Advent of the European Trading Companies in India

Read this article to learn about the advent of the European trading companies in India.

The Portuguese:

From time immemorial India had commercial relations with countries of the west. The commercial route then was not direct by sea.

The merchants sailed over the Indian Ocean and the Red Sea and reached Europe through Arabia. But in the seventh cen­tury when Arabia became very strong as a power it dominated the Red Sea and the Indian Ocean.

The commerce of India and her neighbouring countries in the South-East was dominated by the Arab merchants from whom the merchants of Venice, Genoa and other Italian cities purchased the Indian goods, mainly spices and re-sold these to different European countries. There was naturally a desire among the Europeans to find out a direct route to the countries of the East as it was the main source of ‘precious stones and pearls and various drugs and spices’ (Marco Polo).

When Vasco da Gama, a Portuguese mariner disembarked at the Indian port of Calicut in 1498, a new era began in the relations between Asia and Europe. Vasco da Gama’s discovery of the direct sea route to India brought the Portuguese merchants in India, who coveted the advantages of the eastern trade.

The Hindu ruler of Calicut whose title was Zamorin treated the Portuguese mariner in a very friendly way which encouraged them to open up commercial relations with Calicut within two years. In 1500 Pedro Alvarez Cabral sailed out from Lisbon with 1200 Portuguese and thirteen ship and a huge quantity of merchandise and reached Calicut. Hardly Alvarez had arrived at Calicut when he began to forcibly deprive the merchants of other nations of the benefits of their commerce. A large number of Arab merchants used to throng at the port of Calicut at that time and much of the prosperity of the Port of Calicut was due to Arab merchants who carried on trade there.

But Alvarez made him-self so haughty and his ambition became so limitless that he soon earned the displeasure of the Zamorin. But when Alvarez tried to out the Arab merchants from Calicut it brought him into hostilities with the Zamorin. The Portuguese began to take part in the political intrigues among the neighbouring Indian states and even entered into alliance with the enemies of the Zamorin, the chief of whom was the ruler of Cochin.

The Portuguese were also engaged in piratical raids on the merchant ships of other traders. Alvarez was followed by Vasco da Gama for a second time (1502) and he set up factories in Cochin and Cannanore. After this the Portuguese Government began to send one officer annually to look after the affairs of the Portuguese in India. In this way the Portuguese somehow main­tained their existence in India struggling against the Arab merchants and the local rulers, when the Portuguese government sent Alfonso Albu­querque as the Governor of the Portuguese affairs in India.

With the Coming of Albuquerque, the foundation of the Portu­guese power in India was really laid. In 1510 Albuquerque by a sudden attack occupied the port of Goa from the Bijapur Sultan and arranged for its defence by strengthening its forts. He made Goa the centre of the Portuguese power as also of commerce in India. For a small country like Portugal it was not possible to send out sufficient number of colonists to India, as such, Albuquer­que encouraged his Portuguese followers to marry Indian women and thereby he thought of raising a Portuguese population in India arid a permanent Portuguese settlement.

Albuquerque realised that if the Portuguese were to hold a monopoly control over the Indian commerce, they must bring Aden, Ormuz and Malacca under control. He succeeded in occupying Ormuz and Malacca and thereby served the interest of his country. But his inhuman treatment of the Muslims tarnished his name.

Under Albuquerque’s successors the Portuguese occupied Diu, Daman, Salsette, Bassein, Chaul, and Bombay, San Thome near Madras and Hughli in Bengal. Portuguese occupation of Diu gave them control of the mouth of the bay of Cambay which compelled the Arabs to withdraw from their Indian trade.

The Portuguese also occupied the major part of Ceylon. With the expansion of territories the Portuguese began to spread Christianity and in 1534 Pope Paul III raised the Church at Goa into a Bishopric and in 1538 the Portuguese Church in Goa was placed under a Bishop. A few years later Jessuit missionary Fransisco Xavier came to Goa and took the lead in spreading Catholic Christianity in Goa. He died in 1552 in Goa and was made a saint.

