Note:  Do not rely on this information. It is very old.

East India Company

East India Company, The, was founded in 1600, and obtained a charter from Queen Elizabeth, granting it exclusive rights of trade between England and the East. In 1612 it established its first factory at Surat, the starting-point of pilgrims going to Mecca, and an important outlet of the trade of Western India. The "factory" was composed of English traders and clerks, living together, attended to spiritually by an English chaplain, and administered by a president, assisted by some of the leading traders as a council. Hence the "Presidencies" and Councils of the present Government of India. No ladies were permitted in the factory. The Company were much hampered in India at first by the Portuguese, and always, farther East, by the Dutch. In 1620, however, they obtained a footing at Masulipatam; they repelled a Portuguese attack on Surat, and so impressed the Great Mogul; in 1639 they purchased a strip of ground, and built Fort St. George, round which a native industrial population grew up, the nucleus of the present Madras; in 1665 the Surat factory was moved to Bombay, obtained by the Crown as part of the dowry of Catherine of Braganza, and leased to the Company. In 1640 a factory had been established at Hughly, about twenty miles above Calcutta, an important outlet for linen, saltpetre, and silk. This, in 1685, was moved to the present Calcutta, where the sites of some native villages were purchased from the Nawab of Bengal. The Company had to some extent purchased its privileges by gifts to the Crown - thus it helped Charles I. to raise £60,000 for war purposes - and gave presents, though not of large amount, to Charles II. and James II. The right of making war on its own account was granted to it by the former king. The abolition of its monopoly, threatened by Cromwell, was voted by both Houses in 1693, but the disclosures of the bribery by which it had attempted to avert this step were so scandalous that Parliament was hastily prorogued to stop further revelations. In 1698, however, a rival company was established, but the two were amalgamated in 1708 as the "United Company of Merchants trading to the East Indies," with a capital of £3,200,000, lent to the Government at 5 per cent. For the last half of the 18th century it was but little in conflict with the natives; the enterprise of Dupleix (q.v.), governor of Pondicherry, nearly destroyed its rule. But it was saved by Clive (q.v.) in 1750-52, and Dupleix, repudiated by his government, died in poverty. From Clive's time onward this trading company is gradually converted into the deputy-ruler of India, and the histories of the two are difficult to separate. We find that the Company interferes in the affairs and feuds of native princes; sets its own candidates on native thrones; steps into the place of the native administrators of their dominions, with their consent - thus, in 1765, it became Dewan to the Great Mogul, taking the revenues of Bengal, Berar, and Orissa, and providing for the defence of the provinces, and it took the place of the Great Mogul (in 1771) when he joined the Mahrattas, and so forfeited his suzerainty and the pension paid him by the English Government) as suzerain of feudatory states. The Company, however, as Adam Smith said, "had two incompatible characters - that of trader and that of sovereign." As sovereign, its business was to increase the wealth of the country; as trader, to get that wealth as cheaply as possible. Moreover the officials were corrupt, and traded largely on their own account, and interfered with native production in their own interest. Lord Clive abolished the private trade. In 1783 Fox's India Bill, introduced in consequence of charges of maladministration brought against the Company, proposed to abolish the Court of Directors of the Company, transferring their power and patronage to seven commissioners nominated by Parliament. George III., to increase his own power, was anxious to nominate these commissioners, and, failing to secure this power, put pressure on the House of Lords, and induced it to reject the bill. Under Pitt's India Act in 1784, Parliament controlled the whole administration of the East Indian Empire, a Board of Control was appointed by Parliament, a Governor-General by the Crown, and, while the East India Company made all first nominations in its Civil Service and its army, promotion in India was left to the local governments or to the Governor-General in Council. In 1813 the Company lost its privilege of exclusive trade with India, in 1833 all its monopolies, and the country was thrown open to Europeans without (as hitherto) the requirement of a licence from the Board of Directors. The Governor-General of Bengal was made Governor-General of India, with increased control over Madras and Bombay, and a legal member added to the Council. In 1853 Parliament refused to renew the charter of 1833, which then expired, introduced open competition for first appointments, and gave a representative character to the Legislative Council. Finally, in July, 1858, after the Mutiny, India was transferred to the Crown by Act of Parliament, though the Company existed till 1873 as a medium for the distribution of stock. J. S. Mill strongly opposed the transfer.