No More Learning

Troubles over Brazil brought about a renewal of
the war in 1652, upon the expiration of the truce. Colombo fell in
May, 1656, and Jaffna (the last Portuguese stronghold in Ceylon)
two years later; while on the coast of India Negapatam and all the
Portuguese possessions on the Malabar littoral to the southward of
Goa were taken between 1658 and 1663. Peace between the two
countries had been concluded in 1661; but the news of this did not
1 English Factories, 1634-6, p. 88.


## p. 86 (#114) #############################################

86
THE EAST INDIA COMPANY, 1600-1740
come in time to save Cochin and Kannanur. The only consolation
for the Portuguese was that Dutch schemes for the conquest of their
remaining settlements were thus foiled; while the danger of attacks
in the future was warded off by an English guarantee, as related below.
Meanwhile England had in 1652 become involved in a war with
Holland. At home the Commonwealth fleet proved victorious, after
a hard struggle, and Cromwell was able to dictate practically his own
terms when peace was made in 1654. In the East, however, the
interests of the English had suffered considerably, owing to the pre-
ponderance of Dutch naval power in those waters. Though the
Company's settlements were not attacked, for fear of offending the
monarchs in whose dominions they were situated, ship after ship feli
into the hands of the Hollanders, with the result that not only was
heavy loss inflicted upon the Company but English prestige suffered
greatly, both in India and in Persia. There was, however, some com-
pensation in the outcome of the war; for the commissioners appointed
under the Treaty of Westminster to assess damages awarded the
English Company £85,000 1 in settlement of its claims against its
Dutch rival, decreed the restitution of the island of Pulo Run 2 (in
the Bandas), and provided for the payment of damages to the repre-
sentatives of those Englishmen who had suffered at Amboina in 1623.
Of these decisions the most unpalatable to the Dutch was the second,
since to allow the English a footing in the Spice Islands meant a
serious breach in the Dutch monopoly of cloves. Every mode of
evasion was therefore practised; and although the surrender was again
stipulated in a fresh treaty concluded in 1662, it was not until March,
1665, that the island was actually made over-only to be retaken in
the following November, on the receipt of the news of the outbreak
of the Second Dutch War. The long-standing dispute was finally
settled by the peace of 1667, which assigned the island to Holland.
A further consequence of the hostilities with the Dutch in 1652-4
was a tendency on the part of both English and Portuguese in the
East to draw together for mutual support; and also an increased
desire on the part of the former to find some defensible spot on the
western coast of India, where they could be secure against both the
exactions of Indian officials and the attacks of European foes. The
provision of such a retreat came, however, not from any action on
the part of the East India Company but from the turn of events upon
the accession of Charles II. By a secret article of the marriage treaty
1 of tnis amount the Commonwealth government at once borrowed £50,000,
and the loan was never repaid (Court Minutes of the E. India Co. , 1655-9, p. v).
2 Thi: island had been made over to the English by its inhabitants in 1610,
in hopes of protection against the Dutch, who, however, took advantage of the
subsequent hostilities to effect its capture. By the Anglo-Dutch accord of 1623
it was recognised as English property, but the weakness of the East India Com-
pany was such that no serious attempt was made to take over so distant a
possession, though proposals to that effect were mooted from time to time:


## p. 87 (#115) #############################################

CO-OPERATION WITH THE PORTUGUESE
87
with Portugal (1661) England guaranteed the Portuguese possessions
in the East against the Dutch, and to facilitate this the island of
Bombay was included in the dowry of the new queen. Owing to
difficulties placed in the way by the local officials, to whom the
arrangement was distasteful, the island was not made over to the
king's representatives until February, 1665. Experience soon showed
that the outlay on the maintenance and development of the new
possession would make too heavy a demand upon the royal purse;
and on 27 March, 1668, in consideration of a temporary loan of
£50,000 at 6 per cent. , Charles transferred it to the Company at a
quitrent of £10 per annum. The actual date of the handing over
was 23 September in the same year.
It is time now to turn our attention to more peaceful topics and
to note the progress made by English commerce in India and the
neighbouring countries. The friendly relations established with the
Portuguese by the Convention of Goa (1635) much improved the
position of the East India Company's servants in those regions. It
became possible to dispatch ships singly to and from England and to
develop unhindered the port-to-port traffic, using for this purpose
mainly small India-built vessels in lieu of the cumbrous and expensive
ships built for the long sea-voyage out and home. The Malabar Coast,
too, was opened to English trade, with the result that saltpetre,
pepper, cardamoms, and cassia lignea (wild cinnamon) from those
parts figured largely in the cargoes of the homeward-bound vessels.
The tightening of the Dutch monopoly over the pepper and spice trade
of the Far East and Ceylon drove the English to rely chiefly on the
Malabar trade for these products. In Gujarat agriculture and the
textile industry had not yet recovered from the terrible famine of
1630-1, and the Company's factors were forced to look for fresh sources
of supply to make good the deficiency. Now that the menace of the
Portuguese flotilla at Maskat was removed, trade was extended
to Lahribandar and Tatta in the Indus delta (1635), and to Basra
(1640); while at the same time the commerce with Gombroon was
largely developed, partly owing to the eagerness with which Asiatic
merchants availed themselves of the English and Dutch vessels for
transporting their goods between India and Persia, especially during
the long war between those two countries over the possession of
Kandahar. Ventures were even made to Macao and Manilla; but
these were discouraged by the Portuguese and Spaniards respectively,
as soon as it was found that the English were not willing to risk trouble
with the Dutch by carrying contraband of war; and so no permanent
trade resulted. Further, we may reckon among the consequences of
the Anglo-Portuguese entente the establishment of an English settle-
ment at Madraspatam, on the Coromandel Coast; for, had hostilities
1 The payment of this rent has been traced down to the year 1730. After
that the treasury seems to have neglected to apply for it.


## p. 88 (#116) #############################################

88
THE EAST INDIA COMPANY, 1600-1740
a
continued, it would scarcely have been prudent to settle so near the
Portuguese fortress of St Thomé. Regarding this development
something must now be said.
We have already noted that as early as 1611 the English had
followed the example of the Dutch in starting a factory at Masuli-
patam, the chief port of the kingdom of Golconda. The trade here was
valuable, particularly in piece-goods, for export to Persia and to
Bantam; while the grant in 1634 of freedom from all duties gave the
Company a considerable advantage over their competitors, including
the Dutch. It had already been discovered, however, that most of
the piece-goods wanted for the trade of the Far East were procurable
at cheaper rates in the Hindu territory to the southwards, under the
dominion of the raja of the Carnatic, the shrunken remnant of the
once extensive kingdom of Vijayanagar; and in 1626 the factors at
Masulipatam established a subsidiary settlement at Armagon, a little to
the northward of the Dutch fortress at Pulicat. This place proved to
have many disadvantages, especially in the shallowness and exposed
nature of the roadstead; and so in 1639 an agreement was made with
a local ruler a little further south, by which permission was obtained
to erect a fortified factory close to the little town of Madraspatam.
Thither the English removed from Armagon in February, 1640; and
in September, 1641, Fort St George (as the new station was named)
superseded Masulipatam as their headquarters on the Coromandel
Coast. In thus acquiring. a fortified settlement-a privilege which
would never have been granted in Golconda territory—the factors
were only just in time; for the Hindu kingdom of the Carnatic was
already tottering under the attacks of its Muhammadan neighbours,
and in 1647 the district round Madras fell into the hands of Mir
Jumla, the leader of the Golconda forces. The English, however, were
on good terms with him and easily procured his confirmation of their
privileges, which included the government of Madraspatam, subject
to sharing with the royal treasury the customs paid by strangers. ?
By this time English trade on the eastern side of India had been
extended from Masulipatam to the seaports of Orissa, and factories
had been started (1633) at Hariharpur (in the Mahanadi delta) and
at Balasore. In 1650-1, following the example of the Dutch, this
commerce was carried into Bengal itself and a settlement made at
Hugli. Before long factories were planted at Patna and Kasimbazar;
but for some years little benefit resulted to the Company, owing to
the large amount of private trade carried on by its servants. However,
the commerce on the eastern side of India grew steadily in importance
>
1 This division of the customs continued until 1658, when it was agreed
that an annual sum of 380 pagodas should be paid as the royal share. After
much dispute, the agreement was revised in 1672 and the amount was raised to
1200 pagodas per annum. For righty years that sum was regularly paid, and
then it was remitted altogether by Muhammad 'Ali, nawab of the Carnatic.


