Bipan Chandra Summary: Beginning of European Trade Settlements | Famous Books for UPSC Exam (Summary & Tests) PDF Download

The Beginnings of European Settlements

Trade Relations with Europe

• Trade between Europe, India, and Southeast Asia dates back to ancient times, including interactions with Greeks.

• During the Middle Ages, several trade routes connected Europe and Asia, primarily by sea routes through various passages and overland routes.
• Trade routes included paths through the Persian Gulf, the Red Sea, and overland routes through Iraq, Turkey, and Central Asia.
• Arab merchants dominated the Asian leg of the trade, while Italian merchants controlled the European part.
• Along the trade routes, obstacles such as tolls, duties, piracy, and natural calamities were common.

European Demand for Spices

Spices

• European demand for Eastern spices, particularly during the winter months, drove the profitability of trade with Asia.
• Spices were essential for preserving and flavouring meats during the winter when fresh food was scarce.
• European food was heavily spiced until the 17th century due to this dependence on imported spices.

Changes in Trade Routes

• Turkish control over trade routes increased after the Ottoman conquests, restricting access to other European nations.
• Venetian and Genoese merchants monopolized trade and resisted sharing with emerging Western European nation-states like Spain and Portugal.

European Exploration and Discoveries

• Despite obstacles, Portugal and Spain initiated efforts to find new sea routes to India and the Spice Islands.
• In 1494, Columbus's expedition led to the discovery of America instead of reaching India.
• In 1498, Vasco da Gama successfully found an all-sea route to India, circumventing Africa via the Cape of Good Hope.
• These discoveries marked the beginning of a new era in global trade and exploration.

Impact of Discoveries

• Adam Smith regarded the discovery of America and the Cape route to India as the most significant events in human history.
• The 17th and 18th centuries witnessed a massive increase in global trade, with America's vast resources stimulating European economies.
• America's precious metals, particularly gold and silver, fueled European trade, industry, and scientific advancement.
• America also provided a significant market for European manufactured goods, contributing to economic growth.

European Penetration of Africa and Asia

Early Capital Accumulation

• The penetration of Africa by European countries in the 15th century provided a major source of early capital accumulation.
• Initially attracted by gold and ivory, trade with Africa quickly shifted towards the slave trade.
• In the 16th century, Spain and Portugal held a monopoly on the slave trade, later dominated by Dutch, French, and British merchants.
• The triangular trade involved European manufactured goods exchanged for African slaves, who were then traded for colonial produce in the Americas, generating immense profits.

Impact of the Slave Trade

• The demand for slaves in the Western Hemisphere, particularly on plantations and in mines, was insatiable due to harsh working conditions and high mortality rates.

Slave Trade

• Estimates suggest between 15 and 50 million Africans were sold into slavery.
• The prosperity of West European and North American nations relied heavily on the slave trade and slave labour on plantations, providing capital for further economic development.

Abolition of Slavery

• Slavery was abolished in the 19th century when it ceased to be economically significant.
• However, it was openly defended and praised by monarchs, ministers, church dignitaries, and leaders of public opinion as long as it remained profitable.

European Expansion into Asia

• In the 16th century, European merchants and soldiers began penetrating and subjecting Asian lands to their control.
• This process led to the decline of Italian towns and merchants as commerce and power shifted westward towards the Atlantic coast.

Portuguese Dominance in Asia

• Portugal monopolised Eastern trade for nearly a century, establishing trading settlements in India such as Cochin, Goa, Daman, and Diu.
• The Portuguese combined trade with the use of force, leveraging their superior armed ships to dominate the seas.

Alfonso de Albuquerque

• Under figures like Alfonso de Albuquerque, they expanded their dominion from Hormuz in the Persian Gulf to Malacca in Malaya and the Spice Islands in Indonesia.
• Portuguese methods included piracy, plunder, forcible conversion to Christianity, and inhumane treatment, leading to resentment among the Indian population.
• Their possessions in India survived for a century due to control over the seas, disciplined soldiers and administrators, and a lack of confrontation with the powerful Mughal Empire.
• Conflict with the Mughals in Bengal weakened Portuguese influence in the region, while English competition further eroded their power in Gujarat.