The Portuguese power continued to be strong till the middle of the sixteenth century but with the death of Governor D. J. Castro the Portuguese power in India began to decline. The Portuguese had, with the permission of the Emperor, set up (1579) their trad­ing centre at Satgaon in Bengal wherefrom they shifted it to Hughli. The Portuguese were naturally rougish and corrupt and carried on depredations on the neighbouring villages, forcibly converted people into Christianity, carried on trade without paying any customs duties and sell the natives as slaves.

Emperor Shah Jahan was aware of the notoriety of the Portu­guese even before his accession to the throne. They had seized two of the slave girls meant for his wife Mumtajmahal. Soon after his accession to the throne Shah Jahan ordered Kasim Khan, Gover­nor of Bengal, to punish the Portuguese. Kasim Khan sent his son against the Portuguese and in a period of, three months ten thousand Portuguese were killed and 4,400 were taken prisoners. They were sent to Agra where they were forced to adopt Islam. Many of those who refused to accept Islam were tortured to death and a few were permitted to return to Hughli.

The short-sighted policy of the Portuguese Governors, their religious bigotry and persecution of non-Christians, resorting to every kind of corrupt practice in the name of business including selling people as slaves and carrying on piracy led to their gradual decline in India as well as in the East. Discovery of Brazil gave them an alternative for setting up colonies there. The result was gradual extinction of the Portuguese trade in India.

The Dutch:

The discovery of the direct sea route to India and Vasco da Gama’s reaching Calicut in India encouraged the Dutch to set up a number of small commercial organisations for trade with India and the East. The news of the formation of the English East India Company in 1600 encouraged the Dutch to combine their small com­mercial organisations into. The United East India Company in 1602.

The Dutch Government granted this company not only charter to carry on trade in the East, but also to enter into war and peace, maintain troops, construct forts etc. The Dutch merchants first arrived in South East Asia and entered into conflict with the Portu­guese there and occupied Amboyna in 1605 in 1619 they under the command of Jan Petersoon Coen conquered Jakarta, and set up the Dutch business centre there. Petersoon Coen was the real founder of the Dutch power in the East. At about this time the English merchants also came to the Malayan Archipelago for trade but due to the vehement opposition the English, no other busi­ness men except the Dutch, could build up their trade there.

The Dutch began to pursue a policy of ousting the Portuguese from India and the East and between 1636 and 1639 they attacked Portuguese Goa once in every year. In 1641 they occupied Malacca and by 1658 conquered all the Portuguese trading centres in Cey­lon. They came to the islands of Java, Sumatra and the Moluccas, attracted by the lucrative spice trade there and the whole Malayan Archipelago became their strategic administrative and economic cen­tre. Commercial interests drew the Dutch also in India and gradually they established their factories on the Coromandel coasts, Bengal, Bihar and Orissa. Their important commercial centres in India were Pulicat, Surat, Negapattam, Cochin, Chinsurah, Cossimbazar, Baranagore, Patna, and Belasore. Indigo, silk, saltpetre, rice, cotton fabrics, opium were the main articles of their export trade from India.

The main feature of the Dutch trade in India and South East Asia was their conflict with the Portuguese and the English mer­chants. Their rivalry with the English was more bitter than that with the Portuguese. Their policy was influenced by two motives, first, to take revenge against the Portuguese who were the allies of Spain, the enemy of the Dutch independence. Secondly, to mono­polise the spice trade in the East. With the gradual decline of the Portuguese, their first object was fulfilled and their second objec­tive brought them in continued hostility with the English.

Under the Stuarts and Cromwell the relation between the Dutch and the English was hostile. Although there were occasional amicable settlements between the English and the Dutch, hostilities were renewed and in 1623 the Dutch massacred ten English men and nine Japa­nese at Amboyna which marked the climax of the hatred of the Dutch towards the English as well as other trading nations. Though the main commercial centres of the Dutch were in the Malayan Archi­pelago and of the English in India, yet the Dutch did not cease to be strong commercial rivals of the English in India.

The Dutch in their bid for expansion of trade came into conflicts with Mir Jumla and during 1672-74 they repeatedly obstructed the com­munication between Surat and other English settlements in Bombay and even captured three English vessels on the Bay of Bengal.

They also resented the advantage enjoyed by the English paying only 3,000 rupees annually to the Emperor while the Dutch were obliged to pay the usual customs duties. They made a complaint to the emperor and demanded equality of treatment with the English.