## p. 89 (#117) #############################################

COROMANDEL FACTORIES
89
as the merits of the Coromandel piece-goods came to be recognised
at home and as Bengal sugar and saltpetre were likewise found to be
in demand; and a considerable trade was consequently established
between the coast and England. In 1652, under the stress of the war
with the Dutch, the seat of the eastern presidency was removed from
Bantam to Fort St George. Three years after, however, came the
partial collapse of the Company described on a later page. Orders
were sent out for the abandonment of the factories in Bengal and the
reduction of those on the coast to two, viz. Fort St George and
Masulipatam, with a corresponding diminution of staff. From a
presidency the coast became once more an agency, though Greenhill,
who had succeeded to the post of president before the Company's
orders arrived, was generally accorded the higher title until his death
at the beginning of 1659. The period of his administration was the
low-water mark of the Company's trade in those parts, owing to the
financial weakness at home and the competition of private ventures.
The revival that followed the grant by Cromwell of a new charter
will be the theme of a later page.
Meanwhile we must look back to 1635 and follow the course of
the Company's affairs at home. The Convention of Goa, which produced
such beneficial results in the East, had in England the unexpected
result of arousing a dangerous competition. Financially the success
of the Company had by no means answered expectations. The earliest
voyages, it is true, had proved very profitable; but when the full
burden of maintaining so many factories was felt, to say nothing of
the losses caused by Dutch competition and the resulting quarrels,
the profits fell off and the capital required to carry on the trade was
raised with ever-increasing difficulty. The system adopted—that of ter-
minable stocks—each of which was wounded up in turn and its assets
distributed, had many drawbacks. The plan was perhaps the only
practicable one; but it tended to prevent the adoption of any con-
tinuous 'or long-sighted policy, and it concentrated attention on
immediate profits; while, since it necessitated a fresh subscription
every few years, it exposed the Company to the effects of any string-
ency prevailing in the money market. Owing largely to political
troubles, the period from 1636 to 1660 was one of general depression
of trade, especially towards the end of the Commonwealth; and this
depression, together with the practical loss of its monopoly, went
perilously near to extinguishing the Company. During the twenty
years following 1636 the capital raised for four successive Stocks
aggregated only about £600,000, whereas in 1631 a single subscription
(that for the Third Joint Stock) had produced over £ 420,000, while
further back still (1617) no less a sum than £1,600,000 had been
subscribed for the Second Joint Stock.
These financial difficulties, and the small amount of profit earned
in comparison with the Dutch East India Company, evoked much
criticism of the Company's general policy, together with some im-


## p. 90 (#118) #############################################

90
THE EAST INDIA COMPANY, 1600-1740
patience that so large a sphere of possible commercial activity should
be monopolised by a body that was apparently incapable of dealing
with more than a portion of it. The colonising movement-stimulated
by the success of the plantations on the American seaboard and in the
West India islands—produced suggestions that something more was
required than the leaving of a few factors here and there in the East
Indies, and that English trade in those regions would never flourish
until it was based, as in the case of the Dutch and the Portuguese,
upon actual settlements independent of the caprice of local rulers and
strong enough to resist their attacks. The prospect of a considerable
extension of commerce as the result of the Convention of Goa, and
the apparent inability of the existing Company to take full advantage
of this opportunity, provided a plausible excuse for those who were
eager to engage in the trade on their own lines; and by the close of
the same year (1635) a rival body-commonly known as Courteen's
Association, from the name of its principal shareholder—was forme:
in London to trade with China, Japan, the Malabar Coast, and other
parts in which the East India Company had not yet established
factories. Endymion Porter, one of the royal favourites, was an active
supporter of the project, and it was doubtless owing in great part to
his influence that King Charles lent his countenance to the new asso-
ciation by issuing a royal commission for the first voyage and by
granting to Courteen and his partners letters-patent which practically
established them as a rival East India Company (1637). The pro-
moters of the new venture, however, soon found their expectations
disappointed. The result of the first voyage was a heavy loss, for the
leaders, Weddell and Mountney, disappeared with their two vessels
beneath the waves of the Indian Ocean on their homeward way in
1639. Sir William Courteen had died shortly after the departure of
that fleet, and his son had succeeded to a heritage much encumbered
by the cost of the venture; still, he struggled hard to maintain the
trade, with the assistance of friends and of other merchants anxious
to compete with the regular Company. Factories were established at
various places on the Malabar Coast–Rajapur, Bhatkal, Karwar;
and Courteen's captains did not hesitate, in spite of the limitations
in his patent, to visit Surat, Gombroon, Basra, and other places within
the sphere of the East India Company. But what was gained in one
direction was lost in another; money was wasted in ill-judged enter-
prises, such as the attempt to establish a colony at St Augustine's Bay
in Madagascar (1645-6); and supplies from home were both irregular
and inadequate, with the result that one factory after another had to
be abandoned. About 1645 Courteen himself withdrew to the con-
tinent to escape the importunities of his creditors; and although other
merchants continued to send out ships under licence from him, their
1
?
1 For this see Foster, “An English settlement in Madagascar," in the English
Historical Review, XXVII, 239.


