More than State: British East India Trading Company
As you dig into the principles of company management, sooner or later you come across two large formations - the Inquisition and the East India Trading Company. I’m not ready to discuss the first to avoid holivars, but I unearthed a little about the second.
This is a business that suddenly became larger than England, influenced technological progress, unleashed a couple of wars and killed hundreds of thousands of people. In half the planet, traces of this company - from “Company Gardens” near the Cape of Good Hope to references in modern films like “Pirates of the Caribbean”. The business was impressive.
Imagine the situation: the second half of the sixteenth century, in England a complete ass with finances. The people are baying and disobeying, a well-functioning judicial system has become a tough random, a threat of war, no reliable external alliances. It is clear that all this will lead to even greater problems, internal schism and civil war. We had to do something, and do it pretty quickly.
The first way to solve the problem was as simple as logging - to refinance and lick the wounds, and then slowly give back what was done. But only Amsterdam gave at 14% per month, and therefore the British, slightly numbed by Dutch impudence, refused to take it.
It remained to think. This was unusual, so the result also turned out to be unexpected.
I myself, of course, did not participate in this matter, but raising the data was exciting. I must say right away that there are many sources, they are contradictory, but some integral impression can be made. Further - exclusively what I understood, it is quite possible that the plot went somehow differently. To me, all this was important not for historical accuracy, but in the applied plan for studying control theory. It was on this that I tried to focus further.
Deeper in the ass
The most profitable business then was trading with new lands. Let me remind you, at this time, Portugal slowly gave the palm on the seas of Spain, plus Venice was strong. England did not even have a sensible fleet.
Previously, a company had already been created to trade with Spain, and it provided a sufficient stream of income. But this whole song ended right at the time of the king’s change - Philip II forbade carrying goods on foreign ships. In English you can’t, in your Spanish you can. For the British, it was Ales - there was not enough money anyway, but here it was not enough at all. Here are the forks.
Smuggling began, wild and merciless. In 1563 there was an embargo on the import of goods into England, because the English Jackie Sparrows with the Morgans and Bloods painfully competently gave the Spaniards a go-ahead at distant frontiers. By the way, the real one from the whole list is only Morgan, and he was born a century later. Therefore, we honor the memory of nameless heroes.
And even a little later, the corsairs managed to grapple with Portugal and foreign trade of England finally came thick polar fox.
Contacts with Russians
In 1553, the British explored the road to us Russians. Ivan the Terrible in 1558 made his way to the Baltic and - away we go. We needed a lot of gunpowder and guns, cannon steel - and now the British set them up. We did not need anything else from them - everything could be got closer. But the Europeans did not give us weapons - and I fully understand them. By the way, about the guns - it seems that these were the very ones that the Lefty master bequeathed not to clean with a brick.
Europe, from such a spectacle of ammunition supplies, bypassing everyone, to put it mildly, fell into cognitive dissonance. The trade associations thought for a long time what to do, and still convinced the Danish king that the British were carrying trunks to the Swedes so that the named Swedes could attack him personally. The Danish king was paranoid. In a medical sense. The sea route was blocked. The British tried smuggling, but quickly learned that the Danes were not relaxed Spaniards, they knew how to catch, and the ships were squeezed right away with the goods.
The Age of Smuggling
The English merchants were loners who, if anything, sat by law. They did not have a central association and a trade union, and this greatly interfered with upholding interests. Running a little ahead, right up to the time of the end of the Drake round-the-world trip in Spain, they argued about everything - but they had already broken into two fronts, the Anglo-Spanish trading company and the “trade union”. At the same time, someone especially cunning established a supply chain for the Berbers (1576). The Spaniards, fighting with the pirates of the Sultanate, were very pleased that uneducated pirates have long-range rifles and guns with the stigma "made in England." Consequence: May 1585 - confiscation of all English ships by Spain.
In response, Elizabeth began massively issuing corsair patents. An example of the hero of these years is Jora Clifford, a gloomy man with a very interesting manner of entertainment. He accumulated raids already on the 47-gun ship, and then began to intercept the Spanish convoys with silver and gold. The problem was that they still had to be found, which did not work out. Three times he epically missed the convoy and robbed the uninvolved. Then an extravaganza happened at San Juan. There, the British in a large assortment approached the island to rob. The Spanish General de Guzmán ordered the cannons to roll deeper and not to shoot. The British decided that the guns had not yet been delivered, and came closer, already 150 meters to the fort. And they began to arrange a military council. Firing 24-pound cannons from 150 meters with the ability to carefully aim at the shot sectors is like a machine gun on a wagon point-blank. The raid broke off. To put it mildly.