The rivalry between the Dutch and the English merchants continued in the bitterest form till the middle of the eighteenth century. In 1759, the Dutch opposition to the English in India finally entered into a conspiracy with Mir Jafar and requisitioned a fleet of 13 ships from Batavia to oust the English from Bengal but were miserably defeated at the hands of Give at the battle of Bedara.

Between 1580 and 1640, Portugal was under Spain. There were hostilities going on between English and Spain which naturally meant hostilities between the English and the Portuguese. But with the cessation of hostilities between England and Spain by a treaty concluded in 1604, peace was restored between England and Spain but this did not stop the commercial rivalry between the English and the Portuguese in the East.

This led to hostilities be­tween these two nations and the English with the assistance of Persia occupied the important Portuguese commercial centre of Ormuz and began to levy customs duty there. This was a serious loss to the Portuguese. Ultimately by the Treaty of Madrid in 1630 com­mercial hostilities between the English and the Portuguese diminished although did not cease altogether. A Convention signed between the Portuguese Governor of Goa and the President of the English factory at Surat commercial peace was guaranteed mutually by the Portuguese and the English.

When in 1640 Portugal became in­dependent of Spain, the relations between the English and the Portu­guese further improved and the English right to trade in the East was conceded by the Portuguese. Charles II, king of England, received Bombay as a part of dowry in his marriage with Catherine of Barganza. This facilitated the conclusion of a treaty with the English in 1661 by which the English agreed to support the Portu­guese against the Dutch.

The French:

The French were the first among the European nations that desired for commercial relations with the countries of the East, but as it happened, they were the last to come into the field of eastern commerce and enter into competition with other European com­panies.

In the second half of the sixteenth century, a French merchant ship came to the Portuguese business centre Diu in India. But during the rest of the century and the first half of the seventeenth, no French merchant ships came to India but two such ships reached Sumatra in 1601.

Bourbon king Henry IV, and minister like Richelieu realised the importance of the eastern trade and Henry IV following the ins­tance of the Netherlands formed the French East India Company. But its initial attempts having proved unsuccessful, no further attempts at establishing trade relations with the East were made for a few years to follow. Nevertheless some French mariners, as a private enterprise, came to Persia, Arabia and even to Bengal and the Deccan in India. Two of them, Giles de Regiment and Rigault, were specially noteworthy.

In the middle of the seventeenth century the French traveller Fancois Bernier visited the Mughal court and on his return to France wrote an account of the wealth and merchandise of India. The information contained in his account roused the enthusiasm of the French mariners and merchants. It was about this time Louis XIV’s finance minister Colbert formed a French East India Com­pany named ‘Compagnie des Indes Orientals’ in 1664. Louis XIV provided the company with an interest-free loan of 3 million livres.

The Company was thus created and financed by the State. After initial attempts made to colonise Madagascar had proved a failure, the Company undertook a fresh expedition in 1667 under the command of Francois Caron accompanied by Marcara, a native of Ispahan reached India and set up the first French factory at Surat in 1668. Marcara succeeded in obtaining a patent from the Sultan of Gol-kunda and set up a second French factory at Masulipatam in 1669.

In 1672 the French began to use force for expanding their control over the Indian territories and seized San Thome, a Dutch business centre close to Madras, by defeating the French Admiral De La Haye. But the French were defeated by the combined forces of the Sultan of Golkunda and the Dutch.

The French had to restore San Thome to the Dutch. In the meantime Francois Martin and Bellinger des Lespinay obtained from the Muslim governor of Valikondapuram a small village where Martin lay the foundation of Pondicherry in 1673 and himself took charge of the modest settle­ment in 1674 which was to develop into a very important place and the largest and the most important French business centre in India. In 1684 the French obtained a grant from Nawab Shaista Khan of Bengal and set up a factory in Chandernagore in 1690-92.

The French and the Dutch merchants became mutually hostile and the English merchants rendered help to the Dutch in their rivalry with the French. In 1693, the newly built French factory at Pondicherry was captured by the Dutch but by the treaty of Ryswick between the European powers there was restoration of mutual conquests and the Dutch returned Pondicherry to the French in 1697.

