31 The Beginning of the European Commerce

D. Subramanyam Reddy

1. Introduction

Long before the coming of the European merchant companies to India, the Greeks and Romans used to trade with India. But the weakness and distractions of the Roman Empire, and subsequently the rise of the Muslim power led to end of direct trade relations between Europe and India. The Muslims of Egypt and Arabia took over the trade between India and Europe. They used to collect goods from India and hand over them to the European traders in the Mediterranean ports upto Venice and Genoa. The Arab merchants acted merely as intermediaries between the Indian and European traders, and most of the trade was by sea-route.

2. Advent of European Merchant Companies :

With the rise of merchant class in Europe and emergence of some European nations as maritime powers direct trade relations began, once again, with India.

2.1 Coming of Portuguese :

The Portuguese were the first to come to India. Though Afanassi Nikitin, a Russian merchant visited India before the Portuguese (1469-72) and spent most of his time in southern India, he seems to have had little commercial activity. The Portuguese, on the other hand began splendidly. In 1498, Vasco da Gama discovered sea-route to India via the Cape of Good Hope. He and his crew discovered spices in plenty, especially in Sumatra, Java, etc., in what were then known as “Indian Waters”. Then, in early 16th century, the Portuguese established their trade settlements at Goa, Diu, Daman, Salsette, Bassein, Chaul and Bombay on the West Coast, San Thome near Madras and Hugli in Bengal and even extended their authority over the major part of Ceylon (now called Sri Lanka).

2.2 Coming of the Dutch :

After the Portuguese, the Dutch came to India. In spite of the strict vigilance of the Portuguese over the sea-route they discovered, the Dutch dared to send their ships in 1595 to trade with India. Further, a book written in 1595-96 by Jan Huyghen Van Linschoten, a Hollander on the Portuguese grip upon the East led to formation of both the Dutch and the English East India Companies. In 1602, the United East India Company of the Netherlands was established, with powers to trade, to make war, conclude treaties, acquire territories and build fortresses in the East. Although, the Dutch showed interest in Sumatra, Java and Borneo, they also established trading settlements called factories in Gujarat in Western India, on the Coromandel Coast in south-eastern India, and in Bengal, Bihar and Orissa in eastern India and also in the interior of lower Ganges Valley, apart from one in Ceylon in 1658. The Dutch could supplant the Portuguese and maintain monopoly in spice trade in the East in the 17th century. They could also carry trade between India and the Island countries of the East from their bases in India at Surat (from 1616) etc.

2.3 Coming of the English :

The English did not lag far behind. Since the time of the coming of the Portuguese, the English began planning to trade with India. Their first attempt was in 1527 when Robert Thorne submitted a report to Henry VIII and facilitated the English to have passage to India. Two voyages were made, one in 1527 and another ten years later and some more afterwards. But, all ended in failure. Then, two expeditions were sent to China via Cape of Good Hope, one in 1582 and another in 1596. These also ended in fiasco. But, Captain Drake‟s completion of round the world voyage via New Hemisphere, his return via the Cape of Good Hope in 1580, the successful expeditions of 1586 and 1588 helped the English to get lot of nautical data on sailing via the Cape of Good Hope and venture to send, in 1583, a party of merchant travellers to Akbar, with a letter from Queen Elizabeth. This effort also ended in failure. One of the parties Ralph Fitch was caught by the Portuguese when he was on his way via Ormuz. He was sent as prisoner to Portuguese Goa. Here, he escaped and tried to meet Akbar, along with his party that had joined him later. But they could not get permission to meet the emperor. Then, Ralph travelled eastwards, took a boat on the Ganges, in 1584, and went down to Hugli in Bengal. From there he went to Chittagong. Pegu in Burma and visited Rangoon etc. Afterwards, he went to Chiengmai in northern Siam, Malacca near Singapura, went back to Pegu and from there sailed to Ceylon, and to Cochin in India and to Goa etc. Finally, he travelled to Basra, Babylon, Mosul, Aleppo and London. His voyage helped the English to get lot of information about trade in the East and need of naval power which they developed quickly for achieving their objective.

