UNIT 7 EUROPEAN COLONIAL

POWERS
Structure
Objectives
lntroduction
The Background
Towards Africa and the Americas
Towards Asia : The Portuguese Onslaught
The Decline of the Portuguese Empire
The Rise of the Dutch
The S~ccessof the English
English Rivalry with the Portuguese and the Dutch
Frencb Colonial Ambitions
The Structure and Pattern of European Trade
Towards the Conquest of lndia
lndustrial Capitalism and lrnperialism
Let Us Sum Up
Key Words
Answers To Check Your Progress Exercises

7.0 OBJECTIVES
This Unit deals with the overseas activities of European powers with special reference
to Asia and lndia, After reading this Unit you will be able to explain :
e the expansion of European nations for trade and markets carried out by the
formation of trading companies,
the growth in the trading empire of the Portuguese. the Dutch. the English and
the French in the East,
the nature, methods and pattern of trade with the East in the context of the
growth of capitalism on a global scale,
e the transformation of Europeans from traders to colonial powers, and
e trade rivalries between European colonial powers and the success of the French
and English East lndia Company in lndia.

'7.1 INTRODUCTION
In the previous 'Unit we have examined the transformation which occurred in Europe
from the fifteenth to the middle of the nineteenth century. During this period there
was a tremendous growth in trade and markets based on a growing technology
applied in agriculture and especially manufactures. Capitalism was replacing the
feudal economy and society. However, the changes which occurred in Europe were
not limited to it. World history after 1500 A.D. got closely related to developments
taking place in Europe. This is because capitalism as a system is based on profit
making and competition in the market. It constantly requires expansion of the
market fo; raw material and selling of goods. Capital accumulates and secks outlcts
for reinvestment for further profits. Its expansion therefore was world-widc.
engulfing other types of economics, societies and cultures.

'7.2 THE BACKGROUND

'The remarkable transformation started in the fifteenth century when Europeans went
. ,- , . ,., . ,. ... .. . - .
out to the world. This does not mean that no contact with other cultures existed
. . ... .
C'rpitalhm and Imprrirlhm after the beginning o f the Christian era. Contact with t l ~ c( 11111crc and other parts o f
A s h was also very o l d and continued throughout the ~ ~ ~ ~ talgt sl .l cYou must have
heard o f Marco Polo (C. 1254-1324 A.D.) who travcllctl I(,('hina and fascinated
Europeans with h i s travel tales. Stories about the fabulour riches o f the East
enhanced the desires o f Europeans.
The city-states o f Italy virtually came t o monopolist the trade o f the East with the
rest of Europe from about the twelth ccntury. 'l'radc with South-East Asia and India
was carried o n along several land and sea routes. One route brought eastern goods
to Iraq and 'furkcy via the Persian gulf. From thcrc it reached Genoa and Venice by
l a n d Another one brought them to Alexandria in Egypt via the Red Sea but since
thcrq was no Sue1 canal then. from ~ l e x a n d r i ail was conncccted to. Italian towns
via the Mcditcrrancan. Anothcr route by land. scarcely used. was through the passes
of ~ h r t h - w e s across
t Central Asia. Kussio t o the Baltic.

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7.3 TOWARDS AFRICA A N D THE AMERICAS
Scar411 l,r altcr~iativehci\ routcs'by.countrics o n the Atlilntic coast began as early as
the l'ik'tccnth ccntury. I.hc l'ortugucsc started making efforts from the Wcst Coast of
Africb. As we saw in thc prcvious Unit religion. c o n ~ m c r c i irivalry
~l with Italy and
the spirit'ol'advcnturc ;~ndenquiry g ~ r i c r i ~ ~byc dthe Rcni~iswnccwere the motivating
fuctors for the explorers. A n i~dditionalpush was provided when land route was
blocked by ~ h Ottoman
c .l'ul.ks with their c;lpturc 61. Costa~ltinoplcin 1453. The
highly lucrative tmdc i n spices i ~ n d o t h c gotds
r of the East had l o be retained. 'l'hc
Porlu~gucsccl'forts were joined by Spain and subscqucntly by the middle of the
sixtccinth century not only new sc;~ routcs to India had been discovcrcd but a new I

. con~idcnthad bccn f o t ~ n di ~ n dcoloniscd. Fiuropcb assault on the world had hegun

and by thc cnd 01. the ciphtccnth ccntury. European nations had already laid.clain1 to
more than lialf ol' thc world's land surhcc and i n varying dcgrcc cfkctivcly
conlrillcd nearly a ~ h i r dol' il. Across lhc ~ t l a n t ~ cSpain
.. and Portugal had come to
contribl South America while North America had been receiving scltlcrs from various
Euroflcan countries. I n 1776 a new nation had cmcrgcd . . United States of America
'

from former British territory. Thc Carribhean islands scattered i n hctwccn the north
and tdc south had been subjugated to Spanish. French and British interests.
Conqdest and colonisation 01. the American continents brought tremendous bcncfits
to thccmerging European colonial powers. The colonies got structurally linked t o
them iin a subordinate position undergoing at bcst a distorted development. I n the
opinioin o f Andre Gunder Frank. while European powers were developing theic was
a process o f 'development o f underdevelopment' i n the colonies. The Spaniards
destroyed two mature civilizal.ions the lncasa and the Aztecs i n South America to
implatit their own. Plantations worked by slaves came to characterise the economies
o f the kolonies. Slaves working under sub-human conditions provided cheap labour
on the!sugr. cottctn and tobacco plantations and the mines o f the Americas.
~stimdtesvary but somewhere between 15 and 50 million Africans were brought as
slaves Into the New World. Europe on the other hand was enriched by a range o f
new pqbducts from the New World cocoa. tomatoes, maize. beans. capsicum and
tobacco. Potalo discovered in 1538 by a Spanish soldier Pedro de Ciem de [.eon. i n
the Capca valley o f Columbia was introduced .in Europe in 1588 as a curiosity.
Along with maize, the potato was instrumental i n solving the fond problem of the
growink population o f Europe by the eighteenth century. thus reducing the danger of
periodic famines. Finally. i t was bullion which directly contributed to the wcalth .of
Europy by providing the much needed supply o f money and clrpital for the growing
manufijcturc. tradc and wars. A l l this had implications for Europe's tradc with Asia.