But our hero Zhora raised his experience, drew conclusions and returned six months later with 18 ships. And on the island there was just a change of fighters - the old soldiers were taken away, and the new ones have not arrived yet. As a result, the British with two attempts took everything at once - 60 people killed in losses, 4 million pesos of revenue. A month later, the loss amounted to another 200 deaths from dysentery and 500 patients. I had to leave the island. After paying off the loans, George Clifford lowered the remaining money at the races, which seriously enriched the English budget as a result (after sublimation and distillation).
About such remarkable people then consisted of a "free fleet."
Let me remind you, the whole history of maritime trade is the history of astronomy and navigation. Who has a better card, he wins. The British could not trite around the Cape of Good Hope in Africa. Three expeditions were sent: three ships, three ships, two ships. Weevil has eaten everything. Everything would have gone slowly and sadly if the Dutchman Jan Gugein hadn’t stolen the cards from the Spaniards. At 17, he got a job as a servant of the Archbishop of the East Indies, and maliciously abused his official position - he copied all the cards that he could get to the dash. He illustrated with them his little book (sorry, a book) about travel. 4 years before the formation of the Company, he published it.
On December 31, 1600, 214 merchants and one Earl George Clifford, already mentioned, received an excellent New Year's gift - Queen Elizabeth founded the East India Trading Company CJSC. The manager was a man named Thomas Smith, 24 directors appeared. But on December 31 they did not celebrate, because they have Christmas, not New Year's. Now about Zhora. Zhora Clifford had time to go broke specifically and entered into this project in order to push ships that could not become a liquid asset at a time when the merchant fleet was not needed. Cunning type.
The first expedition started in 1601 and returned in 1603. They went around the Indian Ocean and bought all the fun. Jewelry and silk weighed almost nothing, but the ships were loaded with pepper to the very top. Margin 400%. It was so much that they simply did not have time to sell it - for 3 years it was listed on stock balances. The next year, another expedition started. According to its results, the founders received a full return on investment - and they still have shares in the company.
The model of the English company was built on bonds - merchants gave the company a loan, and then demanded a refund with interest regardless of the circumstances. The success of the expeditions in this aspect was unimportant. Nobody gave shares to investors. And in the Netherlands there was already a stock market, and there they understood what a stock was - it was the shares of the Dutch company that were traded in Amsterdam. The stock gives a share.
The Dutch as a population had 10 times more money, and the population was actively investing. For now, just keep this fact in mind, he has not yet begun to dramatically influence history.
At the same time, the Dutch entrenched in Indonesia - the British could not afford to invest in local infrastructure and could not afford to close the risks of unsuccessful expeditions, there was not enough money. And the Dutch could show a couple of years of losses to investors, but then get after this decade of prosperity. Plus, all their operations were calculated in shares - if one failed accounted for two successful ones, you were still in the wild.
The consequence of this model - the Dutch East India company for the 1603rd year had the full budget of England in operating expenses. A young English East Indian company had horseradish with butter.
In 1688, the British heard about the stocks and also reorganized - long before the actual reorganization, Uncle Cromwell, who was known in economics circles, very actively kicked them.
A slightly later example of a Spanish base. This is the island of Palawan. The story is interesting because there was no stone in place, so the Spaniards built it from coral. A very long time.
This is how picturesque it looks from the ground.
In the 1620s, the Dutch captured the Banda Islands and gained a monopoly on nutmeg. Admiral Kun decided to create an intra-Asian trading system, a kind of bus for exchanging goods between China and other countries. And he did it. The British, Spaniards and Portuguese, looking at this impudence, just boiled with rage, but could not do anything. “Even the tallest gallows in the good old England are not tall enough for Kuhn,” said the director of the British East India Company.
Armed clashes began. The Dutch and English fought over the islands of Ai and Rune. And by the forces of the Japanese. But this is a separate song. In 1621, Asian mercenaries slaughtered all the British there. Kuhn simply justified his actions before the shareholders: "There is no trade without war, just as there is no war without trade." Then the Dutch attacked Jakarta, where there was a warehouse of pepper, again they cut everyone out without exception. The British also did not remain in debt - if a Dutch merchant met, then his team landed right at sea. This continued for some time - the British lost almost all the trading ports except the Indian ones.
