UNIT 25 THE EUROPEAN TRADING

COMPANIES
Structure
25.0 Objectives
I 25.1 Introduction
I
1
25.2 European Trading Companies in India: 1600-1750
25.2.1 The Dutch East India Company
25.2.2 The English East India Company
25.2.3 The French East India Company
25.2.4 Other European Trading Companies
25.3 Factories and Their Organisation
25.3.1 The Dutch

I
25.3.2 The English
25.3.3 The French
25.4 Parental Contact and Control
25.4.1 The Dutch
I 25.4.2 The English
25.4.3 The French
25.5 The Indian Rulers and the European Companies
25.5.1 The Dutch
25.5.2 The English
25.5.3 The French
25.6 Let Us Sum Up
25.7 Key Words
25.8 Answers to Check Your Progress Exercises

25.0 OBJECTIVES
After reading this Unit, you will learn about:
the growth and expansion of the European trading companies in India;
the European factories and the pattern of their internal organisation;
the nature of state control over the European trading companies; and
the 11 lian rulers' response and attitude towards these trading companies.

25.1 INTRODUCTION
In the preseot Unit, our discussion will confine to the European settlements in India
till the close of our period, organisation of the factories of European trading
companies in India and their relations with their parent countries and the
MughaUIndian rulers. We have already discussed in detail the organisation, location
and the nature of the trading activities of the Portuguese in India in Unit 4 of Block
1. Here, the details of armed confrontations between the European companies and
Indian states are omitted (for these details see course EHI-05). Questions concerning
the trading interests of the European companies have been dealt with in Unit 23 of
this Block.
The evolution of Nation States in Europe broke the European 'unified single
economic system'. This coincided with the agricultural and industrial revolutions in
Europe. Mercantilism also played its own role. All these factors created the need to
look for new markets. With home markets having limited scope for consumption,
foreign markets were the only answer. However, as you have already read in Unit 4,
at tl.ar tit LLt e merchants of Venice and Genoa were enjoying trade monopoly over
the Eastern Seas. There was strong urge on the part of other European merchants to
bresk their monopoly, and hence the search for alternative routes to the East. This
was possible because of great advance in shipbuilding and navigational technologies.
It ultimately resulted in'the discovery of a new route to the East via the Cape of
Good Hope. This led to the European monopoly over the seas-first by the Content Digitized by eGyanKosh, IGNOU
Portuguese and later by other European powers (the English, Dutch and French).
 You will find that in the late 18th century, India had become the theatre ofco5dlict
among European trading companies (for further details see our course EHI-05).
Besides the Portuguese, Dutch, English and French, there were other European
nations also who were interested in the Eastern trade. But their trading activities were
on a much smaller scale.

25.2 EUROPEAN TRADING COMPANIES IN INDIA:

1600-1750
In the present section, we will trace the adveht of the European trading companies
in India and their growth. This section will also cover the conflicting interests and
armed clashes between them and India.

25.2.1 The Dutch East Indirl Company

The Dutch East India Company was formed in 1602 through a charter. The Dutch
were primarily interested in spice trade. Therefore, .they paid more attention to the
Far East. India was just a trading depot for them. They established their first factory
at Petapuli in North Coromandal in 1606, followed by another at Masulipatam in the
same year. Gradually, they realized that Indian textiles could be the best commodity
for exchange with the spice islands (Indonesian Archipelago). This necessitated
expansion of their network in India. They established their factories at Pulicat (1610),
Cambay (1620), Surat and Agra (1621), Hariharpur (1633), Patna (1638). Dacca
(1650), Udaiganj (1651), Chinsura (1653), Qasimbazar, Baranagore, Balasore and
Negapatam (1659-60).
They had two factories in the interior'of the Golkunda temtorie-ne at
Nagaiavancha and another at Golkunda. The former was established in 1670, but
owing to political unrest the Dutch.withdrew from there in the 1680s. In Golkunda
they established their factory in 1662. Once again, owing to the political disturbances.
(Mughal-Golkunda clashes, 1684-87) they withdrew from Golkunda also in 1684. By
1675 Hugli rose into prominence. It undermined the importance of the Dutch factory
at Pipli (on the Orissa coast), and finally they abandoned it in 1675. Similarly, in 1658
the Dutch factories at Dacca and Udaiganj were also abandoned owing to armed
attacks of the local raja. In the Bengal region two more factories were established
by the Dutch in 1669 (Khanakul) and 1676 (Malda) but both had to close down soon.
The rising power of the Dutch was looked upon as a threat by the Enghsh to their
own vested interests. When the English established a factory at Masulipatam and
opened trade at Petapuli, the Dutch interest lay in not allowing English to have a
share in the Pulicat trade. This conflict of interests continued. However, in 1619 the
Dutch managed to have a truce with the English and both agreed to become
copartners in Indian trade. The English Company was allowed to share the Pulicat
trade provided they bore half the maintenance cost of the Dutch fort and garrison
there. But it did not last long. In 1623 and again in 1653-54, the Dutch attacked the
English ships. Between 1672-74 the Dutch again tried to obstruct English settlements
at Surat and Bombay and captured an English vessel in the Bay of Bengal. The
English realized the supremacy of the Dutch over the Eastern Islands. They decided
to drive them away from their Indian possessions. To fulfill their designs, the English
joined hands with the Portuguese in India. Finally, they succeeded in defeating them
at Bedara (1759) which weakened the Dutch opposition in India greatly. Since then
the Dutch confined themselves to "country trade" in India. Whatever small
possessions they had at Nagore and Negapatam were surrendered in 1773. By 1795,
the English succeeded in expelling the Dutch completely from their Indian
possessions. Even their hold on the Cape of Good Hope loosened in favour of the
British.