The Decline of Portuguese Dominance and the Rise of English and Dutch Influence

Portuguese Decline

• Portugal struggled to maintain its trade monopoly and dominion due to various internal and external challenges.
• Factors contributing to Portugal's decline included a small population, an autocratic and decadent court, a weaker merchant class compared to the aristocracy, lagging development in shipping, and religious intolerance.
• During the latter half of the 16th century, growing commercial and naval powers like England, Holland, and later France, challenged Spanish and Portuguese dominance in world trade.
• Portugal became a Spanish dependency in 1580, and the defeat of the Spanish Armada in 1588 weakened Spanish naval supremacy.

Rise of English and Dutch Influence

• The defeat of the Spanish Armada allowed English and Dutch merchants to utilize the Cape of Good Hope route to India, challenging the Portuguese and Spanish monopolies.
• In 1595, Dutch ships sailed to India via the Cape of Good Hope, leading to the formation of the Dutch East India Company in 1602 with extensive powers granted by the Dutch parliament.
• The Dutch focused primarily on the Indonesian Islands, particularly Java, Sumatra, and the Spice Islands, where spices were produced.
• They expelled the Portuguese from the Malay Straits and Indonesian Islands and defeated English attempts to establish themselves in the region.
• Despite their primary interest in Indonesia, the Dutch also established trading depots in various Indian cities and conquered Ceylon from the Portuguese in 1658.
• The Dutch exported various goods from India, including indigo, raw silk, cotton textiles, saltpetre, and opium, while also engaging in ruthless exploitation of the Indian population.

English Ambitions in Asian Trade

• English merchants were inspired by the success of the Portuguese and the lucrative Asian trade.
• The desire for profit from spices, textiles, precious metals, and other goods motivated English merchants to participate in Asian commerce.
• However, until the end of the 16th century, England lacked the naval strength to challenge the dominance of Portugal and Spain in the region.

English Supremacy in India

• Despite initial setbacks, the English continued to challenge Dutch influence in India.
• By 1795, the English had successfully expelled the Dutch from their last possession in India, establishing their supremacy in the region.

Growth of the East India Company's Trade and Influence, 1600-1744

Humble Beginnings in Surat

• The English East India Company started with humble trade operations centred around Surat until 1687 when they remained under the authority of Mughal rulers.

East India Company

• By 1623, the Company had established factories at various locations in Surat, Broach, Ahmedabad, Agra, and Masulipatam.

Strategy of Trade, Diplomacy, and Force

• From the outset, the Company aimed to combine trade and diplomacy with military control over the territories where their factories were situated.
• English authorities, like Roe, advised a strategy of using both military strength and diplomacy to secure their interests in India.
• Attempts to fortify factories, such as in Surat in 1625, were met with resistance from local Mughal authorities, demonstrating the challenges faced by the Company.

Expansion to Southern India: Focus on Madras

• In the south, conditions were more favourable for the English due to the absence of a strong central Indian government.
• The Company opened its first factory in Masulipatam in 1611 but later shifted focus to Madras, where they obtained a lease in 1639 to establish Fort St. George.
• By the end of the 17th century, the Company asserted full sovereignty over Madras and was prepared to defend its claim militarily.

Profit and Control: Exploitation of Indian Resources

• Despite being profit-seeking merchants, the Company aimed to make Indians pay for the conquest of their own country by imposing taxes for fortifications and repairs.
• Acquisition of Bombay from Portugal in 1668 provided a strategically important port, leading to the shift of Company headquarters from Surat to Bombay.

Expansion to Eastern India: Ambitions of Sovereignty

• In Eastern India, the Company established factories in Orissa in 1633 and obtained permission to trade in Bengal in 1651.
• Success in trade and the establishment of fortified settlements in Madras and Bombay fueled aspirations for political power in India to control trade and revenue.
• English officials like Governor Aungier advocated a policy of using military force to secure and expand English dominion in India.

Conflict with the Mughal Empire and Subsequent Reconciliation

• Hostilities erupted between the English and the Mughal Emperor in 1686, resulting in disastrous outcomes for the Company, which underestimated Mughal strength.
• After setbacks, the English once again became humble petitioners, seeking trade concessions from the Mughal Emperor and recognizing the limits of their military capabilities.
• The Mughal Empire pardoned English actions, acknowledging the economic benefits of foreign trade, and granted trading privileges in return for compensation and taxes.

Commercial Success Amidst Political Constraints

• Despite political setbacks, the Company's commercial affairs flourished, with significant increases in imports from India to England, despite restrictions imposed by the English government.
• British settlements in Madras, Bombay, and Calcutta became prosperous centres attracting Indian merchants and bankers, contributing to urban growth amidst political instability.
• These settlements served as strategic bases for the Company's ambitions in India, providing access to sea routes and the capability to leverage political disorders for further conquests.

