Development of East India Company:

The East India Company (EIC), also known as the Honorable East India Company (HEIC) or the British East India
Company and informally as John Company,] Company Bahadur, or simply The Company, was an English and later
British joint-stock company. It was formed to trade in the Indian Ocean region. During 16th and 17th

centuries Portguese and Dutch were already established. EIC had set up its first settlement at the Bay
of Bengal in 1611 and by mid-17th century had 21 settlements.

Source# 01: The Dutch trading post at river Hooghli

The City School/Academics/History Resources/Class 8/2019-2020 Page 1 of 6

Three Company Presidencies:

Source# 02

An Important early center- Madras:

Madras situated on the Coromandel Coast, was the company’s most important center in the subcontinent until
the mid-18th century. It grew despite the fact that it was a difficult place for the ships to arrive at- the sea was
usually rough and the beech usually covered with pebbles. Madras also began the Fort St. George in 1640
which contained offices, military areas and church building as well.

The City School/Academics/History Resources/Class 8/2019-2020 Page 2 of 6

 Source # 03: The company settlement at Madras

A Royal gift- Bombay:

Early in 17th century the Portuguese and the British were rivals for trade in the subcontinent. But later the
relationship grew friendlier when in 1660, the British king, Charles II married Catherine, the sister of the king of
Portugal. (Catherine is famous for introducing the habit of drinking tea to England). So, Portuguese offered
Bombay to the British for trade. This new friendship made trade easier for the British.

Charles II offered Bombay to the company for a very low rent. Unlike Madras, Bombay had a good harbor but it
was an unhealthy place for Europeans, many of them dies of fever and other diseases. Even then, it grew to
become Company’s main port on the west coast. It had a fort with an army and from the early 18th century the
Company had set up a ‘navy’ here, called ‘Bombay Marine’.

A small beginning for a large city- Calcutta:

Calcutta on Hooghli River became Company’s settlement in 1690. It was good site for the traders- the river was
wide and deep which made it easy for ships to anchor.it grew within time but it had a few disadvantages: the
sand of the river caused difficulties for the ships. Mosquitoes in the marshes and swamps made the area
unhealthy, a huge salt water flood during monsoon and when the water receded, it left behind dead fish rotting

The City School/Academics/History Resources/Class 8/2019-2020 Page 3 of 6

in the streets. This resulted in epidemics causing the loss of lives. However Company had made Fort William
here.

The Company made large profits:

The East India Company was well established on East and West coasts of India by early 18yh century. However,
the ships had to take a long route from India to Britain. Even with this difficulty the Company became the most
successful British Company in India. It earned England more than 10% of her annual income. The Company used
following strategies for it.

 The Company had a ‘monopoly’ on the sale of Indian goods in Britain.

 Company merchant bought goods directly from India merchants and had ‘cut out the middle man’.
 They had owned their own ships. So they didn’t have to pay to the ship owners.
 Company ships were large and gave an ‘Economy of Scale’.
 The Company developed new markets of Indian goods in Africa and North and South America.
 The Company started to play a role in Indian politics.

How did the Company grow in power?

In the early years, Company settlements were defended by small number of troops. Later, the Company
began to train the local soldiers called sepoys. So small armies were formed at Bombay, Calcutta and
Madras. They grew rapidly by 1742. These new armies made the Company much more powerful as local
Rajas and Nawabs borrowed these soldiers to fight battles. In return, the Company at first asked for the
trading agreements, but later asked for lands. Now they start to play a political role. Trade became less
important as Company could make money by collecting taxes. Such military advantages made the EIC a
powerful player in local conflicts and disputes, as did the financial support offered by some local Indian
merchants and bankers, who saw in the EIC’s increasing influence an unmissable commercial opportunity.
After military victories at the battles of Plassey (1757) and Buxar (1764), the EIC was granted the diwani of
Bengal – control over the administration of the region and the right to collect tax revenue. At the same
time, the company expanded its influence over local rulers in the south, until by the 1770s the balance of
power had fundamentally changed. Expansion continued and rivals such as the Maratha people in western
India and Tipu Sultan of Mysore were defeated. By 1818, the EIC was the paramount political power in
India, with direct control over two thirds of the subcontinent’s landmass and indirect control over the rest.