Martin was again placed in charge of Pondicherry and within a few years he developed it into a very prosperous and important business centre of the French in India. In 1706 Martin died but at that time Pondicherry had a population of (40,000) almost twice as much as that of Calcutta (22,000).

During the first quarter of the eighteenth century, however, the French Company suffered serious set back for lack of resources and the factories at Surat, Masulipatam and Bantam had to be abandoned. This condition of the French Company continued till 1720 during which period the Company passed through very’ bad days. None of the Governors that managed the affairs of the Com­pany from the death of Martin till 1720 was strong or capable.

In that year the French East India Company was reorganised and re­named as ‘Perpetual Company, of the Indies’ and under the able administration of Lenoir and Dumas, prosperity returned and the French even occupied Mauritius, Mahe, Karikal etc. It may be mentioned that Lenoir or Dumas had no political motive, expansion of commerce was the only motive behind their expansion of terri­tories. They raised fortification, maintained troops no doubt, but all this was for the purpose of defending their settlement against the attack of the English and the Dutch.

From after 1742, there was a change in the character and objective of the French Company and motive of imperial expan­sion replaced their former commercial motive. This naturally opened a new chapter in the Anglo-French conflict in India which was of serious political consequences to the political history of India herself.

The English:

The example of the Portuguese had inspired the English voya­gers to daring enterprises to open up new routes by sea to foreign countries. For a hundred years from the accession of Queen Eli­zabeth I (1558) there were most daring attempts at sea voyages by the English mariners. In 1580 when Francis Drake returned to England by the Cape of Good Hope after his voyage round the world and due to the great enthusiasm created by the victory over the Spanish Armada among the English mariners, some daring voyagers set out for the eastern waters.

In 1591 Ralph Fitch reached Burma and India by sea and returned to England. This was followed by the voyages of James Lancaster who reached Cape Comorin and Penag between 1591-92; and of Benjamin Wood who also sailed into the eastern waters with a fleet in 1596. In 1599 John Milden-hall, a merchant adventurer reached India by land route. He carried a letter of request from Queen Elizabeth to Emperor Akbar for permission to the English merchants to establish trade in India on the same terms as did the Portuguese. Mildenhall stayed long seven years in the east but could not achieve anything tangible. Real attempt at establishing commercial relations with the east began in the year 1600 A.D. (Dec. 31st).

On that date Queen Elizabeth granted by a charter to the Company named ‘The Governor and Company of Merchants of London Trading in the East Indies’ the rights to carry on trade with all countries of the East. This com­pany is commonly known as the English East India Company.

For a few years the English East India Company confined its activities to the spice trade with Java, Sumatra and the Moluccas. But in 1608 Captain William Hawkins came to the court of Jahangir with a letter from James I, king of England, requesting per­mission for the English merchants to establish India. Capt. William Hawkins was received with all civility in the Emperor’s court and Jahangir was willing to grant the permission to Hawkins as requested.

But due to vehement opposition of the Portuguese and the Surat merchants Emperor Jahangir had to change his mind and Hawkin’s mission failed. Hawkins left Agra for Surat where he met three English ships under the command of Sir Henry Middleton. Middleton had compelled the Surat merchants to exchange their merchan­dise with those carried in his three ships near Bab el Mandeb. This put the Surat merchants into great fear of the English and when Capt. Best came to the Surat port, they did not try to prevent his entry (1612).

The Portuguese sent a force to oust the English from Surat but it was defeated by Capt. Best. Next year Jahangir issued a farman permitting the English to establish a factory permanendy at Surat. This was followed by the arrival of an ambassador, sent by James I of England to the Mughal court. The ambassador was Sir Thomas Roe, an eminent Englishman who was “pregnant of understanding, well-spoken, learned, industrious and of homely personage”. For three years (1615-18) Thomas Roe stayed in the Mughal court.

In 1615 the Portuguese and the English merchants came into conflict once again but the Portuguese were defeated. In this way the English were proving their superiority in military strength step by step.