25.2.2 The English East India Company

In 1599 the 'English Association of the Merchant Adventurers' was formed to trade
with the East. This company (popularly known as the East India Company) got a
Content Digitized by eGyanKosh, IGNOU Royal Charter with her trade monopoly in the East by Queen Elizabeth on
 31 December 1600. In 1608the English merchants decided to open their 'first' factory '--MCaawd-
at Surat. By 1619, they succeded in establishing factories at Agra, Ahmedabad and
Broach.
Conditions were more favourable to establish a factory in the South as there was no --
-
strong Indian state in that part. Vijaynagar had faded away ever since their defeat in
1565. In the South, the English opened their first factory at Masulipatam in 1611. In
1626, another factory was opened at Aramgaon. In 1639, they got Madras on lease
from the local Raja. Soon, they fortified it which came to be known as Fort St.
I George. They acquired the island of Bombay in 1668 and fortified it soon after. It
was soon to supercede Surat (by 1687) as the headquarters of the Company on the
west coast.
The English penetration in the East was comparatively late. They established their
first factory in Orissa at Hariharpur and Balasore in 1633. In 1651, they got
wrmission to trade at Hugli. Soon they also opened their factories at Patna (Bihar)
and Qasimbazar (Bengal). In 1690, an English factory was opened at Sutanati which
was later (16%) fortified. In 1698, the English acquired the zamindarl of Sutanati,
Kalikata and Govindpur, where they built the Fort William. Soon it grew into a big
city and came to be known as Calcutta.
25.2.3 The F'rench East India.Company

The French were late comers to the Eastern trade. The French East India Company
was founded in 1664. The first French factory was establish at Surat in 1668. This was
the place of prime importance to the English. But the Mughal-English armed clash
at Hugli (see section 25.5) caused a sericus setback to the English possessions and
trade in India. It also provided an opportunity to the French to strike roots in India.
In 1669, the French established their second factory at Masulipatam. In 1673, they
got Pondicherry, and in 1674 the Nawab of Bengal granted them a site near Calcutta
where in 1 W 9 2 they built the town of Chandranagore.
The French, had to face the Dutch and English rivarly very soon. The Dutch
merchants convinced the ruler,of Gdkunda about the aggressive designs of the
2rench. Thus, Golkunda in coordination with the Dutch power, decided to expel the
French from St. Thome (1674). Finally, the French had to surrender St. Thome.
Later, in the early 1690s. when the war broke out between France and the
Netherlands, their Indian counterparts also raised their arms against each other. In
1693 the Dutch caputred Pondicherry from them. The Dutch blocked the French
com crcial activities at Hugli. By 1720, the French control over Bantam, Surat and
Musulipatam got loosened: "even it started selling its licences to others." But a
revival came about in 1721. A new Company was reconstructed soon (1725) at Mahe
(on the Malabar coast). In 1739, they opened their factory at Karikal.
There was fierce rivalry between the English and the French. Clashes in India began
with the war between the two countries (France and Britain) in Europe in 1742
leading to the three 'Carnatac wars' (1746-48; 1749-54; 1758-63). The decisive battle
was fought at Wandiwash (January, 1766). The French were defeated and lost almost
all their possession in India (for further details see our course EHI-05).

Now the English supremacy over other European Companies was complete. The
Portuguese had to be content with Goa, Daman and Diu, while the French were
confined to Pondicherry, Karikal, and Mahe. The scene was now left open for English
aggrandisement (for details, see course EHI-05).
25.2.4 Other European Trading Companies
The Danes entered as traders in 1616 but with no ambition to establish an Empire.
They managed to secure the Tranquebar port from the Nayak of Tanjore in 1620
and built a fort there. But the overall resources available to them were extremely
,cant 7 ley also established their factories at Masulipatam, Porto Novo and
Sercu~ipctr(1755). However, their success was limited, and ultimately they sold off
their factories to the English and finally quit India in 1845.
The Swedish East India Company was formed in 1731, but its activities were directed
exclusively towards China rather than India. The Flanders merchants established the Content Digitized by eGyanKosh, IGNOU
Ostend Company in 1722 but their activities were also limited in India.
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Index
7