## p. 91 (#119) #############################################

TROUBLES OF THE COMPANY
91
interference with the operations of the East India Company became
almost negligible.
However, the monopoly of the latter, once broken, was not easily
re-established; especially as, after the outbreak of the Civil War, the
Company was no longer able to invoke the protection of its royal
. charter, and the efforts made to induce the parliament to grant a
fresh one proved fruitless. An attempt in 1649 to raise capital for a
new joint stock was frustrated by the appearance of another rivai
body (consisting partly of those who had acted with Courteen),
headed by Lord Fairfax, with a scheme for establishing colonies in
the East, particularly on Assada (an island off the north-western coast
of Madagascar), on Pulo Run (when it should be recovered from the
Dutch), and on some part of the coast of India-all these being in-
tended to serve as fortified centres of commerce, after the pattern of
Goa and Batavia. Under pressure from the Council of State, both
bodies agreed to a modified scheme under which the trade was con-
tinued by a "United Joint Stock” for five years, much on the previous
lines. The attempt to colonise Assada proved an utter failure, and the
chief outcome of the new stock was the establishment of trade at
Hugli and other inland places in Bengal. In 1653-4 (as already
noted) the position of the English in the East was severely shaken by
the successes of the Dutch in the war that had broken out between
the two nations; and when the five years for which the United Joint
Stock had undertaken to send out ships came to an end, it was found
impossible, in the disturbed state of England, to raise further capital.
Private merchants took advantage of the situation to dispatch a
considerable number of ships and, although the Company did not
altogether cease its operations, they were on a much diminished scale.
The retrenchments made in consequence on the eastern side of India
have been already noted; in the Moghul's dominions Agra and other
inland stations were ordered to be abandoned; and English trade
was practically confined to a few seaports. Such was the state of things
when the grant of a fresh exclusive charter by Cromwell in 1657 put
new life into the Company and enabled an effective trading stock to
be raised.
The commerce of the English in India, though temporarily at a
low ebb, was by this time firmly established; and it may be well to
examine briefly its general character and the conditions under which
it was carried on. When the English commenced to trade in the
dominions of the Moghul, they found there a voluminous and valuable
commerce and a well-developed mercantile system. Expert mer.
chants, often commanding large supplies of capital, were established
in all the principal centres; money could be remitted readily between
1 For a detailed account see Foster, "English commerce with India 1608-58,"
in the Journal of the Royal Society of Arts, 19 April, 1918.


## p. 92 (#120) #############################################

92
THE EAST INDIA COMPANY, 1600-1740
the chief towns by means of bills of exchange; and marine insurance
is mentioned as early as 1622. The chief trend of trade was westwards,
either by land through Kandahar to Persia or else by sea through the
ports of Gujarat and Sind to the Red Sea or the Persian Gulf; but
there was also, until the Dutch monopolised the traffic, a considerable
commerce between. Surat and Achin and other parts of the Eastern
Archipelago. In Western and Northern India the chief areas with
which the Company's servants at first concerned themselves were
Hindustan proper (the valleys of the Jumna and of the upper Ganges)
and the fertile province of Gujarat. Bengal and Bihar were too remote
from the headquarters at Surat; and although in 1620 some factors
were dispatched from Agra to open up trade at Patna, in order to
procure the local piece-goods and Bengal raw silk, the experiment
proved a failure. The factors were withdrawn in the following year
and (as we have seen) it was not until a later period that English
trade was established in Bengal, this time by way of the Coromandel
Coast. Of the Indian products purchased in the earlier years for the
European markets the most important were indigo and cotton goods;
though from 1625 onwards we note a growing demand in England
for saltpetre and Malabar pepper. The indigo was procured mainly
from Sarkhej (near Ahmadabad) or from Biana (near Agra), and its
extensive use in Europe for dyeing purposes made it at first the most
valuable article of the Company's trade. Soon, however, cotton goods,
both the plain and the patterned, came into favour at home, the
former displacing for household use the more expensive linens
imported from Holland and Germany, the latter finding great accept-
ance for hangings and other decorative purposes; insomuch that in
1624 the governor of the Company declared that England was saved
annually a quarter of a million sterling by the substitution of Indian
calicoes for foreign linens. Of miscellaneous exports to England may
be mentioned cotton yarn (largely used for fustians and other cloth
manufactures), drugs, lac (for dyeing), carpets, and (later) sugar.
Raw silk formed also an important item in the lading of the earlier
ships; this, however, was almost entirely of Persian origin. The chief
commodities brought from England were broadcloth, which was
chiefly in demand at court; tin and lead, though after a time the
competition of supplies from the Malay Peninsula made it unprofit-
able to import the former; quicksilver and vermilion; Mediterranean
coral, for which there was a constant demand; ivory, of African
origin; tapestries; gold and silver embroideries; and other articles of
European manufacture. In the main, however, the factors were
forced to rely, for the purchase of Indian commodities, on the impor-
tation of bullion or specie, the favourite form of the latter being
the Spanish rial of eight. Most of the silver thus imported was at
once coined into rupees at the Indian mints. Gold. was occasionally
brought out, either in bar or in coin, but not at first to any great
extent. Subsidiary supplies were obtained from the Far East, and


## p. 93 (#121) #############################################

THE COMPANY'S TRADE
93
later from Guinea (in the form of gold dust). In providing funds for
lading the returning ships, the English merchants were helped by the
profits made on intermediate voyages in Eastern waters, especially
to Mokha and Gombroon; as also by the sums earned by carrying
native merchants and their goods to and from those ports. Nor did
they hesitate to borrow freely from Indian merchants and bankers to
fill their ships, though these loans went far to reduce the profits on
the
trade, owing to the high rates of interest prevailing. The volume
of English trade with India was by no means large. In the first fifteen
years (1615-29) twenty-seven vessels, averaging rather more than
500 tons apiece, were dispatched from Surat to London; while in the
next fifteen (1630-44) the number was only twenty-one. The cost of
the cargoes (which generally included goods from Persia and Bantam)
is only occasionally given, but it seems to have averaged during the
second of these two periods about £50,000 per annum. To this figure
must be added the value of the goods sent home from the Coromandel
Coast, though as regards this not even an estimate can be framed.
Obviously the commerce carried on by the English was only an in-
significant proportion of the total seaborne trade of India; and it was
not by any means equal to that of the Dutch in the same region. The
Company's servants had many difficulties to contend with, even when
the land was at peace and no extraordinary obstacle presented itself,
such as the attempt made in 1633 to constitute the indigo trade a
royal monopoly, or the embargo laid thirteen years later by Prince
Aurangzib upon the sale of saltpetre to the English, for fear lest, as
an, ingredient of gunpowder, it might be used against Muslims. In
the purchase of goods the factors were hampered by the intricacies
of the monetary system and the varying weights and measures; and
these difficulties, combined with their slight knowledge of the various
languages--in which few of them attained much proficiency-
necessitated the employment of brokers, who fleeced both sides
impartially. Again, the producers of the goods were intensely con-
servative, and when the Company wrote for piece-goods of special
sizes or indigo unmixed with sand, great trouble was experienced in
persuading the weavers or indigo-makers to depart from their cus-
tomary practices. There were also difficulties of transport. Goods
from up-country had to be carried down to the port either in ox-carts
or on the backs of camels or oxen. The roads were mostly mere
tracks, impassable in bad weather, and often infested with robbers.
The exaction of petty duties on the way, in spite of imperial farmans,
proved a constant source of dispute; while in the cities, and especially
at the ports, the officials were apt to be overbearing and extortionate.
It is true that the European trader suffered no worse treatment than
the Hindu or the Armenian; indeed, his position was often strong
enough to enable him to resist with success. It was usually easy to
make friends at court by the presentation of Western curiosities, and
the mere threat of appealing to the emperor was sometimes sufficient


