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The Straits Settlements

Agent of Empire
The East India Company

The English East India Company was the most unique organization in British colonial history. Starting as a monopolistic trading body, the company became involved in politics and acted as an agent of British imperialism in India and Southeast Asia from the early 18th century to the mid-19th century. In addition, the activities of the company in China in the 19th century served as a catalyst for the expansion of British influence there.

Formally called the 'Governor and Company of Merchants of London Trading into the East Indies', and later the 'United Company of Merchants of England Trading to the East Indies', the East India Company (EIC) was formed for the exploitation of trade with East and Southeast Asia and India. Queen Elizabeth I of England granted a charter to the EIC, awarding it a monopoly of the trade with the East. The EIC arose from a grouping of London merchants, ordinary city tradesmen and aldermen who were prepared to take a gamble in buying a few ships and filling them with cargo to sell in the East. At the end of the voyage, after the return cargo was sold, the profits would be shared amongst the share holders. This system was known as "joint-stock".

Huge profits were made from the initial and difficult voyages to Southeast Asia, mainly from the sale of pepper acquired from the Sumatran and Javanese trading ports and sold in London. Soon, the EIC was building more and bigger ships and increasing the number of shareholders.

The company was formed to share in the East Indian spice trade. This trade had been a monopoly of Spain and Portugal until the defeat of the Spanish Armada (1588) by England gave the English the chance to break the monopoly. Until 1612 the company conducted separate voyages, separately subscribed. There were temporary joint stocks until 1657, when a permanent joint stock was raised.

The company met with opposition from the Dutch in the Dutch East Indies (now Indonesia) and the Portuguese. The VOC's policy was a monopoly on trade in spices, pepper and other commodities in the region., The Dutch virtually excluded company members from the East Indies after the Amboina Massacre in 1623 in which English, Japanese, and Portuguese traders were executed by Dutch authorities.

After the massacre, and owing to the high costs of financing its voyages to the archipelago, the EIC turned its attention to India where it already had a factory at Surat. At that time, Surat was the main port of trade between India and Europe. Although the EIC turned to India, it did not completely withdraw from the Malay archipelago. It kept its factory at Bencoolen on the west of coast of Sumatra.

At this time, the Indian market became more attractive for English goods. but the company's defeat of the Portuguese in India (1612) won them trading concessions from the Moghul Empire. The company settled down to a trade in cotton and silk piece goods, indigo, and saltpetre, with spices from South India. It extended its activities to the Persian Gulf, Southeast Asia, and East Asia.

From the mid 1600's onwards, the EIC slowly began to acquire territory in India (Madras, Bombay and Calcutta). During this period also, the EIC was allowed to raise its own military force. In 1689, the EIC issued a formal declaration of its intention to be a territorial power in India, thus revising its earlier commercial aims. By the 1700s, the French were becoming involved in India too.

The eighteenth century was a very important period in the EIC's history. The EIC expanded into Northern India and was increasingly involved in the China Trade. In London, the Company's office headquarters was improved to reflect its importance as a great company of the world.

With the world's silver deposits being in the hands of enemy nations such as Spain, the EIC found it difficult to pay in silver for increased imports of Chinese tea and silk. It turned to Southeast Asian produce as another form of payment. The EIC also hoped to attract Chinese junks to an entrepot in the archipelago where the terms of exchange would be more favourable to the EIC. It was this that led to the establishment of Penang and Singapore and eventual British domination of the Malay peninsula.

After the mid-18th century the cotton-goods trade declined, while tea became an important import from China. Beginning in the early 19th century, the company financed the tea trade with illegal opium exports to China. Chinese opposition to this trade precipitated the Opium War (1839-42), which resulted in a Chinese defeat and the expansion of British trading privileges; a second conflict, often called the "Arrow" War (1856-60), brought increased trading rights for Europeans.

The original company faced opposition to its monopoly, which led to the establishment of a rival company and the fusion (1708) of the two as the United Company of Merchants of England trading to the East Indies. The United Company was organized into a court of 24 directors who worked through committees. They were elected annually by the Court of Proprietors, or shareholders. When the company acquired control of Bengal in 1757, Indian policy was until 1773 influenced by shareholders' meetings, where votes could be bought by the purchase of shares. This led to government intervention.

The Regulating Act (1773) and Pitt's India Act (1784) established government control of political policy through a regulatory board responsible to Parliament. Thereafter, the company gradually lost both commercial and political control. Its commercial monopoly was broken in 1813, and from 1834 it was merely a managing agency for the British government of India. It was deprived of this after the catastrophe of the Indian Mutiny in 1857, and it ceased to exist as a legal entity in 1873.


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