A Portuguese
m English
o French
Dutch
A Danish

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 ~ -~ ~ ~ . ----

C b e d r Y o ~ r ~ 1 Tile Ewopal Tmdhg C o m p ~ l e s

1) Critically analyse the Dutch-English rivalries for the control of Indian seas.
..........................................................................................................
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2) Fill in the blanks:
i) The Dutch East India Company was formed in the year ........................
ii) The English Association of merchant adventurers was established in
........................ (year).
, iii) First English factory in India was established in ................. (year) at
..a*.............. (place).
iv) The British acquired the island of Bombay in ......................... (year).
v) French established their factory at Chandranagore in ....................... (year).
vi) Battle of Wandiwash was fought in ......................... (year) between
......................... and ..........................
25.3 FACTORIES AND THEIR ORGANISATION
You have already read in Unit 4 of Block 1 how the European trading Companies
established their factories in the East. These factories were not manufacturing depots:
they.were warehouses. They were often fortified. In the present section we will
describe the internal organisation of their factories in India.

25.3.1 The Dutch

The Dutch East India Company's chief administrative centre was at Batavia. This
establishment was headed by the Governor-General of the Dutch East Indies and a
I Council. It controlled all the Dutch factories in Asia. The Council was responsible to
the Central Board of Directors known as "Gentlemen XM"who met for six years
I in succession at the Chamber of Amsterdam followed by two years at the Chamber
I of Zeeland.
A 'factor' was appointed at each station (factory). These factors used to send regular
reports to Batavia regarding trading activities of the region, the list of ships,
commodities exported and imported, etc.
The Dutch factories at Coromand-alwere administered by a Directorate headed by a
Director (designated as governor in 1615) at Pulicat. Prior to 1655 the Dutch factories
in Bengal were controlled and administered by the Coromandal 'factor'. However,
in 1655 a separate 'Directorate' independent of the 'government' at Pulicat was
formed at Hugli. This gave great impetus to the Dutch trade in Bengal. In the 1690s,
the seat of the Dutch administrative machinery in Coromandal also shifted from
Pulicat to Negapatnam.
In India each factory was administered by a Council consisting of the director, a
a senior factor, the incharge of the Company's trade-books, a law enforcement officer,
7
k
the incharge of the warehouses, the incharge of the loading and unloading of the ships
i
and six junior factors, one of whom acted as secretary to the Council. Their salaries
were not very lucrative.

:I 25.3.2 The English

As for the internal management of the English Company it was administe~edby a
'Court of Committees' whose nomenclature later was changed to 'Court of Directors'
in 1709. It consisted of a governor, a dupty governor, and 24 members to be elected
annually by a general body of the merchants forming the Company. Besides, there
was a secretary and a treasurer. Its members were known as Directors. The
Company's superior body 'Court of Directors' was based in London while its Content Digitized by eGyanKosh, IGNOU
 subordinate body was in Asia. The directors were to be annually elected by the
shareholders of the Company meeting in a 'Court of Proprietors'. Each shareholder,
irrespective of the value of the share, had only one vote. The membership of the
Company was not confined to shareholders only. But it could be secured through
inheritance or presentation by paying an entrance fee through apprenticeship,
services, etc.
The Company enjoyed extensive powers to issue orders and to make laws in
accordance with the laws and customs of the realm. The Company also possessed
judicial powers to punish its servants for their offences by imprisonment or fine.
In India, each factory was administered by a Governor-in-Council. The governor was
the President of the 'Council' with no extra privileges. Everything was decided in the
'Council' by majority votes. The members of the 'Council' consisted of senior
merchants of the Company.
While the 'Court of Directors' was the supreme authority in framing policies for the
Company, the rights of its presidencies in Asia were limited. Generally, various
day-to-day matters were directly referred to the sub-committees unless the matter
was for the consideration of the Court. The Presidents and the members of the
Council in Asia could communicate directly with the 'Court' or the Secretary of the
Company at home (London). But this freedom and privilege were rarely given to the
factories under the authority of the presidencies. As measure of check, the Court at
London encouraged the senior officials to report separately on various subjects. Thus,
information generally got duplicated and discrepancies could be checked.
The maintenance and implemention of the policies of the Company obviously rested
upon the Company's President and Council in India.
The administration of the English factories of the Eastern coast was governed from
Fort St. George (Madras) having their President and Council stationed there. The
Council advised the governor in administrative matters.
1
In 1700, English factories in Bengal were placed under the separate control of a
President and Council located at Calcutta.

25.3.3 The French

The ~ r e n c hEast India Company's headquarters in India was at Surat which was later
shifted to Pondicherry. The supreme body was known as 'Superior Council of the
Indies' and headed by a Director-General. He was the overall incharge of the French
affairs in India. The Supreme Council composed of five members was presided over
by the governor. The entire administration was in his hands. Though laws were
enacted in the name of the French king, the governor and the counsellors could be
removed Githout any reference to the French king. All the colonial officers were
subjrdinate to the Council.
One notable feature of the French East India Company was the constant quarrels
and jealousies of the French officials in India which ultimately affected the smooth
development of French interests in India. In the 1670s' Caron got envious of the
remarkable success of his fellow Frenchman Marcara. Though, ultimately Marcara
succeeded in convincing the French government about baselessness of the charges,
the seeds of conflicts and clashes thus sown from the v e y i n ~ p t i o nof the French.
factories in India proved harmful. Similarly, in 1726, Dupleix was suspended from
his office and it was only in 1730 that the suspension order was withdrawn and he
was appointed 'Intendant' or Director of Chandranagore.
Check Your Progrew 2
1) What was Gentlemen XVII?

