Note by Eugene Blanchette:  The "English East India Company" as it is now usually known, was called the Honorable East India Company (HEIC) or "John Company" in the 18th and 19th centuries.  The 5 "session" article below was developed by  for the British Library by Anthony Farrington and is taken from a book called Trading Places: The East India Company and Asia 1600-1834 by Anthony Farrington, published by The British Library, 2002. in 2000. 

The Beginnings of the English East India Company

The Company of Merchants of London trading into the East Indies was founded by a charter from Queen Elizabeth I on 31 December 1600, following more than a year of political negotiations and finance raising. The charter named 218 subscribers to the new enterprise, which was granted a monopoly of all English trade in any lands lying east from the Cape of Good Hope to the Straits of Magellan--in other words, the whole of Asia and the Pacific. Spices were the spur for this merchants' venture. They gave taste and flavour to otherwise bland foods, they were mixed, blended and distilled into medicines and perfumes, and their rarity made them extremely valuable. The British Library Sir Thomas Smythe, first governor of the East India Company, engraved by Simon de Passe, London, 1616. (BL shelf-mark OIOC P1489) Trading in them offered the possibility of making a fortune. Fathom: Can you describe the formation of the East India Company? Anthony Farrington: The Company really began as a London reaction to what the Dutch had started to do. Most Asian goods coming into London, principally spices, were coming through the medium of the Levant Company, which had been in existence from the late Elizabethan period and was trading to a lot of the world of the eastern Mediterranean. Spices and other Asian goods were coming up through the Red Sea, carried by Arab and Persian traders into the Western world to be re-distributed. All of a sudden, this Levant trade is seen to be under threat, because the Dutch are imitating the Portuguese and have begun to go round the Cape and bring goods directly into Amsterdam, Rotterdam and the other ports. Pepper is suddenly worth a quarter of what it was before. So it's no coincidence that in the first subscription--that is, the first proposal that is floated in the City of London for having an English East India Company--nearly a quarter of the initial listed names are actually Levant merchants. They are diversifying in the face of a potential commercial threat. Fathom: Are they also responding to political concerns? AF: No. There's not a sense of national purpose. There was perhaps more of that in the Dutch voyages. The Dutch were engaged in this horrific struggle for independence with the Spaniards and, by extension, their fellow Catholic Portuguese. Portugal and Spain are united in 1580, anyway, so from 1580 the ships and the whole Asian trade of Portugal becomes fair game for these emerging northern merchants. Fathom: What is the monopoly that the English East India Company is granted? AF: It takes about 12 months to get the whole thing together, and the subscription is widened to more than 200 merchants and city figures. Then they apply to the Crown for a chartered monopoly. This simply means that this is going to be the only English organisation that is allowed to trade into Asia. You don't put up that kind of risk capital without ensuring you minimise the risk as far as possible and making sure there are no rivals. h all the chartered companies of the late Elizabethan period. The Muscovy Company and the Levant Company also have similar charters of monopoly. Fathom: Why does Elizabeth I grant the monopoly? AF: It has to be good for the common wealth. What's in it for the Crown--apart from rarities and exotic goods, and prestige because you're going to be sending letters to unknown princes who are going to give you presents--is that there's going to be a regular flow of dutiable stuff into the Port of London. The customs revenues were tremendously important. Fathom: How are the first voyages organised? AF: They are financed as separate voyages. The first voyage leaves in February 1601, and like all the early voyages it's intended for Indonesia, for pepper and fine spices. They have quite a horrendous journey though. They are becalmed on the Equator, it takes them a long time to get down to the Cape of Good Hope. By the time the four ships, which have got 500 men on board, get to the tip of South Africa, 100 of them are already dead. They make a couple of landfalls for provisions, including Madagascar, and then their first Asian port is at the tip of Sumatra. Eventually they reach Bantam in 1602, and leave behind a small group of merchants and assistants. But the Dutch had got there before them. The first Dutch voyage was in 1595, and the whole Dutch effort was tremendously capitalised in comparison with the English. Something like five times as much money went into the initial capital of the United East India Company. The Dutch were already great merchant seamen in European waters and, before the break with the Catholic south, the Spanish Netherlands had been doing all the carrying trade out of Lisbon. So they already had developed quite a lot of expertise in Asian commodities. And then also they had got a stranglehold on the Baltic trade--herrings and tar and pitch from northern Europe. Fathom: How does the financing work for the first voyages? AF: For the first 10 years, each voyage is counted as a separate venture, so just as there is a subscription list for the founding of the company, there is a subscription list for each of the first 12 voyages. The British Library Detail from the first subscription list for the English East India Company, 22 September 1599. (BL shelf-mark OIOC B/1, f.6) Theoretically, when the ships came back with their cargo, the cargo was auctioned and then the shareholders in that particular voyage were paid out. By 1615, there was a clumsiness to this operation. What relationship and responsibilities do, say, the men who were left in Asia by voyage number three have to the activities of voyage number five? It was all getting ridiculously complicated. The bookkeeping was becoming a nightmare. By 1615, they amalgamated into a single joint stock, and really this is the beginning of a modern concept of shareholdings and dividends. We have to remember, in terms of the trade in Asia, the Company's trade is a fleabite. We think it's important because of all the things that, with hindsight, we know happened as a result of these European incursions in Asia. Even for the mighty Portuguese, with their forts along East Africa and their base at Goa, it's a fleabite. The total value in Asian trade is enormous, but Asian trade is an