Meanwhile, in 1591, Sir James Lancaster made another voyage which influenced starting of the English East India Company. Stevens also made such voyage upto Goa via the Cape. Another adventurer by name John Mildenhall made voyage to India. He was successful in getting permission to trade in India from the then Mughal Emperor Jahangir.

On 31st December 1600 the Company titled “The Governor and Company of Merchants of London, trading to the East Indies” i.e., the English East India Company was established to trade with the East. Queen Elizabeth was also one of its shareholders. The first ship sailed from England on 22 May 1601. Later, it was converted into “United Company of Merchants of England trading to the East Indies.

In the beginning, the Company was interested in trade only. In 1608, William Hawkins, the first representative of the Company arrived in the Mughal court. He was well received. He was the first to have held a Mughal assignment, that is, the royal grant of a territory from which he was to collect revenue for the state and make his living. In 1611, Hawkins could get the Emperor‟s permission to open trade at Surat. But, the Portuguese influence in the Mughal Court and the unruly behavior of the English sailors at Surat nullified the gain. But, the efforts of Middleton and Best, in the next few years, in improving the image of the Company helped them gain the Emperor‟s permission in 1613, to open trade at Surat, and also at Ahmadabad, Cambay and Goa. Then came Sir Thomas Roe as „ambassador” of king James to the Mughal Court with the intention of concluding a treaty of “free trade” between the two countries. Though he could not succeed in that, he was able to get, in September 1618, a public declaration by the emperor that he was for friendship with the English. And, the English merchants were given liberty to trade “freely” in India, to live in a rented house on shore, to govern themselves and to bear arms when they went abroad in the city. They were asked to pay only normal dues. The Portuguese were asked to cooperate in the “open trade”. Before Roe left India in February 1619, the English Company could establish factories at Surat, Agra, Ahmadabad and Broach and were placed under the control of the president and council of the factory which became a depot for cotton, muslin, saltpeter, indigo and dyestuffs collected from the interior. Factories were also started at Broach and Baroda mainly to purchase piece-goods there. The purpose of having a factory at Agra was mainly to sell broad-cloth to the officers of the Imperial Court and to buy indigo, the best quality of which was manufactured at Biyana. In 1668, Bombay was transferred to the Company by Charles II (who had got it from the Portuguese as a part of the dowry for marrying Catherine of Braganza) at an annual rent of £. 10. By 1687, Bombay superseded Surat as the chief settlement of the English on the west coast of India.

On the south-eastern coast, the English had established, in 1611, a factory at Machilipatnam, then under Golkonda kingdom, to purchase the locally woven piece-goods for export to Persia and Bantam. But, due to troubles from the Dutch there and the local Golkonda officials they started a factory, in 1626, at Armagaon (now called Duggarajapatnam), north of the Dutch settlement of Pulicat. Though they revived their factory at Machilipatnam they could not continue there due to continuation of the old problems. So, they decided to move to a better place south of Pulicat and finally secured permission to establish a factory at Madras (now called Chennai) from the local chieftain of Kalahasti, and feudatory of the Vijayanagar King, then with capital at Chandragiri, near Tirupati in the present state of Andhra Pradesh. It was at Madras that the English built a fortified factory which came to be called Fort St. George which became the headquarters of the British on the Coromandel Coast.

