Mercantilism is a school of thought that emerged in European countries during the late 15th century. Capitalism appears in the world economy on the verge of the Industrial Revolution around the 17th and 18th centuries. Before that, capitalism was not even known or applied rigorously in the European world. Mercantilism is a thought that precedes the rise of capitalism in general. From the name itself, it is evident that the whole theory is focused on the Merchants. That’s why we can say that the Merchants were the Heroes of Mercantilism. They are the pilots of this entire economic and business system. It is all about trading and earning profit for the newly emerged class named Merchants. Mercantilism took birth as the traditional Feudal system was decaying in European societies. Rising trade and widening the market reach weakened the old ruling class- the Feudal lords.
In the initial phase, the traders got the power and support from upper-class rich people for financing and gathering assets. Oriental goods had high demand among the upper-class people. The consumption of oriental goods was a sign of high status in society. The aristocrats depended on the merchant class to get and relish the tastes of those luxurious oriental goods. By the time they got more indebted to the traders. Feudal lords and aristocrats are the main pushing element of Mercantilism in reality. The contemporary thoughts were about supporting Mercantilism since it earned huge profits from trading outside their own country. The revenue of the Kingdom was going up. This made the merchants’ class more influential over the political power of the Kingdom and parliament what so.
During that period, many European countries were interested in exploring the rest of the world more and more, especially the Orient. Portuguese, Dutch, Danish, French, Swedish, Austrian, and British each nation were forming their business enterprises for trading purposes. The only motive behind all the initiatives was profit-making. In the upcoming sections, we will discuss some of those European enterprises famously called the East India Companies of each country. The focus of the discussion will be based on their arrival in India and how they started dominating the Indian market system. The appearance of multiple companies made their task more and more competitive. The policies taken by different European powers at other times created many troubles and distractions in the Indian economy. They furthered the administrative passion acquired by the most superpower, The British East India Company.
Different Nations with their East India Companies:
During Mercantilism, many European countries started forming their own trading companies and enterprises. Some of them were private, and some others had the royalty received from the monarchs. For example, the British East India Company had monopoly power over the business in Asian countries, given to them by Queen Elizabeth I. Some mentionable companies or enterprises were British, French, Dutch, Portuguese, Danish, Swedish, Spanish, Austrian, etc. Among them, India has witnessed and experienced the movements of the Portuguese, Dutch, French, Danish, and British specifically. Now we are going to observe the arrivals of different nations and how they impacted the Political Economy and further shaped the administrative structure of the country India.
• Portuguese:
The Portuguese were the earliest nation among all who had started the campaign of mercantilism. Portugal is the farthest west country in Europe. In that period, oriental goods such as spices, cotton, and textiles were imported only through Arabian merchants. That’s why the price of those products became so higher after an extended range of transportation. Portuguese people needed to find a new trading route was the most necessary. One of the finest inventions was the Caravel, a small but durable and speedy boat traveling by sea. In 1486, they succeeded Bartolomeu Dias by discovering the southern part of Africa. It was named Cape of Good Hope, currently the city of Cape Town in South Africa. After that, another Portuguese explorer, Vasco Da Gama, commenced the revolutionary journey. He and his crew became the 1st to discover the route to India and southern Asia from Europe. He arrived at Calicut Port in 1498. At that time, he brought the Orient goods to his country, sold them to many places, and earned 60 times more profit than the total cost of the journey. After that, another explorer named Afonso de Albuquerque arrived in India and got permission from the local rulers to build a fort in Kochi. It was the first-ever European establishment made in India. After that, they explored Sri Lanka, Indonesia, and Maldives and started expanding their networks.
After exploring the southern part of the continent, they learned about Bengal’s rich cotton, saltpeter, and textile industry. Then they started their voyage toward Bengal. At that period, Bengal was ruled by the Sultanates, and their capital city was Gauda. Portuguese had two paths to connect with Gauda. 1st one was the Chattagram Port, and the 2nd one was the Adisaptagram. They had also built their factories and warehouses around these two port areas. Chattagram port was nearer to the sea bed, so they named it Porto Grande (The Great Harbour). The other one was called Porto Paqeuno (The Little Harbour).