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 I

1 2) Describe the functioning of the 'Court of Committees'.

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. .
25.4 PARENTAL CONTACT AND CONTROL
In this section we will discuss the European trading Companies' relations with their
I parent country.

25.4.1 The Dutch

The Dutch East India C~mpanywas established through a charter granted by the
Dutch Government (States General). The Company was to be governed through 17
Directors commonly known as 'Gentlemen XVII'. Dutch East India Company had a
unique fea!ure in that its shareholders did not have any control over the managing
body. Though States General was the final controlling power the Gentlemen XVII
enjoyed real powers and worked as a state within the state. In 1644 Gentlemen XVII
told the States General: "the places and strong-holds which had been captured in the
East should not be regarded as national conquests, but as the property of private
individuals".
Batavian Governor-General-in-Council enjoyed almost sovereign authority in so far
as the Dutch East Indian trade was concerned. The Council at Batavia was an
efficient administrative body. Each factor in the East was asked to send regular
I
reports. Periodic inspection by senior officers was also done. It was difficult for the
Gentlemen XVII to interfere and check Council's activities on account of the long
distances and absence of speedy means of communications. Gentlemen empowered
Batavian Governor General in Council to enter into treaties with the rulers in the
t 1 region to the east of Cape of Good Hope, to build fortresses and garrisons and
appoint governers, etc. But all the treaties were concluded in the name of the Dutch
state. The Dutch East India Company at home did not favour promotion of trade by
showing the strength of arms. They often instructed the Governor-General-in-Council
to avoid armed clashes as far as possible. But, its factors realised that trade in India
was impossible without indulging in war and show of armed strength. The Directors
of the Company at home were heavily dependent for information upon Batavian
Council which in turn collected informations through factors stationed at various
places in India and other eastern countries. At times Governor General at Batavia
and factors in India often tried to twist certain orders. In 1616, when the Dutch
Director at home issued an order that "the subjugation of Arnboina and Banda
islands were of prime importance and all foreign nations should be barred from this
trade"; Governor General of Batavia in the wake of Anglo-Dutch clashes decided
not to use force against the English. Direct~rGeneral Coen, on the other hand,
interpreted the instructions aq a mandate-to use force against Fnglish to drive them
out from the Spice Islands. As a result, Batavian Council decided not to endorse
Coen's actions. But, by August 1616, Coen succeeded in getting the sanction from
Gentlemen XVII. That resulted in Governor General's (Raynet Reael) resignation