Thomas Roe could not conclude any definite commercial treaty with the Emperor, which he had in mind, but succeeded in secur­ing various privileges for the company such as right to erect factories in some other places in India. By the time Roe left India (1618) the English had factories at Agra, Ahmedabad and Broach, besides Surat. All these factories were placed under the control of the President and Council of the Surat factory. The President and the Council of the Surat factory were also given the charge of the Company’s trade with the Red Sea ports and Persia.

The English factories began to purchase cotton piece goods, indigo etc. and sold English Broad Cloth to the Indians, particularly to the officers of the Mughal court at Agra.

In 1661 Charles II of England married Catherine Barganza, princess of Portugal and obtained Bombay as a part of the dowry to Catherine. Bombay then belonged to the Portuguese. Charles sold Bombay to the English East India Company at 50,000 £, and soon it became the most important of the English factories of the English in India.

In the meantime the English had also succeeded in establish­ing their factories at Masulipatam, Armagaon etc. Masulipatam was the principal business centre of Golkunda. In 1632, the English obtained from the Sultan of Golkunda the Golden Farman granting them the right to trade throughout the kingdom of Golkunda on payment of a fixed customs duty of 500 pagodas per year. This farman was renewed in 1634. The farmans granted by the Sultan could not save the English merchants from the extra demands of the Sultan’s officers.

In 1639 Francis Day obtained the lease of Madras from the ruler of Chandragiri and constructed a fortified factory there and named it Fort St. George. Soon it grew into the most important business centre of the English in south India.

The English now turned their attention to the north. Factories had been already started by them at Hariharpur and Belasore in 1633. In 1651 Mr. Bridgeman established a factory at Hughli, and more factories followed, one at Cossimbazar and another at Patna.

The English trade in Bengal was mostly in cotton piece-goods, silk, saltpetre, sugar etc. But as the English servants of the com­pany began to carry on irregular trade on their private account, the company could not derive much profit to begin with. In 1658 when all the factories in Bengal, Bihar and Orissa were placed under the control of Fort St George, the company’s trade was regularised.

The first half of the seventeenth century was not much prosper­ous insofar as the English trade was concerned. But the renewal of the charter of the company by Cromwell and Charles II and James II and the financial support it received from home led to rapid progress in the company’s trade which became prosperous in no time.

The disturbed condition in India, prolonged warfare between the Mughals and the Marathas, and the Marathas and the Deccan states exposed the company’s trade to grave danger. The Malabar pirates also posed a great threat to the English trade. All this led Gerald Aungier, President of Surat factory, to write to the Court of Direc­tors in England that “times now require you to manage your gene­ral commerce with the sword in your hands”. Sir Joshia Child who had a great influence on the Court of Directors, initiated the policy of using military power for the “foundation of a large, well-grounded, secure English dominion in India for all time to come” and also to secure large revenue. Thus territorial expansion in India was also included in the objective of the trading concern, the East India Com­pany.

This policy of military intervention was put into practice by Sir John Child, brother of Sir Joshia Child, Governor of Bombay, who tried to occupy Chittagong and certain other Mughal ports on the west coast, and seized some of the Mughal vessels. Aurang­zeb sent his army to attack Bombay. John Child had to beg par­don of the Emperor. Pardon was granted but an agreement had to be signed by the English agreeing to pay a compensation of one and half lakhs, to remove John Child from the governorship of Bom­bay and to return all the vessels seized by the English.

Meanwhile hostilities also began in Bengal between the English and the Mughals. The English merchants in Bengal were experienc­ing difficulties in procuring goods from the interior parts of Bengal as this involved payment of customs and tolls at numerous check- posts. Besides the normal customs duties, the local officers exacted extra payments from the English merchants. To avoid these vexa­tions the Company obtained from the Nawab Shuja-ud-din a farman in 1651 granting the English the right to carry on their trade on payment of a fixed duty of Rs.3,000 per year.

In 1656, by an­other nishan, i.e. directive, the English were granted security of trade, for it laid down that the English were not to be troubled for pay­ment of customs or tolls for their import and export trade either by land or water, up or down the country, and they were also given rights to buy and sell freely without any impediment. But the successors of Shuja-ud-din did not consider the nishan as binding on them and the English were subjected to usual customs duties and extra levies.

