World History

How did the British East India Company impose its rule on India?
Answered by Discovery Channel
  • Discovery Channel

    Discovery Channel

  1. Queen Elizabeth I of England was a savvy businesswoman, partnering with the British East India Company (EIC) to create several innovative business practices. The British EIC was considered the first joint-stock corporation, in which investors were able to purchase shares of the company and collect dividends according to the percentage of the company that they owned. However, not many corporations throughout history have ruled entire countries. Yet by the beginning of the 17th century, several merchants had become incorporated into the EIC and had monopoly over all East Indies trade. Interest in trade with India almost certainly was because the company's most profitable crop was opium.

    By 1750, Britain had control over the most productive opium fields, and by 1793, it had a total monopoly over opium cultivation in India [source: PBS]. The opium was mostly exported to China, which eventually fought two opium wars with Britain over the import of the dangerous drug. To maintain their authority, the EIC set up a private army, recruited native Indians to join them and eventually instituted martial law. They imposed taxes, illegal land seizures and torture on the population. In 1857, a group of Indians (called Sepoys) who had joined the EIC's army rebelled against the EIC's control during the Sepoy Rebellion. The revolt was a failure, and Great Britain maintained its rule over India until 1947.

    Queen Elizabeth profited off of other similar investments: She owned a major share in the ship owned by Sir Francis Drake, the Golden Hind. The ship's voyages earned Drake a 5,000-percent return on his money [source: Hartmann]. The EIC was also the world's first limited liability corporation (LLC in the United States; Ltd. in Britain), wherein investors are protected from losing any more than their initial outlay of funds. In the case of bankruptcy, the investors are not liable for the company's outstanding debts [source: IRS]. Elizabeth covered any shortfalls of the EIC with funds from the royal coffers.

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