5 Fast Facts About the East India Company

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The British East India Company was a private corporation formed in December 1600 to establish a British presence in the lucrative Indian spice trade, which until then had been monopolized by Spain and Portugal. The company eventually became an immensely powerful agent of British imperialism in South Asia and the de facto colonial ruler of large parts of India. Partly because of endemic corruption, the company was gradually deprived of its commercial monopoly and political control, and its Indian possessions were nationalized by the British crown in 1858. It was formally dissolved in 1874 by the East India Stock Dividend Redemption Act (1873).

1. In the 17th and 18th centuries, the East India Company relied on slave labor and trafficked in slaves from West and East Africa, especially Mozambique and Madagascar, transporting them to its holdings in India and Indonesia as well as to the island of St. Helena in the Atlantic Ocean. Although its slave traffic was small in comparison with transatlantic slave-trading enterprises such as the Royal African Company, the East India Company crucially relied on transfers of slaves with specialized skills and experience to manage its far-flung territories.

2. The East India Company controlled its own army, which by 1800 comprised some 200,000 soldiers, more than twice the membership of the British Army at that time. The company used its armed force to subdue Indian states and principalities with which it had initially entered into trading agreements, to enforce ruinous taxation, to carry out officially sanctioned looting, and to protect its economic exploitation of both skilled and unskilled Indian labor. The company’s army played a notorious role in the unsuccessful Indian Uprising (also called the Indian Mutiny) of 1857–58, in which Indian soldiers in the company’s employ led an armed revolt against their British officers that quickly gained popular support as a war for Indian independence. During more than a year of fighting, both sides committed atrocities, including massacres of civilians, though the company’s reprisals ultimately far outweighed the violence of the rebels. The rebellion brought about the effective abolishment of the East India Company in 1858.

3. Beginning in the early 19th century, the East India Company illegally sold opium to China to finance its purchases of Indian tea and other goods. Chinese opposition to that trade precipitated the First and Second Opium Wars (1839–42; 1856–60), in both of which British forces were victorious.

4. The company’s management was remarkably efficient and economical. During its first 20 years the East India Company was run from the home of its governor, Sir Thomas Smythe, and had a permanent staff of only six. In 1700 it operated with 35 permanent employees in its small London office. In 1785 it controlled a vast empire of millions of people with a permanent London staff of 159.

5. Following several years of misrule and a massive famine (1770) in Bengal, where the company had installed a puppet regime in 1757, the company’s land revenues fell precipitously, forcing it to appeal (1772) for an emergency loan of £1 million to avoid bankruptcy. Although the East India Company was bailed out by the British government, harsh criticism and investigations by parliamentary committees led to government oversight of its management (the Regulating Act of 1773) and later to government control of political policy in India (the India Act of 1784).