The East India Company was not the first merchant trading company, but it would become the world’s first joint-stock venture corporation, eclipsing even that of the largest state-run empires of Spain and Portugal.
A 1496 treaty between England and the rulers of Burgundy led to the creation of the Merchant Adventurer Guild of London, with a promise to sell wool only in Antwerp and Bergen op Zoom.
English Fustian heavy twill cloth (a mix of flax and cotton) was particularly prized for onward trade into Germany.
This would be swapped at annual trade fairs in Germany, particularly in Frankfurt and Cologne for goods such as Southern German metals.
Prior to Elizabethan times Edward VI had debased the coin of the realm so much that traders, especially those in the main European trading hub of Antwerp needed more and more English money to buy the same goods.
Eventually groups of English traders pooled their resources to fund expeditions to circumvent Antwerp, which was slowly dying as a trading centre due to the wars in the Spanish Netherlands.
They wanted to find their own sources of gold and silver for coin, and spices such as pepper, nutmeg and cinnamon, and tea which were worth more than their weight in gold from fabled Cathay (the Far East.)
The English government could not afford to fund costly and risky expeditions so merchants and politicians set up what would be known by the modern world as joint-stock companies. Investors (shareholders) would see a return on their investment from successful expeditions, like a modern corporation.
The Muscovy Company which traded with Moscow in what is now known as Russia. It was set up in 1555. But the Far East was where the real money was to be made.
Elizabeth I needed a lot of money during her reign. As a Protestant queen she was assailed by Catholic threats both foreign and domestic. This money was primarily needed for defence and a navy to protect England particularly from Spain. She didn’t want to debase the coin any further, as had happened previously, so England needed a new source of gold and silver to mint its own money.
She was helped in this by ‘explorers’ such as Frobisher and Drake, especially Drake and his ship the Golden Hind. They were basically privateers, i.e. state sanctioned pirates who would bring back fabulous riches after plundering Spanish and Portuguese trading ships. The captured foreign riches showed Elizabeth how much England could make from trade.
East Indiaman image on a 9d stamp
In 1592, British raiders captured a large Portuguese ship, East Indiaman, the Madre de Dios in the Azores. It had about £140,000 worth of spices on board, but even more importantly they found a Latin account of the Kingdom of China, carefully wrapped in calico and locked in a sandalwood box.
This rutter was basically the key to navigating and opening up the hitherto unknown trade routes to the East Indies. On the 31st of December 1600, the Levant merchant Thomas Smythe was appointed governor of ‘The Company of London Merchants trading into the East Indies.’ For their first voyage, they raised £68,000. £40,000 alone went on equipping the ships. They took £21,000 in cash and £6,860 worth of merchandise.
This initial voyage of what would become known as the East India Company first came at a loss of between £4,000 and £5,000 which had to be met by the shareholders. The return from the first voyage was a disappointment as London had no real way to get rid of all the spices and didn’t really know what they were. The Dutch had been selling pepper at eight shillings a pound but with this glut on the market the price now dropped to two.
Despite this, a second voyage was planned because they wanted to use up the supplies they had warehoused in Bantam and Java. £60,000 was subscribed, the fitting out of the ships cost £48,000. With £10,000 in cash and £1,000 worth of merchandise the fleet commander, Middleton was tasked to look for rarer spices such as cloves, cinnamon and musk rather than pepper.
After arriving in the East Indies the fleet sailed from Bantam to Amboyna in the Moluccas. Middleton traded amicably with rival Portuguese traders. All went well until a Dutch fleet hove-to on the horizon.
The Dutch with their own trading company, the VOC were jealous of the English trying to do what they were already doing and forbid the Portuguese governor from trading with the British.
After three years, three ships returned and returned the shareholders a profit of 95%. A full ship had been lost but it was still a very profitable second voyage.
In the meantime a breakthrough had happened to the EIC when the Levant merchant Midnall went to Agra via Kandahar and Lahore. In Agra he spoke to Akbar the Great, the Mughal Emperor. He said he wanted freedom of commerce between the two countries and the right to attack Portuguese ships and harbours without Mughal intervention. Eventually Akbar granted his request and this gave the East India Company their first opening into India, and the Portuguese could do nothing about it.
By now British trade in Indonesia started to break down as the Dutch were beginning to realise what dangerous rivals the British were, and since the Dutch armistice they no longer needed the British as allies against the Portuguese. As such the Dutch forbade Indonesians to trade with the British, or any other European nation apart from themselves.
