East India Company

This section covers the rise and fall of the British East India Company. 

Jump to:

  1. Formation of the company in 1600
  2. Catherine of Braganza and Charles II
  3. Export to America and trade monopoly
  4. Private army of the East India Company
  5. 1834 - New Charter focuses on administration
  6. Rebellion and the abolition of the East India Company

Formation of the company in 1600

The East India Company was perhaps the most powerful commercial organisation that the world has ever seen. In its heyday it not only had a monopoly on British trade with India and the Far East, but it was also responsible for the government of much of the vast Indian sub-continent. Both of these factors mean that the East India Company (or, to call it by its proper name, the British East India Company) was crucial to the history of the tea trade.

the most powerful commercial organisation that the world has ever seen

Elizabeth I granted the charter to set up the British East India CompanyBefore 1600, Portugal controlled most European trade with India and the Far East (an area known then as the Indies). But in 1600 Queen Elizabeth I gave a royal charter to a new trading company, the East India Company, by which it was given a monopoly over all British trade with the Indies. The Company soon began competing with the Portuguese, as did later East India Companies, set up in the Netherlands, Denmark and France (though for ease, the term East India Company shall here be used to describe the British East India Company). The East India Company's first major base was in western India, where it found a rich source of exotic textiles and other produce, which could be exported back to Britain or taken further east to exchange for spices.

The Company successfully weathered the various political storms going on in Britain in the seventeenth century. Oliver Cromwell provided the merchants with a new charter after Charles I was deposed and the Commonwealth established in 1649. Then when Charles II was restored to the throne in 1660, the Company ingratiated itself with him in order to protect its interests. In fact, Charles II actually extended its privileges to allow the Company to take military action to establish itself in places where it wished to trade.


Catherine of Braganza and Charles II

But where does tea fit into all this? Charles II's Queen, Catherine of Braganza, was a Portuguese princess who had grown up with a taste for tea. Catherine of Braganza loved to drink tea.When she married Charles and came to England, tea gradually became a fashionable drink in courtly and aristocratic circles.This was made possible by the East India Company, which in 1664 placed its first order for tea - for 100lbs of China tea to be shipped from Java for import into Britain. This steady supply continued until 1678, when an import of 4,713lbs swamped the market until 1685, when 12,070lbs was imported, swamping the market again. This pattern continued until the end of the century. But the eighteenth century was very different. Tea drinking really took hold as an activity for the whole population, and the East India Company's imports rocketed. By 1750, annual imports had reached 4,727,992lbs.

tea drinking really took hold as an activity for the whole population, and the East India Company's imports rocketed

In fact though, tea was still very expensive, partly because of the Company's monopoly on the trade and partly because of high taxes imposed upon it. To satisfy the demand of the less wealthy, an enormous amount of tea was smuggled in and sold illicitly - some was even brought in on the East Company's own ships, by crew members who then sold it on to smugglers. This situation continued for years, until the William Pitt the Younger became Prime Minister in 1783. With the Commutation Act of 1784, he slashed the tax on tea so dramatically that smuggling became pointless. Thereafter virtually all tea was imported legally by the East India Company.


Export to America and trade monopoly

In the decades leading up to Pitt the Younger's Commutation Act, tea smuggling had really hit the profits of the East India Company. Needing to increase profits and offload the surplus tea that the Company had accumulated during the worst years of the smuggling, it asked the British government for permission to export direct to America, which at this time was still a British colony. Permission was granted, and it was decided that the tea would carry a tax of 3d per lb. The Americans were outraged, many considered such British-imposed taxes illegal. They were doubly angered by the decision that the Company should also have a monopoly on distribution, another move that was intended to help it out of financial trouble. When the Company's ships arrived in Boston in late 1773, the townspeople resolved that the tea should not be brought ashore nor the duty on it on paid. But the colonial administration would not allow the ships to leave port. The deadlock eventually resulted in the Boston Tea Party, when a mass of townspeople, dressed as Native Americans, boarded the ships and threw all the cargo of tea overboard. This was one of the key events that sparked off the American War of Independence.

the Americans were outraged, many considered such British-imposed taxes illegal

When America eventually won its independence from British rule in 1783, it began its own free and independent tea trade with China. The success of this trade made some people in Britain question the wisdom of the East India Company's ongoing monopoly on British trade with the East. East India House, LondonIn 1813, the Company lost its monopoly on trade with India, but still had a complete monopoly on trade with China, which meant it was heavily dependent on the tea trade. The Company's charter was due for renewal in 1834, and in the decades before that there was a growing call for the abolition of the monopoly and the instigation of free trade with China as well. Supporters of free trade argued strongly that the Company kept tea prices artificially high in order to maximise its profits, using tactics which included restricting the supply of tea. One anonymous pamphleteer writing in 1824 stated that 'the lordly grocers of Leadenhall Street [where the Company was based] have most scandalously abused the monopoly of which they are now in possession'. Comparing the prices of tea sold at auction in London with the prices at auction in Hamburg and New York, he thundered that 'the monopoly of the tea trade enjoyed by the East India Company costs the people of this country, on average, not less than TWO MILLIONS TWO HUNDRED THOUSAND pounds sterling a year!'

growing call for the abolition of the monopoly and the instigation of free trade

The movement gathered pace, and committees were set up by free trade organisations to examine the evidence. The report of one such committee in 1828 claimed that the restriction of supply by the East India Company, and the artificially high prices, had actually driven down the annual consumption of duty-paid tea per person in Britain, from almost 28oz in 1800 to just 20oz in 1828. This was particularly objectionable because (in the words of another contemporary pamphleteer) tea was one 'of the principal necessaries of life'. The report noted with abject horror that tea consumption among the 'poor convict population' of New South Wales in Australia, which enjoyed direct trade with China, was over three times higher than among the 'free and wealthy people of Great Britain'. It concluded that 'in the United Kingdom, where the Company have a complete monopoly, they fleece their countrymen of the last penny they can give'.