<I
and Coen's taking over the control.
Often rivalries existed within the factories. When Coen appointed Ravesteyn as
administrative head in Western India, Goeree simply refused to accept his authority.
The crisis could be solved only when in 1620 Coen sent Pieter van den Broecke to
Surat with the responsibility for supervising the activities of the Dutch factories in
t Western India and Persia. Yieter Van den Broecke rejected the directives from
Batavia which advocated the capkre of indigenous merchant vessel. Jan Van Hasel
i continued to deny the borrowing of money from l a lenders for commodity
I
purchases despite the directives from ~ a t a v i aand Gentlemen XVII who ordered to
use only Company's capital for such purchases. Thus despite Company's attempts to
rationalize its administrative procedures the Company's de facto control over factors
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and factories was impeded due to the unreliability of communications.
 25.4.2 The English
In the early 17th century, the English East India Company was the single largest
Company of England. It strictly adhered to monopoly with regard to Eastern trade
vis-a-vis other English merchants. Therefore, from the very beginning it attempted
to oust rival mercantile interests from the Eastern Seas and to secure exclusive
privileges. No nonmember was allowed to trade with the East. This naturally created
dissatisfa-tion among those English merchants who were denied their share in the
huge profits from the Eastern trade. These merchants tried to influence political
leaders but the Company somehow (through bribes, etc.) managed to retain its
privileges upto Charles 11's reign. In spite of all opposition these merchants, known
as 'interlopers' continued to defy the monopoly of the Company by indulging in the
East Indian trade on their own. By 1688 the situation turned favourable when in
British Parliament they became supreme. These "Free Merchants" tried to press their
demands'in public as well as in yarliament. In 1694, the Parliament passed the
resolution that all thecitizens of England had equal right to trade in the East. This
resulted in the formation of 'New Company'. But the 'Old Company' refused to
surrender their privileges. Finally, after long drawn conflicts, both the Companies
agreed to join hands and a new company, "The Limited Company of Merchants of
England Trading to the East, Indies", was formed in 1708.
There existed close relationship between the Company and the Crown. Queen
Elizabeth herself was one of the shareholdeis of the Company. After Queen
Elizabeth's death (1603), James I renewed the charter (1609) though it could be
revoked at any time at three years' notice. In 1615, the Company got the power to
enforce law to maintain discipline on long voyages. The charter of 1623 further
enhanced the Company's powers of controlling and punishing its servants.
However, the Conlpany had to face tough time under Charles I. In 1635, Charles I
permitted Sir William Courten to set up a new trading body to trade with the East
, Indies under the Courten's Association, named the 'Assada Company'. But the latter
could hardly put up any strong competition to the East India Company. '
The situation again changed under Oliver Cromwell who supported the interests of
the Company. In 1657, he granted a new charter that resulted in the union of
Courten's 'Association' and the 'Old Company'. This charter was important for it
changed the very character of the Company. Earlier, its shareholders used to
contribute as per voyage converted into one single joint-stock company with
continuous flow of stock. Now anyone could become a member of the Company by
an entrance fee of £5 and by a subscription o f f 100 to the Company's stock. T o have
the right to vote, one had to be a shareholder of a 0 0 , and to be elected a member
of the committee his shares should be worth f 1000. The term of governor and deputy-
governor was reduced to two years.
Another charter was granted to the Company in 1661 by Charles 11. By this charter,
the Company was empowered to,appoint governors and subordinate officers for
administration. Their judicial powers to punish were enhanced. The Company also
got the right to empower the governor and the Council of its each'factory to supervise
the persons employed under them according to the English law. The charter of 1668
was the major step in the transition of the Company from a mere trading body to a
territorial power. As we have mentioned earlier, in 1669 the Company procured
territorial rights over Bombay. Now the Company could freely make laws and issue
ordinances for governing the island. The Company even secured the right to mint
money at Bombay in 1676. The charter of 1683further granted the Company to raise
military forces within a prescribed limit, and to declare war on or make peace with
America, Africa and Asia. In 1687, the Company was permitted to establish a
municipality and a Mayor's court at Madras.
The Glorious Revolution (1688), however, gave a great jolt t o the rising power of
the Company. By the charter of 1693, one could subscribe shares of more than
f 10,000. Similarly, the minimum limit to qualify for vote also extended from £500 to
$1000 and instead of one vote, now a single member could have a maximum number
of 10 votes. In 1694, the principle of rotation of officers was made compulsory. Out
of 24 members, 8 were to retire every year. The qualification for the right to vote
once again was reduced from f 1000 to £500; now each member could enjoy the right
to 5 votes instead of earlier 10. This charter was followed by a number of charters in
Content Digitized by eGyanKosh, IGNOU
1709, 1711, 1726, 1734, 1744, 1754, 1757 through which the Company succeeded in
 The Europan Trading Cornpanin
erlsuring more and more military and administrative powers for the Company in lieu
of huge loans granted by the Company to the Crown and the Parliament.

25.4.3 The French

The French East india Company was a state controlled organisation and thus differed
from the Chartered Companies of England and the Netherland. The French East
India Company was highly dependent on the French government for its grants,
subsidies, loans, etc. After 1723, it was almost wholly controlled by the French
government with Directors as its representative. Its shareholders were mostly nobles
and rentiers and not merchants. They were more interested in short term dividends.
With an autocratic, corrupt and decadent French government, such level of control
was obviously harmful for the French East India Company.
For all practical purposes, the Directors had no power. Even the shareholders seldom
met, and when they did they had no say in the presence of royal officials or the king.
The 'Assemblee Generale' also could hardly think of rejecting any proposal of the
Syndics or Directors which had the ministerial approval.

The French East India Company was bankrupt almost from the beginning. To
reorganise the Company, general assemblies were called in 1684. The Directors
nominated by the king were supposed to hold the post for life. After the death of a
director, another one could be chosen through election by the surviving directors and
other stockholders with at least 20,000 livres. Administration was entirely in the
hands of 12 directors who were to receive 3000 livres annually.
In 1688, eight new directorships were creat:d. These directors were to pay 60,000
livres each as appointment 'fee'. In 1697, the ordinary stockholders unsuccessfully
demanded their own representatives in the Company's administration.
In 1721-23, attempts were made again to reconstitute the Company. The Company,
after 1730, became a national East India Company. The 12 directors were hardly
more than 'clerks' under a state appointed 'Council des Indes' consisting of royal
councillors, naval officers, and prominent merchants. The provision to select 6
syndics or directors by the shareholders to represent shareholders ramained in the
abeyance till 1745 when the shareholders were permitted to nominate 12 persons out
of whom the king chose 6. After 1730, the Council transmitted its orders through one
Royal Commissioner. The successive Controleues-General and navy ministers were
actually controlling the Company. The lion's share of the capital remained in the
hands of the directors.
The company'^ headquarter was in Paris. But it had equally large staff at Lorient
undtr the charge of a resident director.
The French Company owned its own fleet. But the wastage in the French East India
Company was higher than in the other two large East India Companies.
From 1769-1785, and again after the French Revolution (1789), the French East India
trade was thrown open to individuals.

Check Your Progress 3

1) Who were 'interlopers'? Describe their clash with the English East India
Company.