Then in 1633, the English established factories at Hariharpur in the Mahanandi Delta and at Balasore, both in the present Orissa. In 1651, a factory was established at Hugli in Bengal and others at Patna in Bihar and Cassimbazar in Bengal. In 1658, all the settlements in Bengal, Bihar and Orissa, and on the Coromandel Coast were made subordinate to Fort St. George in Madras. The Company‟s main articles of trade in Bengal included silk, cotton piece goods, saltpetre and sugar. In 1651 and 1656, they secured from Sultan Shuja some privileges relating to export and import of goods and exemption from payment of duties, and even got them confirmed, in 1672, by the Governor of Bengal, Shaistakhan and, in 1680, by the emperor Aurangazeb. Now, the English thought of building a fortified settlement at Hugli as at Madras. The ambition of the English, however, led to conflict with the Mughals. Finally, peace was concluded in September 1687 by which the Hugli, earlier occupied by the Mughals, was restored to the English. The English built a factory at Calcutta also. The English-Mughal hostilities, however, renewed in 1688, but the English were again crushed. This kind of rash and premature actions of the Company was stopped by a treaty with the Mughal emperor in 1690. An English factory was established at Sutanuti (Calcutta). In 1691, the position of 1651 relating to custom-duties was reestablished. In 1696, the Company fortified its factory at Sutanuti. In 1698, the Company was granted the right of revenue farming (or Zamindari) of the three villages of Sutanuti, Kalikata (Calcutta) and Govindapur. In 1700, the English factories in Bengal were placed under the separate control of a President and Council established in the fortified settlement called Fort William. Thus, by the end of 17th century the English Company had securely settled down at Surat, Bomaby, Madras and Calcutta. This was the situation before the Company conquered the whole of Indian sub-continent.

2.4 Coming of the Danish, Swedish Companies :

With regard to the Danes (of Denmark), they came to India in 1616. But, they confined to private trade. Though the Swedish East India Company was formed in 1731, its trade confined to China. The Ostend Company was organized by the merchants of Flanders in 1722 had a brief career in India. Then came the French Company with which the English had long conflict.

2.5 Coming of the French :

It was at the initiative of Colbert, the Finance Minister of France that the Compagnie des Indes Orientales was formed in 1664 as part of the Minister‟s plan to augment France‟s financial and commercial opulence. The first French factory was established in 1668 at Surat where the principal station of the English Company in India was situated. The premature attempt of the English Company, during Aurangazeb‟s time, to usurp political power in India, leading to expulsion from Mughal territory, attack and seizure of the English factory at Surat, the island of Bombay, Machilipatnam and Visakhapatnam, though later restored, helped the French to improve their footing in India. They had already established a factory at Machilipatnam in 1669, built the modern town of Pondicherry in 1673, received a site near Calcutta in 1674 from Nawab of Bengal, and during 1690-92, built the town of Chandernagore and erected fortifications at Pondicherry.

3. The English Company and its European Rivals :

Every European trading Company desired to have monopoly of the trade in the East. Naturally, there developed contest over the eastern trade; between the Portuguese and the Dutch, the Portuguese and the English, the Dutch and the English, and the French and the English in the 17th and 18th centuries.

3.1 The English Portuguese Rivalry :

Though the Portuguese came to India at the end of the 15th century, with Vasco da Gama landing at Calicut in 1498, they began trade only in early 16th century. The real foundation of Portuguese power in India was laid by Alfonso de Albuquerque who came to India in 1503 as commander of a squadron, got promoted as Governor of Portuguese affairs in India in 1509 and secured the Port of Goa in 1510 from the Bijapur Sultan. But, the image of the Portuguese merchants in the eyes of the Indian rulers soon deteriorated for various reasons. . . . stopping ships of other countries on the high-seas or at their ports, their ambition to establish an empire in the East, conversion of locals to Christianity, piratical activities, and, discovery and colonization of Brazil. But, they had fortified positions in India, support of a clique in the Mughal Court, control over the Cape route to India and other ports in West Asia. They were tackled in the areas east of India by the Dutch and in India by the English.

