NCERT Textbook - From Trade to Territory (The Company Establishes Power) Class 8 Notes | EduRev

Social Studies (SST) Class 8

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UPSC : NCERT Textbook - From Trade to Territory (The Company Establishes Power) Class 8 Notes | EduRev

 Page 1


9
From Trade to Territory
The Company Establishes Power
2
Aurangzeb was the last of the powerful Mughal rulers.
He established control over a very large part of the
territory that is now known as India. After his death in
1707, many Mughal governors (subadars) and big
zamindars began asserting their authority and
establishing regional kingdoms. As powerful regional
kingdoms emerged in various parts of India, Delhi could
no longer function as an effective centre.
By the second half of the eighteenth century, however,
a new power was emerging on the political horizon –
the British. Did you know that the British originally
came as a small trading company and were reluctant to
acquire territories? How then did they come to be masters
of a vast empire? In this chapter you will see how this
came about.
Fig. 1 – Bahadur Shah Zafar
and his sons being arrested by
Captain Hodson
After Aurangzeb there was no
powerful Mughal ruler, but
Mughal emperors continued to
be symbolically important.
In fact, when a massive rebellion
against British rule broke out in
1857, Bahadur Shah Zafar,
the Mughal emperor at the time,
was seen as the natural leader.
Once the revolt was put down by
the company, Bahadur Shah
Zafar was forced to leave the
kingdom, and his sons were shot
in cold blood.
© NCERT
not to be republished
Page 2


9
From Trade to Territory
The Company Establishes Power
2
Aurangzeb was the last of the powerful Mughal rulers.
He established control over a very large part of the
territory that is now known as India. After his death in
1707, many Mughal governors (subadars) and big
zamindars began asserting their authority and
establishing regional kingdoms. As powerful regional
kingdoms emerged in various parts of India, Delhi could
no longer function as an effective centre.
By the second half of the eighteenth century, however,
a new power was emerging on the political horizon –
the British. Did you know that the British originally
came as a small trading company and were reluctant to
acquire territories? How then did they come to be masters
of a vast empire? In this chapter you will see how this
came about.
Fig. 1 – Bahadur Shah Zafar
and his sons being arrested by
Captain Hodson
After Aurangzeb there was no
powerful Mughal ruler, but
Mughal emperors continued to
be symbolically important.
In fact, when a massive rebellion
against British rule broke out in
1857, Bahadur Shah Zafar,
the Mughal emperor at the time,
was seen as the natural leader.
Once the revolt was put down by
the company, Bahadur Shah
Zafar was forced to leave the
kingdom, and his sons were shot
in cold blood.
© NCERT
not to be republished
OUR PASTS – III 10
East India Company
Comes East
In 1600, the East India
Company acquired a charter
from the ruler of England,
Queen Elizabeth I, granting it
the sole right to trade with the
East. This meant that no other
trading group in England could
compete with the East India
Company. With this charter
the Company could venture
across the oceans, looking
for new lands from which it
could buy goods at a cheap price, and carry them
back to Europe to sell at higher prices. The Company
did not have to fear competition from other English
trading companies. Mercantile trading companies
in those days made profit primarily by excluding
competition, so that they could buy cheap and sell dear.
The royal charter, however, could not prevent other
European powers from entering the Eastern markets.
By the time the first English ships sailed down the
west coast of Africa, round the Cape of Good Hope, and
crossed the Indian Ocean, the Portuguese had already
established their presence in the western coast of
India, and had their base in Goa. In fact, it was Vasco
da Gama, a Portuguese explorer, who had discovered
this sea route to India in 1498. By the early seventeenth
century, the Dutch too were exploring the possibilities
of trade in the Indian Ocean. Soon the French traders
arrived on the scene.
The problem was that all the companies were
interested in buying the same things. The fine qualities
of cotton and silk produced in India had a big market
in Europe. Pepper, cloves, cardamom and cinnamon too
were in great demand. Competition amongst the
European companies inevitably pushed up the prices
at which these goods could be purchased, and this
reduced the profits that could be earned. The only way
the trading companies could flourish was by eliminating
rival competitors. The urge to secure markets therefore
led to fierce battles between the trading companies.
