The East India Company, 1600-1857

Essays on Anglo-Indian connection

William A. Pettigrew, Mahesh Gopalan, William A. Pettigrew, Mahesh Gopalan

• Publisher: Routledge India
• Year: 2016
• ISBN:
  9781317191964
• Edition: 1
• Topic: History
• Subtopic: Indian & South Asian History
• Index: History

This book employs a wide range of perspectives to demonstrate how the East India Company facilitated cross-cultural interactions between the English and various groups in South Asia between 1600 to 1857 and how these interactions transformed important features of both British and South Asian history. Rather than viewing the Company as an organization projecting its authority from London to India, the volume shows how the Company's history and its broader historical significance can best be understood by appreciating the myriad ways in which these interactions shaped the Company's story and altered the course of history. Bringing together the latest research and several case studies, the work includes examinations of the formulation of economic theory, the development of corporate strategy, the mechanics of state finance, the mapping of maritime jurisdiction, the government and practice of religions, domesticity, travel, diplomacy, state formation, art, gift-giving, incarceration, and rebellion. Together, the essays will advance the understanding of the peculiarly corporate features of cross-cultural engagement during a crucial early phase of globalization.

Insightful and lucid, this volume will be useful to scholars and researchers of modern history, South Asian studies, economic history, and political studies.

Part I The regulatory worlds of the East India Company

1 The failure of the cloth trade to Surat and the internationalisation of English mercantilist thought, 1614–1621

William A. Pettigrew

DOI: 10.4324/9781315563466-1

Historians of early modern commerce and political economy remain pessimistic about the conceptual utility and explanatory power of the term ‘mercantilism’. Recent authors have either echoed the long-established frustration with formulating a coherent definition of the term or have conceded that mercantilism provides a ‘weak conceptual hand’ (Hoppit 2014: 23). While the traditional view that mercantilism is fixated above all else on the balance of trade theory has received some challenge, the other (and related) pillar of mercantilist doctrine – that international trade should be conducted in ways that benefitted the nation state – remains strident (Stern and Wennerlind 2013). This view has inadvertently led historians of mercantilism to sustain the ‘Eurocentricism’ of some of their historical actors when seeking to explain the intensification of global trade in the seventeenth century. According to this view, mercantilism was a pan-European belief system. Conspicuous differences in how separate European nations managed their empires beyond Europe reflected ‘epistemic’ ideological fissures within the ‘metropole’, rather than the profound influence of local non-European agency (Pincus 2012: 4). As such, ideological debate about mercantilist policy – although it often developed across national borders within Europe – was as rigidly nationalist in its generation as it was in its ambition (Kafadar 1991; Subrahmanyam 1995; Van Ittersum 2005; Reinert 2011).

This chapter contests this view by arguing that non-European contexts and actors played an important role in stimulating and reorienting ideological debate about mercantilism. Historians of the Atlantic world have succeeded in demonstrating the centrality of non-European peoples and contexts in structuring early modern European empires in the Americas and the belief systems that sustained them (Cronon 2003; Richter 2003; Koot 2012). This chapter examines the relationship between English commercial interactions and the formulation of economic theory by analysing the East India Company’s operations in the Persian Gulf and the Indian Ocean and especially in the Mughal port city of Surat in the second decade of the seventeenth century and the way corporate committees in London and in Surat reflected on the development of this trade. It argues that the profound shifts in mercantilist doctrine that writers like Thomas Mun produced derived much of their inspiration and impetus from an appreciation born of the specific corporate setting for a multipolar international trading system that developed from Surat in the years 1614 to 1619. This corporate setting necessitated the simultaneous integration of multiple perspectives on this trading system that the East India Company enjoyed: from London; from the bullion markets of Europe; from Surat, Persia, the Red Sea and Indonesian trades. Out of this integration came Mun’s new theory of a multipolar commercial system that disabused earlier writers of a conception of England’s international trade that relied on separate balances with individual (rather than integrated) overseas markets (Thomas 1926: 12). Mun famously clarified the doctrine of the balance of trade. But careful reading of the discursive context of Mun’s writing shows how his more important conceptual innovation involved the description of this multipolar international market. This description also enabled Mun to demonstrate that money was a commodity like any other, as Mun realised that the Surat trade was profitable because it integrated a complex, multipolar commercial structure in which European bullion could be transformed into Asian commodities at prices that would then yield still greater quantities of money once those goods were shipped back to Europe. By broadening and complicating the perspective on bullion arbitrage, Mun could challenge the long-standing prejudice against bullion exporting that viewed international trade solely in terms of outflows rather than in terms of the international and profit-multiplying exchanges of bullion into commodities and back again.