In Europe, the Thirty Years War began. Thirty years later, it ended, but in the East Indies the real Santa Barbara was happening - Bombay, which was supposed to be English, still could not be correctly conveyed. Everyone fought against everyone, because the situation was constantly changing.
Historically, the profit was only about 5% per year, but stocks were growing steadily - over the 9 years from 1672 to 1681 they jumped from 80 to 365 pounds. In 1694, the East India Company employed 35 people and a bunch of freelancers (including captains).
The business did not go. More precisely, he walked more slowly than that of the neighbors, with difficulty and anguish. In 1688, the so-called “Papillon Syndicate” was formed, which began a bidding auction in parliament for a separate permit for trade with the East. Wilhelm looked at these disputes, and in 1694 (already becoming king) issued a decree according to which the monopoly of the East India Company was canceled. All trading companies had equal rights to trade with India.
The business scratched its head, threw itself off and supported the overthrow of the bloody regime, but nothing came of it. In order to somehow regain monarchy trust, the East India Company came to Wilhelm in 1696 with an offer - they gave a loan of 500 thousand pounds at 4% in exchange for restoring the monopoly. However, uncle Papillon appeared immediately, who offered the king 2 million at 8%. Wilhelm made an original decision: he took both loans and left the situation as is. After a dozen years, the founders died, and it was only for commercial interests. As a result, in 1702, the syndicate and the East India Company merged into one company, which was now called the “New or United East India Company”. The monopoly was restored to the great joy of the owners. Plus, some in the department drew conclusions from the failed overthrow of the king - and began to realize that we need our own power structures within the business. To further such failures were not.
The task is set - it is necessary to solve.
By 1720-1730, almost all developed Europeans sailed to China in the Indian Ocean. In China, there lived the Chinese, who had long been accustomed to doing fine themselves without foreign trade. But they had a small surplus of goods, which they gladly exchanged for gold and silver.
This means that full “collectors” went there, and tea and silk were brought back, dare you? George Anson also realized and captured the Spaniard with two annual sales of the British East India Company on board. This was a good business development for the British. And the British decided to make this a repeating business process.
A Danish East India company was still conducting operations on the site, an Austrian company was established in 1717, and a Swedish one was opened in 1731. The Dutch and the Portuguese were already fighting merrily both in the trading plan and in very offline. The Dutch won. And then the French leaked into this warm brawl. There was an incredible amount of rabble in the region, including some pretty well-trained exiled Japanese ronin. They, according to conservative estimates, had up to 100 thousand snouts. The French hired everyone they could reach - and all of a sudden they started teaching European rules of battle that no one had done before. And at the same time they added a super-mobile - an analogue of diplomatic immunity. Only the tribunal of the French East India Company could judge their actions.
While the British exhaled a little and continued to grow steadily, the French unexpectedly rang everyone.
Climax of history
At this time, we need to understand why England suddenly found the means. There was a guy named Lorenzo Tonti who proposed a win-win scheme - you give a million to the state in the company of your comrades, and then you earn interest from him until the last of your comrades dies. The Caribbean pirate fraternity scheme, slightly twisted by Tonti. In France, this "scam" was not allowed, suggesting that then friends would cut each other so that the latter received a jackpot. And in England and Holland a ride. The only difference is that the Dutch gave 6%, and the British 8%.
No one understood anything yet, but it was a disaster for Holland. These two percent British lived. Because wealthy Dutch people came to English banks. The operating account grew very fast, England began to allow herself huge turns. Plus, uncle Wilhelm really took for the most valuable elite of society - he had grandmothers, and there was no need to worry about the rear. Nobody will overthrow him, otherwise there will be no attendants, because the whole system rested on the royal word and the royal treasury.
And taxes in England were 13.2% at the 1740th, and in the Netherlands - about 30% of the total. And the Dutch suddenly began to build industry in England. Because the British banks gave the Dutch cheap loans from their own Dutch money from tontines. The process caused several more recursive consequences, and the British became fat cats. Turnover from the Dutch Company went to the English Company.
The public understood the scale of what was happening in about 40-50 years, when it was too late to twitch.