By 1610 the EIC would get another breakthrough and be granted trading concessions in some coastal areas of India. By the beginning of the 18th century, the Company had acquired three new settlements of its own, called Presidencies. These served as regional headquarters for an increasing number of factories or trading stations planted over the interior.
The oldest was Madras. It was purchased by the company on the 8th of August 1639, and was a little fishing village. Next was Bombay, which had been reluctantly given to the British crown as part of Queen Catherine of Braganza’s dowry. She was the Portuguese wife of Charles II. The third, and newest, was Calcutta. This was on the east bank of the Hooghly River and thus benefitted from the trade along the Ganges river.
The EIC would use these coastal colonies as bases to increase their influence further into India. The EIC would also trade in African slaves from Mozambique and Madagascar in eastern Africa as cheap labour for their factories in the East Indies and India, thus keeping costs low and increasing shareholder profits.
During the 1600s the EIC grew steadily but was still overshadowed by the VOC, leading to a series of battles and skirmishes culminating in the Anglo Dutch wars which started in the 1650s and went on intermittently until the mid 18th century.
The Directors of the East India Company were ever anxious for nothing more than a quiet trade, undisturbed by ‘alarums and brabbles’. After the fall of Calcutta in June 1756 they saw that the continuance and maintenance of trade could only be secured and broadened with the use of military force which would sharply cut into their profits.
The 17th century saw the EIC truly gain pre-eminence due to its control of India. A lot of this was due to Robert Clive. Rising through ‘John Company’ ranks when a call went out for clerks to volunteer for its nascent military arm in 1746 when a French fleet threatened Madras.
By 1750 he was a senior officer, a Major in India. What would nowadays be termed mercenaries were recruited from England and Ireland, as well as native troops (sepoys.)
Sepoys – native troups
By 1800 there were over 200,000 men under arms for the EIC. The Company was not allowed to compete for recruits in the British Isles, so it had to find its soldiers from other places. There were complaints about the quality of those that were sent from England, due to disabilities, weakness, or being broken gentlemen.
As an apocryphal story of the complaint made to the Directors ‘that whilst it was no doubt inevitable that some of the company’s soldiers should be recruited in Newgate Jail, trawling them from the Bedlam Madhouse was going too far.’
Many East India Company officers were those who could not afford to purchase a commission in the British Army. Initially they were no better than second-rate security guards, good enough for protecting factories and warehouses, called godowns. This manpower and some military alliances with a few Indian rulers gave the EIC massive military strength.
Shah Alam inadvertently handing over the keys of India to Clive
Clive was able to harness this strength along with using the latest military technologies of artillery and modern firelocks to oust the Nowab (Prince) of Benghal in 1757 at Plassey. Here a EIC force outnumbered 10-1 shattered the Bengalis.
Now the EIC controlled Bengal, its first extensive piece of Indian territory. Over the subsequent decades the EIC continued this steady growth subsuming smaller Indian territories. But their biggest challenge would be the Mughal empire (northern India and Pakistan), the Mahratta empire (central India) and the sultanate of Mysore (southern India.)
By the 1750s, spices were no longer producing the great riches of yesteryear as plantations in the East Indies now were competing with the West Indies. The West Indian plantations were closer to Europe so their sugar, and tobacco could reach European markets quicker than from the East Indies.
By the time the East India Company took over Bengal the Dutch East India Company was in decline. The backbone of the East India business was not the acquisition or retail of Indian merchandise but tea. The tea was obtained in China in free commerce and against competition from the Dutch and the French.
The one big advantage the British had over the others in China was that they could give the Chinese Indian opium. This led to the First Opium War with the help of the British government against the Qing dynasty of China and led to British control of Hong Kong.
When Delhi finally fell in 1803 the EIC had almost total control of India, Pakistan and Bangladesh. There would be intermittent skirmishes with the Mahrattas, but they were no longer a serious threat.
The East India Company, due to its large overheads, namely the cost of warships, troops and administration in India, was no longer making massive profits of earlier years, but the tea trade was still generating a good profit.
Now the EIC had a trading monopoly of virtually the entire Indian subcontinent. Actual territorial gains by the East India Company were irrelevant to their finances. As well as the vast profits from trade they also levied taxes regionally, further generating more income from the 1750s onwards.
