Read Online The East India Company: The World's Most Powerful Corporation (The Story of Indian Business) by Tirthankar Roy - Free Book Online
Authors: Tirthankar Roy
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Dutch, Arabic and Portuguese, the languages of the sea. The older Atlantic merchant marine was the ‘nursery’ that supplied the Indian Ocean commanders of this generation. Some of the first generation voyagers, especially Lancaster, had joined the Company as directors, and their leadership enabled the Company to organize trips with more preciseeconomic aims rather than the opportunistic missions of an earlier era. The ships now had chaplains, surgeons, musical instruments, facilities for staging Shakespearian plays and a more disciplined crew. Above all, the whole enterprise was exceedingly profitable. The distributed profit on the first voyage was 300 per cent. Distributed profits in all of the East India voyages together exceeded 200 per cent every year until 1616.
Nevertheless, the first fifteen years were not smooth sailing. True, the internal constitution remained intact; the first governor, Thomas Smith, merchant and alderman, remained in office until 1621; and the Company succeeded in sending one expedition every year as specified in the charter. But it had to battle with three adversities. The first problem was capital. The business of spice carried risks. One bad expedition could bankrupt the Company. Fearing for their money, many of the Company’s shareholders did not fully pay up their capital, adopting a wait-and-watch policy on the current voyage. The Company had to go around with a begging bowl after every voyage in order to finance the next one. A second problem arose from fluctuations in demand for luxuries. There were not too many buyers available for the eastern spices at the prevailing exorbitant rates. When a few of them died in a plague epidemic, stocks built up to disastrous levels.
The third problem arose from what was known as the separate voyages system. Partly on account of the precarious finances, the shareholders divided into groups, and the lobbies and clubs among them individually funded voyages. The practice divided loyalty, for these financiers expected to have the first call upon the profits from a voyage that they had paid more money for. Apart from compromising the economic interests represented by the firm, the separate voyages weakened diplomatic efforts, which had to be undertaken by common consent and for a common purpose, and left the military enterprise to the temperaments of individual commanders of fleets. These features imparted a dangerous informality to the whole enterprise.
Hoping to settle all these problems at once, the Company declared itself a joint-stock concern in 1612. The prodigious sum of £429,000 was raised as capital. The threat of bankruptcy was substantially reduced. Orders henceforth were issued only in the names of the high officials, governor and deputy governor. Above all, it placed the political aspect of the business upon a firmer footing.
If these measures settled problems at home, the trading enterprise was beginning to run into a formidable obstacle overseas. Nearly all of the early voyages were induced by the lure of spices from Southeast Asia. Inthe Southeast Asian trade, the Portuguese challenge was primarily naval, and could be overcome with military means. But the Dutch, who were already entrenched in trade and were a more organized enemy, proved more difficult to handle.
The Dutch East India Company had followed the English one by two years. It was a slightly different entity from the English Company. It was initially a shipping cartel. Ship-owning merchants decided to pool capital, and form a unified management, partly because they felt threatened by similar moves made by their English counterparts. Company formation occurred in the Dutch republic in a somewhat different way from the process in England. The power of the royalty was relatively weak after the Dutch Provinces joined together; consequently, major mercantile decisions took place independent of the court. Between 1595 and 1599, merchants of Amsterdam and Rotterdam had fitted every
Nevertheless, the first fifteen years were not smooth sailing. True, the internal constitution remained intact; the first governor, Thomas Smith, merchant and alderman, remained in office until 1621; and the Company succeeded in sending one expedition every year as specified in the charter. But it had to battle with three adversities. The first problem was capital. The business of spice carried risks. One bad expedition could bankrupt the Company. Fearing for their money, many of the Company’s shareholders did not fully pay up their capital, adopting a wait-and-watch policy on the current voyage. The Company had to go around with a begging bowl after every voyage in order to finance the next one. A second problem arose from fluctuations in demand for luxuries. There were not too many buyers available for the eastern spices at the prevailing exorbitant rates. When a few of them died in a plague epidemic, stocks built up to disastrous levels.
The third problem arose from what was known as the separate voyages system. Partly on account of the precarious finances, the shareholders divided into groups, and the lobbies and clubs among them individually funded voyages. The practice divided loyalty, for these financiers expected to have the first call upon the profits from a voyage that they had paid more money for. Apart from compromising the economic interests represented by the firm, the separate voyages weakened diplomatic efforts, which had to be undertaken by common consent and for a common purpose, and left the military enterprise to the temperaments of individual commanders of fleets. These features imparted a dangerous informality to the whole enterprise.
Hoping to settle all these problems at once, the Company declared itself a joint-stock concern in 1612. The prodigious sum of £429,000 was raised as capital. The threat of bankruptcy was substantially reduced. Orders henceforth were issued only in the names of the high officials, governor and deputy governor. Above all, it placed the political aspect of the business upon a firmer footing.
If these measures settled problems at home, the trading enterprise was beginning to run into a formidable obstacle overseas. Nearly all of the early voyages were induced by the lure of spices from Southeast Asia. Inthe Southeast Asian trade, the Portuguese challenge was primarily naval, and could be overcome with military means. But the Dutch, who were already entrenched in trade and were a more organized enemy, proved more difficult to handle.
The Dutch East India Company had followed the English one by two years. It was a slightly different entity from the English Company. It was initially a shipping cartel. Ship-owning merchants decided to pool capital, and form a unified management, partly because they felt threatened by similar moves made by their English counterparts. Company formation occurred in the Dutch republic in a somewhat different way from the process in England. The power of the royalty was relatively weak after the Dutch Provinces joined together; consequently, major mercantile decisions took place independent of the court. Between 1595 and 1599, merchants of Amsterdam and Rotterdam had fitted every
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