At that time, Saptagram was a city of rich and culturally dominant people. The town was full of luxuries, merchants, markets, and factories. It was the largest trading and business hub in the western part of Bengal. Emperor Akbar permitted Portuguese merchants to free trade during the Mughal Dynasty and establish business houses in Bengal. They even got clearance for religious practices. The revenue increased daily due to their significant expansion throughout the territory. Even they could pay around ten thousand bucks annually as taxes to the Mughal empire. Later they started trading with Acarnanians also. At that time Portuguese began to involve themselves in illegal activities throughout the regions. The Pirates looted people in the coastal areas, and many factories and port areas were destroyed during those clashes. Slave trading played a significant role in making local people distant from Portuguese traders. While things were getting out of control, Mughal emperor Shah Jahan demolished all the establishment of Portuguese traders and merchants. This is how the Portuguese chapter of India came to an end.
• Dutch:
The Netherlands has an ancient and substantial historical legacy, along with the largest Business enterprise in the world of that period. United East India Company or VOC (Vereenigde Oostindische Compagnie) was the wealthiest business enterprise in the world. It was also the first Multinational Company in the world. Historical data said that the revenue of the VOC was 7.9 trillion USD, almost the total amount after adding the contemporary world’s top 20 companies. The company was established in 1602. The Dutch people used to buy oriental goods from Portuguese traders, which cost them a lot. After installing the company, VOC started their voyage and business campaign, and within a short period, they gathered economic dominance over other enterprises and countries. VOC was the first company to offer its stocks to other small companies and individual traders. They introduced the concept of a share market in front of the world. The company got 21 years of lease from the Dutch Crown, including monopoly over the Asian sea route, building their factories and trading houses, and making deals and contracts with the local rulers. The Dutch company was also attracted to India because of its spices and clothing. For the first time, they arrived at the Coromandel Coast and interacted with the local Vijayanagar Empire. Then they established their base in Masulipatnam, Pullicat, Malabar Coast, Surat, and finally in Bengal. In 1629 the company visited the Bengal for the first time under the leadership of Captain Henry De Witt. At that time, the Portuguese had already started dominating the trade around the Hooghly, and Dutch traders faced colossal competition and tax barriers while trading with local people. So, they established their base at Pipili, currently situated in Odisha, and from Pipili, they started their business. They also started dealing with North India through the Ganges and extended up to Agra. In 1645 they again tried to establish their center near the Hooghly because of its continuously increasing prosperity. After many ups and downs, they finally made their first-ever factory in Bengal on the Bank of Hooghly at Chinsura. In 1666 they built a factory in Dhaka. They imported many precious metals, spices, silk, opium, saltpeter, and cloths. These were the major components of their trading goods. By the time their dominance started decaying due to many factors. The outrage of pirates made them suffer a lot further, which caused enormous losses for their company. After the British invasion, they started conquering all the trading centers and hotspots for their dominance and monopoly. In 1800 Britishers destroyed many Dutch factories, buildings, and warehouses, and finally, they agreed with the British Company and left India in 1824.
• Danish:
Danish EIC, formerly the Danish-Norway East India Company, didn’t have much significant impact on Indian trading history, but they made their marks by taking the initiative to spread education and religious practices throughout many regions of Bengal.
The company was formed in 1620 under the control of the Crown of the Kingdom. King Christian IV took all the possible initiatives to create a company like other European countries. During their first voyage, they reached India, and immediately after their arrival, they had to fight against the Portuguese. After many conflicts and troubles, they got permission to make a fort from the Tanjore Nayaka Kingdom. Still, it was difficult for them to stay in business due to tough competition with other European super giants like Portuguese, French, Dutch, and above all, Britishers. They also had no experience and efficient trading expertise to control the management, which made them alive in the competition. After 30 years of war in Europe, the state’s revenue system crashed, and the company went bankrupt in 1650.
The 2nd phase of the company started in 1670 with the help of some aristocrats, and again they started exploring the Orient. In 1698 they arrived at Gondalpura of Bengal and started their business with the native country. In 1755 they established the Serampore trading center near the bank of Hooghly River. Since earlier it was mentioned earlier, they have also contributed to education in this country. Serampore College was built in 1818 and is one of the oldest colleges in the country right now. For religious purposes, they founded the Theological Society in Bengal. They were also the pioneers of Printing Machines in the Indian Subcontinent. From trading printers, they earned a significant amount of wealth from India.
During the Anglo-Denmark War of 1801-1814, the Danish side was defeated severely by the Britishers. Consequently, the colonies and factories were also occupied and destroyed by the Britishers, and finally, in 1815, they sold their company to British EIC and left the country.