Private army of the East India Company

Private army of the British East India CompanyAn added complication was that at the same time, the East India Company's sphere of activity was fundamentally changing.Charles II's charter to the Company had allowed it to use military force where necessary to establish trading stations, and in the seventeenth and eigthteenth centuries it established many well-fortified trading posts in India. Over the course of the eighteenth century, the control of the Mughal Emperor in Delhi was in decline, with independent regional princes taking power instead. But unhappy with this turn of events, the Company increasingly used its private army to establish governmental control over large territories of India. By the beginning of the nineteenth century, with help from the British army, the Company had conquered about half of India.

with help from the British army, the Company had conquered about half of India

Thus India was being ruled by twenty-four merchants from the East India Company boardroom in Leadenhall St, London, the same merchants who controlled British trade with the east. This caused great uneasiness to many in Britain, who considered the dual roles of merchant and ruler to be completely incompatible. This view was eloquently summed up by a writer in 1831, who argued that as well as losing its trade monopoly, the Company must have nothing to do with commercial affairs as long as it had anything to do with the government of India. He wrote, 'we object to their (the Company) being allowed to combine in their own persons the seperate and irreconcilable functions of tea-dealers and rulers of a mighty empire. Let them make their election; let them choose as to whether they will be grocers or emperors; but do not allow them to attempt both... To be a good grocer or a cheesemonger, a man must be nothing else. If the Company prefer these useful functions to those of a loftier character, we shall not blame them for their choice. But we protest against their being allowed to carry a sword in one hand and a ledger in the other - to act at once as sovereigns and tea dealers.'


1834 - New Charter focuses on administration

These arguments were too powerful for the British government to ignore. In 1834, Parliament's new charter for the Company abolished its trading functions altogether. Instead, the Company became an agent of the British government, administering British India on behalf of the Crown. India was still to be ruled from the boardroom of the East India Company, but its rulers would no longer also be tea dealers. China was still the major source of tea, and since the Company had now been relieved of any trading rights with China, its thoughts turned to the possibility of growing tea in India. Previously, when the Company had had a monopoly on the Chinese trade, it had not been in its interests to encourage cultivation of tea elsewhere.

seeds from China were germinated in Calcutta and then sent on to Assam and other areas

A Tea Committee was established to investigate where in India might be most suitable for the cultivation of tea plants and seed imported from China, and to oversee that cultivation. One obvious area was Assam, where indigenous tea plants had already been found growing. Seeds from China were germinated in Calcutta and then sent on to Assam and other areas to conduct trials. C.A. Bruce, an agent of the East India Company in Assam, was appointed Superintendent of Tea Forests and set about cultivating plantations of both China tea and indigenous tea. In 1838 12 chests of Assam tea were sent to the East India Company in London. Some was used for public relations purposes - sending out samples to stimulate interest - and the rest went to the regular London Tea Auction. This was the first auction of Assam tea in London, and the novelty of the product ensured that it got a very good price. Bruce's experiment had been a resounding success. A new organisation, the Assam Company, was formed to exploit the potential of Assam tea. This new company faced many problems - not least the need to capture and train wild elephants which were necessary to transport tea through the dense jungles - but by 1855 tea cultivation in Assam amounted to over half a million lbs.


Rebellion and the abolition of the East India Company

The Indian Mutiny in 1857Soon though events in India were to take a dramatic turn. The East India Company had lost its trading rights, but it had not lost its desire to make money. The cost of the Company's of India administration was met through heavy taxation and charges on the Indian people - they even had to pay for medals to be struck to commemorate their own conquest. There were localised rebellions and the Company used increasingly heavy-handed tactics to control the Indian population. In May 1857 three regiments of Indian soldiers serving in the Company's army at Meerut near Delhi rebelled. The revolt spread, and led to a vicious conflict as the British forces tried to put it down. The rebellion lasted over a year, during which time both sides committed acts of terrible cruelty. Even after peace was established, the trust between the Indians and the East India Company administration was destroyed. The British government decided that enough was enough, and directly assumed all the Company's powers and possessions in India. The first viceroy, Lord Canning, was appointed to govern British India.

for the first time British tea imports from India exceeded those from China

The heyday of the East India Company was well and truly over, but the heyday of Indian tea production was just beginning. With the exception of Darjeeling, which was producing high-quality but low-yielding tea crops, there was little tea cultivation outside Assam. The new British administration in India saw the potential for more widespread cultivation and offered generous land leases to would-be tea planters. By 1888 Indian tea production had reached 86 million lbs - and for the first time British tea imports from India exceeded those from China.


  • Effects of the East India Company's Monopoly on the Price of Tea. Observations on the Trade with China (London, 1822)
  • Report of the Committee of the Liverpool East India Association on the Subject of the Trade with India, 21 March 1828 (Liverpool, 1828)
  • Observations of the Influence of the East India Company's Monopoly on the price and supply of tea: and on the commerce with India, China, etc (London, 1831)
  • Andrew Barr, Drink, A Social History (London, 1995).
  • Denys Forrest, Tea for the British (London, 1973).
  • Roy Moxham, Tea, Addiction, Exploitation and Empire (London, 2003).

Image credits:
Elizabeth I: www.history.org.uk
Catherine of Braganza: The Queen's Royal Surrey Regiment
East India House: Wikipedia
Private army of the East India Company: Columbia University magazine
Indian Mutiny: KA: The History Files

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