internal economy and these newcomers are just unimportant. Fathom: Does the Company try to muscle in on part of that internal trade? AF: They try to imitate the patterns of trade and the patterns of success that they see. They did, of course, have one difference, one advantage. On the whole, Asian trading was peaceful. The Company were turning up in heavily armed ships that could hold their own against any Asian shipping that we know of. And, at the end of the day, they were prepared to enforce their concept of free trade with guns. If they felt that they were not being allowed a fair crack of the whip, they could retaliate against the whole trade of a particular port by blockading it. The men on land were always vulnerable; the sea gives a kind of freedom of action. So in various disputes--for instance, with the Mughal authorities--if there's a dispute on land, and the men of the English factory find themselves thrown into prison--which happened on occasion--then the ships would immediately strangle the trade of the port, which brings people to negotiate. Fathom: Are the English trying to take their own goods out there? AF: Yes, but not with a lot of success. They are under pressure, of course, from the home country. England's main manufacture is this wonderful quality, heavy woollen cloth, called broadcloth, and great fortunes were founded on this cloth. The British Library The arms used by the East India Company until 1709, from a plaster cast of a ceiling boss in Poplar Chapel, East London. (BL shelf-mark OIOC F859) Think of the prosperity and wealth of areas like Yorkshire, East Anglia and Gloucestershire in the fourteenth and fifteenth centuries. It's England's primary export: it's largely exported out into northern Europe through the wool staple, going to the Hanseatic ports, and big money is being made in this trade. Fathom: But there is not much of a market for heavy woollen cloth in east Asia? AF: Absolutely. The broadcloth--which is wonderful quality and very expensive--found a small niche market. It's such fine quality, it's always useful as a present, even if what you do is put it on the floor. You are certainly not going to wear it. It found a little niche market in Japan; even now, you can find specimens of English broadcloth lining the boxes in which sets of samurai armour are kept. The bright red colour turned out to be quite popular for furnishing Chinese temples, because red is a lucky colour. They even managed to sell some in the Yemen, where they were trading for coffee. The supposition there is that it was used mainly to line the insides of wealthy men's tents and as blankets for camels. But you're not going to get rich exporting broadcloth. Fathom: Did the subscribers get rich? Is the East India Company a successful commercial enterprise? AF: It's enormously successful. After the Act of Union in 1707, it becomes Britain's single most successful enterprise. By the eighteenth century, it's head and shoulders above anything else. It becomes the biggest single employer in London. Fathom: When you were setting out, particularly in the early days, what chances have you got of coming back? How risky are the voyages? AF: Ship loss is always dramatic, and especially by the end of the seventeenth century, when you've got greater literacy, the beginnings of popular pamphleteering, it always excites public interest. But ship loss is actually quite small. One of the things I've done is a great catalogue of all the ships' logs. I calculate that about 4,600 separate ship's sailings took place from London over the 200 plus years, and out of those only 5 percent ended in disaster. Nor was disaster always shipwreck. Sometimes the ship gets set on fire because some fool drops a candle next to the gunpowder barrels, this type of thing. So it's actually a fairly rare occurrence, although it's always horrible when it happens. And of course after the first 12 voyages the risk is minimised anyway, because it's a joint stock. The real problem is disease. Again, putting it into context, life is a problem in the seventeenth century. If you're living in London the sanitary conditions that breed disease are not very different from those in the southern hemisphere, it's just the climate that tends to make things worse. Also, you're going to an area where you've got different immunities. The British Library Letter from King James I to an Asian ruler, carried in the East India Company's sixth voyage in 1619. (BL shelf-mark Add.Ch.56456) Going into the tropics you're encountering things you've never met before. The very first voyage left three merchants at Bantam; only one of them survived, the first two died within seven or eight months. And this is a normal pattern. You could expect to lose at least a third of the overseas personnel in any given year. As well as the waterborne sanitation-linked diseases, like cholera and typhoid, you've got the ravages of malaria, and then there are all the terrible things that are done to the human body by excessive drinking. Drink played a very, very large part in the lives of most European people well into the eighteenth century. That's the culture. Water is not fit to drink and, of course, particularly in Southeast Asia, there are attractive new spirits to discover--arak, toddy--and the quantities consumed are really quite amazing. They also stuck to a terrible diet, as far as one can tell, particularly the men at the level of the seamen, the working-class guys. Even in harbour they would be eating away at mostly salt pork and they objected to being given rice. Fathom: How do monarchy and parliament regard the Company's success? Is it seen increasingly as an imperial adventure? AF: The imperial aspirations only enter the picture much later; that's a long way in the future. They're happy to have the revenue coming in. There are hiccups, obviously, in the civil war period, simply because London finds itself caught between the King and Parliament, and trade in general declines. But the company survives. Cromwell seems to be that much more outwardly aggressive: He really starts to think about Britain's pride. There is the war against the Dutch, which is partly reflecting Dutch claims and aggression towards the English in Southeast Asia, and English counterclaims to freedom of the seas. But certainly by the end of the seventeenth century, the Company is just running a very, very successful private enterprise, which has fixed assets in the form of houses and warehouses, and a couple of fortifications in Asia. And if you hold the shares, it's a very safe, regular dividend investment. By the eighteenth century, it's like gilts--it's as safe as houses. This session is adapted from an interview with Anthony Farrington conducted in May 2002.