Through the seventeenth and eighteenth centuries they
regularly sank each other’s ships, blockaded routes,
and prevented rival ships from moving with supplies of
Fig. 2 –  Routes to India in the
eighteenth century
Mercantile – A business
enterprise that makes
profit primarily through
trade, buying goods
cheap and selling them
at higher prices
© NCERT
not to be republished
Page 3


9
From Trade to Territory
The Company Establishes Power
2
Aurangzeb was the last of the powerful Mughal rulers.
He established control over a very large part of the
territory that is now known as India. After his death in
1707, many Mughal governors (subadars) and big
zamindars began asserting their authority and
establishing regional kingdoms. As powerful regional
kingdoms emerged in various parts of India, Delhi could
no longer function as an effective centre.
By the second half of the eighteenth century, however,
a new power was emerging on the political horizon –
the British. Did you know that the British originally
came as a small trading company and were reluctant to
acquire territories? How then did they come to be masters
of a vast empire? In this chapter you will see how this
came about.
Fig. 1 – Bahadur Shah Zafar
and his sons being arrested by
Captain Hodson
After Aurangzeb there was no
powerful Mughal ruler, but
Mughal emperors continued to
be symbolically important.
In fact, when a massive rebellion
against British rule broke out in
1857, Bahadur Shah Zafar,
the Mughal emperor at the time,
was seen as the natural leader.
Once the revolt was put down by
the company, Bahadur Shah
Zafar was forced to leave the
kingdom, and his sons were shot
in cold blood.
© NCERT
not to be republished
OUR PASTS – III 10
East India Company
Comes East
In 1600, the East India
Company acquired a charter
from the ruler of England,
Queen Elizabeth I, granting it
the sole right to trade with the
East. This meant that no other
trading group in England could
compete with the East India
Company. With this charter
the Company could venture
across the oceans, looking
for new lands from which it
could buy goods at a cheap price, and carry them
back to Europe to sell at higher prices. The Company
did not have to fear competition from other English
trading companies. Mercantile trading companies
in those days made profit primarily by excluding
competition, so that they could buy cheap and sell dear.
The royal charter, however, could not prevent other
European powers from entering the Eastern markets.
By the time the first English ships sailed down the
west coast of Africa, round the Cape of Good Hope, and
crossed the Indian Ocean, the Portuguese had already
established their presence in the western coast of
India, and had their base in Goa. In fact, it was Vasco
da Gama, a Portuguese explorer, who had discovered
this sea route to India in 1498. By the early seventeenth
century, the Dutch too were exploring the possibilities
of trade in the Indian Ocean. Soon the French traders
arrived on the scene.
The problem was that all the companies were
interested in buying the same things. The fine qualities
of cotton and silk produced in India had a big market
in Europe. Pepper, cloves, cardamom and cinnamon too
were in great demand. Competition amongst the
European companies inevitably pushed up the prices
at which these goods could be purchased, and this
reduced the profits that could be earned. The only way
the trading companies could flourish was by eliminating
rival competitors. The urge to secure markets therefore
led to fierce battles between the trading companies.
Through the seventeenth and eighteenth centuries they
regularly sank each other’s ships, blockaded routes,
and prevented rival ships from moving with supplies of
Fig. 2 –  Routes to India in the
eighteenth century
Mercantile – A business
enterprise that makes
profit primarily through
trade, buying goods
cheap and selling them
at higher prices
© NCERT
not to be republished
11
goods. Trade was carried on with arms and trading
posts were protected through fortification.
This effort to fortify settlements and carry on profitable
trade also led to intense conflict with local rulers. The
company therefore found it difficult to separate trade
from politics. Let us see how this happened.
East India Company begins trade in Bengal
The first English factory was set up on the banks of
the river Hugli in 1651. This was the base from which
the Company’s traders, known at that time as “factors”,
operated. The factory had a warehouse where goods
for export were stored, and it had offices where Company
officials sat. As trade expanded, the Company persuaded
merchants and traders to come and settle near the
factory. By 1696 it began building a fort around the
settlement. Two years later it bribed Mughal officials
into giving the Company zamindari rights over three
villages. One of these was Kalikata, which later grew
into the city of Calcutta or Kolkata as it is known today.
