East India Company. The establishment of an East Indian trade dates from the time when the Portuguese navigator, Vasco da Gama, having effected the eastern passage to India by doubling the Cape of Good Hope, cast anchor off the city of Calicut on the 20th May 1498. The Portuguese, however, never actually founded a trading company; their admirals were the king's officers, whose efforts were directed rather towards the conquest and conversion of the eastern races than to mere commerce, except as a royal monopoly. Nevertheless they were supreme in the seas they had opened from 1500 to 1600, and dispensed the treasures of all the islands of the East, from Goa to Celebes, and as far northward as Japan; for it was on the islands that the Europeans, one and all, first gained a permanent footing. In the next century their place was rapidly taken by the Dutch, whose first vessel had rounded the Cape only in 1596, and whose East India Company was founded in 1602. The earliest incorporated East India Company was the English, to which Queen Elizabeth granted a charter on the last day of the 16th century (31st December 1600), under the title of 'The Governor and Company of Merchants of London trading to the East Indies.' Two later companies, after a short period of competition, united with the original association; and in 1709 its last and most formidable rival, the English Company (1698), was amalgamated with the London Company, under the style of 'The United Company of Merchants of England trading to the East Indies.' About 1624 the English were compelled by the Dutch to withdraw nearly all their factories from the archipelago, and, shut out from the trade of the islands, they began to found settlements on the coast of the Indian peninsula. The nucleus of Madras dates from 1639; Bombay came to the Company in 1668; Calcutta was founded in 1686; finally, in 1689 the Company passed the resolution to acquire territorial sway, to 'make us a nation in India,' which was to change its factors and clerks into governors and conquerors. The old Company's charter, granting exclusive trading rights in the Indian and Pacific oceans, had been renewed from time to time, with various modifications, though not without much contention and difficulty; and these exclusive privileges were extended, in consideration of sundry loans to the government aggregating £3,200,000, to the united Company, whose constitution thus established was maintained with little alteration as long as the Company existed. Every shareholder who held £500 of the Company's stock became a member of the Court of Proprietors, which annually chose twenty-four to form a Court of Directors from those of their number who held not less than £2000 of stock. Six of the directors went out of office every year; they retired in rotation, so that each had four years of office. It was a general custom with the proprietors to elect the same persons as directors over and over again. Theoretically, the constitution of the Company was very democratic, but practically the affairs were in the hands of the directors; for the proprietors took little other interest than in receiving their half-yearly dividends. The proprietors had from one to four votes each, according to the amount of stock held by them. The Board of Control, of later formation (1784), bore relation to the governmental affairs of India.
Properly speaking, the Company were only merchants: sending out bullion, lead, quicksilver, woollens, hardware, and other goods to India; and bringing home calicoes, silk, diamonds, tea, porcelain, pepper, drugs, saltpetre, &c. from thence. Not merely with India, but with China and other parts of the East, the trade was monopolised by the Company; and hence arose their great trade in China tea, porcelain, and silk. Until Clive's day, however, paltry and insufficient salaries were paid to the servants of 'John Company,' who were permitted to supplement their income by every means in their power—to 'shake the pagoda tree.' By degrees avarice and ambition led the Company, or their agents in India, to take part in the quarrels among the native princes; this gave them power and influence at the native courts, and hence arose the acquisition of sovereign powers over vast regions. India thus became valued by the Company not only as commercially profitable, but as affording to the kinsfolk and friends of the directors opportunities of making vast fortunes by political or military enterprises. It is not the purpose of the present article to trace the political affairs of the Company, or the rise of a British empire in India; that will be done under INDIA.
In 1744 the Company obtained a renewal of their charter till 1780, but not without a loan of £1,000,000 to government; for the monopoly was distasteful to the nation at large. France, too, had an East India Company (six had been established between 1604 and 1719), and the struggles between the two companies for power in the southern part of India led to constant warfare between them during the 18th century. Other loans to government were the means of obtaining further renewals of the charter in later years. In 1833 the legislature took away all the trading privileges of the Company. The dividends to proprietors of East India stock were thenceforward to be paid out of taxes imposed by the Company on the people of India, in such provinces as were under British dominion. From that year the Company's powers became anomalous; the Company could not trade, and could not govern without the sanction and continued interference of the imperial government. The wars in India since that year have been waged by Britain as a nation, rather than by the Company; and Britain practically, though not nominally, became responsible for the enormous cost of those wars. In 1853 the charter was renewed for the last time, for an indefinite term of years, but with a further lessening of the power of the Company, and an increase of that of the crown; patronage also was abolished.
After the Mutiny the Company was forced, in spite of a strenuous resistance, to cede its powers in 1858 to the crown, under an act for the better government of India. Most of the distinguished men, military and political, till then in the Company's service, accepted office under the crown, to assist the government by their general knowledge of Indian affairs. These affairs are now managed by a Secretary of State for India. The East India House (1726) was demolished in 1862; and Haileybury (q.v.), the East India college since 1806, was closed in 1858.
See Sir John W. Kaye, The Administration of the East India Company (1853); J. T. Wheeler, India under British Rule, from the Foundation of the East India Company (1886); Danvers' Records of the E.I.C. (1896, &c.); and other books cited under INDIA.