7.4 TOWARDS ASIA : T H E PORTUGUESE '

ONSLAUGHT
I n contrast t o the Americas i n the Western hemisphere. direct colonization o f the
East b y European powers did not begin straightaway. Territorial control had t o wait
 hut the control o f the was was v c r y s ~ j l ' (IIIC
t 10 t I i C s ~ ~ p c r i o r i ol'
ty ~i;~vigi~tio~i;~l
technology and arms especially hcxausc 01' the use 01' g ~ ~ ~ i p o w d1c11r .15 1.1. tlic
01'
Portuguese n n v i g t o r Alhuqucrquc proucll> \\lrc~tcto his k i ~ i yt I i ; ~ t ";rt tlic r~111io11r
our coming. the native ships i l l 1 vi~nishcil.antl L.\L.II tlic hirds ccascd t o skim over tlic
water".
When Vasco [)e Gama reached Calicut via tlic C.~pc 01' <iood Hope it opcncd ;III
altogether new chapter i n the history of Intlii~:\ t r i ~ d i n glinks with liuropc. .l'lic
v o y a g from Lisbon t o C:~licut tiiok ten niontlis and h u r t c c n days. I'hc clarity i n
Portuguese purpose is indicated by the statement made t o 'l'unisi;~n mcrch;~nts i n
Calicut that ihey h a d 'conic t o scck Cliristia~isand spices. They certainly succecdcd i ~ ,
fulfi,lling the latter mission as the cilrgo with wliicli Vasco D e F a m a returned sold
for sixty r i m s the cost o.f his voyage.
A t that time tradc i n the I n d i i ~ no c c i ~ owas o n i o ~ i o p o l yol' A r a b m c r c l i i ~ ~ i t W
s.itli~ri
liftecn years o f thcir first arrival i n Indian waters the I'ortug~~c\cliad complctcl!
destroyed A r a b navigaticwi. very often resorting to plundcr, \laugIitcr ol \;~ilors ;~nd
other coercive mcthods. Their K i n g Manuel I. w i ~ squick to declare Iii~iisclf"l.ord
ovcr co~iquests.nirvigetion and t r i ~ d cwith f!t hiopia. A r i hii~. ~ Persia and India ". ill
1501.
?he I'ortugucsc wr-rc dctcrniincd t o develop and retain thcir n;~v;~lsuperiority ovcr
Asia by estahlislii~~g trading points o n land cilllcd feitorias. E'eitorias wcrc u~il'ortil'icd
trgding outposts which :~lsoserved iIs str;~tcgic hi~scsI'or thcir I;V;I~ l'lcct. I'ortugucsc
OVC~SC~ISexpansion had bccn h;~scd o n thcsc specially o n thc co;~st ol: A f r i c i ~ .
However. i n India. they soon rcaliscd that the cst;~hlislinic~ito f trading points would
not be unopposed; Wlicli Zi~niorian.!lie king of Calicut did ~ i o cooperate t in
expelling the Muslin1 traders from his port. tlic I ' o r t ~ ~ g u c sbo~iib;~rdcd
,~ it.
Subsequently thcy cleverly uscd the rivalry hct\vccn C'ocl~inant1 C'i~licutand
managed to construct the first fort o n thc Mjrlehnr' tc.~.~.it<)i.!. ol: tlic I<;+o f C ' o c l i i ~ ~ .
I n 1509,. L)iu was conquered .hy dcliating the ~iav;!l Ilcct sctit h! t Ilc M i ~ n i l ~~LIICI. ~ k 01'
Egypt. Goa. captured i n I510 hccamc tllc I'ortugucsc ;rcl~~iitiistr;~ti\.c base. Wlicti the
Spanish K i n g Charles V rcnounocd intcrcsts ill the I ~ i t l i aocr;lli
~i ;l.re;l keeping o ~ i l y
the Philippines i n the Far East. the I'ortug~~csc cilllic to ;~cqtrirc;I ~ i i o ~ ~ c ~ol: p oon
ly
Eastern maritime empire wllicli I i ~ t cacquired
t tlic 11;11iic01' I'sti~dt)d : ~I ~ i d i ; ~ .
The Portuguese dominated the maritimc tritdc with Asia t i l l t l ~ chcgi~lriirigol' tlic
sixteenth century. I n 1506, .the lucrative t r i ~ d ci n spiccs hcca~iic:I crow11 1no11o~c;ly
and the Portuguese proved t o bc ruthless t o p1:cscrvc it. Quitc o f t c ~ai tliin l i ~ i c
existed between trade and piracy. Various ~ i i c t l i t d swcrc uscd t o extract niolicy I'roni
lndian ships. one o f them being the cartaze system. ')'his n systc~ivof liccnsc o r
pass, in which, captains o f a l l th!)sc Indian ships sailing t o a destination m)t rcscrvcd
b y the Porttigucse. were obliged t o buy passes from the Viceroy ol' ( h a . .This was
necessary t o prevent seizure o f thcir ships and thc confisci~tionof thcir nicrclii~iidisc'.
b y the Portuguese. O n c ' o f the main rcirsons for the success o f the I'ortugucsc 01; tllc
sea was because thc M ughals had not heen-intcrcstcd i n developing ;I strong navy.
Moreover.. the southern part o f lndia was also ciutsidc the dircct tcrritoriirl irillt~cncc
o f the Mughais enahling the Portugucsc t o get a foothold. I n this(n1atincr the
Portuguese not only profited from the spice tradc hut also ;~ctcdiis carriers hctwccn
other Asian countries. Indian cloth went t o Siani. cloves l'roni the M o l u c c i ~ st o
China, Persian carpets t o India and coppcr and silver Croni .lapan t o China.