2) In what way French East India Company differed from its counterpart English
East India Company?

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 25.5 THE INDIAN RULERS AND THE EUROPEAN
COMPANIES
The Mughals and the Indian rulers were interested in the development of India's
overseas trade. They wanted it as it would have increased their revenue resources.
Therefore, in spite of all odds, the Mugha1 Emperors and the local Indian rulers, in
general, welcomed foreign merchants. However, the Mughals and other Indian rulers
were we* on the seas. To ensure smooth sailing of the Indian ships it was necessary
for them to align with one or the other powerful European power who were masters
of the seas. You will notice so long as the Mughals were strong, the European
merchants followed the policy of seeking concessions'through petitions and presents.
The Companies also combined trade and diplomacy with war and control of the
temtory where their factories were situated. With the weakening of the Mughal
power, the European Companies started imposing their will on the Indian rulers to
get monopolies and concessions. They also took full advantage of the internal
conflicts. (For details see our Course EHI-05.)

25.5.1 The Dutch

The Dutch got favourable response from the rulers of Golkunda. They granted them
concessions to trade on payment of 4 per cent customs duty on their exports and
imports. The Company was also given exemption from duty on cloth (which
amounted to about 12 per cent). In 1612, the duty of 4 per cent was commuted into
a fixed payment of 3000 pagodas annually.
The chief feature of the Company's relation with the Indian rulers was that in spite
of getting concessions from the Indian rulers, the local officials constantly used their
power to evade the orders and imposed duties on Company's trade. It frequently
resulted inclashes with the local officials. In June 1616, the Dutch had to close down
their factory at Petapuli owing to the exhorbitant demands of the local havaldar. In
1619 also the Dutch were virtually on the brink of closing down their factory at
Masulipatam owing to the local bavaldar's oppression, but the Golkunda ruler acted
promptly and replaced Mir Qasim, the local havaldar. In 1636, the Dutch had to
abandon their factory at Hugli owing to harassment by the local officials and rivalries
of local merchants, etc. (the factory was later reopened in 1645-50). They were also
exempted from the custom dues at Masulipatam on payment of 3000 pag-. In 1657
they got from the Golkunda king the right to mint coin in the Pulicat mint. They
collected the mint duty of 5.38 per cent. By the famum of 1676, the Golkunda ruler
granted the Dutch complete freedom from tariffs in Golkunda.
In the 168(k, the Dutch had to resort to arms owing to. their conflict with the
Golkunda minister Akanna. In 1686, they occupied the port of Masulipatam. The
siege continued for two months. Ultimately Golkunda had to come to terms, and the
king agreed to restore all previous privileges;
In 1690, the Nayak of Tanjore allowed the Dutch to pay only half of the toll in all
parts of his kingdom. They also got the right to keep other Europeans out from the
ports of Tanjore. They also received the right to mint coins at Nagapatam. The
Bijapur ruler also confirmed all the privileges granted to them by the Nayak of Jinji
in 1651.
For trade along the west coast, the Dutch succeeded in getting tarman from the
Mughal Emperor Jahangir. They were exempted from tolls from Burhanpur to
Cambay and Ahmedabad. Shah Jahan also issued two tarmans granting them
permission to trade in Bengal(1635) and at Surat. In 1638, the Company got another
farmam from Shah Jahan to trade in saltpetre as well. In 1642, Shah Jahan exempted
the Dutch from the payment of transit duties along the Pipli-Agra route. In 1662
Aurangzeb confirmed all the privileges granted by Shah Jahan to the Dutch in
Bengal. This was followed by another farman in 1689by which Aurangzeb permitted
Content Digitized by eGyanKosh, IGNOU all the concessions enjoyed by the Dutch in Golknn* which was shortly occupied by
the Mughals. Shah Alam (1709) even reduced customs duty from 3% per cent to 2'12
 per cent at Swat and Hugli. He also granted total exemption to the Company from =BnCm
paying transit dues throughout the Mughal Empire. But, owing to the hinderances
posed by the local officials, the Dutch factors sometimes could not avail of the rahdori
exemptions. Similarly, to oblige the local officials, they had to spend a handsome
sum. But the Company often misused their privilege of carrying duty-free goods.
Instead of carrying their own goods, the Company often helped Indian merchants in
evading customs at Hugli. In 1712, Jahandar Shah confirmed all the privileges granted
by Awanpeb in Coromandal. However, the local authorities were not ready to
surrender the privileges granted by Jahandar Shah. A major conflict broke out at
Palakottu and Drakshavaram in 1725-30, and the Dutch factory was attacked and
I plundered (1728).