## p. 94 (#122) #############################################

94
THE EAST INDIA COMPANY, 1600-1740
to render the local authorities compliant. Above all, the knowledge
that the English and Dutch were mighty at sea and could easily stop
the commerce of a port—thereby injuring the customs revenue-
formed a powerful restraint. As President Blackman explained in
1652 to the governor of a Malabar port that was undergoing discipli-
nary treatment in this way, “God hath given us power on the sea
that, if wee bee wronged on the land, wee may right ourselves there”;
and although such action involved serious risks, neither the English
nor the Dutch hesitated to take it when more peaceable methods
failed.
One great hindrance to the Company's trade, both outwards and
homewards, was the competition of goods brought out or taken home
by its own servants. For some time attempts were made to suppress
this private trade by requiring the factors and ships' officers to sign
penalty bonds and by confiscating their goods when they offended;
later on, lists were drawn up of commodities in which the Company's
employees might legitimately speculate, while leaving to their masters
the trade in the more valuable items. But all was in vain. The articles
which the Company wished to engross were naturally those most in
demand and yielding the highest profits. Men went to the East to
make money-for their meagre wages offered no temptation-and
though some refrained from trenching upon their employers' mono-
polies, most had no scruple in taking advantage of every opportunity
that presented itself. Capital was easily procured from friends at
home or from Indian merchants, who were only too glad to share
thus in the benefits of the privileges accorded to English goods, includ-
ing favourable terms of freight and freedom from customs at Gom-
broon, Fort St George, Masulipatam, and elsewhere. At last, finding
it hopeless to suppress such competition in the port-to-port trade
(which the factors could carry on, if necessary, under the names of
Indian merchants), the Company in 1661 resolved to confine itself to
the direct trade between England and India. Another step in the
same direction was taken in 1664, when the trade, outwards and home-
wards, in jewels, musk, civet, ambergris, etc. , was thrown open,
subject to registration and the payment of a small percentage for
"permission and freight”. After this the Company's efforts were
mainly devoted to preventing at home the exportation or importation
of forbidden goods, seizing them when found and inflicting penalties
on those responsible. Even then its success was by no means great;
and at home, as in the East, its profits suffered considerably by this
illicit traffic.
Cromwell's hesitation to grant a fresh monopoly of Eastern trade
on the lines of previous charters was largely due to an acute difference
of opinion amongst those concerned as to the advisability of continuing
the joint-stock system. A strong party, including several merchants
whose influence with the Protector was considerable, preferred the
"regulated system” followed by the Levant and certain other com-


## p. 95 (#123) #############################################

CROMWELL'S CHARTER
95
panies, permitting members to trade independently. The controversy
lasted long enough to give the system of more or less open trade a
trial; for since the United Joint Stock virtually ceased to send out
capital after 1654, while the charter restrictions were quite inopera-
tive, for about three years the markets of the East were free to all
comers. As we have seen, advantage was taken of this by a number
of merchants, including many members of the Company, to dispatch
ships to the Indies; but the results were far from satisfactory to those
responsible for the ventures. In India itself there ensued a ruinous
competition among their agents, both in the sale of their cargoes and
in the purchase of goods for the return. voyage; while at home the
rush to dispose of the latter produced a disheartening drop in prices.
The merchants concerned soon realised that after all there were
advantages in the old system, under which such competition was
eliminated. A further sobering influence was exerted by the con-
tinued successes of the Dutch and their evident intention of ousting
the Portuguese from their remaining possessions in India. The most
likely method of countering such schemes seemed to be to oppose to
them a united front such as could scarcely be expected from a
"regulated” company; and it may be added that the spectacle of
the prosperity attained by the Dutch East India Company-itself
working by means of a joint stock-probably went far to remove the
prejudice which had been inspired against the system by the poor
results secured by the English Company in recent years. It is there-
fore not surprising to find that by February, 1657, the principal
merchants engaged in the trade, including many of the chief "inter-
lopers", were agreed in desiring the continuance of the joint-stock
system. At the same time the existing Company resolved to endure
no further delay, but to dispose by auction of all its rights and privi-
leges and to withdraw from the trade. This quickly produced a
decision on the part of the Protector and his advisers to grant a charter
substantially on the lines of those of Elizabeth and James I; and on
19 October, 1657, this document passed the great seal. ' Thereupon
a new joint stock of nearly £740,000 was subscribed, though as a
matter of fact only one-half of the capital was ever called up. The
now stock, it is important to note, was to be a permanent one, with
the proviso that periodical valuations (the first being fixed for 1664)
were to be made, when shareholders were to be allowed to withdraw
their proportionate shares of the assets. For the first time, therefore,
the Company acquired a fixed capital, in lieu of successive stocks
raised and distributed at short intervals.
Cromwell's charter of course lost its validity upon the restoration
of the monarchy. King Charles, however, made no difficulty about
granting a fresh one (3 April, 1661), which repeated with certain
.
1 For its terms see Court Minutes, 1655-59, p. xvii.


## p. 96 (#124) #############################################

96
THE EAST INDIA COMPANY, 1600-1740
modifications and additions the grant of 1609. Power was given to
the Company to seize and send home interlopers : to wage war and
conclude peace with non-Christian princes : and to appoint governors,
who, in conjunction with their councils, were to exercise civil and
criminal jurisdiction at the various settlements. Under this authority
the agent at Madras was in 1666 created governor of Fort St George;
while on the acquisition of Bombay the Company in like manner
appointed the Surat president to be governor of that island. In view
of later controversies, it is worth noting that the Company begge
the king to get the new charter confirmed by parliament. Some steps
were taken in that direction, but nothing was achieved. Similarly,
in the case of Cromwell's charter, the Protector had promised to
obtain parliamentary sanction for the Company's privileges, but had
failed to do so.
The East India Company now entered upon a period of great
commercial prosperity, due chiefly to the increasing demand for
calicoes, tea, and coffee. Although for some years it prudently re-
frained from distributing its profits, using them instead to strengthen
its position, a dividend of 20 per cent. on the paid-up capital was
distributed in each of the years 1662-4, and one of double that amount
in 1665. The losses sustained in the two wars with Hoíland (1665-7
and 1672-4) caused a temporary set-back; but in the main a satis-
factory rate of dividend was maintained, and in 1682 the Company
was able not only to pay 50 per cent. in money but also to declare a
bonus of double that figure, crediting each shareholder with the half-
payment still due on the original subscription. John Evelyn, who
had been one of the subscribers in 1657, records in his diary that he
now sold his share of £500 (on which he had paid £250) to the Royal
Society for £750. Had he retained it until 1691, it would have given
him an annual average of nearly 22 per cent. on his original outlay.
The prosperity enjoyed by the Company throughout the reign of
Charles II excited some dissatisfaction among the general body of
English merchants, who felt themselves aggrieved that this profitable
commerce should be confined by royal charter within so narrow a
channel. In the East there were not wanting interlopers who boldly
defied the Company's authority; while at home the right of any
power other than parliament to impose such restrictions upon foreign
trade was continually questioned. Some attempts were made within
the Company itself to widen its membership and give greater elas-
ticity; but these had little result, as the majority held firmly to their
rights of monopoly. In 1683-5 the issue was fought out in the law
courts, with the result that Chief Justice Jeffreys upheld the legality
of the Company's privileges and confirmed its claim to seize inter-
lopers. The victory seemed complete. Sir Josia Child, who was the
dominant figure in the Company's administration, had secured the
favour of both King Charles and his brother James; and the latter
a year after his accession, gave the Company a fresh charter confirm-