The English East India Company, formed in 1600, could establish factory at Surat in 1608 and compete with the Portuguese in spice trade with the eastern countries. It was the English Company‟s William Hawkins who could get this permission to trade at Surat in 1608 from the then Mughal emperor Jahangir. But, the Portuguese could get it cancelled and Hawkins was expelled from India in 1611. Then, came Captain Best, who defeated the Portuguese in 1612 at Swally, near Surat and later got permission from the emperor to trade at Surat, Ahmadabad, Combay and Goga and began the Company‟s relations with India. Then, in 1616, Sir Thomas Roe came to India with a letter from the king of England to the Mughal Emperor. He secured a treaty from the emperor for trading and establishment of factories in Mughal India and improved the influence of the English and minimized the image of the Portuguese in the Mughal Court. The incidents which took place in 1620 and later between the English and the Portuguese further enhanced the prestige image of the Company in India and the Persian Gulf region where the Portuguese were maintaining ports. The Persians even joined the English in removing Portuguese power in the Gulf region around 1622. Since then the Portuguese began losing their hold over the eastern seas as well as their possessions in India except in Goa, Diu and Daman. Their possessions, properties and fortifications in the eastern coast of India and Ceylon gradually came under the Dutch hold. In 1622, Bombay went to King Charles II of England as dowry for marrying a Portuguese princess. Salsette and Bassein were captured by the Marathas in 1793, Hugli was already taken over by the Mughals and both came, later, under the British control along with the Dutch possessions in India. The fall of Portuguese, in fact, began in 1630 when the Treaty of Madrid ended hostilities between England and Portuguese. The treaties of 1654 and 1661 further strengthened friendship between them. Their inferior position, compared with the Dutch and the English led to their elimination from Indian trade.

3.2 The English Dutch Rivalry :

The Dutch monopoly of pepper trade in the East and sharp increase of its price in 1600 forced the English to establish their Company and venture to trade in the Spice Islands. With the elimination of the Portuguese from the East by the Dutch, it became easier for the English to enter the spice trade in the East. But, they had to face far stronger opposition from the Dutch than the one from the Portuguese. Though the English could establish their connections in Sumatra and Java and had their full share in the article of pepper; they were not allowed to trade in cinnamon, cloves, nutmegs and all other finer spices. The Dutch opposition to and their desire to eliminate the English from trading in the East Indies continued to increase, particularly after the Portuguese were eliminated from there and concluding of the peace treaty of 1609 between Spain and Holland. The English, too, were determined to establish their hold in the Spice Islands. This, naturally led to conflict between the English and the Dutch. It went on for some time. The treaty of 17th July 1619 concluded between them in London allowed the English Company to have only half of trade in pepper and one-third of the finer spices in the Isles. They were also allowed to trade at Pulicat on paying half the expenses of the garrison and thus became copartners in Indian trade. But, this cooperation did not last long as both were determined to oust the other. In 1623, the Dutch executed ten Englishmen along with nine Japanese and one Portuguese man on grounds of conspiracy against their possession in the East Indies. This was called by the English as Massacre of Amboyna. The English decided to utilize it for their advantage. But, the Dutch, after having eliminated the Portuguese from Malacca in 1640 and totally removed the Portuguese from East Indies in 1644 held complete control over the Eastern Islands. However, the Dutch War of 1654 forced the Dutch to pay, in 1665, a compensation of £. 3,615 for the massacre of 1623 and also cede the Island of Polaroon which was later given back to the Dutch after the treaty of Breda. The Anglo-Dutch rivalry could remove the Dutch from the Eastern Islands and British from India. The English, therefore, tried to remove the Dutch at least from India. For this, it entered into a treaty with its former rival the Portuguese. This made the Dutch to concentrate on the Eastern Islands than in India where they had notable factories at Pulicat (1610), Surat (1616), Chinsura near Calcutta (1653), Cassimbazar, Balanagore, Patna, Balasore, Nagapatnam (1659) and Cochin (1663). With the defeat of the Dutch in the battle of Bedara (Biderra) in 1759, the Dutch influence in India collapsed and the English influence began to increase in India. After this date, the Dutch Company in India began to limit itself more to the “country trade” and its officers began showing interest in private fortunes in collaboration with the officers of the English Company. The Dutch settlements at Nagore was occupied by the English in 1773 and those at Nagapatnam and other places on the Coromandel Coast and at Trincomalle in Ceylon were occupied by the British in 1782. Finally, in 1795, the English expelled the Dutch power from India also from Cape of Good Hope and also Ceylon, Malacca, Banda, Amboyna and Cochin.

3.3 The English French Rivalry :

While the English found a tougher rival in the Dutch than in the Portuguese, the French outrivaled both. The English and the French fought their utmost in the 18th century to obtain India as booty. There was a serious contest with a view to control India for the supreme “trading” advantages of one Company at the expense of others by means of subduing the power of the Indian rulers and using this power to the favour of one Company only.

