How did the East India Company change the world?


Announcer: Welcome to Stuff You Missed in History Class from howstuffworks.com.

Candace Keynard: Hello, and welcome to the Podcast. I'm Editor Candace Keynard joined by staff writer, Jane McGrath.

Jane McGrath: Hello, Candace.

Candace Keynard: I have a new last name, yes. But the content is all the same on the inside so don't be fooled.

Jane McGrath: Oh, I don't know, you're a different person to me.

Candace Keynard: I'm smiling a lot more -

Jane McGrath: I can't take it.

Candace Keynard: - because I have a wonderful hubby, but same history buff as always and today, we actually have a very seemingly dry but quite juicy topic for you guys.

Jane McGrath: That's right. Today we're talking about the East India Company, and we should clarify that there are actually a couple of East India Companies and when people - when historians talk about the East India Company, they usually refer to the British, which is what we're going to focus on but we're going to talk about the other ones as well.

Candace Keynard: Yeah. So, if you like tea and you love opium, this is the episode for you.

Jane McGrath: Yeah, I think you can say that for sure. To give you some background, what's really important is that back a few years after Columbus discovered the America's, the Portuguese explorer, Vasco de Gama, actually discovered a water route to the east India's on the other side of the world. So, this made it so much easier to travel, it's faster to travel to the East India's which had so much - so many commodities that Europe was after, especially spices and if you've ever had British food, I mean, it's not - it's pretty bland.

Candace Keynard: Sorry British listeners. We do love our fish and chips though.

Jane McGrath: Yeah, but that's exactly why Europe was so after the East India's. It had so many good spices and we all know how good they can be.

Candace Keynard: So, Queen Elizabeth, a very enterprising woman, thought I really want a piece of that pie and she came up with a very innovative way in which she could raise enough money, in addition to what was available in the royal treasury, to get a bunch of ships together to go and make a successful trade route for England.

Jane McGrath: That's right and it's interesting to note that that the Dutch sort of got a head start on England at this time. Even though they didn't have their official charter yet, they were doing really well over in the East India's. Like I said, they didn't have an official charter and this was causing a lot of problems back home for them because individual companies would compete each other and flood the market with spices and so the profits would drop and they wouldn't have enough to fund their - more sea ventures, etcetera, and so England actually took a really smart move, you know, when the London merchants got together and asked Queen Elizabeth for a charter.

Candace Keynard: And, so, she granted it to them on December 31st, 1600, a very grand day because this charter, you know, what seemed to be innocuous piece of paper that allowed people to trade more successfully, turned England into this major world super power.

Jane McGrath: And it started a few precedents and our colleague, Josh Clark, writes a great article about how the East India Company changed the world. And, in it, he talks about how this company was basically the first joint stock corporation and what that means basically, if you're not into the business jargon, is that investors are given a share of ownership in the company.

Candace Keynard: And if the company should go under, you're guaranteed not to lose anymore than what you put in the company so -

Jane McGrath: That's right. It was the first limited liability corporation.

Candace Keynard: Exactly. And here in the United States, we abbreviate that as LLC; over in England, it's LTD. And it's good news because, especially in times like these, if a company goes under, you're guaranteed that you won't be responsible for any outstanding debts that the company has occurred. So, very, very smart move on Elizabeth's behalf.

Jane McGrath: That's right. And they had this charter and the Dutch learned from it. They made their own charter a couple years later. And, so, England was still catching up with the Dutch for decades to come. They would fight each other over on the other side of the world. It's interesting to note, it took about a year to go back and forth from the East India's to Europe so it -

Candace Keynard: And just to clarify, the route you're talking about, are you talking about sailing down both sides of Avacon and through the Cape of Good Hope?

Jane McGrath: Right, yes, that's right.

Candace Keynard: Okay.