## p. 97 (#125) #############################################

ATTACKS ON THE COMPANY
97
ing all its privileges. Then came an unexpected blow in the shape of
the Revolution. The new government was largely dependent on the
Whig party, and the hopes of the opponents of monopoly rose high.
A vigorous campaign was organised in support of the demand for a
revision of the existing system; while the press teemed with pamph-
lets for and against the Company, to whose enemies were now added
the various traders who were affected by its importation of printed
calicoes and manufactured silks. The battle was long and furious.
The Company defended itself ably and at times unscrupulously; but
the arguments of its opponents made a great impression, and public
feeling was on the whole in favour of their claims. Early in 1690 a
parliamentary committee recommended that the trade should be
granted to a new joint-stock body, to be established by act; and two
years later the House of Commons, after the failure of a bill intended
to widen the existing Company by increasing its capital to £1,500,000,
presented an address to King William, praying him to withdraw the
current charter and grant a fresh one on such terms a she might see
fit. This could not be done without three years' notice; but while
discussion was proceeding, the Company itself, by omitting to pay
punctually a tax recently imposed, forfeited its charter. A new grant
was made in October, 1693, which practically carried out the wishes
of parliament by doubling the capital, restricting the amount of stock
that could be held by any one member, and providing that any mer-
chant might join on payment of £5. This arrangement, however,
though it considerably increased the number of shareholders, did not
pacify the Company's opponents.
Attempts were still made to dis-
regard the charter by sending out private ships; and, upon the Com-
pany endeavouring to stop one of these (nominally bound for a
Spanish port), the matter was carried to the House of Commons. A
committee was appointed which reported that the detention was
illegal, and in January, 1694, the House passed a resolution “that all
the subjects of England have equal right to trade to the East Indies.
unless prohibited by Act of Parliament”. This naturally caused much
exultation among the Company's enemies, who were now able to
allege parliamentary authority for trading in the forbidden area.
In 1695 competition was threatened from an unexpected quarter.
Seventy-eight years earlier James I had granted a patent for a Scottish
East India Company, but had soon cancelled it under pressure from
his English subjects. Now the project was revived, and the Scottish
Parliament passed an act incorporating a company for the purpose
of trading to Africa and the East and West Indies. By the terms of
1 Sir William Hunter has suggested (History of British India, II, 310) thi't
this was done of set purpose, Child being convinced that his lavish bribery au
court would enable him to secure a fresh charter on favourable terms. It seems.
however, unlikely that the Company would in this way put itself at the mercy
of the government, and the actual outcome was that it had to concede many
of the demands it had so long resisted.


## p. 98 (#126) #############################################

98
>
THE EAST INDIA COMPANY, 1600-1740
the act half the capital might be held outside Scotland; and when it
was found that £300,000 had been secretly subscribed in London, the
English Company in alarm brought the matter before both Houses
of Parliament. National jealousy came at once into play, with the
result that the Commons resolved to take drastic action against the
subscribers and to impeach the promoters of the scheme. This deter-
red the English members from paying up their subscriptions, and so
the financial position of the new venture was seriously weakened.
The dreaded competition in the East Indies never eventuated, for the
new Company's energies were exhausted in a disastrous attempt to
found a settlement at Darien, in Central America; yet the opposition
of England rankled long in Scottish breasts, despite the fact that one
of the articles for the union of the two kingdoms provided for the
repayment to the shareholders of their capital with interest.
In England the uncertainty prevailing as to the validity of the
East India Company's privileges led that body to apply in 1696 for
parliamentary sanction to its trade; but this proved unsuccessful.
However, two years later the financial needs of King William's gov-
ernment brought the matter to an issue. The monopoly was virtually
put up to auction between the contending bodies. The existing Com-
pany, which, owing to great losses during the war with France, was
not in a position to make a high bid, offered to increase its capital to
£1,500,000, and out of this to make a loan to the government of
£700,000 at 4 per cent. interest; while its competitors undertook to
form a new company which would lend £2,000,000 at 8 per cent.
The latter terms, despite the higher rate of interest, proved the more
attractive, and a bill providing for a loan on these conditions was
introduced. Thereupon the East India Company offered to find the
£2,000,000 required, since its privileges could not be saved on any
other terms; but the proposal came too late, and the bill received the
royal assent in July, 1698. It provided for a subscription of £2,000,000
sterling as a loan to the state, which in return would grant to a
"General Society”, made up of the subscribers, the exclusive right
of trading to the East Indies, with a saving clause allowing the
existing Company to continue its operations until the expiry of the
three years' notice required by its charter, i. e. until September, 1701.
The concession made to the new body was to last until the government
repaid the loan, and this was not to be done until after 1711. The
members of the “General Society” might either trade separately, to
the value each year of the amounts they had severally subscribed, or
they might unite in a fresh joint-stock company to which His Majesty
was empowered to grant a suitable charter. The great bulk of the
subscribers chose the latter alternative, and on 5 September, 1693,
they were accordingly incorporated by royal charter under the style
of "The English Company Trading to the East Indies". The manage
ment was entrusted to twenty-four directors, who were to appoint
from among themselves a chairman and deputy-chairman: and we


## p. 99 (#127) #############################################

THE UNITED COMPANY
99
may note in passing that the shareholders were not required, as in
the earlier Company, to pay a separate sum for admission to the
freedom
The new body set to work with energy. Ships and factors were
dispatched to the East; while a special ambassador, Sir William Norris,
was sent to obtain from the Moghul emperor the grant of all necessary
privileges. However, it soon became apparent that to oust the older
Company from its well-established position was a task beyond the
strength of the new corporation. Its original capital having been lent
to the government and the interest. received thereon being insufficient
to maintain the trade, fresh money had to be raised from the members,
and this proved difficult of accomplishment. Moreover, the "Old
Company" (as it was now termed) had taken the precaution to sub.
scribe, in the name of its treasurer, £315,000 to the loan, thereb:
obtaining the right to trade in his name each year to that amount,
even after the expiration of its privileges; while the difficulty that
the Company would cease to be a corporate body when its notice
expired was surmounted in April, 1700, by obtaining an act permitting
its continuance under its own name until the repayment of the
£2,000,000 loan. This astute move decided the issue. The "New
Company" had already made tentative proposals for an amalgama-
tion, and as time went on this was seen on both sides to be the only
possible solution. Under pressure from the government, an agreement
was reached early in 1702. The actual direction of the trade during
the process of amalgamation was entrusted to a body of “Managers”,
half to be appointed by each Company, the annual exports being
provided in equal proportions by the two bodies. This arrangement
was to last for seven years, during which the servants of both Com-
panies in the East were to clear all debts and wind up the separate
stocks sent out before the union. At the end of the time the Old
Company was to surrender its charter and make over the islands of
Bombay and St Helena to the New Company, the charter of which
was to be henceforth the basis of "The United Company of Merchants
of England Trading to the East Indies". Further, the Old Company
was to purchase from the New sufficient stock to equalise their
respective shares; while the latter was to pay to the former half the
difference between the values of the respective "dead stocks" (i. e.
buildings, etc. ) in the East.
This agreement still left room for disputes, to settle which an act
was passed in March, 1708, under which the Earl of Godolphin was
appointed arbitrator; the term of the Company's privileges was
extended by another fifteen years; and it was given the right of buying
out those members of the "General Society" who had elected to trade
on their own account. In return for these concessions the United
Company was required to lend the exchequer a further sum of
£1,200,000 without interest-thus reducing the rate of interest on
the whole debt to 5 per cent. Godolphins award was issued in


