The East India Company evolved from a small enterprise run by a group of City of London merchants, which in 1600 had been granted a royal charter conferring the monopoly of English trade in the whole of Asia and the Pacific.
Tea, Textiles and Porcelain
At its outset the East India Company was interested in the commercial opportunities offered by the spice islands of Southeast Asia rather than India. However cargoes of Indian cloth sparked growing interest amongst consumers in England. The Company also shipped Chinese merchandise from Canton (Guangzhou): tea, silk, textiles and porcelain. Asian commodities were paid for with exported British woollens and metals, supplemented by silver bullion.
The Company’s operations were underpinned by the ‘factory’ system: when the ships returned to Europe, agents known as ‘factors’ were left behind at trading posts to negotiate with local merchants for the sale of current stocks of goods and the procurement of return cargoes for the next year’s voyage.
Company business was overseen by a central administration in London based around the twenty-four elected members of the Court of Directors The London-based directors of the East India Company who dealt with the daily conduct of the Company's affairs. and a number of specialized committees of the Court. The directors were answerable to the Company shareholders who met regularly at the General Court of Proprietors. The Company sent commercial, political and administrative instructions on its ships to the councils established at its main settlements in Asia, and these councils were in turn responsible for the management of subordinate factories which included Bandar Abbas and Basra.
From Trading Company to Military Power
The East India Company developed beyond a purely commercial enterprise when war between Britain and France spread to India in the mid-1740s. The Company established military supremacy over rival European trading companies and local rulers, culminating in 1757 in the seizure of control of the province of Bengal.
In 1765, the Mughal Emperor granted the Company the diwani (the right to harvest the revenues of Bengal, Bihar and Orissa), which provided funds to bolster the Company’s military presence in the sub-continent. Further territorial acquisitions in India during the late eighteenth and early nineteenth centuries cemented the change in the Company’s role from mere trader to a hybrid sovereign power.
The Board of Control: Parliament Curbs Autonomy
Faced with this transformation and with growing concerns about mismanagement and corruption, the British Parliament decided to place a curb on the Company’s autonomy. From 1784 the Board of Control Formally known as the Board of Commissioners for the Affairs of India, it was established by an Act of Parliament in 1784 to supervise the activities of the East India Company. supervised the East India Company’s administrative and political affairs, but not its commercial business nor the exercise of patronage by the directors.
The Company’s mercantile monopoly came increasingly under attack and its commercial operations were at first scaled down by Parliament after years of pressure from the free trade lobby and then wound up completely by the Charter Act of 1833. The Company continued in its imperial role until 1858 when, in the aftermath of the military and civil rebellion in the north of the sub-continent, the Government of India Act transferred its powers to the India Office The department of the British Government to which the Government of India reported between 1858 and 1947. The successor to the Court of Directors. , a department of state. The EIC was finally dissolved on 1 June 1874, after shareholders received compensation from Parliament.