Jane McGrath: Thank you for clarifying that. And, so, because it took so long for this transportation, they couldn't - whenever they had a dispute, they couldn't very well come back to their original countries and then come back. It would just take much too long. And, so, these companies had their own military resources. They would fight each other. They would fight even local areas if the local governor there was just being uncooperative and they didn't want to deal with it. So, they were catching up with the Dutch for a long time. There was this interesting book called Splendid Exchange by William Bernstein, and I love his description of the East India Company because he calls it the obnoxious kid brother of the Dutch East India Company because the Dutch had basically better ships, better technology, more ships and the English were just catching up for so long.

Candace Keynard: It was sort of a case of anything you can do I can do better and they took it to the extreme.

Jane McGrath: Yeah, exactly, and so the Dutch sort of had control over the Spice Islands. That was their territory and they were elbowing the English to more unprofitable, not as nice ports so the English sort of made their way to India instead. And, in India, they were able to capitalize on their clothes and textiles.

Candace Keynard: And, not to mention, their opium. And what was rather irresponsible of the East India Company is that they would force the people, and the lands that they controlled, to purchase their commodities only from them so they would essentially take hold of all the commodities whether it was tea and the American colonies are opium and the Indian colonies, and they would use that to leverage their power essentially.Like, we all know the story of the Boston Tea Party and Jane and I have done a podcast about it as well. In short, the East India Company had a bunch of surplus tea that it needed to unload and the prime target market were the American colonists so they made it much, much more attractive to buy tea from the EIC than from any other purveyor of the tea. And the colonists did not like being told where to buy their stuff from.

Jane McGrath: That's right. One historian put it that the colonists dumped the tea in the ocean because the East India Company was dumping the tea on them. You know, they had their surplus and -

Candace Keynard: Tit for tat.

Jane McGrath: Right. They didn't want it forced down their throats basically.

Candace Keynard: Well, and that's what the colonies were founded on this idea of freedom so who was England to come in and say you have to buy from us -

Jane McGrath: True.

Candace Keynard: - which is essentially what they were doing.

Jane McGrath: Yeah, and either way you look at it, it did lead to the American Revolution or it was a contributing factor, one of the major events that were taught in history class. This helped lead to the war and it helped form the United States today and so it's a huge influence that the East India Company had over world events.

Candace Keynard: To think that a business, essentially, could've started a war like that is a really powerful thought and it's not just in the American colonies that the EIC provoked this kind of uprising, you know, we said before that they were trying to control all the opium exports over in India and it lead to a very similar revolution there.

Jane McGrath: That's right. And to give you some background on that - India was a very fragmented territory. It wasn't unified by any means when the East India Company came in. The East India Company businessmen basically had to make individual deals with all the local rulers at that time in India and some were more cooperative than others so they made individual contracts, like I said, and they got - at first, their textiles and their clothes, they made a lot of money from that commodity but this became less profitable. And they had to shift over to the spices in India and they were mostly after China, to get Chinese porcelain, silk and tea. And, so, you have this multiple trade system going on. So, the Chinese were getting less and less interested in the textiles but they were getting more and more interested in opium.

Candace Keynard: Who wouldn't?

Jane McGrath: So, opium became a major point in the East India Company and its trade between India and China and like Candace alluded to before, no Indian was able to grow opium in India without selling it to the East India Company. And, so, they sold it to China and basically China had a lot of problems with this. They didn't want to deal with this anymore. The Chinese authorities we should say. And at least in my history class, the way they painted it to me was that opium was a highly addictive dangerous drug and the East India Company was very irresponsible in taking advantage of this. And, actually, Bernstein, the historian I mentioned before, he actually said that it wasn't quite like that. Only about 1 percent of the Chinese smoked opium to such an extent that they got addicted, which is still bad, I mean, opium was a problem at the time but also one of the issues was that the Chinese authorities did - they did have a moral issue with the opium trade but it was mostly about the economy and economic issues involved in opium. About 1806, the value of opium coming into China exceeded the value of tea going out so this was a problem. The country was starting to hemorrhage silver and so this is what eventually bubbled up into two opium wars.

