The spice route

Last Updated 29 January 2011, 13:34 IST

The story of the East India Company (EIC) is important in itself. But, much more significantly, it occupies a seminal place in many other important stories. It was at the apex of two major transformations in modern world, the transformation of England and that of India. EIC was also indirectly involved in the first major wave of economic globalisation that started from the 16th century onwards. It was also a major factor in the urbanisation of modern India. At least three modern cities of India - Bombay, Calcutta and Madras - owe their emergence to the EIC. Above all, it was the first trading company that actually went on to become the 'State' and ruled over one of the largest empires recorded in human history. All these stories are interconnected and must be told in all their complexity and grandeur.

Since ancient times, India had trading relations with Greece and South-East Asia. But the trading chain that started since the 16th century and involved India, along with large parts of the globe, was new and distinctive in many ways. It all started in October 1599 when some important London merchants met the Queen of England, Elizabeth I and suggested to her the idea of establishing a direct trade with the East. Till then, the trade with the East was dominated by the Portuguese and the Dutch. The Queen responded with enthusiasm. She soon received a petition from the merchants to set up a ‘Company’ to trade exclusively with the East and also to have a monopoly over that trade. The Queen signed the Charter and granted the monopoly. The East India Company was established in 1600 and also acquired a monopoly over trade with the East. It is important to recognise that India figured prominently in the European idea of the East.

Akbar was the emperor of India at that time. For a whole range of reasons, the passion to trade with the East was very strong in Europe. In particular, spices from India and Indonesia (then called East Indies) were a coveted item in Europe. These spices (clove, nutmeg, cinnamon and ginger) were precious commodities in European life, both as preservatives and additives to meat (European population got fresh meat only four months a year). These spices made European food edible and tasty. In addition to the craving for spices, there were also the stories of the wealth and riches of the East that tempted the merchants of Europe towards East. The impetus for trade was also facilitated by the discovery of a new sea-route to India by Vasco-da-Gama in 1498. So important was this discovery that leading economist Adam Smith wrote that the discovery of America by Columbus and of the new sea-route to India were “the two greatest and most important events recorded in the history of mankind.” The EIC ship landed on Indian shores at Surat in 1608 and by the end of the century England had replaced the Portuguese as the chief operators in India.

EIC was indeed a company with a difference. It started as a trading enterprise and, within 150 years of its operation, ended up capturing state power directly. For a whole century, from 1757 to 1857, it was the State in India. It collected taxes, maintained a large army and fought many wars. Quite unusual for a trading company, a large proportion of its employees comprised soldiers and civil servants. It was indeed a unique trading company that directly controlled large parts of the world politically. Its revenue was greater than that collected by the British government from its population. At its height, it maintained the largest army in the world. But it was also a unique State. It was completely at the service of commerce. It was a government owned by businessmen in which the shares were daily bought and sold. As Macaulay commented: “It is strange, very strange.” It indeed was quite unique and untypical for pre-modern world to conceive of a politically sovereign unit solely at the service of commercial imperative and run like a commercial unit. It was nothing short of a miracle? But, how did this happen? Why did EIC become a State instead of continuing as a commercial venture?

Some part of the explanation must reckon with the accidental ‘discovery’ of America by Christopher Columbus. This discovery provided a great opportunity to the countries on the Atlantic coast (Spain, Portugal, France and England) to reach the new world and collect the gold and silver, available in the plentiful, in the mines in the new world. What followed was a sustained exploitation of silver mines of Americas with the help of local manpower. The conditions in the mines were harsh and took their toll on the lives of workers. According to one estimate, the population of Mexico was reduced to one-third during the course of the 16th century, on account of new diseases like small-pox and influenza. This necessitated the search for new labour, which was forcibly acquired from the African coast. According to another estimate, around 13 million Africans were transferred to Americas to work in the mines as slaves. As a result, full-fledged plantation colonies of African slaves began to be established in Brazil and the Caribbean islands.

The mining of silver brought unprecedented wealth to Atlantic Europe. Between 1493 and 1700, the Americas produced 51,000 metric tons of silver, which was nearly 81 per cent of total world availability of silver. All of it went to Atlantic European countries. It was this silver that gave the West an enormous advantage in its Eastern trade. Although EIC traded only with the East, its Eastern trade was crucially dependent on the rich inputs that came from Latin America and Africa.

