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French East India Company
• founded in 1664 to compete with the British and Dutch East India companies, it was chartered by King Louis XIV for the purpose of trading in Eastern Hemisphere. • The first state-sponsored voyage to the Indies was in 1603. Given 15-year monopoly of the Indies trade. • Company not a joint-stock corporation, and was funded by the Crown. • Later company was granted a 50-year monopoly on French trade in the Indian and Pacific Oceans, a region stretching from the Cape of Good Hope to the Straits of Magellan. • IPO later offered to French aristocracy – quickly sold out
Commerce to politics
• decline of the Mughal Empire • the French decided to intervene in Indian political affairs to protect their interests, by forging alliances with local rulers in south India. • From 1741 the French under Joseph François Dupleix pursued an aggressive policy against both the Indians and the British until they ultimately were defeated by Robert Clive. • The Company was not able to maintain itself financially, and it was abolished in 1769 • King Louis XVI transfers to the state all its properties, assets and rights • The King pays all debts and obligations
Key territories Chandannagore. Pondicherry .
Sutanuti. Kalikata (became Kolkata) • Weak administration by Mughals – political weakness of the rulers of Bengal • Gun power & European war strategies vs medieval strategies of the local rulers • Riverine communication – hence. superior naval power won .European settlements in Bengal • • • • • French – Chandannagore Portuguese – Bandel Dutch – Chinsura Danish – Srirampur English – Govindapur.
and sultanate of Bijapur . then the Cholas.Pondicherry • Roman settlement between 2nd century BC to 2nd century AD • Sanskrit university in 8th century BC • 4th century AD onwards – part of Pallava kingdom. and the Pandyas • Then ruled by the Sultanate of Madurai. Vijaynagar kingdom.
Dane and then French • till 1690 the French were interested mainly in trade and commerce activities • Name changed from Puducherri • In 1699. the French bought Pondicherry town from the Dutch .European connection • Portuguese. Dutch.
French connection deepens • Mughal rulers donated villages to French to get timber from surrounding forests • French thwarted Maratha attacks – more villages to French • In 1793 – administered out of Madras by English • Returned to French in 1816 – remained in their possession till 1954 .
Bombay and Pondicherry? .What parallels do you see between the stories of Surat. Calcutta.
Class responses • All are ports – critical since Europeans were naval powers and traded over high seas • All had fairly well developed mercantile traditions and traders already in place • Settlements along the Hooghly river was because that was the only river which allowed large European ships to sail upstream .
Class responses • All locations suffered from lack of strong local political rule and administration – the power vacuum allowed some European powers to evolve from traders to colonial powers • The large hinterland required a system of distribution and sourcing which the local merchants could provide • Local merchants also acted as financiers .
and admin later handed over to the British Crown) – Political influence – the rise of the French and English through local support – Financial – the death of the Dutch and the French – Intellectual – Military – Manpower (numbers of talented people) – Customer – preference for a certain company .Class discussions • Power – manifested in – Political administrative (EIC taking over as colonial power.
This discussion continued Later at end of class .
Business in Pondicherry The story of Indian businessmen to build the trading centre .
Pillais and later Chettiars .French business interests • Cloth purchase and manufacture • Long distance with France and other French settlements • Indians used as intermediaries – Mudaliars.
Thanappa Mudaliar • Rice traders in Mylapore – dealing with the Portuguese • Appointed “broker of the company” by the French • Encouraged others like him to trade with the French • This post became hereditary – raised to the French aristocracy (“courtier”) .
Nainiyappa Pillai • Traditionally shepherds • Became chief brokers for the French company • Also “Dubash” • Post also became hereditary .
types of cloths. etc • Dispatch of goods timebound . availability. qualities. prices.The importance of brokers • Typically between the buyer (French company) and suppliers (cloth manufacturers) • French did not know about – Manufacturing. threads.
coordinate and deal with them .Constraints • Lack of knowledge of local language and cultures • Lack of knowledge of production variables • Large number of producers – how to contact.
Hence • Rise of intermediaries • Transition from agrarian functions to a new business class • Value addition in the supply chain • Intermediaries also functioned as financiers and bankers to suppliers What is an intermediary? What role does an intermediary play? .
money lenders – Middlemen (interpreters. and also for supply from and to the hinterland – Local network – Warehousing and transport – Financiers. bankers.Class discussion • Intermediaries become important in the second stage of economic development – From agrarian to sectoral (industrial) and then on to tertiary (services) stages • Intermediary functions – Aggregators – Link between sources of produce. translators) .
Alternative model • Dutch and Danish companies – Direct contact and dealing with suppliers (weavers) – Direct financing of produce for purchase by the company .
Rise of Joint stock company • French company capital tied up in advances to weavers • Joint investment requested from merchants in placing goods in French ships and in shipping industry .
Rise of Joint stock company • Working methods – Advances to suppliers through merchants – Merchants supervised production and providing stocks to port – French company accepted produce as per requirements – Immediate reconciliation of accounts .
Rise of joint stock company • Formed with many brokers • Allowed them to develop efficient merchant capital from wider network possible individually • Allowed brokers to work with a degree of independence from the French company .
Issues • Earnings of brokers through joint stock company initially lower than individual earnings – not all merchants wanted to join • Some merchants joined because of monopolies in specific textile items • Too many small merchants allowed French to create specialised verticals – each in specific types of cloth .
Advantage • Distribution of French goods in Indian market • Gain considerable advantage in value addition – Avoidance of high prices for lower quality cloth .
or the Portuguese • Favourable treatment in rates and duties in the home market (France) .Rise of protectionism • Sole concessions for the company • Restrictions on brokers – they cannot deal with other companies like the Dutch.
The death of the French • Intermediaries wooed away by the British from Pondicherry to Madras • French lost the battle of the high seas in Europe – British Navy much stronger • British had more capital and invested more time in understanding local people .
while the forms of intermediaries have evolved – Distributors finance functioning of companies by paying deposits in order to become distributors – Credit from company and to retailers also functions as a form of finance • If intermediaries have too much power. unlike the Dutch and the Danish .What are the learnings? • The role of the intermediaries have not changed much. the company suffers – the French company died because they had no connection with the suppliers.
How do you relate these with the business situations today? .
but they can‟t have total control .Class discussions • Companies must have direct contact with customers in their markets – not depend on intermediaries totally • Role of intermediaries is very important.
etc • Financial – critical • Intellectual – IPRs like Google. like Microsoft & Intel • Military – not seen much except in theatres of war • Manpower – success of TCS. Infosys etc • Customer – Colgate in India – vs HUL & P&G . S Africa. but misuse seen in ITT in Chile and Shell in Nigeria • Political influence – critical. the expansion of Tata into S Korea.Power in large businesses • Political administrative – no more apparent. can be coercive. software cos.
• There were two types of pagodas coined by foreign traders. . worth about 25% less than the Star pagoda.A „pagoda‟ • a unit of currency. The most valuable was the Star pagoda. worth approximately 8 shillings • The second was the Porto Novo pagoda. a coin made of gold or half gold minted by Indian dynasties as well as the British and the Dutch.
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