It also persuaded the Mughal emperor Aurangzeb to
issue a farman granting the Company the right to trade
duty free.
The Company tried continuously to press for more
concessions and manipulate existing privileges.
Aurangzeb’s farman, for instance, had granted only
the Company the right to trade duty free. But officials
of  the Company, who were carrying on private trade on
the side, were expected to pay duty. This they refused
to pay, causing an enormous loss of revenue for Bengal.
How could the Nawab of Bengal, Murshid Quli Khan,
not protest?
Fig. 3 – Local boats bring goods
from ships in Madras, painted by
William Simpson, 1867
FROM TRADE TO TERRITORY
Farman – A royal edict,
a royal order
© NCERT
not to be republished
Page 4


9
From Trade to Territory
The Company Establishes Power
2
Aurangzeb was the last of the powerful Mughal rulers.
He established control over a very large part of the
territory that is now known as India. After his death in
1707, many Mughal governors (subadars) and big
zamindars began asserting their authority and
establishing regional kingdoms. As powerful regional
kingdoms emerged in various parts of India, Delhi could
no longer function as an effective centre.
By the second half of the eighteenth century, however,
a new power was emerging on the political horizon –
the British. Did you know that the British originally
came as a small trading company and were reluctant to
acquire territories? How then did they come to be masters
of a vast empire? In this chapter you will see how this
came about.
Fig. 1 – Bahadur Shah Zafar
and his sons being arrested by
Captain Hodson
After Aurangzeb there was no
powerful Mughal ruler, but
Mughal emperors continued to
be symbolically important.
In fact, when a massive rebellion
against British rule broke out in
1857, Bahadur Shah Zafar,
the Mughal emperor at the time,
was seen as the natural leader.
Once the revolt was put down by
the company, Bahadur Shah
Zafar was forced to leave the
kingdom, and his sons were shot
in cold blood.
© NCERT
not to be republished
OUR PASTS – III 10
East India Company
Comes East
In 1600, the East India
Company acquired a charter
from the ruler of England,
Queen Elizabeth I, granting it
the sole right to trade with the
East. This meant that no other
trading group in England could
compete with the East India
Company. With this charter
the Company could venture
across the oceans, looking
for new lands from which it
could buy goods at a cheap price, and carry them
back to Europe to sell at higher prices. The Company
did not have to fear competition from other English
trading companies. Mercantile trading companies
in those days made profit primarily by excluding
competition, so that they could buy cheap and sell dear.
The royal charter, however, could not prevent other
European powers from entering the Eastern markets.
By the time the first English ships sailed down the
west coast of Africa, round the Cape of Good Hope, and
crossed the Indian Ocean, the Portuguese had already
established their presence in the western coast of
India, and had their base in Goa. In fact, it was Vasco
da Gama, a Portuguese explorer, who had discovered
this sea route to India in 1498. By the early seventeenth
century, the Dutch too were exploring the possibilities
of trade in the Indian Ocean. Soon the French traders
arrived on the scene.
The problem was that all the companies were
interested in buying the same things. The fine qualities
of cotton and silk produced in India had a big market
in Europe. Pepper, cloves, cardamom and cinnamon too
were in great demand. Competition amongst the
European companies inevitably pushed up the prices
at which these goods could be purchased, and this
reduced the profits that could be earned. The only way
the trading companies could flourish was by eliminating
rival competitors. The urge to secure markets therefore
led to fierce battles between the trading companies.
Through the seventeenth and eighteenth centuries they
regularly sank each other’s ships, blockaded routes,
and prevented rival ships from moving with supplies of
Fig. 2 –  Routes to India in the
eighteenth century
Mercantile – A business
enterprise that makes
profit primarily through
trade, buying goods
cheap and selling them
at higher prices
© NCERT
not to be republished
11
goods. Trade was carried on with arms and trading
posts were protected through fortification.