7.5 THE DECLINE OF THE PORTUGUESE EMPIRE

However, b y the first decades o f the seventeenth century much o f the Portuguese
empire i n the East collapsed and was replaced by the D u t c h i n many places and the
British i n others. Several developments were responsible for this. I n 1580, Portugal
got attached t o the Spanish crown and it further got linked t o the declining fortunes
o f Spain. Spain's o w n naval might was reduced with the defeat o f its Armada i n the
naval battle o f 1588 w i t h the English. Portugal's internal development also made i t
difficult t o retain its maritime empire. The aristocracy dominated its society and
merchants d i d not enjoy the social influence necessary t o mould state policy
according t o their interests. T h e crown was autocratic. The Portuguese provqd t o be
intolerant and fanatic In n;ttt.t.\ rrl n-liuitrn anrl rt-uw~t-rit r l C n r r ~ h l l -r . r \ n v r . r u r r n ~ in
c.p&dhmnd InpaWLn their spheres of influence. Moreover their feitorias essentially remained tradlng
outposts lacking adequate manpower and political will t o carve out a territorial
empire. The Portuguese in some ways became victims of their early lead in overseas
expansion by remaining limited t o profits through monopoly trade only.
'
An idea o f Portuguese decline may be gained from the decline in the number of
ships leaving Lisbon for Goa during three centuries; whereas 45 1 ships left Lisbon
for Coa in 1500-49 in 1700-1720 the number was 1 12 and only 70 in 1750-1800.
In the end, their influence got reduced to some pockets only - in East Africa, Diu,
Daman, Goa (where it ended in 1961). Timor and Macao where it, still survives.

7.6 THE RISE OF THE DUTCH

As Portuluese power wavered in the aftermath of ihe Spanish union, the Dutch took
over from them by the mid seventeenth century. The Dutch had been adding to their
comnmercigl and naval superiority in the sixteenth century by transporting eastern
goods brought to Lisbon by the Portuguese, to Antwerp from which it reached other
markets of Europe. The Dutch had shown innovative spirit in business organisaLions
and techniques and in shipping. In the latter, they designed and produced the
nuitship (fiuyt) which was considered to be a masterpiece of Dutch ship-builders of
the scventqenth century. The design of the fluyt was such that it was lighter needing
a smaller arew thus reducing its operating costs. Eventually Dutch ships proved t o be
superior to the bulkier and slower Portuguese ships. Dutch national feelings had
been a r o u b d in their struggle against the domination of Spain over their homeland
the Netherlands and they were all set to rival the Portuguese in the spice trade of the
East.

6. European Seamen unbdinB at an Indlan Port.

In 1602 the Dutch East lndia company was formed and it received a'charter
empowering4 to make war, treaties, acquire territories and fortify them. The main
interest af thq Dutch was in the Indonesian archipelago and the Spice 1slanr'- and
not lndia in the beginning. However, they soon discoverrd that Indian tradc was
necessary to carry on trade with South-East Asia, as there was a good demand of
Indian cloth there. Indian cloth was an essential exchange conlmodity in that area
and in return Indians demanded pepper and spices. The Gujarat region in Westerr.
lndia and the coast of Coromandel in the East produced a large variety of cotton
cloth. Coromandel was even described as the left arm of the Motuccas by Hendrik
Brouwer who later became the Governor General of the Dutch settlements in the
.
r,.. I-A:,. 9.. .I.- r > . . * - ~
I A ~ A 4-2 :.. -I..-:..:-,. ,. x: ".--*.. r-,.- + L * I -.,.
: -f
 Golconda to set up a factory at Masulipatam. Subsequently they established trading European Coloni.l Powen
depots at Nagapatam in Madras. Cochin and at Surat. Cambay, Broach and in
Western India. More trading points came up at Chinsura in Bengal, Agra in Uttar
Pradesh and Patna in Bihar.
With the help of commodities like indigo. saltpetre. opium, raw silk in addition to
cotton, they were able to seize a large part of the inter-Asian trade formerly
controlled by the Portuguese. Many decisive blbws were struck at the Portuguese
control of Goa, their factories in Malabar and their Cinnamon trade of Ceylon. For
this Goa was blocked in the trading seasons. Malacca was conquerred in 1641,

r Colombo in 165536 and Cochin in 1659-63. With this the Dutch virtually replaced
the Portuguese but meanwhile they already had an important rival --.the English.

The East lndia Company had been formed in 1600. through a charter granting it the
exclusive privilege of trading with the area East of the Cape of Good Hope for
fifteen years. Compared to the Dutch company financially, it was a much smaller
concern. For,its first voyage it managed to raise less capital compared to the United
Dutch company. k16wever. the chief asset of the English company was its simple
organization. a court of twenty four directors elected annually by the general court
of shareholders.
In its early voyages the East lndia company concentrated on the spice trade. mainly
peper with Indonesia and the Spice islands. Its rate of profit amounted to nearly 20
per cent per year in the first twelve years. The several voyages (161 1-1 5) yielded a
profit of 214 per cent on original investment. However. yerv soon the English