The French Company, however, passed through very bad days, even selling its licences to others till 1720. Their rivalry with the Dutch over India led to capture of Pondicherry by the Dutch in 1693, though it was given back to the French by the Treaty of Ryswick. At other places also its influence declined. By early 18th century French factories at Bantam, Surat and Machilipatnam had to be abandoned, and its resources were exhausted. The French interest in India, however, revived with the formation of “The Perpetual Company of the Indies” in 1720. In 1721, they occupied Mauritius, a strong naval base. In 1725, the French established themselves at Mahe on the Malabar Coast and in 1739 at Karaikal. And, the Anglo-French rivalry also resumed and ended in French elimination from India.

3.3.1 The First Carnatic war (1746-1748) :

The Seven Year War that began in Europe between the English and the French extended to North America and India. Though the French Company in India, probably due to unpreparedness, requested the English Company to maintain neutrality, the English declined the proposal and a little later even captured French ships off the south eastern coast of India. Naturally, the French force arrived from the French colony of Mauritius and thus began the First Carnatic War in southern India.

The French besieged Madras both by land and sea, and within a week the English surrendered Madras to the French. The English appealed to the Nawab of Carnatic, Anwar-ud-din. The Nawab asked the French Governor of Pondicherry, Duplex to retreat from Madras. But, the French did not heed him. Determined to establish his sovereignty before the foreign merchants the Nawab sent an army against the French who were besieging Madras so as to stop the fight between the foreign companies in his land. But, the French were successful. To get back Madras, the English sieged the French settlement Pondicherry in 1748 with the force got from England. Meanwhile, the Treaty of Aix-la Chapelle concluded in Europe, in 1748, restored Madras to the English, and Pondicherry to the French and thus the First Carnatic War in southern India came to an end. The English in India waited, temporarily, for another opportunity to eliminate the French, the last European rival in India and at the same time to uphold the interests of rival political adventurers, rajas, nawabs etc., so as to improve the English position in India. This led to another conflict between the English and the French in the form of the Second Carnatic War in southern India.

3.3.2 The Second Carnatic War (1749-1754) :

In 1748, Asaf Jah Nizam-ul-Mulk, the Nizam of Hyderabad died. He was succeeded by his son Nasir Jung. But, his grandson, Muzafar Jung laid claim to the throne. Similarly, Chanda Saheb, the son-in-law of Dost Ali, the late Nawab of Carnatic (Arcot) desired to remove Anwar-ud-din, the incumbent Nawab of Carnatic and become its ruler. Both, Muzafar and Chanda Sheb joined together to occupy the respective seats at Hyderabad and Carnatic. The French and the English Companies saw opportunity to gain in the troubled waters. Dupleix concluded agreements with Muzafar and Chanda Saheb on the promise of placing them on the respective thrones. In 1749, all the three jointly defeated and killed Anwar-ud-din in a battle. Anwar‟s son Muhammad Ali fled to Trichinopoly. A French army was also sent to reduce Trichinopoly.

Finding that the situation was slipping out of their hands the English desired Nasir Jung to come and crush his enemies in the Carnatic and sent some help to Muhammad Ali at Trichinopoly. But, Nasir was killed in 1750, and Muzafar was proclaimed Subadar of Deccan by the French. The new Subadar appointed Dupleix as Governor of the territories on the coast of Coromandel from the river Krishna to Cape Comorin, and ceded the territories near Pondicherry as well as on the Orissa coast, including Machilipatnam. In return Dupleix placed Bussey, with an army, in the service of the Nizam. Thus, in two years the French influence was established both in the Carnatic and also in the Deccan.