Every cup of tea drunk in England from the 1600 to the 1850 was supplied by the EIC. In the last third of the 18th century, the EIC stood and fell with the tea trade.
The tea from China and India was what made East India Company most of its money, whereas England had been a predominantly coffee-drinking country until 1730 with the coffee-houses, or Penny Universities as they were known being the hub of news, social discourse and debate, hastening the advent of the broadsheet or newspaper.
When business was bad, the trade price of tea was raised in England. When the state needed money the tea tax was increased. This tea tax was the tie linking American possessions in the Thirteen Colonies to Britain, which was severed, with the Boston Tea Party when ‘Indians’ tipped the tea into the harbour to stop its importation and successive price and tax rises in December 1773. The rallying cry of the American colonists being: ‘no taxation without representation.’ This led to the American War of Independence.
Despite the EICs military prowess their civil administration was callous, mismanaged, lacklustre and inept. The officials governing the various districts attached less importance to trading merchandise than to imposing high taxes upon the subjugated people.
Catastrophic events such as the Benghal famine where 10 million died in 1770 and the infamous Indian Mutiny of 1857 would lead to their eventual downfall. The imposition of taxes, religious grievances and protests at the harsh civil administration led to the powder keg of the 1857 Indian Mutiny.
Backed by the Nowabs and other regional princes who lost a lot of power when Clive took Delhi, many sepoys also mutinied alongside a large part of the local populaces. After a year it was quelled but it cost 6000+ EIC employee and civilian lives, and roughly 800,000 Indians who died due to the fighting and concomitant famine and disease.
This gave the British government the excuse it needed to take control of the Indian cash cow. In August 1858 the ‘Government of India Act’ was passed by parliament. This passed all EIC territory to the British Crown. India would now be ruled by direct governance and was the start of ‘The Raj’, which lasted until 1947.
A previous agreement with the British government from 1833 gave EIC shareholders a 10.5% dividend on their shares every year for 40 years, due to greater government scrutiny and governance of their affairs in India. This meant the British government had to wait until 1873 to formally dissolve the EIC.
In the interim the EIC would still manage the profitable tea trade. In 1873 Parliament passed the ‘East India Stock Dividend Redemption Act’ which formally dissolved the East India Company and paid out any compensation owing to the shareholders.
Calcutta
The relationship between the Company, Calcutta and the state of Bengali was a symbiotic one, both profitable and vital to both parties.
It was so profitable that in 1717 the Ruler of Bengal, Aliverdi Khan was persuaded to grant the Company the privilege of carrying dustucks or exemptions from local customs and tax duties.
When the Nowab died, there was no clear successor. One of the main contenders was Aliverdis grandson Mirza Mohammed, known as Siraj-ud-Daula, or ‘The Light of the State’. He was an arrogant, dissolute and not very popular 19-year-old.
Ud-Daula embarked on a campaign of courtly infighting to get rid of obvious rivals to his succession. He thought one way he could show strength was by attacking the East India Company in Calcutta.
His confederates told him that the British in Calcutta were intriguing with his rivals, which was untrue, but it is noted that the East India Company and other European companies had a habit of interfering in local politics by supporting their preferred candidates, turning them into puppets to increase their trade.
Ud-Daula thought he’d have to attack pre-emptorarily before the EIC got too strong, or they used the infighting between the Bengalis to interfere and claim the governance of Bengal for themselves.
Ironically his attacks on the EIC effected what he had hoped to stop. This meant the attack on the garrison of Calcutta in Fort William, which due to the East India Company’s lack of a substantial, professional military force, was a spirited but ultimately doomed one. The survivors from Fort William were put in the fort’s jail, known as the Black Hole of Calcutta.
After the fall of Calcutta, with help from the British government (who was a stockholder in the East India Company) who sent the 39th Regiment, a Royal Naval squadron and three batteries of Royal Artillery, alongside the East India Company, this combined military force went back up the Hooghly river, retook Calcutta and pursued the fleeing Nowab further up the river.
Colonel Robert Clive
After Calcutta had been retaken, the would-be Nowab, ud-Daula tried to retake it again. Colonel Robert Clive used his smaller forces to launch a surprise attack on the Nowabs camp outside the city wall routing the Bengali forces. This would lead to a pursuit up the Hooghly river which would end at Plassey.
Now the second Bengali attack on Calcutta had failed, the would-be Nowab ud-Daula retreated northwards. On the way he tried to buy French support with a lakh, or chest of 100,000 rupee to secure them as allies against the British. They were mainly stationed at Chandernagore.