f 7. A view of the trading,port of Sur.1. 27

( apitalkn~and Impaialbm , realised the importance of Indian goods especially textiles as a barter commod~t y for
spi$e trade. Plans were drawn up to open a factory at Surat in Gujarat and Capain
~ i / l i a mHawkins was sent to the court of the Mughal Emperor Jahangir. After
spending sometime in Agra Hawkins had to leave as a result of Portuguese intrigue.
It was now clear to the English that they would have to deal with the Portuguese to
galn favours from the Mughals. A Portuguese naval squadron was defeated at
Swilly Hole near Surat in 161 1. This convinced Jahangrr and the English were
allowed to set up a permanent factory at Surat in 1613. An English factory had
already come up at Masulipatam on the East Coast in 161 1. Subsequently they were
alloived to open factories at several places on the West Coast. d
t
A policy of expansion followed with the decision to send Sir Thomas Roe as an
Ambassador to the Mughal court. Roe used his diplomatic rkills to obta~nroyal
favo~urs.Meanwhile on the sea the English often resorted to piracy and plunder of
Portuguese shipr and to holding up Indian ships and exacting heavy ransoms. *I heir
method therefore war a cornbination of difloniacy; thereats. entreaties. intrigue and
aggression I he clrorts of Roc rccurcd thc English a Royal.firman to trade and set I
up factories in all parts of thc Mughal empire. An open confrontation with the
Portpguese in a naval battle ol 1620 ended in Endish victory. Tension between the
English and the Portuguese declined over time. The Portuguese were expelled'from
Hugl(i in Bengal by Mughal forces in 1633.
Withlthe waning of Portuguese influence and power. the English started setting up
factories in d~l'fercntparts of India. Apart from Surat and Masulipatam. by 1623.
factories had k e n set up in Broach. Ahmedabad and Surat. However. the company
felt insecure and vulnerable with unfortified settlements. It resented the dues it often
had to pay to indigenous rulers. Payments also had to be made to local businessmen
who had to he ured as in$rmcd~aries. The English wanted to be a beneficiary of the
red~stributivcenterprise thcmselvcr.
~ngli$hterritorial and imperial an~bition?,can be traced to the attempt made to
fortify Surat as early as 1625. I'hey had recently been driven out from Indonesian.
islandis by the L)utch In 1623. However. Mughal authorities frustrated English
attempts at Surat by imprisoning the English. I he English then focussed on the
smaller states of South Ind~ato void direct conl'rontation. I n the South the strong
Vijaynagar empire had heen overthrown tn 1565 and several relatively weaker states
had emerged. In 1639. thcy man:~gcdto ohta~nMadras on lease from the local Raja.
M a d r ~ rwas a port and the English n~irdcil promise to give half of the customs
revenue to the Raja In return thcy prtxurcd the right to fortify it and also to mint
their own coins. 1hc Engl~shrct up a factory and built a fort called Fort St. George \
around it. In 1662. King Charlcr-ll of England received Bombay as dowry on
marrying a Portugucse princes\. The English crown transferred it to the company in
I665 which was soon fortilied. Growing threat of the Marathas and the availability
of ;I good port scion enabled Bombay to replace Surat as the principal depot of the
compahy on thc Wmt Coast.
',

1
In ~ a s i e r nIndia t b influence of the company steadily rose after 1630. Factories
were citablished at Halasore in Orissa in 1633 and Hugli in Bengal in 1651. More
factories came up at Patna in Bihar and Dacca and Kasimbazar in Bengal. In 1658
all the ~stablishmentsof Hcngal. Bihar. Orissa and the Coromandel coast were
brought under the control of Fort Sr. George.

In Eastern India, the company had to procure its articles of trade like cotton
piecegoqds, silk, sugar and saltpetre from internal areas. There they were subjected
to many tolls and custom duties. The company directed its efforts t o get rid of them.
Through a series offirmans in 1651, 1656 and 1672 they were exempted from
payment of custom duties in return for fixed sums to be paid by the company to
Indian abthorities. In 1680, Emperor Aurangzeb after levying Jaziya on the company
issued afirman that the Company's trade was to be customs-free everywhere except
Surat. Fbr this the company is said to have spent Rs. 50,000 to bribe the Mughal .
officers.
However. local custom officers continued to make demands on the company as a lot
of the laqter's servarits carried on smuggling and trade in their private capacity.
Conflicts with local authorities and the ultimate authority, the Mughal government.
. . .--- - . .. . - .. . " . . .-- - 1 . - . r
 1 .

IF\T F G K T ST* G E O R G E *

3, We ahall now proceed to give your Honol~rsan account of the ~everal

occurrences and our transactions here since the departure of the B,~rdwickeand
Prince Willia,m under the establish'd heads, and'as wo go along chalk also reply to
your several favorirs received this year.

4. The Pdnce William and Xard~uicb sail'd from Fort St. David the 9th ~ ~ ; 7 f i ,
Februar?. Tbe 2d of that month the Deputy Governour and Council inolosed Lm.raca,
us a protest of Captain Langworth's, dated tihe 31et January, for detaining bin 174l,lo*.la
I~,SI,JS.
ahip in India beyoud the time limited by charterparty. The 16th February we L n rent,
took notice to the Deputy Governonr and Council, that we did not observe h e y 1741, no.2
bad taken any obligation from Ca tain Langworth that the snrplas tonnage on the
f
Prime William should be at half reight only, to which they replied the 28th that
the confusion and hurry they were in upon that ship's dispatch occasion'd them to
forget i j , for which they were sorry, but hoped your Horiour~would be no
enff er&s thereby.
5. Your Honour's ships arrived here, sail'd from hence, and now bound home,
are as follows :-
Tho Cceoar ... Captain Robert Cam- 7th Febmary ... Loading for England.
minge.
Halifw ... Captain John Blake ... 5th June ... Sail'd for ye Bay, 6th
Nottinghom ...
Prince of Orange ...
Captain Thomna Browne. 13th Do.
Captain C'harlee Hudson. 20th Do.
July.
...
Boand to England.
...
&l'd for ye Bey, 3d
Jaly.
London, ... Captain Matthew Bootie. 1st July ... Sail'd for ye Bay, 14th
July.
King William ... Captain James Bandere. 18th Jily ...
SeiYd for ye Bay,
Beaufort ... Captain Tbomee Stevens. 3rd August ... }
OM August.
Prince of wales ... Captain John lJelly Ju- 19th Augnst
nior.
...
Loading for England.