But, the English soon turned the scale in their favour. In 1751, the English sent a detachment to Trichinopoly to protect Muhammad Ali, persuaded Morari Rao, the Maratha chief, the rulers of Mysore and Tanjore to join them and Muhammad Ali, and also sent an expedition to Arcot, the capital of Carnatic and occupy it. Chanda Saheb, the Nawab of Carnatic was beheaded on the orders of the Tanjorean Generals. Dupleix, however, won over Maratha, Mysore, and Tanjore rulers and on 31st December 1752 besieged Trichinopoly; it continued for a year. Meanwhile, by January 1754, directions from Europe came to both the Companies to come to amicable settlement. No one was ready to accept victory to the other. The stalemate continued. Meanwhile, Dupleix left India. Godheu who came in his place and Saunders, the English representative concluded a treaty in 1754 by which both agreed to restore all the territories conquered during war time and not to interfere in the affairs of the native rulers. For the time being French influence in the Deccan remained and Bussy could even get Northern Sarkars for the payment of his troops kept in Hyderabad. These included the four Sarkars or districts of Mustafanagar, Ellore, Rajamundry and Chicacole . . . all of which yielded three million rupees. But, peace did not last long as the English were determined to remove the French from India.

3.3.3 The Third Carnatic War (1758-1763) :

In 1756, the Seven Years War began between the English and the French in Europe. Taking advantage of this, the English captured Chandernagore, the important French settlement near Calcutta. They also won the Battle of Plassey in Bengal, defeating the Nawab Siraj-ud-daula of Bengal and got lot of booty. The English men and money moved to the south for a serious contest in the Northern Sarkars which were then under the French and also in further south. Meanwhile, the French under Count de Lally captured Fort St. David from the English on 2nd June 1758. The English settlements in Northern Sarkars were occupied by Bussy on 24th June 1758, including Visakhapatnam fort. After capturing fort St. David, Lally captured Madras. But, his failure to coordinate army and navy which was under d‟ Ache seriously hampered success. Lally also laid siege to Tanjore; while d‟ Ache squadron defeated, on 3rd August 1758, left Indian seas. Hearing this, Lally also left Tanjore. He had also recalled Bussy from Hyderabad. Taking advantage of the situation the English sent army from Bengal to Northern Sarkars and occupied them on 7th December, Machilipatnam on 6th March and concluded a treaty with the Nizam Salabat Jung. The French thus lost everything in Deccan. In Carnatic also, the English defeated the French near Conjeevaram and then at Wandiwash on 22nd January 1760. In 1760, Pondicherry was attacked on 16th January 1761. Pondicherry surrendered, Jinji, Mahe fell and nothing was left to the French. The war ended with the Treaty of Paris concluded in 1761.

4. Company without Rivals:

By 1761, the place of Britain as a world power was assured. England‟s ally, Frederic II won the battle of Rossbach in 1757, made Prussia and humbled France; Wolfe took Quebec in 1759, and the whole of Canada was conquered from the French in 1760. Robert Clive got rid of the last independent Nawab of Bengal in 1757, and Sir Eyre Coote crushed the French power in India in 1761. France was humbled in Europe and effaced in Asia and America. The Portuguese and Dutch rivals of the English in India had ceased to be of any importance. The English Company had no European rivals. By the peace of Paris, the French factories were restored to the French Company, but the latter ended its career in 1769, leaving its factories to continue. Like the remaining, „English Company, together with the process of subjugating the Indian rulers (the rulers of Mysore, Marathas, Nizam, Arcot Nawabs etc.), went on fortifying the frontiers of India, particularly land frontier with Afghanistan and Russia and also the eastern frontier; the sea-frontier was not a problem for them due to strong naval strength. Any possibility of invasions into India was thus ruled out and its rule in India was assured.

5. Summary :

The coming of the European Companies for trade in India led to rivalry and wars among the European Companies and also interference in the internal affairs of the native rulers and, sometimes, even the removal of native rulers from power and establishment of the alien authority.

Web links

• https://en.wikipedia.org/wiki/Economic_history_of_Europe
• http://history4upsc.blogspot.in/2010/07/begining-of-european-commerce.html
• http://www.historydiscussion.net/articles/colonial-advent-in-indian-history-the-portuguese-thefrench-and-the-english/2079
• http://www.kkhsou.in/main/history/europeans.html
• http://www.wapwon.co/search/modern-india-11-the-advent-of-european-commerce-theportuguese-upsc.html
• https://en.wikipedia.org/wiki/East_India_Company
• https://en.wikipedia.org/wiki/Portuguese_India