I 25.5.2 The English

It was during Jahangir's reign that the first English envoy reached the Mughal court
and received a royal farman in 1607. In 1608, when the English established their first
factory at Surat, Captain Hawkins was sent to Jahangir's court for securing trading
concessions. Jahangir, initially, welcomed the English envoy and a mansah of 400 zat
was bestowed on him by the Emperor. Though in 1611 Hawkins got permission to
open trade at Surat, later, under the Portuguese influence, he was expelled from
Agra. The English re-dsed that if they wanted any concessions from the Mughal
court, they had to counter the Portuguese influence. It resulted in armed conflict
between the two at Swally near Swat (1612, 1614). It bore fruits. The Mughals
wanted to counter the Portuguese naval might by joining hands with the English.
Besides, they also wanted benefits for Indian merchants who could aspire to gain
better profits in case of competition between the foreign merchants. Soon, Captain
Best succeeded in getting a royal farman (January, 1613) to open factoriesin the west
coast--Swat, Cambay, Ahmedabad and Goga.
In 1615, Sir Thomas Roe was sent to Jahangir's court. He tried to take advantage of
the naval weakness of Indian rulers. They harassed the Indian traders and ships.
These pressures resulted in the issue of another farman by which the English
merchants got the right to open factories in all parts of the Mughal Empire. The
English success led to an English-Portuguese conflict from 1620 to 1630 to the
advantage of the English. After that, the Portuguese gradually lost almost all of their
Indian possessions except Goa, Daman and Diu. In 1662, they gave the island of
Bombay to king Charles I1 of England in dowry.
Lluring the closingyears of Jahangir's reign when the English Company tried to
fortify their factory at Surat, they were imprisoned by the Mughal officers. When the
Compan;'~rival group of English merchant. attacked Mughal ships, the President of
the Company at Surat was imprisoned by the Mughals and could only be released on
payment of f 1,80,00.
In 1651,the English East India Company got a aish.n from Sultan Shuja, the son of
Shah Jahan, the then governor of Bengal. By this nlshan they received trading
privileges in return for a fixed annual payment of Rs. 3000. ~ i a n o t h enishan
r in 1656
theJnglish Company was exempted from custom dues. Hoftrever, after Shuja's
withdrawl from Bengal his successors ignored his orders for the obvious reason that
it affected the treasury. But later Shaista Khan (1672) and Emperor Aurangzeb's
farman finally ensured a custom-free English trade.
During Aurangzeb's reign, we notice some changes in the Mughal-English
Company's relations. By this time the English Company with fortified settlements at
Madras and Bombay felt more strong. Avrangzeb himself was busy in his Deccan
campaigns. Now they could well think of abandoning their role as humble petitioners.
By the use of force they could now dictate prices and acquire a free hand in trade-
They were planning to establish trade monopoly by gradually driving out all other
European powers from competition..
In 1686, t b Fnglish declared war against the Mughal Emperor and sacked Hugli.
However, tale; were highly mistaken in assessing the Mughal Ihight. Unlike their
counterparts in South India, the Mughals were more than a match to a small trading
Company. It resulted in the latter's humiliation. They had to lose all their possessions
in Bengal. Their factories at Surat, ~ a s u l i ~ a t aand
m Vishakhapatam were seized and
their fort at Bombay was besieged.
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 Realising the Mughal might they again went back to their old policy of "petition Bnd
diplomacy". They again turned humble petitioners and agreed to trade under the
protection of the Indian rulers.
Soon, the Mughals pardoned them considering the advantage of increasing foreign
trade. Aurangzeb granted them permission to trade on payment of Rs. 1,50,000 as
compensation. In 1691, the English Company succeeded in getting exemption from
the grant of custom duties in Bengal on an annual payment of Rs.3000. In 1698, the
English king sent a special envoy Sir William Noris to Aurangzeb's court to secure
the formal grant of the trading concessions and the right to exercise full English
jurisdiction over the English settlements. In 1714-17 another mission was sent under
Surman who was able to procure three farmans from Farmkh Siyar that exempted
them from paying custom dues in Gujarat and Deccan as well. In Bengal so long as
Murshid Quli Khan and Ali Vardi Khan remained on the scene, they strictly checked
the corruption of any of the privileges granted to the Company. But immediately
after their departure (1750s), the Company got an opportunity to intrigue and soon
succeeded in defeating the Nawab of Bengal in 1757 at the battle of Plassey. (For
details see course EHI-05.)
The rulers of Golkunda also maintained friendly relations with the English Company.
In 1632, the ruler of Golkunda issued a farman by which they were allowed to trade
freely in the ports belonging to Golkunda on payment of 500 pagodas irrespective of
the volume of trade. This certainly gave a great boost to English trade in the
Coromandal region.

25.5.3 The kench

The French had to face the wrath of the Marathas (Shivaji) as early as 1677. French
commander (later Director General of French affairs in India) Martin readily
acknowledged the authority of Shivaji and agreed to pay him an amount in lieu of a
licence to trade in his dominions. Shivaji accepted the French request on the
condition that they would not participate in military operations against him. In 1689,
the French got the permission to fortify Pondicherry (from Bambhaji). The French
also succeeded in getting a farman from Aurangzeb as earjy as 1667 to open their
factory at Surat. In 1688 the Mughal Emperor Aurangzeb, ceded Chandranagore
village to the French. The French maihtained close ties wth Dost-Ali the Nawab of
Carnatic. On the basis of a strong recommendation by him the Mughal Emperor
Muhammad Shah issued a farman granting permission to the French to mint and issue
gold and silver currency bearing the stamp of the Mughal Emperor and the name of
the place of minting.