6. It was in the evening of the 7th F e b r ' ~that the Ctesar arrived here, and
as soon ae the President knew what ship it was, he sent immediate advice thereof
to Mr. Hubbard, but the Harutuzcitka and Prince CVilliam were out' of eight before
r
I it reached him.
7. A Frenoh'ship having some little time before landed her treasure a t Ln. from
Pondicherry, Mr. Dumas intercepted a letter from pne of hie people advising the '"
1 Morattaa thereof and urging it as an inducement for them to order some of their
troops thither. As we were unwilling a t that juncture to give any wicked persons
an opportunity to write such letters from hence, and beleiving the money very mfe
on board the Cetur at that season of the year we continued i t on board her till the
5th March, wllen we arder'd it on ehoar, it being uear the npproach of the southerly uMa 6.:74fi
monsoon.
8. Your Honours having adiised us in your letter by the C,rmr that, incase,;LL fmm;;
ehe did not arrive here by the last of August, the Commander was order'd to make *,:
the best of his way to Bengall, we demanded his retwons for coming here, which ~ 2 . 6 6 ; ~ ~ ~
he deliver'd 'UR the 19th March. ~ b . la1
-8.-,L a
p, 3 j z s p 7 j ~ dc ~ c - , \ ~ i ! k ( i 7 :wP+R TVKE'; CY SiiiP-3
FF?.oly I N i ) j 3 ~o - ~ , % L A , V ~ ?

8. C'rum the E.1.C'. records

 and the factories of Surat. Masulipatam and Vieagapatam were rid.The English
opened negotiation with the Mughals and wca back to their earlier mode o f
petitiofling after a brief adoption of an aggressive posture. The Mughals pardoned
them kcause they understood the economic importance of English tiade. Not only
was it perceived beneficial for Indian artisans and traders it also brought in revenue
to the state. Therefore. Aurangzeb allowed Ihe English to re$ulm trade on the
conditi~nof payment of Rs. 1.50.000 as compensation.

Soon the English established a factory ut Sutanti and seized an opportunity to fortity
it in 1696 when Sobha Singh. a Zamindar ichc.llcd. I'n 1698. by paying Hs. 1200 to
. the prc~iousproprietors the company acquircd the Zrrmindari i.e. the right to collect
revenue from thrcc villager. vit. Sutanati. Ciovindpur and Kalikata. In 1700. the
Beqgal factories were placcd under a spearate control of a President and council in a
new fortified settlement called Fort William. l'he village of Kalikata acquired an
analicilied name Calcutta and flourirhed from thcn onwards with i t s population
touchin$ I.UI).fK)I) in 1735. With the death of Auranweb and the weakening of the
Mughal empirc lrticr him the 'Engliih managcd to get more concessions and
privileyes. In 1717. Ernpror Farrukhriyar issued an Impcriill.firn~ungranting the .
cornpanp scwral privikgea:
i) I h c Company cotilrt ftccly trudc in Hcngal without any dutics in return of an
ann~alpayment ol' Us. 3O.OMH).
- - i i ). 'The --o m p i y w;la allowcd to rent morc territory around Calcutta.
-+C
 1
.
iii) The Company retained its.old-privilege of exemption of dws throughout the
province of Hyderaba&and for Madras was required to pay only the existing
rent.
iv) In return for an annual sum of Rs. 10,000 it was exempted from payment of all
dues at Surat.
vl) Company's coins minted at Bombay were allowed currency throughout the
Mughal empire.

Check Your Progress 1

1) Write short answ'ers.

a ) Why d o the capitalists need the expansion of market?

b) Why were a large number of Africans brought as slaves by the Europcan

colonial powers?

....................... .......................................

.................................................................
C) W h o first'established t h e ~ rdomination in the lndian ocean by destroying the
monopoly of q r a b merchants?
..................................................................
..................................................................
..................................................................
d ) What was the Dutch interest ih Indian trade?.

e) What were the special privileges that the English got from the Mughal
Emperor Farrukhsiyar?

2 Narrate the process of the establishment of English commercial settlements in India

in the 17th Century. Answer in 100 words.
L upilulirn~
r ~ lmpairlbm
~ d
7.81 ENGLISH RIVALRY WITH THE PORTUGUESE
A N D THE DUTCH
While the English company was engaged in establishing itself with respect to Mugh;~l
and other Indian statcs it was simultaneously engaged in rivalry with the Portugucsc
and the Dutch. Wc have secn how they came into conflict with the Portuguese in thi
first threc decades of the seventeenth century. The end of hostilities between thc
Portuguese and the English started with thc conclusion of the Madrid trcaty in 1630
Anather agreement made in 1634 betwcen the President of the English Cactory at
Surdt and the Portuguese Viceroy of Goa guaranteed commercial intcltclations
betwcen the two nations in India. In 1654. Portugal fully accepted the rights of the
English to the Eastern trade and thc treaty of 1661 bound them togeth~r'a~ainst the
Dutch in India.
Meanwhilc thc 1)utch had not only replaced the Po.rtugucse in the spice trade but
had expelled the English from the South East Asia. Although. the main interests of
the Dutch were in the Spice Islands. they had established important factorics at
Pulicat (1610), Surat (1616). Chinsura (1653). Cassimba7ar. Haranagore. Patna.
Balasore. Nagapatam (1659). and Cochin (1663). Unlike the English. the Dutch
having secured bases in South East Asia wcre not under pressure to secure territorial
bases in India. Hostilities between the Dutch and the English brought them to a
point of conflict several times from 1653-54 onwards. when. a large fleet of Dutch
ships appeared near Swally. forcing the English company to suspend its trade at
Surak. I n 1667. the Dutch agreed to leave alone English settlcmcnts in India. while
the English gave up all claims to Indonesia. I n this manner two rival colonial powers
settled their conflicts. However. English attempts to drive the Dutch out of the
tndiqn soil continued and the Dutch 'retired' more and more to country trading with
their officers trying to make private fortunes in collaboration with English company
officilals.
The eighteenth century saw a steady erosion in the fortunes of the Dutch. The sprcad
of the English as a result of privileges received. enabled them to establish an
increasing hold over the trade of indigo, silk. cotton, piece-got)ds. saltpetre etc. With
the failure of the Hugli expedition in 1759. Dutch naval power reccived a further
setback. Finally. the Dutch lost their last possession in lndia in 1795 when the
English expelled them. English supremacy though evideht from the beginning of the
eighteenth century however had to bitterly contest another Europcan rival - the
Frenah before emerging fully victorious by the early nineteenth century.

