EAST INDIA COMPANY, an incorporated company for exploiting the trade with India and the Far East. In the 17th and i8th centuries East India companies were established by England, Holland, France, Denmark, Scotland, Spain, Austria, and Sweden. The English, the most important of these, survived until it handed over its functions to the British government in 1858. It was founded at the end of the i6th century in order to compete with the Dutch merchants, who had obtained a prac tical monopoly of the trade with the Spice islands and had raised the price of pepper from 3s. to 8s. per lb. Queen Elizabeth incorporated it by royal charter, dated Dec. 31, 1600, under the title of "The Governor and Company of Merchants of London, trading into the East Indies." This charter conferred the sole right of trading with the East Indies, i.e., with all countries lying beyond the Cape of Good Hope or the Straits of Magellan, upon the company for a term of 15 years. Unauthorized inter lopers were liable to forfeiture of ships and cargo. There were 125 shareholders in the original East India Company, with a capital of £7 2,000 : the first governor was Sir Thomas Smythe. The early voyages of the company, from 16oi to 1612, reached as far as Japan (see Purchas' narratives), and are distinguished as the "separate voyages," because the subscribers individually bore the cost of each voyage and reaped the whole profits, which seldom fell below i00%. After 1612 the voyages were con ducted on the joint stock system for the benefit of the company as a whole. In 1610-1 1 Captain Hippon planted the first English factories on the mainland of India, at Masulipatam and at Pet tapoli in the Bay of Bengal. In 1609 James I. renewed the com pany's charter "for ever," though with a proviso that it might be revoked on three years' notice if the trade should not prove profitable to the realm.
Meanwhile friction was arising between the English and Dutch companies. The Dutch traders considered that they had prior rights in the Far East, and their ascendancy in the Indian archipelago was indeed firmly established on the basis of terri torial dominion and authority. In 1613 they made advances to the English company with a suggestion for co-operation, but the offer was declined, and the next few years were fertile in disputes between the armed traders of both nations. In 1619 was rati fied a "treaty of defence" to prevent disputes between the Eng lish and Dutch companies. When it was proclaimed in the East, hostilities solemnly ceased for the space of an hour, while the Dutch and English fleets, dressed out in all their flags and with yards manned, saluted each other; but the treaty ended in the smoke of that stately salutation, and perpetual and fruitless contentions between the Dutch and English companies went on just as before. In 1623 these disputes culminated in the "massa cre of Amboyna," where the Dutch governor tortured and exe cuted the English residents on a charge of conspiring to seize the fort. Great and lasting indignation was aroused in England, but it was not until the time of Cromwell that some pecuniary reparation was exacted for the heirs of the victims. The im mediate result was that the English company tacitly admitted the Dutch claims to a monopoly of the trade in the Far East and confined their operations to India and adjoining countries.
The need for good ships for the East Indian trade had led the company in 1609 to construct their dockyard at Deptford, from which, as Monson observes, dates "the increase of great ships in England." Down to the middle of the 19th century, the famous "East Indiamen" held unquestioned pre-eminence among the merchant vessels of the world. Throughout the 17th century they had to be prepared at any moment to fight not merely Malay pirates, but the armed trading vessels of their Dutch, French, and Portuguese rivals. Many such battles, usually with successful results, are recorded in the company's history.
It was not until it had been in existence for more than a century that the English East India Company obtained a prac tical monopoly of the Indian trade. In 1635, a year after the Great Mogul had granted it the liberty of trading throughout Bengal, Charles I. issued a licence to Courten's rival association, known as "the Assada merchants," on the ground that the com pany had neglected English interests. The piratical methods of their rivals disgraced the company with the Mogul officials, and a modus vivendi was only reached in 1649. In 1657 Cromwell renewed the charter of 1609, providing that the Indian trade should be in the hands of a single joint stock company. The new company thus formed bought up the factories, forts, and priv ileges of the old one. It was further consolidated by the foster ing care of Charles II., who granted it five important charters. From a simple trading company, it grew under his reign into a great chartered company—to use the modern term—with the right to acquire territory, coin money, command fortresses and troops, form alliances, make war and peace, and exercise both civil and criminal jurisdiction. It is accordingly in 1689, when the three presidencies of Bengal, Madras, and Bombay had lately been established, that the ruling career of the East India Com pany begins. From this moment the history of the transactions of the East India Company becomes the history of British India (see INDIA: History). Here we shall only trace the later changes in the constitution of the ruling body itself.