The French in Europe were already at war with England. The British took Chandernagore on 19th March with a fierce ship-to-fort cannon duel. ud-Daula had further bad news in store-Afghans had attacked Delhi. This was another serious threat to him.
After defeating the French at Chandernagore Clive and his forces, with the help of Admiral Waters, pushed the Nowabs forces further and further north up the Hooghly river.
Eventually Clive crossed and encamped at Plassey near to the Nowabs encampment. He was hoping to depose the Nowab with the help of two Bengali generals. Clive stayed at a hunting lodge, with his forces in a nearby grove.
The next day he found out he was facing around 15,000 cavalry, 30,000 troops and artillery, some of it mounted on platforms moved by oxen and pushed by elephants. He had been set up.
The Battle of Plassey
At dawn on a damp 23rd June, the Bengali army sallied out from their camp, advancing towards the mango grove. Their army had roughly 30,000 infantry of many types, typically armed with matchlock muskets, tulwar swords, pikes and rockets. There were also nearly 20,000 cavalry, armed with swords or long spears, intermingled with 300 artillery pieces, mainly 32-, 24- and 18-pounder in calibre.
A small detachment of French artillerists from the Chandernagore army directed their own field pieces. The French took up position at the larger water tank (reservoir) with four light field pieces, with two heavier guns in front, advanced within a mile of the grove. To their rear was a body of 5,000 cavalry and 7,000 infantry. The remainder of the army (about 45,000) formed a semi circle to the east of the mango grove, threatening to surround Clive’s far smaller army.
Clive watched the formation of the Bengali forces from the roof of the hunting lodge. He was still hoping to hear from Mir Jafar, who was supposed to depose the Nowab. But it was clear Clive had been led into an ambush. Clive ordered his troops to advance from the grove and line up facing northeast.
His forces consisted of 750 European infantry with 100 Lascars, 2,100 sepoy infantry and 100 artillerists manning eight 6-pounders and two howitzers, assisted by fifty sailors.
At 8:00am the French artillery fired the first roundshot hitting two men from the grenadiers of the 39th Regiment ‘We were scarcely drawn up in this manner, when a 24-lb shott from their camp, bounding along, and carrying off the arm of one of the King’s grenadiers.’
This was the starting gun for the rest of the Nawab’s artillery to commence a heavy and continuous bombardment. The furthest forward of the British guns duelled with the french artillery, while those closer to the EIC line engaged the other elements of the Nawab’s artillery. The British roundshot did not discomfit the Bengali artillery but took a toll on the infantry and cavalry divisions.
The Battle of Plassey
Within half an hour the British had lost 10 Europeans and 20 Sepoys and. Leaving the advanced artillery at the brick kilns, Clive ordered the army to retreat back to relative shelter of the mango grove, and to sit down to avoid the bengali artillery fire.
By midday nothing had changed in the disposition of the two forces. An EIC Staff meeting agreed that the current positions should be maintained until nightfall when they would launch an attack on the Nowab’s camp should be attempted at midnight. Soon after this conference, a heavy rainstorm occurred which changed the course of the battle.
As the deluge hammered down the EIC forces used tarps to protect their powder and shot. The Nowabs army took no such precautions and their fine milled gunpower turned to a grey useless sludge as damp seeped into wooden gunpowder kegs and canvas charge bags. This caused the Bengali artillery fire to slacken considerably, while the British kept up a steady rate of fire.
As the rain diminished, Mir Khan, one of the Nowabs top generals assumed that the British artillery would now be as ineffective as the Benghalis was, and ordered the cavalry under his command to charge.
The British dealt with the onrush of horse, countering the charge with heavy grapeshot, mortally wounding Mir Madan Khan and forcing his cavalry to retreat. The Nowab stayed in his tent throughout the cannonade surrounded by officers who assured him of victory.
When he heard that Mir Madan was dying, he was deeply disturbed, and flinging his turban to the ground, entreating Mir Jafar to defend it. Mir Jafar promised he would, but hedged his bets, and covertly sent word to Clive, urging him to advance.
ud-Daula was urged to withdraw his army behind the walls and entrenchments of his camp. His generals also advised him to leave the battle to them and to retreat to safety to Murshidabad leaving the battle to his generals.
ud-Daula did just that and he mounted a camel and accompanied by 2,000 horsemen set out for Murshidabad. At around 2pm ud-Daula’s army ceased their bombardment cannonade and began turning back north to the greater cover and safety of their entrenchments, leaving the French artillery without support.