7.9 FRENCH COLONIAL

-- AMBITIONS
Like ahe other European companier the French company was also the product of
mercwntilist practices and ideas. French activities in the East started relatively late
and it was Colbert who formed the Compagnie dcs lndes Orientales in 1664 to enter
Indian trade. The first French factory was established at Surat in 1668. I n 1669. they
managed. to establish factory at Masulipatam also. I n 1673, they obtained a grant of
a village, Pondicherry on the East Coast which was subsequently fortified. 'They also
received a site near Calcutta in 1674 from the ruler of k n g a l where they built the
town of Chandernagore (1690-92). Although the French company sent seventy four
equipped ships to lndia between 1665 and 1695. its actiLities were much smaller in
scale and size compared to the English and the Dutch. The financial strength of the
French Company became very weak but it revived when it was reconstituted in 1720.
In 1721. the French occupied Mauritius which enhanced their naval power enabling
them to rival the English in their designs. On Indian soil they settled down at the
Malabar coast in 1725 and at Karikal in 1739.
However. the French East lndia company compared to companies of Holland and
Englad was much more dependent on the government. I t suffered from two major
drawbbcks a weak organisation and inadequate capital. Its mercantile activities
were cbntr.olled by the government so much that it smothered the drive, skill and
initiatibe of the company. 'Thus its fortuncs and prospects were too closely linkcd to
rh.. rln.r..lr.rm.r..e. ;..
Kr....n,. ,.-A u:..h.,..l.h ....-
a,.-., C-,,,.h C-...:-.. .I:A -... L... .....I.
same dynaniism Chich for instance the English had. 'l'hc historical evolution of the
two countries has bccn examined in the previous Unit.
This does not necessarily mean that the East lndia Company had a smooth sailing
right from i t s birth. Right from the start i t had to contend with critics and rivals in
rngland. I t had to constantly give bribes and loans to the crown to retain its
cxclusivc monopoly tradc with the East. Even then many 'Free Merchants' or
'intcrlopcrs'(as the company described them) continued to trade with Asia. I n 1690
they petitioned the I'arliamcnt to throw open the Indian tradc and the Company had
to'\pcnd nc;lrly !M).~M)O in bribes to stop this which included 10.000 to the king
himsell'. Eventually in 1702. the two groups decided to join hands which in the words
o f K;rrl Marx signified the "true commencement of the East lndia Company"
representing the broad interests of British merchant capital backed by the
I~arlii~nicnt.

10. A r m of cambd of dUfewa4 E w p c u l powers (Amind I p b C.).

-. ------. - --- -

7.10 THE STRUCTlSRE AND PATTERN OF

EUROPEAN-TRADE
When European colonial powers started trading with lndia in the sixteenth century
thcir main problem was that they had few gocds to offer in reiurn for Indian
eonimoditics. For nearly thrcc centuries they had to struggle with the problem of
financing an adverse balance of trade with Asia. Apart from wine and oil their ships
brought little l'roni Europe. How did they then finance thcir trade'? We have alrcady
seen that gold and silver was being brought into Europe from the mines of South
Amer~cain the sixteenth century. It is that which they used. albeit yeluctaKtly. to pay
for thcir iniports Ironi the East. Although cXiICt figures are not available this can be
illustrated with sonic cslin~atcsaviliii~blcregarding cxports of East lndia Company.
Hetwccn 1660 ;~nd16W. the value of' gold and silver exported to the East was always
at Icaht 66 per cent of the total exports. I n the decade 1680-89 it was as much as 87
per cent. I n the first half of the eighteenth cen!ury the English sent silver worth 270
 FROM THB E A S T ~ ~ M P A P ( ! JRECORDS .4T foR-r
. . ST GEQRGE
B ~ X B TorB DIAMORDS,
B P B ~ O U Bmoms, &A.

Lioenced by the Preeident sod Council of Fort St. George to be shipped 09

$be Prince af W a h , Captain John Pelly Junior, by the following p e m m i q return
f o r - w r d and an other account8 :-
. By Ibdall FQwL~,
oonsignBdto Jndah Supino and Son or order :-
a. P-
-
-
a 8. hu. o.
Qae $4 of diamnndn, raloe nine hundred and fifhy
-three m., (hirby thmo [&I fanams, and oeventy
371 10 6 988 80 76
six C d h , or...
1n 1.11 r d o n ~ tor*;box ofG ~ I
bet& import;,>
aapo 1741, pet Caor.
t , babe of dismondn, ralnd two thou-d
one ' h d d and nine&, eix p s g o d ~r,v e n fan-
and t~ O I U ~or 841'17 7 a,i96 7.4a

