East India Company from 1765 to 1857.

East India Company Map Showing Expansion of Territory from 1765 to 1805 StudySmarterFig. 2 - Map Showing the Expansion of East India Company territory (shown in pink) from 1765 to 1805.

East India Company Map Showing Expansion of Territories from 1837 to 1857 StudySmarterFig. 3 - Map Showing the Expansion of the East India Company territories from 1837 to 1857 (shown in pink).

British East India Company: Timeline

Let's take a look at a timeline of the East India Company's existence.

For this timeline, the name East India Company has been shortened to the acronym EIC.

YearEvent
1600Queen Elizabeth I authorised the formation of a company of London merchants to travel to the 'East Indies' with a monopoly over all trade in that region.
1613The company established its first factory in Surat, India.
1684First archival record of enslaved people being bought to work for the company.
1689The Mughal emperor launched an attack on the EIC base in Bombay. The EIC was defeated and promised better behaviour in the future. They moved their headquarters to Calcutta.
1756The start of a war between Britain and France. This war was mainly fought in India, using trade company finances and armies.
1757Battle of Plassey. The EIC won a decisive war against the ruler of Bengal and his French allies on the side of Indian commander Mir Jafar. The settlement with Mir Jafar enabled the EIC to become rulers of land in India directly for the first time.
1763The Anglo-French war in India ended with the British EIC having won a decisive victory. The frequent use of armies in India meant that the company established a strong military presence across large areas of India.
1764Battle of Buxar. The EIC won a victory against the Mughal Emperor. The emperor then granted the EIC the right to collect revenues (taxes) from the province of Bengal.
1766 - 1799Anglo-Mysore Wars. The EIC went to war against the kingdom of Mysore. The EIC victory enabled them to acquire more land.
1770The Great Bengal Famine. This was caused by the EIC and led to widespread devastation.
1772 - 1818Anglo-Maratha Wars. The EIC went to war against the Maratha Empire in India. The outcome of the war was that the EIC now governed nearly all of India.
1854The EIC conquered the province of Berar.
1856The EIC conquered the province of Oudh.
1857The Indian Uprising - a rebellion of Indians against the rule of the EIC. Although the uprising was suppressed, it had decisive consequences for the EIC.
1858The British government passed the Government of India Act. This formally dissolved the EIC and established that India would now be ruled directly by the British government rather than by a trading company.

East India Company: Slavery

The East India Company started shipping enslaved people from Africa to the East Indies soon after its establishment. Historian Robert Allen suggests that this occurred as soon as the 1620s. However, the first archival record of East India Company slavery is dated from 1684, when 250 enslaved people were transported from Africa to St Helena.

Most of the enslaved people that the East India Company transported originated from the island of Madagascar.

Historian Frenise A. Logan analyses the East India Company's use of enslaved people in its factories. He argues that the East India Company started transporting enslaved people to its pepper factory in Benkulen because they feared that too many Englishmen died in the climate of this area.3

What kind of tasks did enslaved people perform?

The enslaved people in the pepper factory of Benkulen were forced to carry out a range of different activities, these included:

  1. Cleaning
  2. Building the fortifications
  3. Carrying pepper to the cook-rooms
  4. Cutting and draining the swamp near the fort
  5. Acting as soldiers for the fort.4

An average workday for an enslaved person in the pepper factory of Benkulen was twelve to fourteen hours. They were locked up each night, for fear that they would try to run away if this measure was not taken.5

Frenise A. Logun concludes that,

Without them, the British East India Company would have been deprived of this valuable 'factory' which after 1695 became the area warehouse for storing the bulk pepper the Company shipped to England and the British colonies in America and the West Indies.6

East India Company: Army

The East India Company had its own army of 260,000 soldiers, which was twice the size of Britain's standing army.

The army was split into three presidencies, based in three different regions of India:

  1. Bengal Army
  2. Madras Army
  3. Bombay Army

Initially, only British and European soldiers served in the East India Company armies. However, from the mid-eighteenth century, the East India Company began employing Indian troops to form regiments in their forces. By 1844, 94% of the East India Company forces were Indian.7

Sepoys

Indian soldiers who fought under the East India Company were known as sepoys. They were dressed in the red military uniform of British soldiers and were commanded by European officers.

Sepoys were key actors in the Indian Uprising of 1857 which led to the disestablishment of the East India Company. Many sepoys were angry at being commanded to go to foreign regions, which they believed to pollute their caste. They were also afraid that there would be forced conversions to Christianity.

But the most offensive step came with the introduction of the Enfield rifle, for which sepoys had to bite open the cartridges to release the gunpowder into the rifle. Rumours began that the cartridges included tallow (made from beef) and lard (derived from pork) which would go against the Hindu and Muslim codes for purity around eating. It was this which provoked the sepoys into revolt, leading to the Rebellion of 1857.

Caste

The classes of Hindu society, distinguished by ritual purity and social status. An Indian could lose their caste if they did not abide by the correct customs, leading to social exclusion.

East India Company Painting of the Sepoy Uprising 1857 StudySmarterFig. 4 - Painting by Orlando Nori showing sepoys fleeing European soldiers during the 1857 Uprising.