The Company again procured in 1672 a farman from Nawab Shaista Khan granting them right of free trade. But Emperor Aurangzeb by a farman in 1680 ordered that none should molest the Company’s people or obstruct their trade. The English were to pay the usual 2% customs duty for their merchandise and ½% jezia or Poll tax. But the local officials of Bombay, Madras and Bengal went on collecting extra money from the English mer­chants besides the usual customs and poll tax, and would at times confiscate their goods.

The English merchants at Hughli decided to resist such demands by the local officials by force if necessary and they thought of fortifying their factory at Hughli. A precipitate action on the part of the English merchants at Hughli led to hostilities between them and the Mughals. The English sacked Hughli and stormed Hijli and the Mughal fortifications at Balasore. The Mughal army drove the English from Hughli and they took shelter in an unhealthy island in the mouth of the river.

The English agent Job Charnock was a wise man, he saw the need of a compromise, and started negotiations which ultimately ended in their obtaining permission to return to the village Sutanuti. The English thus returned to Sutanuti (Sovabazar) in 1687. But soon after a naval force was sent by the Court of Directors from London to capture Chittagong which Middleton had earlier failed to do. Captain Heath under whose command the fleet now came failed to take Chittagong but this led to renewal of hostilities be­tween the English and the Mughals. Captain retired to Madras. The English were again to leave Bengal and the commercial gains they had made during the last half of a century was practically lost due to the rash action of Captain Heath.

In 1690 the English were obliged to sue for peace with the Mughal Emperor and after conclusion of peace Job Charnock was permitted to return to the swamp girdled village of Sutanuti wherein the same year he laid the foundation of the city which came to be known as Calcutta and became the capital of British India. Job Charnock reigned over the settlement more absolutely than a Rajah.

Ibrahim Khan who succeeded Shaista Khan as Governor of Bengal granted by a farman in 1691, the right of duty free trade to the English on payment of fixed duty of Rs.3,000 per year. From that time the Company’s trade in Bengal began to prosper without any break. In 1696 the Company obtained the right to fortify their factory on the excuse of the danger posed by the rebel­lion of Sobha Singh, a zamindar of Burdwan. In 1698, the English were granted the zamindari of the three villages of Sutanuti, Gobind pur and Kalighata or Kalikata on payment of Rs.1, 200 to the previ­ous zamindar Sabarna Chaudhuri. Two years later (1700) the factories of Bengal were placed under a separate-President and Coun­cil, and a fort was constructed and named after King William II of England which became the seat of the newly constituted Council. Sir Charles Eyre was appointed the first President and Governor of the Council.

Although Bengal was the last of the three main centres of English trade in India, it soon became the most lucrative and impor­tant. “They tapped a richer and extensive hinterland provided with excellent communication by water, and furnished with goods in ris­ing demand in Europe.”

In 1714 an Englishman John Surman was sent to the Delhi Court for securing trading facilities for the company. He succeeded in obtaining from Emperor Farrukhsiyar a farman in 1717 by which the Company was permitted to carry on trade in Bengal, Bombay and Madras free of customs duty. The Company was also per­mitted to mint its own coins. The Nawabs of Bengal, however, showed scant regard for the imperial farman.

The farman of 1717 has been called by Robert Orme, the Magna Carta of the East India Company. Thus the English acquisition of territories and commercial rights in India synchronised with the decline and fall of the Mughal Empire.

Other Europeans:

The success of the Portuguese in establishing trade relations with India encouraged not only the Dutch, French and the English but other nations like the Danes, Prussians, Swiss, Austrians etc. to come to India for trade. The Danes formed the Danish East India Company in 1620 and carried on trade in India for some time. They established their factories at Tanquvar and Serampore. They were, however, ousted in the competition with the French and the English Companies. They left India in 1645.

The merchants of Flanders formed the Ostend Company in 1722, the Swiss the Swedish East India Company in 1731, like­wise the Austrians the Austrian East India Company, to establish trade in India but their attempts were not crowned with success.

The Prussian merchants also came to India for trade but they also had no good luck. All these minor trading nations that came to India lured by the prospect of trade could not stand the competi­tion of the Portuguese, Dutch, English and the French. Eventually, the Portuguese and the Dutch also had to leave the field for the French and the English. In this way by a process of elimination the French and the English companies were left to confront each other in India.