The Foundations of the East India Company

The 16th century paved the way for the East India Company, which would become one of the most notorious organizations in history. It was a hotbed of naval exploration. Our oceans belonged to Portugal and Spain, as they blazed trails through unchartered seas. Such was their dominance they agreed to split the world in half with the Treaty of Tordesillas, 1494. A line was drawn, 48° west of Greenwich. Any land east of the line could be colonized by Portugal and west, Spain, providing it was not already ruled by a Christian. This effectively gave Portugal Africa and Asia, whilst Spain had the Americas (although the line gave Brazil, discovered later, to Portugal). This split is still evident today and explains why Brazil is Portuguese speaking whilst the rest of South America speak predominantly Spanish.

The East Indies, (and the area encompassing modern-day Indonesia, Malaysia, Philippines, and some parts of mainland Asia) fell into Portugal’s half of the map. Nestled in the middle of the east indies are the Moluccas Islands or Spice Islands. Nutmeg, mace, cloves, and pepper grew in abundance in an area already thriving in trade before the Portuguese arrived. These spices were not new in Europe, but their long terrestrial trade route and the fact they were not found elsewhere made them a luxury of only the very rich. For almost 80 years, Portugal had sole control of the spice trade to Europe and it was hugely profitable. However, in 1580 after a crisis of succession, the kingdom of Portugal joined the kingdom of Spain under the Spanish crown in the Iberian Union, effectively creating one kingdom – including all of Portugal’s overseas territories. This would spell bad news for the Portuguese monopoly.

Two new countries were about to put their stamp on the world map; England and the Dutch Republic. They had one important thing in common, war with Spain. The Dutch republic (consisting of modern-day Belgium, Luxembourg, and the Netherlands) had formed during the Dutch revolt. A long period of hostilities, from 1566 – 1648, saw the protestant Dutch republic demanding independence from their catholic Spanish rulers. England had already undergone its protestant reformation and supported the Dutch cause. This, combined with a deteriorating relationship with Spain led to the Anglo-Spanish war lasting from 1585 – 1604. A major point in the war was the defeat of the Spanish Armada in 1588 which opened new possibilities for these emerging naval powers.

War with Spain meant war with Portugal, and what better way to line the war chest than with Portuguese booty. Privateering of Portuguese carracks was rife and both countries got a taste of what the oceans had to offer. Perhaps the biggest success came when Sir Walter Raleigh and the Earl of Cumberland captured the Madre de Deus at the Battle of Flores in 1592. Vast wealth lay aboard, but of even greater value was the ships rutter which held vital information of trade within the East Indies.

The riches were a tantalizing prospect for any merchant at the time. In England, on the 31st of December 1600, a group of merchants succeeded in obtaining a royal charter under the name “Governor and Company of Merchants of London trading into the East Indies”. For fifteen years the company (became known as the East India Company) would be granted a monopoly on trade with all countries east of the Cape of Good Hope and west of the Straits of Magellan. In 1602, the Dutch government followed suit, sponsoring the creation of a single “United East Indies Company” or “Vereenigde Oostindische Compagnie” (became known as the Dutch East India Company) that was also granted a monopoly over trade.

Over the next two centuries these companies would become as powerful as nations, expanding their territories, building armies, and amassing great fortunes; all at a cost to the native peoples who were relentlessly worked and exploited.

Image Credits:

Tready of Tordesillas Map by Antonio de Herrera y Tordesillas, The Library of Congress.

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