This effort to fortify settlements and carry on profitable
trade also led to intense conflict with local rulers. The
company therefore found it difficult to separate trade
from politics. Let us see how this happened.
East India Company begins trade in Bengal
The first English factory was set up on the banks of
the river Hugli in 1651. This was the base from which
the Company’s traders, known at that time as “factors”,
operated. The factory had a warehouse where goods
for export were stored, and it had offices where Company
officials sat. As trade expanded, the Company persuaded
merchants and traders to come and settle near the
factory. By 1696 it began building a fort around the
settlement. Two years later it bribed Mughal officials
into giving the Company zamindari rights over three
villages. One of these was Kalikata, which later grew
into the city of Calcutta or Kolkata as it is known today.
It also persuaded the Mughal emperor Aurangzeb to
issue a farman granting the Company the right to trade
duty free.
The Company tried continuously to press for more
concessions and manipulate existing privileges.
Aurangzeb’s farman, for instance, had granted only
the Company the right to trade duty free. But officials
of  the Company, who were carrying on private trade on
the side, were expected to pay duty. This they refused
to pay, causing an enormous loss of revenue for Bengal.
How could the Nawab of Bengal, Murshid Quli Khan,
not protest?
Fig. 3 – Local boats bring goods
from ships in Madras, painted by
William Simpson, 1867
FROM TRADE TO TERRITORY
Farman – A royal edict,
a royal order
© NCERT
not to be republished
OUR PASTS – III 12
How trade led to battles
Through the early eighteenth century the conflict between
the Company and the nawabs of Bengal intensified.
After the death of Aurangzeb, the Bengal nawabs asserted
their power and autonomy, as other regional powers were
doing at that time. Murshid Quli Khan was followed by
Alivardi Khan and then Sirajuddaulah as the Nawab of
Bengal. Each one of them was a strong ruler. They refused
to grant the Company concessions, demanded large
tributes for the Company’s right to trade, denied it any
right to mint coins, and stopped it from extending its
fortifications. Accusing the Company of deceit, they
claimed that the Company was depriving the Bengal
government of huge amounts of revenue and
undermining the authority of the nawab. It was refusing
to pay taxes, writing disrespectful letters, and trying to
humiliate the nawab and his officials.
The Company on its part declared that the unjust
demands of the local officials were ruining the trade of
the Company, and trade could flourish only if the duties
were removed. It was also convinced that to expand
trade it had to enlarge its settlements, buy up villages,
and rebuild its forts.
The conflicts led to confrontations and finally
culminated in the famous Battle of Plassey.
The Battle of Plassey
When Alivardi Khan died in 1756, Sirajuddaulah became
the nawab of Bengal. The Company was worried about
his power and keen on a puppet ruler who would
willingly give trade concessions and other privileges.
So it tried, though without success, to help one of
Sirajuddaulah’s rivals become the nawab. An infuriated
Sirajuddaulah asked the Company to stop meddling in
the political affairs of his dominion, stop fortification,
and pay the revenues. After negotiations failed, the
Nawab marched with 30,000 soldiers to the English
factory at Kassimbazar, captured the Company officials,
locked the warehouse, disarmed all Englishmen, and
blockaded English ships. Then he marched to Calcutta
to establish control over the Company’s fort there.
On hearing the news of the fall of Calcutta, Company
officials in Madras sent forces under the command of
Robert Clive, reinforced by naval fleets. Prolonged
negotiations with the Nawab followed. Finally, in 1757,
Robert Clive led the Company’s army against
Sirajuddaulah at Plassey. One of the main reasons for
Fig. 4 – Robert Clive
Did you know?
Did you know how Plassey
got its name? Plassey is an
anglicised pronunciation
of Palashi and the place
derived its name from the
palash tree known for its
beautiful red flowers that
yield gulal, the powder
used in the festival of Holi.
Puppet – Literally, a toy
that you can move with
strings. The term is used
disapprovingly to refer to
a person who is controlled
by someone else.
© NCERT
not to be republished
Page 5


9
From Trade to Territory
The Company Establishes Power
2
Aurangzeb was the last of the powerful Mughal rulers.