On seeing this withdrawal, Major Kilpatrick, now OIC (Office In Command) whilst Clive was resting in the hunting lodge, saw a golden opportunity to use artillery to hammer the retreating enemy, if the French position could be taken.
Sending an aide with a message to tell Clive what he was about to attempt, he took two companies of the 39th Regiment with two field pieces, and advanced towards the French artillery position. When Clive received the message, he hurried to reprimand Kilpatrick for his precipitate action without orders.
Clive after ordering the balance of his forces from the mango grove then led the army against the French position which was taken at 3pm when the French retreated to the redoubt of the entrenchment.
As the British force moved northwards towards the larger water tank, it was espied that the left arm of the Nowab’s army had fallen behind the rest. When the rear ranks of this division reached a point in a line with the northernmost point of the grove, it wheeled left and marched towards the grove.
Clive did not know that this was Mir Jafar’s division, but thought his baggage and stores were the intended target. Three platoons under Captain Grant and Lieutenant Rumbold, with a fieldpiece under volunteer John Johnstone were to oppose their advance.
The accurate fire from the field piece halted the advance of Mir Jafar’s division, which remained cut off from the rest of ud-Daula’s army and the protection of their embankment.
Whilst this was going on the main British artillery started to bombard the Nowabs camp from the elevation of the mound of the larger tank. The hot fire caused many Bengali troops and artillery pieces to advance once more from their entrenchment.
To counter this Clive advanced half of his troops and artillery to the smaller tank and the other half to a rising ground 200 yards to its left flank. From there shot could be put into the entrenchment with greater efficiency and effect. This caused the advancing Bengali forces to be thrown into confusion, further offering up even juicier targets.
Many of the large white oxen pulling Bengali guns made fine targets as their corpses bottlenecked the only opening into the entrenchment. Valiantly, but in vain the Nowab’s troops shot their matchlock muskets from any scrap of cover they could find- either from holes, ditches, hollows, or from bushes on a hill to the east of the entrenchment where the French kept up a steady artillery fire from the redoubt. A handful of cavalry charges were also attempted, but the British artillery ruled the battlefield, and they were easily repulsed.
After realising the cut-off Bengali division was that of Mir Jafar’s his ‘ally’, Clive turned his attention to capturing the redoubt and the hill to the east of it. A three-pronged assault with simultaneous attacks being made by two detachments on the redoubt and the hill were supported by the main force in the centre.
Two companies of 39th Regiment grenadiers, commanded by Major Coote, took the hill at 4:30pm after the enemy fled without firing a shot. The grenadiers pursued them across the entrenchment. The redoubt was also taken after the French artillery was forced to abandon it.
By 5pm, the British forces had occupied and cleared the entrenchment and the camp, and though the British troops marched on for over five miles, they did not possess the cavalry to turn an enemy retreat into a rout.
The British losses were estimated at 22 killed with 50 wounded. Of the killed, three were Madras Artillery, one from the Madras Regiment and one from the Bengal European Regiment. Four of the wounded were from the 39th Regiment, three from the Madras Regiment, four from the Madras Artillery, two from the Bengal European Regiment, one from the Bengal Artillery and one from the Bombay Regiment. Four Madras and nine Bengal sepoys were killed while nineteen Madras and eleven Bengal sepoys were wounded.
Clive estimates that the Nawab’s force lost 500 men, including several key officers.
After the Battle of Plassey in June 1757 the East India Company had in a year become the strongest power in Bengal. ud-Daula was murdered by his disgruntled followers, and one of his generals, who was meant to betray ud-Daula to Clive, but led Clive into an ambush at Plassey, Mir Jafar, was set up by the EIC as a puppet Nowab.
Clive effectively became Nowab of Bengal in 1765. It was possession of Bengal, the richest province of the Mughal Empire that enabled the East India Company to finally have dominion over the Indian subcontinent .
When Clive retired in 1767 at 42, he was reputed to be the richest man in England.
The Battle of Plassey was won by the mercenary soldiers of a commercial business, but the governance of the Empire was too serious a matter to be left to its shareholders, and in 1784 the India Act placed the East India Company under the oversight of the British government that appointed its Board of Control.
Researcher: Matt Bury