Administrating the East India Company

East India Company was a private company that received Charters from the British parliament for exclusive rights to ‘trade’ with India. With the corrupt EIC officials amassing huge wealth, the other companies in England began brewing in anger. What will the British Parliament do now?
The British East India Company became the world’s strongest monopoly; Image source: History.com

The British East India Company became the world’s strongest monopoly; Image source: History.com

After the implementation of the Regulating Act of 1773 and the Pitts India Act, of 1784 came the Charter Act of 1793. This act was aimed at solidifying British control over India. Like the Act nullified all personal laws put in place by native rulers instead governance in India would now be based on the written laws by the British.

The laws related to the rights of person and property were to be printed in Indian languages so that people in India could understand them well. It also mentioned that the salaries of the Governor-General and his council would be paid from the Indian revenue and not from the British treasury. So, technically India was paying the people responsible for its oppression.

The next was the Charter Act of 1813. Now, the time period during which the charter came into force is quite interesting. This was the time when the industrial revolution picked up a pace in Britain. British enterprises were coming up and there was a boom in the manufacturing of goods. But in order to sell these manufactured goods, a market was required.

Generally, domestic demand isn't enough to absorb the industrial boom. Since the East India Company was the only company with the right to trade with India, other private enterprises didn't have the option of selling in India. For them, the major avenues were selling in the neighbouring European nations. But the beginning of the 1800s saw the rise of a formidable force that stopped the British trade in its track- the rise of Napolean Bonaparte.

Napolean was a French military leader who initiated the foreign policy of the ‘continental system,’ a system aimed against Britain. Any country joining the continental system by the decree of Berlin and the Decree of Milan must stop its trade with Britain. This badly hit the industrialists of Britain, as they had no market for their goods.

These industrialists began pressurizing the British parliament to revoke the exclusive rights of the East India Company and opening India for the sale of their goods. Also, Adam Smith’s theory about the benefits of free trade was getting very popular. The free trade theory suggests that the market should function freely and monopolies will lead to inefficiencies.

The British parliament too was annoyed by the amount of corruption in the East India Company, which is why the Charter of 1813 did renew their contract for the next 20 years, but this time, the exclusive rights were abolished (the only exception was the tea trade in India).

Now, apart from the East India Company many other British companies flooded India. This greatly changed the composition in India and you could see it as a major step towards strengthening colonization. Earlier, the only motive was ‘trade’ but now licensed Christian missionaries came to India with the aim of spreading Christianity.

This Act also allotted India a yearly fund of 1 lac rupees for the spread of education in India. I think it's important to mention that this provision wasn’t fulfilled until the next 20 years.

This Act was only the beginning of the initiative to curb the influence and power of the East India Company. In the later stories, we will see how the privileges of the East India Company were gradually lessened until the British Crown fully takes over the control after the Revolt of 1857.

Until then, stay tuned!

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