This chapter suggests that the corporate structure provided by the East India Company was central to the formulation of this doctrine. The company’s London committees could measure the success of the Surat trade using accounts. But they could also digest the perspectives on this trading system from the outside; they absorbed some of the insights of their factors, especially the chief factor at Surat, Thomas Kerridge. Kerridge’s view of the benefits of exchanging European silver for Indian textiles and then for Indonesian spices to be converted back into far greater quantities of European bullion pre-empted much of Mun’s argument. Kerridge himself acutely appreciated how English trade in Surat depended – almost entirely – on the willingness of the English to export bullion to the Mughal Empire. Attempts to move the commercial initiative of the English from Surat to the Persian Gulf in this period to ensure greater vending of English cloth (and therefore lessen the company’s reliance on European bullion dealers) and the Mughal and local Gujarati merchants’ refusal to permit this move in the short term suggest that Kerridge’s (and therefore Mun’s) argument in defence of bullion trading voiced the commercial interests of those Gujarati merchants. In this way, Mun’s influential theory of money commodification channelled the interests of these Asian merchants, the East India Company’s factors (like Kerridge) and the ways in which the company’s directors (like Mun) digested the experience of those factors at home to uphold their interests with the English state and public (Muchmore 1970).

In Eurocentric accounts of mercantilism, the overseas trading corporation is the primary executor of mercantilist doctrine because corporations proposed to channel international exchanges in ways that ensured their domicile economy would benefit at the expense of both European trading rivals and the international customers and suppliers of the corporations in places like Surat, Batavia, Cape Coast and Aleppo. But the example of the Surat bullion trade shows to what extent the seventeenth-century English corporation structured transnational commerce and succeeded by accommodating (rather than ‘bridling’) the commercial interests of non-Europeans. Corporations regularly justified their monopolies and juridical power overseas with reference to the need to ‘awe’ the non-European barbarians they traded with, but international experience – from the outset – challenged these stereotypes and compelled corporations to seek trades that would produce mutual benefit for English and non-European merchants. As one East India Company minute recorded, profits provided the best means to ‘bind’ the ‘honestie’ of non-Europeans (IOR B/6: 447). The East India Company’s trade, as K. N. Chaudhuri pointed out long ago, could not have operated without the support of continental European bullion traders and survived because of the extent of demand for its products in Europe (Chaudhuri 1963: 27). Nor could its commercial future have been secured without appreciating the critical importance of accommodating the commercial interests of Indian merchants who tolerated European merchants because they brought precious metals into the Mughal domain. The trade in European bullion by the English Company to the Indian subcontinent offers the clearest evidence of this commercial accommodation.

I

The third decade of the seventeenth century has been a regular port of call for historians of economic thought. These scholars have most often concentrated on the parliamentary debate about the causes of the commercial crisis of the early 1620s and have focused on the printed writings of Thomas Mun who started the debate with A Discourse of Trade, from England unto the East Indies (1621). Gerald Malynes then took up the debate with The Maintenance of Free Trade, According to the Three Essential Parts of Traffique and then Edward Misselden with Free Trade, or, the Means to Make Trade Flourish in 1622. Mun often emerges from such accounts as a maverick theorist who pioneered an integrated understanding of exchange rates and trade deficits with Malynes in particular depicted as a conservative thinker who sustained a mediaeval conception of the substantial and inherent values of precious metals rather than their exchange or commodity values. For many historians of economic thought, this debate pushed and then advertised conceptual sophistication and progress (Appleby 1978; Finkelstein 2000).

Scholars have not devoted careful attention to the preface to these debates and in particular the context for the opening salvo from Mun himself. Mun wrote to deflect the charges that the East India Company’s bullion exports aggravated the domestic economic crisis by creating a shortage of coin. But the conceptual innovations of Mun’s treatment of the mechanics of international trade cannot be understood without appreciating an additional and related contextual shift during the second decade of the seventeenth century: the growing importance to public commercial debate of direct experience of non-European trade. The domestic economic crisis partly derived from an efflux of bullion to continental Europe. Mun’s argument is perhaps best understood as an attempt to distract attention away from that cause and towards an international solution. For that reason, any attempt to appreciate Mun’s theoretical achievement must contextualise his writings into an understanding of the relationship between domestic crisis and the escalation of English trade beyond Europe in this period as well as into the pre-existing printed perceptions of how the international economy functioned.

Mun’s challenge to the bullionist position went against the grain of centuries-old economic thinking. Although the sixteenth century saw greater integration of the English into European money markets and the beginnings of sustained extra-European trade via the Muscovy Company, mediaeval precepts of state economic policy remained: that international conspirators used exchange rates to defraud the English economy and that the depletion of precious metal supplies undermined the power and wealth of the kingdom. To combat the efflux of bullion, policymakers in the sixteenth and seventeenth centuries sought to resurrect the fourteenth-century remedy – the statute of employment – to compel foreign merchants to purchase English commodities with imported goods – thus preventing the outflow of English bullion (De Roover 1949: 11).