## p. 100 (#128) ############################################

100
THE EAST INDIA COMPANY, 1600-1740
September, 1708, and the union was consummated in the following
March. The struggle was now at an end; and it is interesting to note
that its result was to confirm the monopoly of the trade to a chartered
joint-stock company, though on an improved basis. The right of
parliament to control the conditions of this concession had, however,
been established; also the principle of requiring in return some
assistance towards the national finances.
Having thus reviewed the course of events at home, we must now
follow the development of English trade in India during the same
fifty years, a period which synchronised roughly with the long reign
of the Emperor Aurangzib. Soon after the Restoration the Company
withdrew from the port-to-port trade; and as the factories in Upper
India (Agra, Lucknow, etc. ) had been abandoned, the English settle.
ments were now in groups centring at Surat, Madras, and Hugli
respectively. It will therefore be convenient to deal with them more
or less as separate entities.
In Western India the outstanding feature of the period is the
gradual rise of Bombay, which had been ceded by the Portuguese to
King Charles II in 1661, taken possession of on his behalf in 1665, and
made over by him to the East India Company three years later. That
its development was slow is no matter for surprise. The island was
far from healthy; the neighbouring mainland produced little of com-
mercial value, and the barrier of the Western Ghats—to say nothing
of the insecurity resulting from the constant warfare between the
Moghuls and the Marathas--precluded any regular communication
in that direction with Indian trade centres; while the depredations
of the bold pirates of the Malabar Coast were a perpetual menace
to shipping. For nearly twenty years, therefore, Surat retained its
position as the headquarters of English commerce and the seat of
the presidency. Bombay, however, could afford to bide its time. It
possessed a magnificent harbour; its security, thanks to its position
and its fortifications, afforded a striking contrast to the experience of
Surat, which was sacked by the Maratha chief, Sivaji, in 1664 and
again in 1670; while the mild and impartial rule of the English proved
an attraction to traders who had suffered from the tyranny of the
officials on the mainland. Its potentialities did not escape the keen
eye of Gerald Aungier, who in 1669 succeeded Sir George Oxenden
as president at Surat and governor of Bombay; and he made it the
main task of his administration to put the new settlement on a satis-
factory basis. Courts of judicature were established; the local revenue
was settled on equitable. terms; a suitable currency was introduced;
and inducements were held out to merchants and craftsmen to settle
on the island. As the result of all this, by the time of Aungier's death
.
1 The first suggestion for this was made in 1668 (English Factories, 1668-9,
p. 52). See also Foster; “The first English coinage at Bombay,” in the Numis-
matic Chronicle, 4th series, vol. VI.


## p. 101 (#129) ############################################

BOMBAY, 1665-1700
101
(June, 1677) Bombay was on the high road to prosperity, and its
population (according to the estimate of Dr. John Fryer) had risen
to 60,000, three times the number of its inhabitants under Portuguese
rule.
The one desire of the English merchants was to be left to pursue
their calling in peace; but this was impossible in the conditions of the
time. The perennial warfare between the imperial forces and the
Marathas was quickened in 1681 by the arrival in the Deccan of
Aurangzib himself, who thus entered upon the long campaign which
was to engross his attention until his death. Unhappily for Bombay,
the war was not confined to the land but was carried on at sea as
well, the Sidi of Janjira (about 45 miles south of Bombay) acting on
behalf of the emperor against his inveterate foes the Marathas. The
Sidi claimed the right to make Bombay harbour a place of refuge for
his fleets, and this could hardly be gainsaid without offending
Aurangzib; but the effect of the concession was to make the neigh-
bouring waters a scene of continual warfare. In 1679 Sivaji seized the
island of Khaneri at the mouth of the harbour; whereupon the Sidi
fortified its neighbour, Underi, with the result that all vessels entering
the bay were liable to attack from one or the other. With the Marathas
themselves the relations of the English were on an uncertain footing;
while further south the Malabar pirates were a constant source of
trouble. Even at Surat, which was distant from the scene of action,
the strain imposed upon the Moghul finances was felt in the increased
exactions of the local officials and their arbitrary disregard of the
protests of the Company's factors.
In these conditions of turmoil it became more and more evident
that only by being strong themselves could the English secure the
continuance of their commerce; and a few months before his death
Aungier, himself no lover of war, wrote to his employers that the
trade could only be carried on sword in hand. In earlier times the
home authorities had always turned a deaf ear to counsels of vigorous
action, and any outlay on fortifications had been looked upon with
the greatest repugnance. Now, however, came a change, mainly under
the influence of Sir Josia Child, who, after seven years' service in the
directorate, became governor in 1681, and continued to be the domi.
nant force in the Company until his death (1699). He held firmly
the view that the true line of action was to follow the example of the
Dutch, by building up a power on the Indian coast-line which should
be sufficiently strong to repel all attacks and to enforce respect from
its neighbours, even the Moghul emperor himself. In this scheme
Bombay was to be the counterpart of the Dutch settlement at Batavia.
It was to be strongly, fortified and provided with sufficient military
and naval strength to protect English trade; while the cost of all this
was to be met from increased rents, customs dues, and municipal
taxation. Similar measures were to be taken at Madras; and it was
in a letter to that place (December, 1687) that the aims of the


## p. 102 (#130) ############################################

102
THE EAST INDIA COMPANY, 1600-1740
Company were defined, in an oft-quoted passage, as being "to esta-
blish such a politie of civil and military power, and create and secure
such a large revenue to maintaine both . . . as may bee the foundation
of a large, well-grounded, sure English dominion in India for all time
to come”.
In the promotion of these designs Sir Josia found a willing agent
in his namesake, John Child, who in 1682 became president of Surat
and governor of Bombay. The first fruits of the new policy were,
however, disconcerting. The endeavour to raise the revenue and cut
down the expenditure at Bombay caused a revolt of the garrison in
1683 under its commandant, Richard Keigwin, who until November
in the following year governed the settlement in the name of King
Charles, submitting only on the appearance of a naval force with a
royal mandate for the surrender of the place. The rebellion having
been quelled, the Company proceeded to develop its schemes. Already
President Child had been appointed captain-general of the Company's
sea and land forces on that coast; and in October, 1686, when the
Company, goaded by the injuries received in Bengal . (as described
later), had resolved to make a firm stand against the exactions of the
Moghul officials, whatever the consequences might be, a further step
was taken. Child (who had been created a baronet in the preceding
year) was given the imposing title of Captain-General, Admiral, and
Commander-in-Chief of the Company's forces throughcut its posses-
sions, as well as Director-General of all mercantile affairs; and he was
authorised to procoed to Madras and Bengal to regulate matters in
those parts, should he see fit. Ordinarily he was to reside at Bombay,
which in consequence (May, 1687) superseded Surat as the head-
quarters of the western presidency. To complete the organisation
of the English possessions (and especially to check the interlopers
who were making such inroads upon the Company's trade) a court of
1 It has been generally stated that the two Childs were brothers; but Mr.
Oliver Strachey has shown that this was not the case (Keigwin's Rebellion,
pp. 20, 162).
2 This designation--usually shortened to "General"--was explained in a
letter of August, 1687, as being intended to give to its holder “the same pre-
heminence and authority which the Dutch confer upon their Generali at
Batavia”. Its subsequent history is worth noting. After the death of Sir John
Child, Sir John Goldsborough was sent out (1691) as commissary and super-
visor; and two years later he was made captain-general and commander-in-
chief, with Madras as his headquarters, while Sir John Gayer was to act as his
lieutenant-general and guvernor of Bombay. On the death of Goldsborough,
Gayer succeeded to the post of “General” (1694), remaining at _Bombay; while
Higginson, the Madras president, became lieutenant-general. Ten years later
(Gayer being kept in prison at Surat by the Moghul authorities) Sir Nicholas
Waite, the new governor of Bombay, assumed the title of "General”; and upon
his dismissal in 1708 his successor, Aislabie, laid claim to the same designation.
The title was abolished in 1715, when the new post of president and governor
of Bombay was created, with Boone as its first occupant. The title of lieutenant-
general had lapsed in 1698, when Thomas Pitt was appointed governor of
Madras.