Internal Organization of the Company

Charter and Governance Structure

Cape of Good Hope

• The East India Company was granted exclusive trading rights east of the Cape of Good Hope for 15 years by the Charter of 1600.
• Initially managed by a committee comprising a Governor, deputy governor, and 24 members elected by the Company's merchants, later known as the "Court of Directors."
• The Company enjoyed significant profits, averaging nearly 20% annually between 1601 and 1612, derived from both trade and piracy.

Monopoly and Opposition

• The Company operated as a closed corporation or monopoly, prohibiting non-members from trading in the East and sharing in its profits.
• English manufacturers and merchants who were excluded from the Company's monopoly campaigned against royal monopolies like the East India Company.
• Royal support for the Company was secured through heavy bribes, with loans given to Charles II amounting to £170,000 between 1609 and 1676.

Conflict and Resolution

• "Free Merchants," or "Interlopers," challenged the Company's monopoly, leading to partnerships and changes in fortunes.
• The Revolution of 1688 shifted power to Parliament, prompting increased pressure from "Free Merchants" on public and parliamentary opinion.
• The Company defended itself by offering bribes to the King, ministers, and members of Parliament.

Formation of the United Company

• In response to parliamentary resolutions granting equal trade rights in the East Indies, the New Company emerged as a rival to the East India Company.
• The mutual conflict between the two companies led to financial losses, prompting their merger in 1702 into the "The Limited Company of Merchants of England trading to the East Indies" in 1708.

Government and Organization of Company's Factories in India

Evolution of Factory Organization

• As the East India Company gained power in India, the organization of its factories evolved.
• A factory typically comprised a fortified area housing warehouses, offices, and employees' residences, with no manufacturing conducted on-site.

Employee Structure and Compensation

• Company servants were categorized into writers, factors, and merchants, residing and dining together at the Company's expense.
• Salaries were relatively low, with writers earning £10 per year, factors earning £20 to £40, and merchants earning slightly more.
• Real income came from permission granted by the Company to engage in private trade within India, while trade between India and Europe remained reserved for the Company.

Administrative Structure

• The factory's trade affairs were overseen by a Governor-in-Council, with the Governor serving as the President of the Council but having no individual power.
• The Council comprised senior merchants of the Company, making decisions through majority vote

Anglo-French Struggle in South India

Revival of Territorial Ambitions

Nadir Shah

• English East India Company's territorial ambitions revived in the 1740s due to the decline of Mughal power, particularly evident after Nadir Shah's invasion.
• An opportunity arose in Southern India due to the absence of strong central authority after Aurangzeb's death and the withdrawal of Nizam-ul-Mulk Asaf Jah's control after 1748.
• Maratha incursions into Hyderabad and political instability in the Carnatic region created favourable conditions for foreign influence.

Rise of French Rivalry

• France emerged as a significant rival to English dominance in India during the 18th century.
• The French East India Company, founded in 1664, gained strength after reorganization in the 1720s and established bases at Chandernagore, Pondicherry, and other ports.
• French Company was heavily dependent on government support, which influenced its operations and priorities.

Conflict Escalation

• War erupted between England and France in Europe in 1742, extending to their East India Companies in India.
• French Governor-General Dupleix demonstrated strategic brilliance, capturing Madras in 1746 and leveraging alliances with local Indian rulers.
• British forces, led by individuals like Robert Clive, countered French advances, leading to significant battles like the capture of Arcot in 1751.

French Expansion and British Response

• Dupleix's strategy involved intervention in Indian princely conflicts to expand French influence and control.
• French successes included alliances with Chanda Sahib in the Carnatic and Muzaffar Jang in Hyderabad, granting territorial concessions and military support.
• British support for Muhammad Ali in the Carnatic and successful military actions weakened French positions.

French Decline and British Ascendancy

• Internal discord within the French Company, lack of government support, and military setbacks led to Dupleix's recall in 1754.
• Another war between England and France in 1756 saw British gains in Bengal, further weakening French positions in India.
• The decisive battle of Wandiwash in 1760 marked the end of French influence, with the Treaty of Paris in 1763 formalizing British dominance in India.

Lessons Learned

• English learned the importance of exploiting Indian rulers' internal conflicts and the effectiveness of Western-trained armies against traditional Indian forces.
• The realization that Indian soldiers trained and armed in a European manner could be as effective as European soldiers.
• Initiation of the formation of a powerful army consisting of Indian soldiers (sepoys) and English officers.