-
$m fa11 re~arnilSJ. a box br;d;i m s
mpo 1741, per Caror.
By Nioolu Maria 0<wcngnBdto J d a h Sapino & Son or
ordm :-
One bald of dimnoads, vdae eight h a a d d and one
two fenumn and twenty ornh, or 8(n 1 6 801 2 20
mi ntmm ior of ad i n 4
auno 1741, r Cawtar.
.% ~ i o o l uy o n u a n k ~ s n o nF I ~ Amn.imd to David
DeCubto om order :-
hre balr) d dimondr, value nix hundred ud M y
niao p w , h g n fanaw end twenty
*n mta10.6 for one o a a d
imqmtd MBO 1741, por C&14t.
oat- or 248 18 0 6-40 1 1 80

- - - - - - -.-

L r t b r ~lo Elgtt St. George, 1684-86

--
P.S. In rvgard y' : bofore my In-
vdicos may reach yo': hands if the Sloops
~bould meet w'" : a quick passage, I
thoqght convenient to give yon ye : num-
*re of the Cloth as *ell cu, tho Sorte
hadtin on Phch of tl~emViz' : on Sloop
~ o y a l James
l 90 Bales.
, L. C. B. No: 6 Bales 40 Long cloth blue.
S. A. 0.No: 3 Bales 10 : Salamporcs ordinaiy.
B. N. T. No: 28 Bales :{
23 Bales 7 3
29 Bdee 5 Betkloea.
L. C. 0.No : 2 Bales 10 Long cloth ordinary.
P. E. R. 0.No: 1 Bales 8 Percullass ordinary.
2 Balee 7 : ditto :
On Sloop William 122 Balee.
L. C. B. No 6 Bales 52 Long cloth blue.
L. C. 0.N" 2 Bales 50 Long Cloth ordnj :
N" 1 Bales 10 ditto.
B. E. T. No 26 Bales 10 Betteeloes.
-
Balee ... 122 R: J:
-
4
, SP9Cll"lEN oHDI5R @F c & A T H EXRRTfU
F R O r ) I N D i k ' a ] A N E A S T l f l D / ~ce&phl\ry
NEQC HRJT
I I. From the E.I.<'. rcord*.
lakhs and other goods worth only 90 lakhs to India. However, with the advent of the ):wopcm c'dmid Puwm
industrial revolution in the I a t ~ part
r of the eighteenth century the trend started .
reversing. Between 1760 and 1809silver worth 140 lakhs was exported while the
value of other goods rose to 485 lakhs.
Under the mercantilist belief the export of bullion out of a country was considered
bad for the country's economy hnd prosperity. The European companies were facing
severe criticism for doing this a d were under great pressure to find other ways of
paying for their trade in Eastern gods. A partial solution to the problem was found
by capturing the intra-Asian trade. The Europeans made good profit by bringing
Spice lshnds cloves and Japanese cupper to lndia and China, lndian cotton textiles
to South East Asia and Persian carpets to lndia thereby paying for some of their
imports from India. However. only in the later part of eighteenth century when the
English after receiving Bengal revenwr and by exporting of opium to China that a
final solution to the problem of the dcfiiit trade was found.
I n the sixtetnth and the sevsnteenth centuries the bulk of the profit^ of European
companies came from the eok of c~rn~odities brought from Asia to the markets of
Europe. Africa. the A ricen continents and to the Middle Past. A triangular trade

background.
7
had developed betwee Europe, the Americas with their plantations based on slavery
and the West Coast o Africa. Trade with the E a ~prscetded
t against this

We have seen that nght from thq start spices were very high on the lh of
commodities demanded by the Europeans. Among spi- it w~,pepperaldm which
dominated the trade in the sixteenth dnd seventeenth ccntutks. HoWFdr, towards,
the end of the seventeenth ceiury the commodity structure of trade started
changing. Cotton textiles, silk and saltpetre steadily rose in importanca in place of
spices. lndian textiks were regularly dernahdcd by the English and the Dutch .
corhpanks from the second decade of the 17th century.
We have already noted the importance of lndian textiles in the trdde with other parts
of Asia whcrc it was demrnded as a barter commodity. Indian teitilcs are fanlous
for their range. variety and quality. Gujarat. Coromandel and &gal produced a
large variety of plain. dyed. striped, chintz and embtoidered clotti, Indian silks and '
muslin both fine and coarse found markets in Europe as well as in Africa and the
West Indies. The English Company's demand stood at 12,000 pieces of textiks from ,
Suriit in 1614. In 1664. it imported a total of over 750.000 picas and their value
accounted for 73 pe.r cent of the entire trade of the company. By the last decade of
thc ccntury the share of textiles jumped to 83 per cent of the total value. By that
time fine Rengal muslims nd Coromandel Chintt were in great demand among the
7
 upper cla\\c\ in. I uropc. 'I he increase o f imports alarmed indigenous English
nirlnulacturcrs who put political prcssurc on the government to prohibit import of
lndiad tcxtilcs. IJroicctiooist rcgulationa were therefore. passed in 1700. 1721 and
furthclr in 1735. Apart from this raw silk also established itself in the market in the
second half of the rcvcntcenth century.
Another commodity which was increasingly demandcd hv FhC Frenrh and the
Ehgliqh was d t p e t r e . It was used as a necessary ingrediknt in the manufacture of
gunpowder. tn additioh to being a strategic raw material saltpetre being a bulky and
Navy tcommodity it could be used to stabilise the stiips by acting as ballast material.
Rtnalernerged as a major centre of saltpetre tt'ade. Anbther article of import was
indigotwhich was rcquircd as a dyestuff as it was cheap 'and easier to use compared
to woQd which was traditionally used far blue colouring in E u ~ o p e .

