The Success and Influence of the East India Company

FROM THE LECTURE SERIES: Turning Points in Modern History

By Vejas Liulevicius, Ph.D., University of Tennessee, Knoxville

The English East India Company (EIC) started as a joint-stock company under the royal charter issued by Queen Elizabeth. For more than two centuries, it grew and remained a powerful force in India, exerting influence in the ruling of the country. It was the leading factor in creating the British Empire. Why was the EIC so successful?

A coin of the British East India Company, on a black background.
A coin of the British East India Company. (Image: Tethys Imaging LLC/Shutterstock)

The East India Company started trading in Spice Islands, a collection of 13,000 islands the most important of which is today’s Indonesia. However, after a series of wars with the Dutch, they decided to start trading in India. Up until then, India was just the route to the Spice Islands. After shifting from Indonesia to India, the company saw unprecedented success. This growth was the result of a highly efficient administration system. The whole administrative structure consisted of 24 directors organized into different committees. The chairman of the company was elected by the shareholders. There was a well-organized hierarchy of officers with various ranks.

There was also a wide range of merchandise traded by the EIC. They ranged from porcelain and indigo to textiles, coffee, and tea, and even saltpeter (potassium nitrate, the main ingredient for making gunpowder).

All these factors created an immense power for the company. It was even treated as a corporate personality informally referred to as ‘The Honorable company’ or ‘John Company’.

Flag of the British East India Company, 1801–1858.
A flag of the English East India Company 1801. (Image: Yaddah assumed (based on copyright claims)./Public domain)

The Influence of EIC in Indian Politics

For almost two centuries, India had been mainly ruled by the powerful Mughal Empire, which was founded by the descendants of Mongols. One of these emperors is Shah Jahan, the one who had the Taj Mahal built in Agra. But in the 1700s, the Empire started to decline, which provided an opportunity for the EIC to further solidify its presence in competition with other companies like the French East India Company. It was another influential company charted in 1664 and well-established in Bengal and Pondicherry. They supported different princes and helped them in battles against other princes and political forces. They also had formed their own armies by recruiting from locals. Their soldiers were called sepoys and helped these European colonies in India.

Learn more about the Treaty of Westphalia.

Criticisms of the Influence of EIC

Despite its huge successes in India, things were not so easy back home. There was a wide range of concerns voiced by some very prominent critics. For example, Adam Smith, known as the Father of Economics, believed that those monopolies hampered fair trade. Another critic was Edmund Burke, known as the father of conservative thought, who criticized the mutual damage it had on both Indian traditions and British societies.

Learn more about the British Slavery Abolition Act.

The Influence of EIC on Globalization

It is interesting to note that the early signs of globalization were born not in the 20th century but in the 17th century. This is actually the time when the EIC was founded and proceeded to create new global connections through trading. These first signs were present in the British lifestyle. The British teatime ritual had those early signs of globalization. The tea was served with sugar from the West Indies in chinaware made by the Wedgwood company.

This is a transcript from the video series Turning Points in Modern History. Watch it now, on Wondrium.

But it was not just commodities or rituals that underwent globalization. Some of the people who worked for the EIC, known as servants, lived globalized lives, too. One of the most successful servants was Elihu Yale who was born in Boston, America. The famous Yale College was named after him as a tribute to his donations to the college. He moved up the corporate ladder and finally became the governor of Madras, India. His tombstone in Wales read “Born in America, in Europe bred, in Africa traveled, in Asia wedded, and his soul, through his mercy, has gone to heaven.” This is how the life of a person would undergo stages of globalization.

A sketched portriat of John 'Walking' Stewart, English philosopher.
John ‘Walking’ Stewart had a different and modern notion of globalization and at the same time criticized it. (Image: Anonymous unknown author/Public domain)

Another example is John Stewart, a.k.a Walking Stewart. He may be little known to many people, but he was very famous at the time. He was an Englishman sent to Madras in 1763 to work as a humble writer. After two years, he decided to go back home after a row with his bosses. But he took an unorthodox route to England. Instead of voyages or taking normal means of transport, he decided to go home on foot. During his adventure, he passed though different countries including Persia, Turkey, Ethiopia before reaching North Africa, Europe, and finally London.

These walking journeys provided a great atmosphere for him to develop his peculiar philosophy. He believed in a fluid identity for human beings. It is constantly being shaped and reshaped and everything is connected to other things in one way or another.

He turned to vegetarianism and mysticism. According to an urban legend in London, he was able to be present in different places simultaneously. This was even mentioned in his obituary, when he died in 1822. Even Wordsworth mentions him in his poetry as a mysterious traveler. He had a different and modern notion of globalization and at the same time criticized it.

Common Questions about the Influence of the East India Company

Q: Why did the EIC become involved in the subcontinent?

The main reason for the involvement and influence of the EIC in the Indian Subcontinent is trade. They first entered the region as a charted joint-stock company to conduct trade. The trade of spices had proved highly profitable and the British wanted to have a share in this market.

Q: How did the British become rulers from traders?

The influence of the EIC in India started to grow as they got powerful in trade. The decline of the Moghul Empire was a significant factor that paved the way for the influence of the EIC in politics. They had a huge army that helped them engage in battles against other countries and side with certain rules.

Q: What were the effects of the British East India Company?

The effects of the British East India Company were very strong and widespread. It helped the establishment of the British Empire. It was a turning point in the history of economics and set the trends for several centuries to come. Globalization is also another significant influence of this company.

Q: Who ruled India before the British?

Before the British, India was ruled by the Moghul Empire. They were the descendants of the Mongols. The downfall of the empire presented an opportunity for the EIC to assume control in India.

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