Having collected money, England abruptly changed its strategy: it became more profitable to trade than to trade. And the stage of pupation, that is, the protection of their interests, began. Everyone else became pirates for the British. Large armed convoys, military transshipment centers appeared, that’s all. The next stage is the occupation of the bridgehead and the construction of infrastructure. While at a loss, but with the understanding that you need to invest once now, so that then everything works like a clock. There were some excesses, but the British tightened their infrastructure and strengthened themselves well in the Indian basin.
In the 1750s, both England and France clashed with the armies of the Indians and other local sovereigns and were very, well, very surprised. It turned out that the advantage in technology and training is much more important than the advantage in number. All locals began to be rolled out just like a steam rink, and the other strong Europeans were the only strong opponents. June 23, 1757, the date of the Battle of Plessis, is considered by many British historians to be the birthday of the British Empire. This was the date of the final realization of the superiority of steampunk technology over zolgrash tactics.
Both trading companies began to build real empires. But if in the case of France it was a colony of France, then in the case of England - a colony of the English trading company.
A slight difference between the lands of England and the English East India Company
The communication delay was six months. Therefore, the employees of the Company were very autonomous. Actually, in order for this entire structure to work efficiently, somewhere else near the founding of the Company, privileges were granted that employees are inviolable. I mean, it's almost like an army - its own court, its own charter, its own politics. That is, the Company has become a mini-state, an injective England.
In the current period, the principle of hiring employees was this: "a small salary and a huge extra income." For example, the "founder of the British Empire" Robert Clive was originally a scribe with a salary of 15 pounds a year for the 1743rd year. And as a lord, baron Plessis and a general, he talked to his English friends: “I wandered through the cellars open to me between piles of gold and jewelry!”
Employees stole at full height.In 1763, they made an assessment and realized that they stole about the company's annual turnover. The state, of course, was not very happy with this state of affairs - it turned out that the business of England did not give anything. With businessmen demanded reporting and pay taxes. But then it suddenly became clear that most of the government was either tied to the Company in shares, or received a pension from the Company. In 1767, the Company proposed to play in the “Field of Miracles”: “We give you 400 thousand pounds, but we don’t open this black box.” And the Director of the Company said that "all territories subject to the Company were conquered without any help from the British Army and the Royal Navy," so what is happening in India remains in India.
In 1773, Bengal (20 million people) was controlled, in fact, by 250 officials of the Company. Plus the power corps - 500 officers and 3,000 white soldiers. The British found local cadres, who served, in essence, as the occupation administration and vigorously began to press their own. In 1781, they began to investigate this story in London. In 1783, a bill appeared to establish a parliamentary commission to control the Company. In the same remarkable year, Lacagigar began to erupt, and he did this for already 8 months. Volcanic winter began due to soaring ash. About 9 thousand people died directly in Iceland, and seasonal cycles around the planet changed slightly. The Nile did not spill, 2 million people died. And in India, the temperature of the water rose, which led to a drought.
The Company had stocks of biscuits in warehouses, but the warehouses did not open. It was assumed that you just have to wait until competitors die out naturally. When a loaf of bread began to cost about 1000 rubles by our standards, only then did the clerks, on their own initiative, start making crazy grandmas. In 1783-1784, in India, according to various estimates, from 10 to 14 million people died, including up to 4 million in the territories subordinate to the British.
On February 13, 1788, a hearing on these events in London began. The company was forcibly divided into several parts. Commerce was separate, and politics was under state supervision. But in fact, the control system was quite effective, so nothing has changed much. The reports of the governor general were checked by the directorate of the Company, that is, they did not check the embezzlement and abuse, but that the governor did not become disloyal to the company. The official is loyal - and one can close his eyes to his theft. Disloyal - and it is entirely possible to accuse him of corruption. The new scheme has taken root - and the Company continued to work.
In 1779, a spinning machine was invented, and cotton no longer had to be carried. Introduced a barrage duty on imported fabric. They began to carry raw materials. This came back in the 1800s, when Indian weavers, left without orders, began to die of starvation in large numbers. Even the raw materials were not sold - it turned out to be cheaper to carry from Brazil. And yet another round of wars began in Europe, and there was no money left to bring them to China for procurement. In 1771, the Dutch Company went bankrupt.
In 1793, employees of the British East India Company almost doubled their salaries, but at the same time (finally!) Were forbidden to engage in their own trading operations. Now clerks should work exclusively for the Company.
