Chapter 2: From Trade to Territory - The Company Establishes Power

Key Historical Context

• Aurangzeb: Last powerful Mughal ruler, controlled a large part of present-day India.
• Post-1707: After his death, regional governors (subedars) and zamindars began to assert authority, leading to the emergence of regional kingdoms.
• Political Shift: By the late 18th century, a new power was rising—the British.

East India Company's Formation

• Year 1600: East India Company (EIC) chartered by Queen Elizabeth I.
• Exclusive Trading Rights: EIC granted the sole right to trade with the East, preventing other English companies from competing.
• Profit Strategy: Focused on acquiring goods cheaply and selling them at higher prices (mercantile trading).

Competition in Eastern Markets

• European Presence:
  • Portuguese: Established bases in India, notably Goa (Vasco da Gama discovered route in 1498).
  • Dutch & French: Entered the Indian Ocean trade by early 17th century.
• High Demand Goods:
  • Fine quality cotton and silk from India.
  • Spices like pepper, cloves, cardamom, cinnamon.
• Price Wars: Competition among companies increased prices, reducing profits.
• Elimination of Rivals: Companies sank ships and blockaded routes to secure trade dominance, leading to conflict with local rulers.

Establishing Trade in Bengal

• First English Factory:
  • Established in Hukli in 1651.
  • Served as a base for traders (known as factors).
• Development:
  • Factory included a warehouse and offices for company officials.
  • Expansion led to merchants settling nearby.
• Fortification:
  • By 1696, a fort was built around the settlement.
  • In 1698, the company secured zamindari rights over three villages, including Calicutta (Calcutta/Kolkata).
• Royal Edict (Farman):
  • Aurangzeb issued a Farman allowing duty-free trade for EIC.
  • Company officials engaged in private trade were expected to pay duties but refused, leading to significant loss of revenue for Bengal.

Conclusion

• Impact of EIC's Actions:
  • The company's actions created tensions with local rulers, particularly with the Nawab of Bengal, Murshid Guli Khan, due to the EIC's manipulation of trade rights and refusal to pay duties.