## p. 103 (#131) ############################################

THE COROMANDEL FACTORIES
103
admiralty was erected at Bombay in 1684, and another at Madras two
years later, both under letters-patent obtained from the king in 1683.
Further, in 1688 a municipality was established at Madras, with a
mayor and twelve aldermen, including several Portuguese and Indians
-a concession intended to reconcile the inhabitants to a system of
local taxation.
Into the war with the Moghuls which resulted from the troubles
in Bengal the English on the western coast entered only after a long
hesitancy and in a feeble manner. The seizure of some Moghul vessels
brought about a rupture towards the end of 1688, with the conse-
quence that the factors at Surat were imprisoned. Child in retaliation
captured a number of richly freighted ships. Thereupon ensued a
siege of Bombay by the Moghul forces, until in 1690 the English put
an end to the war by a humiliating submission, involving the
payment of a considerable sum. Child, whose dismissal was one of
the conditions of peace, died just as the negotiations were reaching a
conclusion.
The remainder of the period was filled with trouble, owing largely
to the depredations of the English pirates who were swarming in the
Indian Ocean and capturing Indian vessels. For these their peaceful
compatriots were held responsible, with the result that for some time
all the factors at Surat and Broach were kept in prison by the Moghul
authorities. On top of all this came the bitter rivalry between the
servants of the Old and New Companies, elsewhere alluded to. Before
leaving the subject mention should be made of the settlements estab-
lished during the half-century on the Malabar Coast, mainly in order
to obtain a supply of pepper. The chief of these were at Rajapur,
which factory was plundered by Sivaji in 1661, subsequently re-
established, but abandoned in 1679; at Tellicherri, where the English
settled in 1683; at Anjengo, first established about 1694; and at
Karwar, where a factory was maintained (with some intermissions)
from 1660 until the middle of the eighteenth century and was then
withdrawn, leaving Tellicherri and Anjengo to supply the needs of
the pepper traffic.
On the eastern side of India the new start, made upon the grant
of Cromwell's charter, separated the Coast factories (Fort St George,
Masulipatam, etc. ) from those in Bengal and Bihar (centring at
Hugli), each of these two groups forming an agency, under the presi-
dency of Surat; but this arrangement lasted only till 1661, when
Madras became once more the seat of government for all the factories
on that. side of India. The domestic history of the agency for the
next quarter of a century was on the whole one of peaceful progress.
The capture of the Portuguese settlement at St Thomé by the forces
>
1 In 1693-4 the Company paid into the royal exchequer £16,638 as the king's
tenth share of the value of prizes taken during the war (W. R. Scott's Joint
Stock Companies, na, 537).


## p. 104 (#132) ############################################

104
THE EAST INDIA COMPANY, 1600-1740
of the king of Golconda in 1662 drove a considerable number of its
inhabitants to the shelter of Fort St George; and about 1670 the
population of Madras was estimated roughly at 40,000. The Second
Dutch War (1665-7) produced much disturbance of trade, especially
as it synchronised with internal trouble. Sir Edward Winter, who
had been superseded in 1665 by a new agent from home (George
Foxcroft), in the same year seized and imprisoned his successor,
charging him with treason, and reassumed the government in the
name of King Charles. For nearly three years Madras remained
under his control; then (August, 1668) the arrival of a fleet with a
royal mandate induced him to yield his place to Foxcroft, on an
assurance that the persons and property of himself and his adherents
should be respected. The war of 1672-4 between Holland on the one
hand and England and France on the other brought fresh cause of
alarm. In 1673 the Company's fleet was defeated and dispersed by a
Dutch squadron off Petapoli; while on land there was much fighting
round St Thomé, which had been occupied by the French in 1672 but
recaptured by the Golconda forces, assisted by the Dutch, in the
following year. The incursions of the Marathas into Southern India
gave an excuse for strengthening the fortifications of Madras under
Sir William Langhorn (agent, 1672-8) and his successor, Sir Streyn-
sham Master (1678-81); while the administration of the latter is also
memorable for the reorganisation of the judicial system and the
erection of St Mary's church in the fort—the first Anglican church
built in India. In 1631 permission was obtained from the Maratha
ruler at Jinji for English settlements at Porto Novo, Cuddalore, and
Konimedu; while in the following year a factory was established at
Vizagapatam. A few years later the kingdom of Golconda was finally
subjugated by the Moghul forces, and Aurangzib became the nominal
overlord of the English factories on the Coromandel Coast. Negotia-
tions ensued with his general, Zulfikar Khan, who in 1690 confirmed
the existing grants for Madras, Masulipatam, and other stations;
while in the same year a fort at Devenampatnam (close to Cuddalore)
was purchased and made into a new stronghold named Fort St
David. In 1693 the boundaries of Madras were enlarged by the grant
of three adjoining villages; and during the administration of Thomas
Pitt (1698-1709) five more were added, though these were resumed
by the Moghul officials in 1711 and were not recovered until six
years later, under the grant obtained by Surman from the emperor
Farrukhsiyar.
As in the case of the western presidency, Madras suffered much
from the rivalry caused by the establishment of the New East India
Company; and this is perhaps the most convenient place to narrate
briefly the struggle between the two bodies, so far as it affected the
settlements in India. The mission of Sir William Norris, to which
allusion has already been made, proved a fiasco, and the hopes built
thereon by the directors of the New Company were entirely dis-


## p. 105 (#133) ############################################

RIVALRY IN INDIA
105
appointed. After much trouble and delay he reached the camp of
Aurangzib in April, 1701, and was graciously received; but the
emperor was irritated by the depredations committed by European
pirates upon Indian vessels carrying pilgrims to the Red Sea ports,
and the wazir, whom Norris had unwisely offended, threw all sorts
of obstacles in his way. The ambassador found that he could only
obtain the farmans he desired by undertaking to make compensation
for all Indian ships taken by the pirates; and thereupon he quitted
the court abruptly and returned to Surat. He died on the homeward
voyage in 1702.
Meanwhile the presidents appointed by the New Company had
added to the difficulties of their position by quarrelling violently with
the representatives of the older body. All three of these new presi-
dents were discharged servants of the Old Company, and this fact
added acrimony to the disputes, which were further embittered by
the fact that the newcomers had been given the rank of "King's
consul”, and were not slow to claim jurisdiction over all Englishmen
resident in India. This pretension was indignantly repudiated by the
servants of the Old Company, who maintained that the privileges of
the latter remained intact until 1701 at least. Indian authorities,
while taking little interest in the controversy, were naturally inclined
to support the representatives of the older body; and when at Surat
the New Company's president, Sir Nicholas Waite, tore down the
flag that floated over the rival factory, it was at once replaced under
a military guard sent by the Moghul governor. It is true that Waite's
charges against the Old Company, of complicity in the piracies from
which the Indian traders were suffering, bore fruit in the seizure, by
the emperor's order, of Sir John Gayer and other servants of th:
older body; but the blow recoiled on the New Company, whose
factors in Bengal were also arrested under the same instructions.
Most of the Old Company's servants in that province secured them-
selves in the recently erected Fort William at Calcutta; while Madras
successfully resisted the troops sent to occupy it. In the latter presi-
dency John Pitt, the New Company's representative, had established
his headquarters at Masulipatam, whence he carried on a violent
controversy with his relative Thomas Pitt, the governor of Madras,
much to his own discomfiture. The distractions caused by these
disputes, and Norris's failure to obtain authority for new settlements,
formed powerful arguments for an amalgamation of the two com-
panies; and when once this was effected, the first task of the court of
managers was to heal the dissensions in India. Accordingly the grant
of consular powers was rescinded; at Madras Governor Pitt was
confirmed in his post; in Bengal a curious experiment was tried for
a time of a council of four members who were to presiede in turn;
while on the western side Gayer was to be governor of Bombay anil
Waite president at Surat. A proviso that, in the event of Gayer's
continued imprisonment, Waite was to act for him enabled the latter