One major problem the EIC faced in its trade with the East was that in return for spices and silk, it had nothing to offer to the people of tropical and semi-tropical areas. Europe needed Indian products but Indians were in no need of any of European products. The silver from Americas came in quite handy for the EIC. Also, the silk procured from the East was used as a ‘gift’ for African chiefs in return for more African slaves to work in American mines. These African slaves helped extract silver that reached Europe and enabled EIC to trade with the East and buy silk and spices. The silk was used to buy more slaves from Africa. Thus, it was the constant transfers of slave-silver-spices-silk-slave-silver that connected four big continents of the world in a single economic grid. It truly was a global process, the first of its kind. The EIC, along with other European companies, was at the apex of this process, and its clear beneficiary. But why did this create the need to capture State power by the EIC?

One major crisis of the EIC’s Eastern trade was that it did not have anything substantial to offer in return for silk and spice. In its initial years, the EIC sold more than it bought, which meant sending bullion (gold and silver) to the East. This was the time when ideas of Mercantilism held sway over Europe. This meant that gold and silver were seen as the most desired form of wealth of a nation and the Europeans resented the transfer of this wealth to the East. These twin situations - lack of anything to offer in return for spices and not wanting to send bullion out of Europe - fed into the most unique phenomenon the world had ever witnessed. The EIC fought many wars, some with rival European companies and some with Indian chiefs. The net result of these wars was an actual political capture of regions and territories in India. It started with Bengal in 1757 and, by the end of the 18th century, most parts of the Indian sub-continent had passed into EIC’s political control. The Company acquired the power to raise taxes from India. This meant that the Indian goods could now be bought with Indian money (or money raised in India) instead of European silver. The smooth trade could be maintained without having to part with bullion, which could now safely remain within Europe. When Wellesley left India as the Governor General in 1798, he had left behind him the foundation of an empire larger than most others in the world. The new empire had been created through war, conquest, treaty and deceit. But the main imperative for the creation of the new empire was chiefly commercial.

The EIC was thus involved in the transformation of the world in general, and England and India, in particular. It completely changed the image of England within Europe. Around the 16th century, the English had a low reputation among Europeans. They were considered rough, coarse and ill mannered. They were seen as lacking in courtly etiquette. In dress and appearance, they were considered uncouth and inelegant as compared to the aristocracy of continental Europe. In commerce, they were considered no match for the Dutch. However, within 300 years, which was roughly the life span of EIC, all these impressions disappeared for good as the English ruled over the greatest and the largest empire the world had ever seen. The transformation was no doubt due mainly to the EIC.

EIC also transformed India. It was under the EIC that Indian society and economy lost its independence and got integrated to England and the world, though in a subordinate manner. This subordination of Indian economy, polity and society accompanied India’s transition to modernity and left its deep imprint on the transition. Many features of modern Indian society and polity today are a direct product of India’s colonisation that happened through the instrumentality of the EIC.

EIC lost its eminence in England after the industrial revolution. Traders were now replaced by industrialists as the main driving force of the economy. As a result, EIC gradually lost its power and patronage and also lost its monopoly over Eastern trade. In the end, it was the Rebellion of 1857 which sealed its fate. The Company’s rule ended in 1858 and India’s control passed directly into the hands of the British crown. The fortunes of EIC were thus decided by two English queens: Queen Elizabeth granted it power and monopoly in 1600; Queen Victoria, two-and-a-half centuries later, took it all back, commenting that the country felt that “India should belong to me.” The EIC was finally dissolved in 1874.

The Company’s rule in India ended in1858, but the process they had initiated continued. India had become a colony of Great Britain, and it continued to be so even after 1858. The Rebellion of 1857 brought the death-knell of EIC rule, but not of British colonialism. In the end, it required a prolonged and powerful anti-imperialist nationalist struggle, under the leadership of Mahatma Gandhi, to put a final end to British imperialism. That happened in 1947. So, in a way, the legacy of the EIC was finally terminated only in 1947.

(The writer teaches history at the Ambedkar University, Delhi)

(Published 29 January 2011, 13:34 IST)

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