• French:
Another European nation that made some marks in the business history of India was the French East India Company. The journey of the French East India Company can be divided into two parts with the help of historical context. In 1610, the company was formed with the control of the French Crown, and for the administrative posts, they appointed experienced Dutch employees. However, the company was bankrupted in 1640 due to mismanagement and corruption. They didn’t have any significant or mentionable impact on the trading history of European giants. Later, in 1664, under the supervision of Francis Carron, the French East India Company was reformed again. Immediately after the company’s foundation in 1668, the French Company arrived in India and established their first factory in Surat. In 1674, Francis Martin took over the control of the company’s governing body and set a new base in Pondicherry. Under his efficient management and administrative ability, Pondicherry became one of the region’s most developed and prosperous territories. It became one of the largest business hubs in India, controlled by some outside nation. Around 1692, the company officials arrived in Bengal and built their factory at Chandannagar. Then they started exploring other places around the Bengal, like Patna, Kashimbazar, and Dhaka.
During that time, Britishers had already arrived in India and were spreading like wildfire, capturing the Indian markets. The Anglo-French war in Europe also impacted the Anglo-French relations in India. The Carnatic and Naval wars destroyed both parties’ enormous resources and worsened the political situation. It became about capturing the market and acquiring political power through economic dominance over the territory. During the battle of Plassey, the French took the side of Siraj, where the humiliating loss of Siraj also cost a lot for a French company. It was about the initiation of decay for them. After Plassey, Britishers gained political dominance over the Bengal, including their other presidencies, Bombay and Madras. The last pin to the coffin was in 1760 when the Britishers attacked Pondicherry. The French East India Company permanently lost all their dominance over the territory and stayed like another resident under the control of the Britishers.
• British:
Britishers were the conquerors, rulers, and ultimate dominators of all other European countries. They came as traders but ended up as the rulers of India for a long 200 years. Rabindranath Tagore once said, “The trader’s scales became the ruler’s scepter.” They made their identity strong and savage Imperialists in front of the world. The pioneer was the great British East India Company. In 1600 the company got the charter from Queen Elizabeth I on a total monopoly over business rights in Asian countries. Like others, Cotton, Silk, and Spices were the British traders’ main attractions. These commodities had the highest market demand in Europe, and prices were extremely high. That’s why they always wanted to capture the whole Indian market for maximum profit earnings. Besides aggressive trading, eliminating competitors was one of the primary goals. By the time they started dominating the market and simultaneously the whole economy. By capturing the economy, they began to dominate politics within the local states and rulers.
Britishers started their journey by building their first-ever factory in the Surat port area in 1619. After protracted negotiations and bribing, they got permission from Mughal Emperor Jahangir. The historical event was the discovery of Kolkata in 1690 by Job Charnock. He took the lease of three villages, namely Kolkata, Gobindapur, and Sutanuti, and built factories and, warehouses, trading centers on the Bank of the Hooghly river. Initially, the principal purpose was only buying and selling. Over time, they earned more profits for their efficient and well-maintained trading policies and management. But things never go as smoothly as we want. The corruption started among the company officials.
The officials began financing private businesses through the company’s revenue and collecting the profit for their pockets to earn more. They were reluctant to pay taxes and other clauses. The internal issues were resolved within themselves, and they did their business according to their usual pace. Like others, the Britishers wanted to gain political control of the territory, and they were the only nation that made that possible. They acquired Bengal, Mysore, Marathas, Nizams, Sindh, and Sikhs and united the whole region. They received political power over the country from a trading company and started ruling it. India became they’re of the crucial colonies for supplying wealth and prosperity. After the Battle of Plassey, the company took administrative and economic control of Bengal and started exploiting common people.
A tremendous tax rate was levied upon them, and the property was snatched for being unable to pay the tax amount. This is how the Britishers crashed Bengal’s economy, resulting in the 1770 famine in Bengal. Dadabhai Naoroji mentioned the process as the “Drain of Wealth.” The Industrial Revolution in England was the gift of Bengal. They also reformed the Zamindari system at different periods. Those were only for fulfilling their self-interest while leaving the commoners in misery. Later the company ruled India till 1857 when the Great Revolt took place. After abolishing the Great Revolt, the British parliament took over the company’s administration and established the British Royal Empire’s regime.
Different nations arrived here in India at other periods. Every nation has its history, legacy, and contribution to Indian society, economy, and political history. Western European countries discovered the Orient and made them accessible to the rest of the world. This can be regarded as the most historical discovery of humankind to this day. From Vasco Da Gama to Job Charnock, from Portuguese to British, they have written history for this country. Exploiting our resources and sowing the seeds of westernization, the life we live today. But I can’t deny that fact. Overall, we can conclude the discussion with how they applied the Mercantilist school of thought, with huge competition among themselves. It remained one of the unforgettable chapters of Mercantilist history and Indian Economic History.