The City School/Academics/History Resources/Class 8/2019-2020 Page 4 of 6

 The British struggle against other European Powers:

The French also entered into severe competition with the British for the Indian merchandise. Soon the profits
posted by the French company surpassed that of the British East India Company. In 1721 the French seized two
strategically important islands, Mauritius and Bourbon, in the Indian Ocean that gave them the advantage of
swift action to defend its posts in India, if needed. Mahe on the Malabar Coast was annexed in 1725 and Karikal,
to the south of Pondicherry was taken over in 1739.

Pondicherry had a checkered beginning. The British, nervous about the intrusion of the newly arrived French,
let the Dutch do the fighting with the French. Pondicherry was taken by the Dutch in 1693 but given back to
the French in 1697 as part of theTreaty of Ryswick. Francois Martin once again saw to the prosperity of
Pondicherry and when he died in 1706, the population of Pondicherry rivaled that of Madras, at about fifty
thousand. In contrast Calcutta only had a population of twenty-two thousand in that year. However, they had
to abandon their post in Surat and Masulipatam, as it was becoming more and more difficult to defend them.

By the early 18th century the Dutch had appeared to be tired of their Indian trade. After fighting the Catholic
Portuguese on religious basis and then the British on the basis of trade rivalry, the Dutch retreated to their
Southeast spice trade in Java and left India after 1759. Now there were only two players left in India, the
British and the French, not counting the diminished power of the Portuguese, who confined themselves to
Goa and its vicinity.

In 1741 a visionary Joseph Francois Dupleix (1697-1764) was given charge of Pondicherry presidency. He
was the son of the director-general of the company and had a vision of building a French Empire in India. So
far the foreign nationals in Indian soil seemed to have no other interest but to profit from trade so that their
mother countries could prosper. But Dupleix had other ideas.

A Decisive Battle:
Despite the company's dominance, the rest of Europe had not yet given up. In particular, the French still
commanded an important trading fortification near Calcutta. Plus, local Indian rulers were still seeking to
retake control of local trade. In June 1756, the Nawab, or regent, overwhelmed poorly prepared company
forces and captured Calcutta, which the company had controlled since 1690. As a result, the company lost
2.25 million pounds.

But already, the company had been preparing a counteroffensive. Led by Robert Clive, a commander of a
nearby company fort who'd started out his career in India as a young writer, a small but focused expedition was
able to retake the city in February 1757.

The City School/Academics/History Resources/Class 8/2019-2020 Page 5 of 6

 Depiction of Clive after the Battle of Plassey
The victory proved decisive for the company's
fortunes, which rose 12 percent when news
of the victory reached London.

It was a conspiracy engineered by India's own

merchants that the company an ironclad
monopoly over the subcontinent for another
hundred years.

Believing they could control the "foreign

barbarians" to their own ends, three Indian
aristocrats offered to help the company
overthrow Bengal's Nawab in exchange for
exclusive business deals. But one of the
aristocrats, Amir Chand, demanded a 5% cut of the company's earnings.

Outraged by Chand's audacity, Clive drew up two treaties, a real one for a separate conspirator that promised
to install him as Britain's Bengal puppet, and a fake another for Chand pretending to agree to his terms. The
operation went forward, and in the summer of 1757 the Nawab was overthrown and Plassey, then capital of
Bengal, was taken.

The plot cemented the company's hold not only in Bengal but the rest of the subcontinent. Clive won an
immediate 2.5 million pounds for the firm, to be followed by enhanced revenues in the future. The victory also
sent shares climbing to nearly 275 pounds.

Robins sums up the event:

"In the space of less than a decade, the Company had rerouted the flow of wealth westwards. Yet,
this was a corporate revolution, designed to acquire the riches of an entire people for the benefit of
a single company."

Questions:

 (a) What does the Source 03 shows about the Company’s establishment in India?
 (b) Why was the Britain interested in trade with India?
 (C) ‘The Company was interested in trade with India in spite of long distances’. Do you agree? Give
reasons for you answer.

The City School/Academics/History Resources/Class 8/2019-2020 Page 6 of 6