7.1 1 TOWARDS THE CONOUEST OF-INDIA

Hy tha early eighteenth century the English and the ~ r e n c bcompanies had settled

f
drwn Cith a profitable trade. Madws. Bombay and Cale ta grew into flourishifig

.:
cities ds a result of British scttlements. attracting Indian 'c pitah skills and merchants:
This id reflected in thcir population growth.
In 1744. Homhay had roughly 70,000 people and 6y the m ddlc of the century
Calcutta hid i~hout?(Ml.OOO and Madras 300.000 people. he Mughal empire after
the dcilth ol Aur:~llg/c.h war t'ollowcul by a decentralisatio of pdwcr with the
cnicrgdnck of' a Ii~rgcnunibcr of smaller states. The English and thc IZrcnch
cooipahich wcrc secing a political and tertitorial future in India. 'l'hc French and the
English had hecomc poliiic;~~ rivals in Europe and in North A'merican colonies. India
was i~ prixcd p o t c ~ l t ~ci ~
o l o ~ ~The
y . sta'ge was therefore cleared for the Anglo-French
rivalry wlrich hcgan in illc 1740s'and ended in a n eventual victory of' the English and .
then began tllc conquest ol India beginning with Bengal from the battle of Plassey in
1757.. Ip thc following s c t i o n we will see how the change in England's isternal
economy brought changes in its trade relations with the les developed countries and
in the naturc of Furopttan imperialism.

7.112 INDUSTRIAL CAPITALISM A N D IMPERIALISM

I

From the m i d d & . d k i d ~ of

r the 18th century the industrial
~ c v o l u t i o n(sce Unit 6)
not only t h e charact& of the English .economy, but also the pattern of
Englan S external t r a d e a n d relations with colonial dependencies. AS ~ngiand's \
chmge!
industrial manufactures developed, correspondingly, the need to import
manufactured goods from abroad was reduced. Moreover, there came a stage when
the manufactures not only fully supplied the internal market of England but sought 1

export markets. Such export markets existed initially in Europe but as other
countries in the continent b e ~ a nto industrigl,ise therpselves. export market could be
undergone modern ,

36 % . ..
> , .. ,, , ,. 9
 from those countries agricultural commodities, particularly raw materials. So far as Europem Colonial Powers
lndia was concerned this change from merchant capitalist to industrial capitalist
pattern of trade and consequent imperialist policy is clear in the first decades of the
19th century.
J
There was not only a change in the pattern of trade (i.e. the commodity composition
and direction of trade).between England and India, but also in the policies that
structured the economic and political relations between these two countries. For one
thing, the monopoly of trade with lndia given to the English East lndia Company
stood in the way of private business interests of England in Indian trade. Some such
private business operated side by side with the so-called monopoly of the East lndia
Company even in the 18th century-viz. the Free Merchants and the Private trade of
the servants of the Company. But the Company's monopoly hecame an obstacle to
English capital seeking opportunities to operate in India. Ranging from Adam Smith
(Wealth oJ Nations, 1776) to various business lobbies, and attack on the Company's
absolute monopoly rights were mounted leading to the abolition of the monoply of
East India Company in lndian trade'in 1813. The Company's monopoly in China
trade was also abolished later in 1833. Both these abolitions were effected by Charter
Acts, i.e. laws passed by the British Parliament at intervals to renew the Company's
charter of monopoly. While legislation in England'thus opened up lndia to British
business, the increasing political hegemony of the British in early 19th century lndia
aided the process.. Sometimes 'British trade followed their flag, sometimes it was the
other way around - but consistently there was a pattern of British business and
politics being mutually reinforcing in building the British empire in India.

13. An artlsti coaccption of Bdturir Receiving the d c h r of the Emt.

Check Your Progress 2

. .
1) List the important trading ports of India during this period.
............
I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.........................................................................................
2) What were the n ~ d j o rgoods that -ere exported f r o m India to other courltries'?

3) l?iscuss Ihe chnrigca' ill the ~ratlcrriol trade :-ti' the Eusopc;rrr curnpanics witti lrldia
d8uringthe 17 and lSth Centuries. %rite )our ansivcr. ill 100 ~ 1 ~ r . d ~ .

4) Whnt is the basic difference between ~ ~ l e r c h n capitalist

nt and ind~istrialcapitiiliqt it1
the n a t u ~ eof exlernal trade'!

7.13 LET US S U M UP
In this lJnit we have seen that the growth in trade and commerce in Europe led to
the search for new markets and material resources by the various colonial powers.
Asia. Africa and America with potentiality of good markets and lot of untapped
resources were the ideal grounds for the colonial powers to make their fortune.
Different trading companies were formed in Europe to carry out the external trade.
However very soon because of clash of interests many sided struggles started among
European colonial powers, the Portuguese, !he Dutch, the French and the English.
 established its monopoly over Indian trade. The nature and pattern of England's
external trade was linked with the change from mercantile to industrial capitalism in
England.

7.14 KEY WORDS

Balance of Tnde : The difference in export and import in the overseas trade.
Firman : An order issued by the emperor.

7.15 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
I) a) See Sec. 7.1
b) See Sec. 7.3
c) See Sec. 7.4
d) See Sec. 7.6 .
e) See Sec. 7.7 ,
2) Your answer s h o k iticlude the coming of English representarwe to the Mughal
-. court, receiving of firman for trade, establishment of English factories at Surat.
Madras, Bombay, Orissa, Bengal, etc. See Sec. 7.7.
Check Your Progress 2
I) Find out the answer applying your own knowledge.
2) See Secs. 7.6, 7.7, 7.10.
3) You have to focus on spice trade, cotton, textiles, silk and saltpetre which later
on replaced the dominance of spice trade, initially the European merchants used
gold and silver to pay for their imports from the East, with the industrial
revolution the pattern completely changed. See Sec. 7.10.
4) Merchant capitalists promoted export of manufactured goods from India,
Industrial capitalists promoted import of manufactured goods to India. See
Sec. 7.12

Same Useful Books For This Block

. J.M. Roberts : The Pelican History of the World.

Carlo M. Cipolla : Fontana Economic History of 'Europe, Volume-3.
E.J. Hobsbawm : Industry and Empire.