## p. 106 (#134) ############################################

106
THE EAST INDIA COMPANY, 1600-1740
to take possession of the post, which he continued to hold until his
dismissal in 1708.
It now remains to trace the progress of the English in Bengal,
Bihar, and Orissa. Under the arrangements made upon Cromwell's
grant of a charter, an agent was appointed, with Hugli as his head-
quarters, having under his control the factories of Patna, Kasimbazar,
and Balasore, the last named being the port at which all cargoes were
received or shipped. This arrangement was, however, short-lived,
"
,
for in 1661 the agency was abolished and the factors were replaced
under the agent at Madras. The importance of Dacca, both as the
seat of government and as a centre for the purchase of fine cotton
goods, led the Company in 1668 to sanction the formation of a factory
in that city; while a few years later others were opened at Rajmahal
and at Malda. The trade of the English in these parts grew steadily
both in volume and in value. The Company looked to Bengal for its
regular supply of saltpetre, for which there was an ever-increasing
demand in Europe; while great quantities of silk and silk goods were
also purchased, artisans being brought from England to improve the
methods of manufacture. Sugar and cotton yarn were further articles
of export, and by 1680 the annual investment in Bengal had risen to
£150,000. In hopes of further development, the Company in 1681
determined to make the settlements there independent of Madras;
and accordingly in the following year William Hedges, one of the
"committees”, was sent out as "Agent and Governor of all affairs
and factories in the Bay of Bengal". The experiment did not prove a
success. În 1684 Hedges was dismissed and the Bengal factories were
once again placed under Fort St George, the agent at which was given
the new title of President and Governor for the Coast and Bay.
Now came a time of serious trouble. For many years there had
been friction with the local officials over the question of way-dues
and customs. From the beginning the English had aimed at securing
complete exemption from such imposts, in consideration of an annual
present of 3000 rupees; and in 1656 they had obtained from Shah
Shuja, who was then governing the province, a grant freeing them
from all demands on this score. Such an arrangement was much to
the benefit of the factors themselves, since their private trade passed
free as well as the Company's, while the necessary presents went
down to the account of the latter; and accordingly they made strenu-
ous efforts to secure its continuance. On the other hand the Moghul
officials saw no reason why the fast-increasing commerce of the
1 The establishment at Hariharpur (in Orissa), the earliest English settle-
ment in those parts, had been withdrawn in 1642.
2 Bruce's Annals, II, 451.
3 For grants relating to Bengal, 1633-60, see the appendix to English Fac-
tories, 1655-60.


## p. 107 (#135) ############################################

THE WAR IN BENGAL
107
English should escape the tolls levied upon other merchants, nor did
they recognise that the nishan of Shah Shuja was binding upon his
successors. The factors made several attempts to settle the matter by
obtaining an imperial farman in their favour, but without success;
and although Shaista Khan, then governor, gave them in 1678 a
fresh nishan, with the approval of the emperor, freeing them from
dues, these were soon again demanded. Two years later a farman was
at last obtained from Aurangzib, which seemed to settle the dispute
in favour of the English; but the wording was ambiguous, and the
Indian officials declared that it really authorised them to demand
the same dues as were paid by the English at Surat. The factors were
powerless to resist any exactions the authorities chose to make, since
it was easy to enforce the demand by stopping the saltpetre boats on
their way down the Ganges or by preventing the native merchants
from dealing with the English; and full advantage was taken of both
methods to extort money from the factors. Gradually the latter came
to the conclusion that force was the only remedy and that it was
essential for their security to establish, at or near the mouth of the
Ganges, a fortified settlement similar to those at Madras and Bombay.
This they might make the centre of their trade, and thither they
might withdraw when threatened; while from such a base they could
at any time exert pressure upon the viceroy by stopping the sea-
borne trade of the province. The home authorities, who (as we have
seen) were already persuaded of the necessity of adopting a bold
policy, readily fell in with this view, and in 1686 they sent out orders
that the Bengal factories should be withdrawn and an attempt made
to seize Chittagong, for which purpose they dispatched several ships
and a small force of soldiers. At the same time on the western side
of India the Moghul coast was to be blockaded and the local shipping
seized; while the Coast settlements were to assist with the full
strength of their resources. The enterprise was a rash one, though
all might have been well if the Company had left the control of
affairs entirely in the hands of Job Charnock, its experienced agent
in Bengal; not that fighting would have been entirely avoided, but an
accommodation would have been reached more speedily and nothing
would have been done as regards the absurd plan of attacking so
distant a port as Chittagong. In point of fact a rupture was forced
by the Moghul governor of Hugli, who in October, 1686, made an
attack upon the factory there. The assault was repelled, but Char-
nock deemed it wise to abandon the place and drop down the river
to Sutanati (on the site of the modern Calcutta), from whence he
carried on some negotiations with the viceroy. These . failing, the
English withdrew further down the Hugli river and fixed their head-
quarters on the island of Hijili, at its mouth; while, in reprisal for
1 For a detailed account of the operations see the introduction to C. R.
Wilson's Early Annals of the English in Bengal, vol. I.


## p. 108 (#136) ############################################

108
THE EAST INDIA COMPANY, 1600-1740
the injuries sustained, their ships sacked and burnt the town of
Balasore. In their new station they were blockaded by the Moghul
forces, while fever made great havoc among the small garrison; but
timely reinforcements enabled Charnock to effect an agreement under
which, in the autumn of 1687, the English returned to Sutanati, where
they remained for a year unmolested. The home authorities, how-
ever, were obstinately bent upon the plan of a fortified settlement
in Bengal; with the result that in September, 1688, a fresh naval
force arrived under Captain William Heath, who had plenary powers
to carry out the projected attack upon Chittagong. Despite the
opposition of Charnock the new settlement was abandoned, and in
January the fleet arrived at Chittagong, only to find it much too
strong to be assailed with any chance of success; whereupon Heatii
decided to retreat to Madras. However, the conclusion of peace in
the early part of 1690, on the initiative of the Bombay authorities,
paved the way for the return of the English to Bengal; and the new
viceroy, uneasy at the loss of trade resulting from the disturbances,
wrote to Charnock at Fort St George, inviting him back. To these
overtures the agent would not listen until a specific promise was
added that the grievance over customs should be redressed-a pro-
mise that was redeemed in February, 1691, by an imperial grant of
freedom from all dues, on condition of the payment, as before, of
3000 rupees per annum in lieu thereof.