He established control over a very large part of the
territory that is now known as India. After his death in
1707, many Mughal governors (subadars) and big
zamindars began asserting their authority and
establishing regional kingdoms. As powerful regional
kingdoms emerged in various parts of India, Delhi could
no longer function as an effective centre.
By the second half of the eighteenth century, however,
a new power was emerging on the political horizon –
the British. Did you know that the British originally
came as a small trading company and were reluctant to
acquire territories? How then did they come to be masters
of a vast empire? In this chapter you will see how this
came about.
Fig. 1 – Bahadur Shah Zafar
and his sons being arrested by
Captain Hodson
After Aurangzeb there was no
powerful Mughal ruler, but
Mughal emperors continued to
be symbolically important.
In fact, when a massive rebellion
against British rule broke out in
1857, Bahadur Shah Zafar,
the Mughal emperor at the time,
was seen as the natural leader.
Once the revolt was put down by
the company, Bahadur Shah
Zafar was forced to leave the
kingdom, and his sons were shot
in cold blood.
© NCERT
not to be republished
OUR PASTS – III 10
East India Company
Comes East
In 1600, the East India
Company acquired a charter
from the ruler of England,
Queen Elizabeth I, granting it
the sole right to trade with the
East. This meant that no other
trading group in England could
compete with the East India
Company. With this charter
the Company could venture
across the oceans, looking
for new lands from which it
could buy goods at a cheap price, and carry them
back to Europe to sell at higher prices. The Company
did not have to fear competition from other English
trading companies. Mercantile trading companies
in those days made profit primarily by excluding
competition, so that they could buy cheap and sell dear.
The royal charter, however, could not prevent other
European powers from entering the Eastern markets.
By the time the first English ships sailed down the
west coast of Africa, round the Cape of Good Hope, and
crossed the Indian Ocean, the Portuguese had already
established their presence in the western coast of
India, and had their base in Goa. In fact, it was Vasco
da Gama, a Portuguese explorer, who had discovered
this sea route to India in 1498. By the early seventeenth
century, the Dutch too were exploring the possibilities
of trade in the Indian Ocean. Soon the French traders
arrived on the scene.
The problem was that all the companies were
interested in buying the same things. The fine qualities
of cotton and silk produced in India had a big market
in Europe. Pepper, cloves, cardamom and cinnamon too
were in great demand. Competition amongst the
European companies inevitably pushed up the prices
at which these goods could be purchased, and this
reduced the profits that could be earned. The only way
the trading companies could flourish was by eliminating
rival competitors. The urge to secure markets therefore
led to fierce battles between the trading companies.
Through the seventeenth and eighteenth centuries they
regularly sank each other’s ships, blockaded routes,
and prevented rival ships from moving with supplies of
Fig. 2 –  Routes to India in the
eighteenth century
Mercantile – A business
enterprise that makes
profit primarily through
trade, buying goods
cheap and selling them
at higher prices
© NCERT
not to be republished
11
goods. Trade was carried on with arms and trading
posts were protected through fortification.
This effort to fortify settlements and carry on profitable
trade also led to intense conflict with local rulers. The
company therefore found it difficult to separate trade
from politics. Let us see how this happened.
East India Company begins trade in Bengal
The first English factory was set up on the banks of
the river Hugli in 1651. This was the base from which
the Company’s traders, known at that time as “factors”,
operated. The factory had a warehouse where goods
for export were stored, and it had offices where Company
officials sat. As trade expanded, the Company persuaded
merchants and traders to come and settle near the
factory. By 1696 it began building a fort around the
settlement. Two years later it bribed Mughal officials
into giving the Company zamindari rights over three
villages. One of these was Kalikata, which later grew
into the city of Calcutta or Kolkata as it is known today.
It also persuaded the Mughal emperor Aurangzeb to
issue a farman granting the Company the right to trade
duty free.
The Company tried continuously to press for more
concessions and manipulate existing privileges.
Aurangzeb’s farman, for instance, had granted only
the Company the right to trade duty free. But officials
of  the Company, who were carrying on private trade on
the side, were expected to pay duty. This they refused
to pay, causing an enormous loss of revenue for Bengal.
