English East India Company Founded (1600) and Its First Voyage

The English East India Company was founded on 31 December 1600, when Queen Elizabeth I granted a royal charter to a group of London merchants for trade with Asia. The charter gave the “Governor and Company of Merchants of London Trading into the East Indies” a monopoly of English commerce east of the Cape of Good Hope. Its first fleet, led by James Lancaster, sailed in 1601 to the pepper ports of Sumatra and Java, beginning an enterprise that would eventually rule much of India.

Background: pepper, rivals and risk

At the end of the 16th century the spice trade with Asia was among the most profitable businesses in the world. The Portuguese had controlled the sea route around Africa since Vasco da Gama’s voyage of 1497-1499. In the 1590s Dutch merchants began sending their own fleets, starting with Cornelis de Houtman’s first Dutch voyage to Java in 1595.

English interest had grown after earlier voyages. Francis Drake had called at the Moluccas during his circumnavigation of 1577-1580, and in 1591-1594 James Lancaster had led a voyage to the East Indies that reached the Malay Peninsula but ended in heavy losses. When Dutch success drove up the price of pepper in Europe, London merchants decided to act.

A voyage to Asia took up to two years and needed ships, guns, crews, silver and trade goods. No single merchant could easily carry the cost or the risk of losing a fleet, so investors combined their money in a company.

The founding of the company

In September 1599 a group of merchants met at Founders’ Hall in the City of London and pledged money for a voyage to the East Indies. The petition to the Crown was delayed for more than a year, partly because Elizabeth’s government was negotiating peace with Spain and did not want to provoke it.

The charter was finally granted on 31 December 1600. It named about 218 founding members and appointed Sir Thomas Smythe, a leading London merchant, as the first governor, with a court of 24 committees (directors). The company received a monopoly of English trade with the East Indies for 15 years and the right to export silver bullion, which was usually restricted.

At first the company was not a permanent joint-stock company in the modern sense. Investors subscribed to individual voyages, and the profits of each voyage were divided among its own shareholders. The first voyage raised a capital of roughly £68,000.

James Lancaster’s first voyage

The fleet consisted of four ships: the Red Dragon (Lancaster’s flagship), the Hector, the Ascension and the Susan, with a smaller supply ship, the Guest. It left the Thames in February 1601 and sailed from Torbay in April, carrying several hundred men.

The voyage was slow, and scurvy affected many crews on the way to the Cape of Good Hope. Lancaster’s own ship was said to have suffered less because he gave his men lemon juice, an early example of a remedy that would only be properly tested in James Lind’s scurvy trial more than a century later.

In June 1602 the fleet reached Aceh in northern Sumatra. Lancaster delivered a letter from Elizabeth I to the sultan, Alauddin Riayat Syah, and obtained permission to trade. Pepper was scarce, however, and in October 1602 Lancaster’s ships captured a large Portuguese carrack in the Strait of Malacca, whose cargo of cloth and goods helped make the voyage profitable.

At Banten (Bantam) in western Java, Lancaster bought large quantities of pepper and left a small group of merchants to run a trading post, or “factory”. It became the company’s main base in Asia for the next decades. The fleet returned to England in 1603, arriving after the death of Elizabeth I. Lancaster was knighted by the new king, James I.

Key people

• Elizabeth I (1533-1603): granted the charter that created the company.
• Sir Thomas Smythe (c. 1558-1625): first governor and a central figure in English overseas trade, also involved in the Virginia Company.
• James Lancaster (c. 1554-1618): commander of the first voyage and later a director of the company.

Consequences

The first voyage made a profit, but large shipments of pepper also pushed prices down in London. Further voyages followed almost every year. In 1602 the Dutch founded the Dutch East India Company (VOC), which had much greater capital and state backing and soon pushed the English out of the most valuable spice islands of Indonesia.

Partly for this reason, the English company turned increasingly to India. It set up a trading post at Surat in 1613 after obtaining permission from the Mughal emperor Jahangir, and later bases at Madras (1639-1640), Bombay (1668) and Calcutta (1690). Indian cotton textiles, rather than spices, became its most important trade. Later, tea from China would join them as a major source of profit.

In 1657 the company was reorganised on a permanent joint-stock basis, so that shareholders invested in the company as a whole rather than in separate voyages. This made it a more stable and powerful institution.

Legacy

Over the following two centuries the company changed from a trading body into a political and military power. After the Battle of Plassey in 1757 it took control of Bengal, and by the early 19th century it governed much of the Indian subcontinent with its own army. Its rule ended after the Indian Rebellion of 1857, when the British Crown took direct control in 1858. The company was dissolved in 1874.

Historians often describe the East India Company as one of the first great multinational corporations. It pioneered joint-stock investment, shareholder meetings and long-distance management, and its history is also closely linked to the rise of British colonial rule in Asia.

Myths and facts

• Myth: the company was a branch of the English government. It was a private company owned by its shareholders. The Crown granted its privileges and could withdraw them, but the company raised its own money and made its own decisions.
• Myth: it went to India from the start. The first voyages aimed at the pepper and spice ports of Sumatra, Java and the Moluccas. India became the centre of its business only after the Dutch proved too strong in the spice islands.
• Fact: the monopoly applied only to English subjects. It did not stop Portuguese, Dutch or Asian merchants from trading, and the company faced strong competition from the outset.
• Fact: early voyages were extremely dangerous. Disease, shipwreck and conflict regularly killed a large share of the sailors on board, and investors could lose everything if a fleet was lost.

Timeline

• 1591-1594: James Lancaster’s first, privately funded voyage to the East Indies.
• 1599, September: London merchants meet at Founders’ Hall and pledge funds for an East Indies voyage.
• 1600, 31 December: Elizabeth I grants the royal charter.
• 1601, February-April: Lancaster’s fleet leaves the Thames and sails from Torbay.
• 1602, June: The fleet reaches Aceh in Sumatra.
• 1602: The Dutch East India Company (VOC) is founded.
• 1602-1603: A factory is set up at Banten in Java.
• 1603: The fleet returns to England; Lancaster is knighted.
• 1613: The company opens a trading post at Surat in India.

Why it matters

The charter of 31 December 1600 created the organisation through which England, and later Britain, built its trade and empire in Asia. A modest venture to buy pepper grew into a company that ruled millions of people, shaping the history of India, Britain and global capitalism.