Two things changed in the seventeenth century. First, as constitutional debate intensified under King James I, the royal prerogative’s means of raising money without the Parliament became more controversial, and a devaluation of the currency, though it might have helped gather revenue for the Crown, was increasingly regarded by councillors as a dangerous last resort (Malynes 1610). Second, the extent of extra-European trade greatly increased in the first decades of the seventeenth century – and largely under the auspices of another branch of the prerogative – the chartered corporation. These trades – to Virginia, to India, to the Levant and to Russia – complicated mediaeval narratives of bilateral trade in which a domestic market could be undermined by international financial conspirators. The companies, as exclusive bodies in a charged constitutional climate, also provided focal points for public anger and fear during the periods of economic crisis. As such, by the seventeenth century, corporations, and especially the East India Company, often shouldered the accusation traditionally levelled at foreigners – that they depleted the nation’s wealth to enrich impersonal and transnational interests.

Despite the large expansion in overseas trade from England during the opening decade of the seventeenth century, England was plunged into a period of economic hardship in the second decade. The crisis had two related dimensions: one was the shortage of coin; the other was the failure of the cloth trade – England’s traditional export monoculture. The shortage of coin limited the liquidity of the domestic economy and therefore restricted trade, but it also posed problems for the state because the royal mint generated funds for the monarchy. The shortage of coin was blamed on various factors. The most plausible explanation argued that silver had been undervalued by an erroneous alteration, in 1611, to the bimetallic ratio of silver to gold (Supple 1964: 167). This mistake motivated money dealers on the continent to purchase English silver, drawing it out of the kingdom in the process. King James I proposed to solve the problem with an abortive attempt to substitute brass coinage for silver in the same year (TNA: SP14/67, 72). Merchants were also forbidden from purchasing silver at prices higher than those stipulated by the royal mint (TNA: SP14/73, 139). Throughout the period, advisers to the king proposed to enhance (or devalue) the currency. But this was persistently rejected on the grounds that the inflationary consequences would hurt those on fixed incomes, rich and poor (Supple 1964: 169). More popular solutions included halting silver exports or stimulating cloth exports.

If coin provided the seventeenth-century English economy with liquidity, unfinished cloth was its principal commodity and export good. In the second decade of the seventeenth century, economic projectors – chief among them Sir William Cockayne – questioned whether England could benefit more from finished wool exports rather than exporting the unfinished raw material to Europe where it would be manufactured. In 1614, in what became known as Cockayne’s project, King James approved a large-scale experiment to see if this could be achieved. The result confirmed the supremacy of weavers on the continent and badly affected the scale of exports in England’s monoculture trade in wool. From 1614 to 1616, the scale of English wool exports reduced by 20 per cent. This failure aggravated the commercial crisis (Wilson 1960). King James’s financial woes continued alongside the national economic depression and added to the pressures for merchants to provide a solution to both. In the so-called Addled Parliament of 1614, James tried and failed to extract revenue from the Parliament and then decided to suspend the legislature for several years. With continental Europe descending into religious war and the Parliament recalcitrant about financing the monarchy, merchant and royal eyes turned to extra-European trade with a more determined gaze. This naturally led to a focus on overseas trading corporations.

This focus integrated parallel discussions about the concurrence of Dutch commercial supremacy with English economic crisis. It concentrated on explaining the success of the Dutch in the spice trade, their closer-to-home herring fisheries as well as ongoing theoretical deliberations between the Dutch and the English about the dominion of the seas (Khan 1923: 24). As initial hopes of discovering precious metals in these new corporate settings faded, several English writers began to promote the local fish trade off the British Isles over the distant markets that corporations concentrated on, especially when it was understood that these corporations enriched the heathen by exporting English bullion. This genre had begun with John Keymer’s 1601 tract ‘Observations on Dutch Fishing’ and continued through similar writings such as Tobias Gentleman’s England’s Way to Winn Wealth (1614), which described fish as the Hollanders’ ‘principal Gold-mine’ and proposed it as a means for the English to improve their specie pile and a principal way for the English – if not addressed – to be depleted of their bullion by the Dutch (Gentleman 1614: 8, 10, 15). Although local in its focus, Gentleman’s anti-corporate argument also echoed through the shift of policy articulated by the Virginia Company propagandist John Smith (1614), in his blueprint for successful colonising, the Description of New England, written in the same year, in which he saw the future of English commercial interests in fish and timber trading rather than in precious metals. This writing helped to establish the false binary between commodities and bullion that Mun and others challenged.

No such initial hopes of solving the specie drain surrounded the foundation of the East India Company in 1600. From the beginning of its trade, the company had understood – from Dutch experience – that specie would be required to trade in Asia. The privileges to export bullion that the company enjoyed represented one of the most important arguments for the company’s corporate sovereignty. In the company’s first charter of 1600, it re...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Acknowledgements
• Abbreviations
• Contributors
• Introduction: the different East India Companies and the variety of cross-cultural interactions in the corporate setting—WILLIAM A. PETTIGREW AND MAHESH GOPALAN
• Part I The regulatory worlds of the East India Company
• Part II Religion, society, ethnographic reconnaissance and inter-cultural encounters
• Part III Diplomacy, power and the company state
• Index