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The British Empire & India

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The British Empire and the East India Company

The East India Company was a private company. This private company initiated Britain's control of India.

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Origins of the East India Company

  • On the 31st December 1600, Elizabeth I gave the East India Company (EIC) a royal charter to own a British monopoly over trade with India. The East India Company in 1600 mainly focused on trading spices and would compete with Portuguese and Dutch companies in India.
  • The East India Company is the best example of Martin Kitchen's view (1996) that before 1800, ‘the Empire [had] largely been left to exploitation by individual adventurers and commercial companies’.
  • The East India Company was a private company founded by the leaders of the Levant Company. They wanted to match the success of the Dutch "Company of Distant Lands', which was having great success trading spices with Indonesia.
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The East India Company's rise to power in India

  • The East India Company was a private company until 1858, by which time it had virtually seized control of India.
  • In the Anglo-Mughal War of 1686, the East India Company began its aggression, resisting tax increases on their business. The resistance led to a major war, but the East India Company was fined 150,000 rupees on its defeat.
  • The East India Company fought against other businesses to control India. The Carnatic Wars were fought in India by the East India Company and its French rival, the French East India Company.
  • In 1803, the East India Company is estimated to have had a private army of 250,000 men (mainly local Indian people). This was larger than the British government's army.
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Shah Alam and the Treaty of Allahabad

  • In 1765, Shah Alam II signed the Treaty of Allahabad with the East India Company. He was the Emperor of the Mughal Empire in India.
  • The Treaty agreed that the Mughal Empire would not collect taxes anymore. Instead, the East India Company's own tax collectors and private army would make money by ruling the region, not only by trading spices and other goods.
  • Tharoor (2019) says "Shah Alam II and his successors lived on the sufferance of the Company", whilst Dalrymple (2019) calls the East India Company “the most advanced capitalist organisation in the world” who focused only on profit.
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The East India Company's tie to government

  • Tharoor (2019) says "It was not the British government that seized India at the end of the 18th century, but a dangerously unregulated private company headquartered in one small office, five windows wide, in London, and managed in India by an unstable sociopath – Clive [Robert Clive]."
  • Dalrymple (2019) says that "the East India Company probably invented corporate lobbying". It spend £1,200 paying MPs in 1693 and over 25% of MPs held EIC shares.
  • In 1767, when the East India Company came under challenge, it agreed to pay £400,000 to the government to keep its position.
  • The East India Company paid large dividends to its shareholders (up to 22% in some years) and in many cases bribed and lobbied MPs in Britain. The Parliamentary investigation found the EIC guilty of bribery.

The Bengal Famine, Indian Mutiny and Indian Economy

The Bengal Famine lasted from 1769 to 1773. The Indian Mutiny took place many years later in 1857.

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The Bengal Famine of 1770

  • Between the years 1769 and 1773, there was a famine in Bengal and roughly 15% of the local population died.
  • The East India Company had increased taxes from 10-15% to 50%, meaning that the local population had lower food and financial reserves in years with bad harvests.
  • Then as more of the population died, the tax rose again to make up for the lost taxpayers.
  • The East India Company's share price peaked at £269 in 1769 and it is possible that it increased taxes in an attempt to support its share price.
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The Indian Mutiny

  • By 1857, the EIC's increasingly expansionist and locally insensitive policies met with nationalist agitation in the Indian Mutiny.
  • The local people resented taxation by the British, as well as their efforts to Westernise Indian society.
  • 85 sepoys (Indian soldiers employed by the EIC) refused to use bullet cartridges covered in grease (rumoured to be coated in pork & beef fat) as this violated their Hindu & Muslim beliefs. The sepoys were imprisoned, leading to a rebellion to free them. The rebels then appointed Badahur Shah, the Emperor of Hindustan as their leader.
  • The EIC lost control of 1/6 of India and the mutiny took a year to suppress.
  • Once Britain regained control in 1858, the East India Company was dissolved and control of India handed over to the British government.
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India's economy

  • Edelstein (2004) highlights that Britain gained economically from its rule over India.
  • All Indian railway construction was tendered to British businesses.
  • India had a colonial tariff with Britain of 0%, relative to 20% with the USA in 1870. This biased all business towards British manufacturers.
  • The East India Company's benefit was to private individuals, rather than other British businesses or the British taxpayer. The only people to benefit were the shareholders who owned the shares in the East India Company and received their dividend payments.

Jump to other topics

1High Water Mark of the British Empire, 1857-1914

2Imperial Consolidation & Liberal Rule, 1890-1914

3Imperialism Challenged, 1914-1967

4The Wind of Change, 1947-1967

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