East India Company: Value

On one hand, the East India Company was a powerful financial and governmental organisation that handled vast sums of money and people. In 1698, the East India Company granted the government of William III a loan of £2 million in exchange for commercial privileges - highlighting what a powerhouse of profit the Company had become.8 By 1833, the East India Company was ruling 500,000 square miles of territory with 93.7 million 'British' subjects who paid £22.7 million a year in tax to the company.9 One anonymous speaker in the British House of Parliament argued in 1825 that,

Were it not, indeed, that the locality of its wealth is at so remote a distance, the very existence of [such] a body would be so dangerous [...] to the stability of the state.10

On the other hand, however, the East India Company's finances took a toll as it changed its focus from a commercial trading organisation to a territorial ruler. In 1801, the East India Company was over £5 million in debt, and critics began to wonder whether the Company's territorial gain had brought any financial benefit. By 1813, many in Britain believed that the East India Company was incapable of generating profits from its commerce in India any longer.11

The Disestablishment of the East India Company

After the Indian uprising of 1857, the British government decided that the East India Company had far too much independent authority for its liking. The British government dissolved the East India Company. This hailed in the era of direct rule of India, known as the British Raj.

East India Company - Key takeaways

  • The East India Company was a commercial trading corporation, but it also became a Company-State because it governed territories like a 'normal' state.
  • The East India Company was created in 1600 by Queen Elizabeth and was dissolved in 1858.
  • The turning point when the Company started to rule territories in India came after the Battle of Plassey in 1757.
  • The East India Company shipped enslaved people from Madagascar to work in its 'factories' in India.
  • The East India Company had a huge army that was twice the size of Britain's army. Its Indian soldiers were known as sepoys.

References

  1. Philip J. Stern, The Company State: Corporate Sovereignty and the Early Modern Foundations of the British Empire in India, (2012), pp. 3.
  2. Ibid., pp. 5-6.
  3. Ibid., pp. 6.
  4. Frenise A.Logan, 'The British East India Company and African Slavery in Benkulen, Sumatra, 1687-1792', The Journal of Negro History, 41, (1956), p.340.
  5. Ibid., pp. 343.
  6. Ibid.
  7. Ibid., pp. 346-7.
  8. W. H. Sykes, "Vital Statistics of the East India Company's Armies in India, European and Native", Journal of the Statistical Society of London, 10, (1847), pp. 100–131.
  9. H. V. Bowen, The Business of Empire: The East India Company and Imperial Britain, 1756-1833, (2005), p.30.
  10. Ibid., pp. 5.
  11. Anon., The Session of Parliament for MDCCCXXV (1825), pp. 42.
  12. H. V. Bowen, The Business of Empire, pp. 17-19.

Frequently Asked Questions about East India Company

The East India Company was set up as a corporation to trade with the East Indies in order to make a profit. However, it ended up ruling large chunks of territory in India, like a government would. For this reason, historian Philip Stern calls the East India Company a 'Company-State'.

The East India Company was established in 1600 when Queen Elizabeth issued a royal charter allowing a group of merchants and traders in London the right to set up a corporation to trade in the East Indies. 

The East India Company itself conquered large territories in India. These were passed to the British government in 1858. As a result, one of the most profitable regions in the British Empire with a large army and population came to the British government through the East India Company. 

The East India Company ended up ruling 500,000 square miles of territory with a population of 93 million British subjects - more than lived under the British government. These 'British' Indian subjects paid £22.7 million a year in tax to the company. Moreover, the company had its own army (twice the size of the British one) and could wage war and conduct diplomacy on its own.

After the Indian Uprising of 1857, the British government seized the opportunity to dismantle the East India Company, which had grown far too powerful and independent for its liking. As a result, the British government disestablished the East India Company and took the regions it ruled over in India for itself. 

Final East India Company Quiz

Question

What is a corporation? 

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Answer

A legal organisation created by individuals and shareholders which aims to make a profit

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Question

Which monarch issued the royal charter to create the East India Company? 

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Answer

Queen Elizabeth I

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Question

What is a colonial proprietor? 

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Answer

A person or organisation that owned colonies and acted like an independent sovereign over these colonies

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Question

Name three activities that made the East India Company like a state government.

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Answer

Any three from: made laws, collected tax, provided protection to subjects, inflicted punishment, controlled territories, conduct diplomacy, waged war, colonial proprietor, commanded obedience

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Question

In which year was the East India Company founded? 

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Answer

1600

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Question

Which battle took place in 1757 which led to the East India Company taking territory? 

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Answer

Battle of Plassey

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Question

What happened in 1857 which led the British government to disestablish the East India Company? 

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Answer

The Indian Uprising of 1857

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Question

What happened in 1858 that dissolved the East India Company? 

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Answer

The British government passed the Government of India Act which meant that the government now ruled India rather than the company.

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Question

In which decade were enslaved Africans first thought to be shipped to the East Indies? 

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Answer

1620s

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Question

Where did the East India Company transport most of its enslaved people from? 

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Answer

Madagascar

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Question

How long was the average work day for a slave in a factory in the East Indies? 

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Answer

12-14 hours

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Question

How many soldiers were in the East India Company's army? 

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Answer

260,000

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Question

What percentage of the army was Indian in 1844? 

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Answer

94%

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Question

What was the name given to Indian soldiers who fought under the East India Company? 

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Answer

Sepoys

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Question

What was the name of the weapon which caused the sepoys to rebel against the East India Company and why? 

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Answer

Enfield rifle. Because cartridges were made using tallow and lard (beef and pork) which went against HIndu and Muslims codes for eating.

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