References:
• History of Economic Thoughts: A Critical Perspective by E.K. Hunt and Mark Lautzenheiser
• Man’s Worldly Goods by Leo Huberman
• Danish East India trade 1772–1807 statistics and structure, Ole Feldbaek Mercantilist Policies and the Pattern of World Trade, 1500-1750, Author(s): Rudolph C. Blitz
• The Journal of Economic History, Vol. 27, No. 1 (Mar., 1967), pp. 39-55, Published by: Cambridge University Press on behalf of the Economic History Association
• Mercantilism as Strategic Trade Policy: The Anglo-Dutch Rivalry for the East India Trade Author(s): Douglas A. Irwin Source: Journal of Political Economy, Dec. 1991, Vol. 99, No. 6 (Dec. 1991), pp. 1296- 1314 Published by: The University of Chicago Press
• The role of mercantilism in Anglo-Dutch political relations, 1650-74 Author(s): GIJS ROMMELSE Source: The Economic History Review, AUGUST 2010, New Series, Vol. 63, No. 3 (AUGUST 2010), pp. 591-611 Published by: Wiley on behalf of the Economic History Society
• Rethinking Mercantilism: Political Economy, the British Empire, and the Atlantic World in the Seventeenth and Eighteenth Centuries Author(s): Steve Pincus Source: The William and Mary Quarterly, Vol. 69, No. 1 (January 2012), pp. 3-34 Published by: Omohundro Institute of Early American History and Culture
• England, Portugal and the Estado da India c. 1500-1635 Author(s): G. V. Scammell Source: Modern Asian Studies, 1982, Vol. 16, No. 2 (1982), pp. 177-192 Published by: Cambridge University Press
• The Portuguese East India Company 1628-1633 Author(s): Chandra Richard de Silva Source: Luso-Brazilian Review, Winter, 1974, Vol. 11, No. 2 (Winter, 1974), pp. 152-205 Published by: University of Wisconsin Press
• FRENCH-ASIAN CONNECTIONS: THE COMPANIES DES INDES, FRANCE’S EASTERN TRADE, AND NEW DIRECTIONS IN HISTORICAL SCHOLARSHIP Author(s): FELICIA GOTTMANN Source: The Historical Journal, JUNE 2013, Vol. 56, No. 2 (JUNE 2013), pp. 537-552 Published by: Cambridge University Press
• SOME ASPECTS OF THE FRENCH TRADE WITH INDIA (1664-1771) Author(s): B. Krishnamurthy Source: Proceedings of the Indian History Congress, 1979, Vol. 40 (1979), pp. 962-972 Published by: Indian History Congress
• THE DUTCH EAST INDIA COMPANY A RELUCTANT DISCOVERER Author(s): Femme S. Gaastra Source: The Great Circle, 1997, Vol. 19, No. 2 (1997), pp. 109-123 Published by: Australian Association for Maritime History
• THE DUTCH EAST INDIA COMPANY AND ITS COROMANDEL TRADE 1700–1740 Author(s): S. ARASARATNAM Source: Bijdragen tot de Taal-, Land- en Volkenkunde, 1967, Deel 123, 3de (1967), pp. 325-346 Published by: Brill
• A Multinational and Its Labor Force: The Dutch East India Company, 1595-1795 Author(s): Jan Lucassen Source: International Labor and Working-Class History, Fall, 2004, No. 66, New Approaches to Global Labor History (Fall, 2004), pp. 12-39 Published by: Cambridge University Press on behalf of International Labor and Working-Class, Inc.
• The Decline and Fall of the Dutch East India Company Author(s): Justus M. van der Kroef Source: The Historian, Spring, 1948, Vol. 10, No. 2 (Spring, 1948), pp. 118-134 Published by: Taylor & Francis, Ltd.
• The Portuguese in India by M. N. Pierson (Publisher: Cambridge University) A Review of the Book
• Portuguese in Bengal: A History Beyond Slave Trade
• Magh Marauders, Portuguese Pirates, White Elephants, and Persian Poets
• The Struggle for the Bay: The Life and Times of Sandwip, an almost unknown Portuguese port in the Bay of Bengal in the Sixteenth and Seventeenth Centuries
• MUGHAL RIVER FORTS IN BANGLADESH (1575-1688) AN ARCHAEOLOGICAL APPRAISAL By Kamrun Nessa Khondker
• Three Frenchmen in Bengal by S.C. Hill