A change in the political situation in South provided the French with an opportunity
to interfere in the internal affairs of Indian rulers. In 1738 civil war broke out at
Tanjore following the death of Venkaji's grandson Baba Sahib. Sahuji, another
claimant to the throne, aproached the French governor M. Duman for help. In return
the French got Karikal and Kirkangarhi. Sahuji's reluctance to cede the promised
territory provided the opportunity to Chanda Sahib, (son-in-law of Dost-Ali, Nawab
of Carnatic) to act promptly and he promised the French Karikal and Kirkangarhi if
they allowed him to occupy parts of Tanjaur. But soon Chanda Sahib had to face the
wrath of the Marathas which compelled him to seek the French help. Muhammad
Shah on hearing about the successful French resistence to Marathas granted M.
Dumas the title of Nawab and bestowed upon him a mansabs of 450012000. The
French involvement in the affairs of the principalities of South India ultimately
resulted in Carnatic wars and the defeat of the French (details of Carnatic wars and
the politics related to Anglo-French clashes etc. are dealt in our course EHI-05).
CbeckYourProgrtss4
1) Why did the Mughal Emperors and the Indian rulers promote the establishment
of European Trading Companies?

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 The European Trading Companies
2) Why the local officials were reluctant to allow the European merchants the
privileges granted by the Indian rulers? What was its result?
.........................................................................................................

25.6 LET US SUM UP

With the discovery of the new sea-route via the Cape of Good Hope, the Eastern
trade was thrown open to all the European nations. During this period, the
Portuguese, Dutch, English and French merchant Companies established their
factories in Africa and Asia. The European Companies were interested in gaining
more and more concessions from the Indian rulers. Their desire to have monopoly
over the Easterri trade brought them into conflict on the seas as well as on the land.
In India, by the 1750's, ts, the English emerged victorious and cultivated designs to
establish an Empire in India.
The Portuguese, Dutch and English Companies were primarily merchant companies.
However, the French East India Company was heavily dependent on the French
government. All the European Companies had fortified factories in India. These
factories served not only as warehouses but also were great repository of arms and
armoury. In India, their chief was PresidenttGovernor. But all powers flowed from
their parent country. The Dutch East India Company was directly answerable to
Batavia which in turn was connected to the headquarters at Hague.
These Companies tried to maintain good relations with the Mughals and other Indian
rulers. But they combined the strategy of flattery, petition and gifts with the show of
arms to gain strength. The Indian rulers were also interested in encouraging the
establishment of European Companies for getting revenue through trade taxes. The
European Companies found South India easy to penetrate and dictate their terms to
weak Nayak and the Deccan rulers. But, throughout the 17th century, they found it
often difficult to cow down the mighty Mughals. Any such attempts were well
thwarted. However, as soon as the Central power showed signs of decadence, the
European Companies, especially the English, succeeded in getting concessions at will.

25.7 KEY WORDS

Country Trade: foreign companies indulging in inland trade in India.

25.8 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) See Sub-section 25.2.1. Analyse the interests of the two Companies in India; give
reasons for the Dutch surrender and discuss how ultimately were they satisfied
with 'country trade'.
2) i) 1602 ii) 1599 iii) 1608, Surat
iv) 1648 v) 1690-92 vi) 1760, England, France
Check Your Rolgess 2
1) See Sub-section 25.3.1
2) See Sub-section 25.3.2. At first define what constituted this committee? Also
prlwide its pc : v r ~ .7
1 .
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 Productionand Trade Check Your Progress 3
1) See Sub-section 25.4.2. After defining them analyse such questions as to what were
their clash of interests with the English East India Company? Why they were
opposing the 'monopoly' of the English East India Company and what was thc
result of the conflict?
2) Read carefully Sub-sections. 25.4.2,25.4.3. Mention that the English East Indi.1
Company was a merchants' organisation while the French company heavily
depended on the French government. Also mention how this played crucial r o l ~
in the weakening of the French power in India. !
s'
Check Your Progress 4 i

1) See Section 25.5. Critically examine that they wanted to develop the Indian
overseas trade so that it could prove beneficial for their own merchants and
craftsmen. Also write how it would have strengthened their finznces as well?
2) Read Section 25.5 and its Sub-secs. carefully. This meant the loss of revenue
resources which they were supposed to collect. Discuss how it quite often resulted
in armed clashes between the two?
5
j
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I

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 S o w Uaehl Books for This Block
SOME USEFUL BOOKS FOR THIS BLOCK
Irfan Habib : Agrarian System of Mughal India (Out of Print)
Tapan Raychaudhuri : The Cambridge Economic History of India, Vol-I
W.H. Moreland : India at the Death of Akbar
S. Arasaratnam ': The Dutch East India Company and its Coromandal Trade,
1700-1740
K.N. Chaudhuri : The English East India Company: the Study of an Early
Joint-Stock Company, 1600-1 640

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