Candace Keynard: But another problem that was occurring during this time was that the British troops essentially were creating private armies from the local Indian populations and so can you imagine that this foreign corporation comes into your country, demands that all the farmers around you sell their crops only to them, and furthermore, taps you for service in a private army. It just didn't seem right and so there was an uprising.

Jane McGrath: That's right and this is called the Sepoy Rebellion and Sepoy was the name of one of these Indian soldiers who fought for the East India Company.

Candace Keynard: But the Sepoy Rebellion, back in 1857, it wasn't exactly successful. It was India's really sort of first major effort to get their independence from Great Britain but it didn't really work because the British Army was able to overtake them. Not surprisingly. They were outnumbered. So, India was an English Colony really until about 1947 when it became a republic.

Jane McGrath: That's right. And I guess that story deserves a podcast in its own because it's, you know, Gandhi and everything. There's so much to talk about in that arena, but we should also go back and mention that this is around the same time as the two opium wars which were both failures on China's part and so they both just ended up in expanding the trading rights for the East India Company and China. So, it's a tough situation.

Candace Keynard: It really was. And sort of a side note to all of this, and this is really a matter more of personal interest because last night when I was reaching about the East India Company, my husband Stuart said, oh, you have to talk about IPA and being sort of a beer aficionado -

Jane McGrath: India Pale Ale?

Candace Keynard: India Pale Ale. He was like -

Jane McGrath: No way.

Candace Keynard: - well, what about the role of IPA in India and I didn't really know much about it so just, you know, as a treat for all of you out there, for those of you like opium, you got yours and now all of you beer lovers are going to get yours. Essentially, the British were very, very used to drinking ale. It was something that was part of their culture; it was something they expected; it was sort of like, I don't know, southerners like to drink their sweet tea; people like water; well, they expected their beer but the problem with the trade route from England to India is that it was so long and the weather changed so drastically from the side of the unloading that they had to figure out a way to make beer differently so that it would make it on the trip. It'd be lik e driving to the grocery store to get a gallon of milk and then taking a three-hour trip home not having a cooler in your car. By the time you get there, it's not going to be good for drinking.

Jane McGrath: Sure.

Candace Keynard: So, a town called Burton on Trent had water that had a really high concentration of gypsum or calcium sulfate and this actually helped change the quality of the beer. In addition to adding extra hops to it, it'd make it really bitter and sort of fruity tasting but it made it stronger and had more preservative qualities so that it could mature more quickly and stay more stable. So, the traders in India as well as members of the Navy and the army there could drink it and be happy because they had their beer. And I actually - I got this information from the Meantime Brewing Company which was a great website if you're curious about the history of beer, but I learned there that IPA is considered a running beer and running beer means that you can drink it immediately. It doesn't have to sit around and mature like ale does. You know, you see in movies Ale is contained in those really big oak barrels where its, you know, I guess aging and getting more delicious with time but it was incredibly popular and the colonists drank it up. I think they were allotted something like a gallon a day and maybe even more after IPA became more successful. And you can still get your IPA today.

Jane McGrath: Wow.

Candace Keynard: So, who knew you'd be learning so much about beer today but, you know, we care about you guys so that's that. And if you want to know even more about other subjects or there's something that tickles your fancy that you wanted to hear Jane and me discuss, email us at historypodcast@howstuffworks.com.

Jane McGrath: That's right. And if we don't do a podcast on it, we could write a blog on it and if you haven't seen it, you should go check out our blog, Stuff You Missed in History Class on howstuffworks.com and you can comment on our stuff and we both post twice a day so it's a lot of fun.

Candace Keynard: It is. It's like getting a quick 60-second dose of Candace and Jane every day. You're going to love it. And if you want to learn even more about the East India Company or beer or Queen Elizabeth, be sure to check articles on howstuffworks.com.

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