The Charter of 1600 granted the East India Company the exclusive privilege of trading East of the Cape of Good Hope for a period of 15 years.
The Charter provided for the management of the Company by a committee consisting of a Governor, a Deputy-Governor, and 24 members to be elected by a general body of the merchants forming the Company. This committee later on came to be known as the ‘Court of Directors’ and its members as ‘Directors’.
The East Indian Company soon became the most important trading company of England. Between 1601 and 1612 its rate of profit recorded about 20 per cent per annum.
Profits of the East Indian Company were derived both from trade and from piracy, there was no clear dividing line between the two at the time.
In 1612, the Company made a profit of £ 1,000,000 on a capital of 200,000.
The Company was a strictly closed corporation or a monopoly. No non-member was allowed to trade with the East or to share in its high profits.
From the very beginning, the English manufacturers and those merchants who could not secure a place in the ranks of the monopoly companies carried on a vigorous campaign against royal monopolies like the Fast India Company. But the monarchs threw their influence behind the big companies who gave heavy bribes to them and to other influential political leaders.
From 1609 to 1676, the Company gave loans amounting to £ 170,000 to Charles II. In return, Charles II granted it a series of Charters confirming its previous privileges, empowering it to build forts, raise troops, make war and peace with the powers of the East, and authorizing its servants in India to administer justice to all Englishmen and others living in English settlements. Thus the Company occulted extensive military and judicial powers.
Many English merchants continued to trade in Asia in spite of the monopoly of the East India Company. They called themselves ‘Free Merchants’ while the Company called them Interlopers.’
The Interlopers in the end, compelled the Company to take them into partnership.
A change of fortunes occurred in 1688 when Parliament became supreme in England as a result of the Revolution of 1688, which overthrew the Stuart king James II and invited William III and his wife Mary to be the joint sovereign of Britain.
The “Free Merchants” now began to press their case on the public and the Parliament. But the Company defended itself by giving heavy bribes to the King, his ministers, and members of the Parliament. In one year alone it spent 80,000 on bribes, giving the King £ 10,000. In the end, they secured a new Charter in 1693.
The time was running against the Company; its success was short-lived. In 1694, the House of Commons passed a Resolution that “a subjects of England have equal rights to trade in the East Indies, unless prohibited by Act of Parliament.”
The rivals of the Company founded another Company and gave a loan of £ 2,000,000 to the Government at a time when the Old Company could offer only £ 700,000. Consequently, the Parliament granted the monopoly of trade with the East to the New Company.
The Old Company refused to give up its profitable trade so easily. It bought large shares in the New Company to be able to influence its policies. At the same time, its servants in India refused to let the servants of the New Company carry on trade.
Both the New and Old companies faced ruin as a result of their mutual conflict. Finally, in 1702, the two deckled to join forces and together formed a united company.
The new company entitled as ‘The Limited Company of Merchants of England trading to the East Indies’ came into existence in 1708.
Company’s Factories in India
As the East India Company gradually grew in power and tended to acquire the status of a sovereign state in India, the organization of its factories in India too changed and developed accordingly.
A factory of the Company was generally a fortified area within which the warehouses (stores), offices, and houses of the Company’s employees were situated.
The Company’s servants were divided into three ranks −
All three ranked employees lived and dined together as if in a hostel and at Company’s cost.
The Factory with its trade was administered by a Governor-in-Council. The Governor was merely the President of the Council and had no power apart from the Council which took decisions by a majority vote. The Council consisted of senior merchants of the Company.