How could the Nawab of Bengal, Murshid Quli Khan,
not protest?
Fig. 3 – Local boats bring goods
from ships in Madras, painted by
William Simpson, 1867
FROM TRADE TO TERRITORY
Farman – A royal edict,
a royal order
© NCERT
not to be republished
OUR PASTS – III 12
How trade led to battles
Through the early eighteenth century the conflict between
the Company and the nawabs of Bengal intensified.
After the death of Aurangzeb, the Bengal nawabs asserted
their power and autonomy, as other regional powers were
doing at that time. Murshid Quli Khan was followed by
Alivardi Khan and then Sirajuddaulah as the Nawab of
Bengal. Each one of them was a strong ruler. They refused
to grant the Company concessions, demanded large
tributes for the Company’s right to trade, denied it any
right to mint coins, and stopped it from extending its
fortifications. Accusing the Company of deceit, they
claimed that the Company was depriving the Bengal
government of huge amounts of revenue and
undermining the authority of the nawab. It was refusing
to pay taxes, writing disrespectful letters, and trying to
humiliate the nawab and his officials.
The Company on its part declared that the unjust
demands of the local officials were ruining the trade of
the Company, and trade could flourish only if the duties
were removed. It was also convinced that to expand
trade it had to enlarge its settlements, buy up villages,
and rebuild its forts.
The conflicts led to confrontations and finally
culminated in the famous Battle of Plassey.
The Battle of Plassey
When Alivardi Khan died in 1756, Sirajuddaulah became
the nawab of Bengal. The Company was worried about
his power and keen on a puppet ruler who would
willingly give trade concessions and other privileges.
So it tried, though without success, to help one of
Sirajuddaulah’s rivals become the nawab. An infuriated
Sirajuddaulah asked the Company to stop meddling in
the political affairs of his dominion, stop fortification,
and pay the revenues. After negotiations failed, the
Nawab marched with 30,000 soldiers to the English
factory at Kassimbazar, captured the Company officials,
locked the warehouse, disarmed all Englishmen, and
blockaded English ships. Then he marched to Calcutta
to establish control over the Company’s fort there.
On hearing the news of the fall of Calcutta, Company
officials in Madras sent forces under the command of
Robert Clive, reinforced by naval fleets. Prolonged
negotiations with the Nawab followed. Finally, in 1757,
Robert Clive led the Company’s army against
Sirajuddaulah at Plassey. One of the main reasons for
Fig. 4 – Robert Clive
Did you know?
Did you know how Plassey
got its name? Plassey is an
anglicised pronunciation
of Palashi and the place
derived its name from the
palash tree known for its
beautiful red flowers that
yield gulal, the powder
used in the festival of Holi.
Puppet – Literally, a toy
that you can move with
strings. The term is used
disapprovingly to refer to
a person who is controlled
by someone else.
© NCERT
not to be republished
13
the defeat of the Nawab was that the forces led by Mir Jafar, one of
Sirajuddaulah’s commanders, never fought the battle. Clive had
managed to secure his support by promising to make him nawab
after crushing Sirajuddaulah.
The Battle of Plassey became famous because it was the first
major victory the Company won in India.
Fig. 5 – The General
Court Room, East
India House,
Leadenhall Street
The Court of
Proprietors of the
East India Company
had their meetings
in the East India
House on Leadenhall
Street in London.
This is a picture of
one of their meetings
in progress.
The promise of riches
The territorial ambitions of the mercantile East India
Company were viewed with distrust and doubt in England.
After the Battle of Plassey, Robert Clive wrote to William
Pitt, one of the Principal Secretaries of State to the English
monarch, on 7 January 1759 from Calcutta:
But so large a sovereignty may possibly be an object
too extensive for a mercantile Company … I flatter
myself … that there will be little or no difficulty in
obtaining the absolute possession of these rich
kingdoms: ... Now I leave you to judge, whether an
income yearly of two million sterling with the
possession of three provinces … be an object deserving
the public attention ...
Source 1
FROM TRADE TO TERRITORY
© NCERT
not to be republished
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