The British East India Company, a private adventure among countries
This is a small story about The British East India Company and its adventures with/against other countries.
The Company was privately owned and none of the shares belonged to the British government. Even if there was connections between the company and the government, it was not enough to justify the following story.
The BEIC first set up operations in India in the 17th century with the goal of trading various products. The years kept passing and by the middle of the 18th century, they found themselves in a dispute with the ruler of Bengal and decided it was time for battle. They fought the Battle of Plassey in 1757 against him. The Company won, and took over the province. They cemented their rule with the Battle of Buxar in 1765.
A private company was now the ruler of a region!
While its technically true that the East India Company was private owned, that's not the whole story.
The Regulating Act of 1773 effectively gave the British government the right to appoint and remove the Governor-General of India.
In 1784, things changed for the East India Company, specially after the EIC Act that formally subordinated the Company to the British government and created the "Board of Control" which was effectively a Cabinet subcommittee to oversee the Company.
There was a brief period in the eighteenth century when the East India Company was truly a private enterprise and fought wars. For most of its history of the military power though, the East India Company was an arm of the British Crown. After 1798 the Governor-General was invariably a General of the British Army or senior politician.
From India to China
The East India Company did not limit themselves to India. After all, they were created for the East India which was every region East of Africa.
They traded with China for many goods, chiefly tea and porcelain. By 1800 the Company was buying 23 million pounds of tea per year at a cost of 3.6 million pounds of silver. Concerned that the China trade was draining silver out of England, the British searched for a counterpart commodity to trade for tea and porcelain. They found it in opium, which they planted in large quantities in Bengal. Over the next few decades, opium smuggling into China became a huge money spinner for them. In 1773, they were exporting 140k lbs of opium from Calcutta in India to Canton (Guangzhou) in China.
This gradually rose to about 5.6m lbs in 1839. That was when the Chinese emperor decided to outlaw opium smuggling, and sent Commissioner Lin Zenxu to deal with the situation. Lin got to Canton, seized and destroyed vast quantities of opium and closed the port to the British. This led to the First Opium War, which which lasted 3 years. It was a bloody affair, and the vast majority of casualties were on the Chinese side. Most of the fighting was done by men employed by and ships owned by the Company.
The company was now fighting against the mighty China, sometimes with mercenaries from India, creating a purely commercial war for the company, without any kind of Nationalism (that would came later in History).
Last Coat of Arms
The end of an Era
The Company kept doing quite well for itself while it lasted, especially with the lucrative opium trade. However, it bore the brunt of the blame for the Rebellion in India that took place in 1857.
A year later, the direct result of the rebelion was the Government of India Act (1858) that effectively nationalized the company and made Queen Victoria (the famous one) Empress of India. When the company finally dissolved in 1874 The Times reported It accomplished a work such as in the whole history of the human race no other company ever attempted and as such is ever likely to attempt in the years to come.
Examples of East India Company Ships
Earl of Mornington
First to fight wars, and maybe the first "too big too fail"
The EIC was a private company in the beginning when it took over Bengal and began its plunder. However, its tactics of plunder and mismanagement of a famine in 1769 led to huge shortfalls in its revenue. The Company was left with debts of £1.5m and a bill of £1m unpaid tax owed to the Crown. On 15 July 1772, the directors of the East India Company applied to the Bank of England for a loan of £400,000. A fortnight later, they returned, asking for an additional £300,000. The bank raised only £200,000. By August, the directors were whispering to the government that they would actually need an unprecedented sum of a further £1m.
This company was truly "too big to fail", so it was bailed out by the British government. In return, the government won the right to regulate it and severely rein it in, passing the Regulating Act of 1773.
However, it retained a surprising amount of autonomy. The reason it could do this was that a large proportion of the MPs at the time were stockholders in the company. This was a conflict of interest, but if it had been nationalised, they would have lost everything. These MPs ensured that the company and its holdings remained private property while also ensuring that the need to protect the company from foreign competition became a major aim of British foreign policy.