The great prosperity of the company under the Restoration and the immense profits of the Indian trade attracted a number of private traders, both outside merchants and dismissed or re tired servants of the company, who came to be known as "inter lopers." In 1683 the case of Thomas Sandys, an interloper, raised the whole question of the royal prerogative to create a monopoly of the Indian trade. The case was tried by Judge Jeffreys, who upheld the royal prerogative; but in spite of his decision the custom of interloping continued and laid the foundation of many great fortunes. By 1691 the interlopers had formed themselves into a new society, meeting at Dowgate, and rivalling the old company; the case was carried before the House of Commons, which declared in 1694 that "all the subjects of England have equal right to trade to the East Indies unless prohibited by act of parliament." This decision led up to the act of 1698, which set up a new East India Company in consideration of a loan of two million to the state. The old company subscribed f 315, 00o and became the dominant factor in the new body ; while at the same time it retained its charter for three years, its factories, forts, and assured position in India. The rivalry between the two companies continued both in England and in India, until they were finally amalgamated by a tripartite indenture between the companies and Queen Anne (1702), which was ratified under the Godolphin award (1708) . Un der this award the company was to lend the nation f 3, 200,000, and its exclusive privileges were to cease at three years' notice after this amount had been re paid. But by this time the need for permanence in the Indian es tablishment began to be felt, while parliament would not re linquish its privilege of "milking" the company from time to time. In 1712 an act was passed con tinuing the privileges of the company even after their fund should be redeemed; in 173o the charter was prolonged until 1766, and in 1742 the term was extended until 1783 in return for the loan of a million. This million was required for the war with France, which extended to India and involved the English and French companies there in long-drawn hostilities, in which Dupleix and Clive became prominent.
So long as the company's chief business was that of trade, it was left to manage its own affairs. The original charter of Eliz abeth had placed its control in the hands of a governor and a committee of 24, the chairman and court of directors in London exercising unchecked control over their servants in India. But after Clive's brilliant victory at Plassey (17 5 7) had made the company a ruling power in India, it was considered essential that the British government should have some control over the ter ritories thus acquired. Lord North's Regulating act (17 73 ) raised the governor of Bengal—Warren Hastings—to the rank of governor-general, and provided that his nomination, though made by a court of directors, should in future be subject to the approval of the crown; in conjunction with a council of four, he was entrusted with the power of peace and war; a supreme court of judicature was established, to which the judges were appointed by the crown; and legislative power was conferred on the governor-general and his council. In 1784 Pitt's India bill created a board of control, as a department of the English gov ernment, to exercise political, military, and financial superintend ence over the British possessions in India. This bill first author ized the historic phrase "governor-general in council." From this date the direction of Indian policy passed definitely from the company to the governor-general in India and the ministry in London. In 1813 Lord Liverpool passed a bill which gave the board of control authority over the company's commercial trans actions and abolished its monopoly of Indian trade. The monopoly of the valuable trade with China, chiefly in tea, was ended by Earl Grey's act of 1833. Its property was then secured on the Indian possessions, and its annual dividends of ten guineas per £ 1 oo stock were made a charge upon the Indian revenue. Hence forward the East India Company ceased to be a trading concern and exercised only administrative functions. Such a position could not, in the nature of things, be permanent, and the Indian Mutiny was followed by the entire transference of Indian admin istration to the crown on Aug. 2, 1858.