England began to fight with France. France began to actively distribute privateer patents in the waters. Something reminiscent, right? In 1807, French and other pirates got so fucked up that the English Company began to change strategy. We switched to the convoys, playing on the fact that the pirates did not have communications. But the convoy system drastically reduced the clock rate of transactions.
The end of the European Wars
In 1811, Europe divided the areas of responsibility in the water area. In the 24th year during the negotiations, it turned out that Singapore was sold to the Dutch. The sultan sitting inside, to say the least, was delighted with such news. And he proposed a deal - to sell Singapore to the Company. And he sold it. That is, the city was immediately recaptured, was not in English jurisdiction, was not in any jurisdiction at all - and became a free haven. The company brought opium. Nearby, Chinese smugglers deployed bases. We also drove from Russia, but camels. That is, it turned out less.
China was getting sick. The company did not want to fight with it (the partner and supplier), but free traders began to sell contraband directly.
At this time, our (Russians) pounded Persia in a military conflict. This drew government troops of the British. We were afraid that the British would go on the attack, the British were afraid that we would go on the attack. Paranoia grew stronger, budgets increased, troops piled up and frowned at each other.
In England, they decided to organize a war with China, but since there were no forces of their own, they entrusted this obligation to the Company. The situation was saved by the fact that the army in China was as plush as before in India. And the Company unexpectedly won.
The success surprised everyone: both England, and China, and even the Company, it seems. Looking at such a picture, the British government decided to undercut the powers of the Company. First they took the monopoly on the East Indies (1813), then on China (1833), requested 6 million pounds (1834), and then introduced a parallel management system in India.
The company was losing money, and it was necessary to invent something urgently. They carried out reconnaissance and established that in India, it turns out, tea is also growing. In Assam. But the locals do not know how to do it like the Chinese, and burn the leaves. Tea is beautiful and strong. In 1837 a British company appeared, which was engaged only in tea. In 1841, a Bengal medical service doctor, Arthur Campbell, secretly exported samples from China and tried to grow them in West Bengal, in the Darjeeling area. The “foreigner” took root very easily on the new land, and now the British could grow real Chinese tea in Bengal. The Chinese tea market has gained a hefty competitor.
In the 50s, the Company rolled out Burma. The reason was completely idiotic - someone started a rumor that the cartridges that were given to the sepoy were greased with pork and cow fat. And this has an important religious connotation. Factory workers began to laugh at the elite of the elites and call them suckers. The English colonel announced a general gathering and brought to the personnel that this was all a lie and a provocation, and therefore he would order that the cartridges be degreased. The people naturally thought that if this is a lie and a provocation, then why degrease it? The Hindus were offended, they continued to be teased by the lower classes.
And then a year later the uprising began. Which, perhaps, would be quickly suppressed, if not for this lever of influence on the sepoys. It was somehow no longer so fun for them to fight for the British. And the British taught the local intelligentsia what and how to do. On your own head. And the locals showed miracles of an inventive approach to solving the problem of how to kill the invaders. Tip: Whenever possible, do not fight with well-motivated engineers who want to kill you.
The second war in Burma undermined the company's budget, and there were no new profits. The company first fell into the cash gap, and then went bankrupt.
A year later, the Indians read a report in London "on the true state of things in the possession of the East India Company." The result is a bill to close the Company. It was assumed that the Queen should rule India directly. There was little money there, but there was a lot of labor, a good market, and even India was proof that England was a force. Without India, the Empire somehow did not work out. As a result, the shareholders of the East India company paid compensation of 15 million pounds, and the business was closed.
The company originally saved England and made it great by pursuing trade routes for what could not be done by a direct invasion of Asian countries. Then it became too autonomous and too strong - enough to become a competitor to England itself. And at that moment, powers began to be cut off to her. The modified Company began to slow down the progress of England (in particular, to use slave labor instead of developing capitalist models), and it had to be closed completely for all reasons accumulated on all sides.
There are many traces left. Shipyards Companies seem to have become a model for St. Petersburg. Huge Cape Town is the former transshipment base of the Company. Jakarta is a slightly grown headquarters of the Company.
Please note how two almost random facts - a 2% difference in Tonti's scheme and the wrong fat in the ammunition depot (or the clear PR job in India) played the role of triggers in this story.
The journey through the links is worth starting from these three pages: Wiki , dictionary , historical site . The most important are the lists of literature, on them you can move on and on.