To what extent were the trading companies responsible for the growth of the British Empire in the years 1680-1740?

The East India Company, who was in charge of trade with India, was properly initiated in 1600 when Queen Elizabeth signed a charter letting the company trade with India and China. Later on, the East India Company (EIC) was given rights to print money and have their own army. Not only was the EIC a joint stock company which allowed them to sell shares of the business for money, it was allowed to take gold out of Britain to trade for foreign goods as India, who had tea, silk, spices, cotton, opium and dyes, and places of interest to Britain did not want to trade with the British because of their unappealing offers.

Although the Dutch had trade in India already because of their sophisticated banking methods like the national debt which allowed the government to borrow money from the people and a large navy eliminated enemies out at sea, by 1720, “15% of all British imports came from India and by 1763 the company’s annual income exceeded £1 million”, the British acquired ports in Bombay, Calcutta and Madras and had overtaken the Dutch in trade. It is fair to say that the Dutch allowed this because of the Glorious Revolution, where William, a Dutch prince, and Mary were married, but it is also argued that the Empire was becoming stronger and overtaking the Dutch economically. The British had many treaties with India making their settlement stronger.

Another trading company was the Royal African Company (RAC) which specialised in trading enslaved Africans. “Between 1672 and 1689, the RAC transported around 90,000-100,000 enslaved Africans to the colonies”. However, business failed because interlopers were selling at a cheaper and, to make matters worse, the company lost its monopoly in Africa letting independent and business merchants take the RAC’s profits for themselves. Although historians like James Walvin, who said the RAC “no longer made a profit and had created demand that it could no longer supply”, may believe that the RAC was a failure, it had some successes. For instance: “the RAC transported 120,000 captured Africans to colonies […] thus enriching the wealth of British plantation owners”, sugar was widely exported by the RAC and 8 forts were built in Africa which, of course, made a positive impact on Britain.

Another short lived company like the RAC was the South Sea Company (SSC). Created in 1711, the company gained its pillars from the war of Spanish succession which included the treaty of Utrecht and was formed because central and South America would be open. The company also opened up to take charge of the national debt in return for half a million pounds, a monopoly in the South Sea and the right to sell shares. The SSC was seen as a costly failure in hindsight but the public were not told about their false success, creating an illusion that the rich were investing in something worth while. Share prices in August 1720 were £1,000 but furiously dropped to £100. One benefit of the SSC was that it took the national debt into its own hands which enabled the government to not be “saddled with huge debts”.

Trade was a strong aspect for the expansion of the Empire, but perhaps trade would not have grown if the government hadn’t intervened. One method of intervention was the navigational acts. In 1696, an act was passed to enable the British to have more control over trade by prohibiting competitors from taking goods from British monopolies meaning double the profits for Britain. More money for the country meant a better navy, boosting trade with colonies and beating those rivals. Although, in theory, this idea seems great for the British, it did have its limitations – smuggling increased due to the raise of taxes, constricted the colonies to just trade with Britain and it definitely did not help the already bad international relations.

Another way the government fuelled the Empire was the introduction of national debt and the bank of England. After the Smyrna disaster of 1693, the English realised that money was the way to win the war. The national debt and bank of England allowed the government to borrow 8% from the people to support trade and navy which brought in taxes and allowed the government to pay back. The “virtuous circle” certainly was a major factor in the expansion of the British Empire, it was so good that we still use it today. This virtuous circle was put as a policy in 1660 by Charles II named the “blue water” policy where naval power and commercial wealth went hand in hand and were “mutually sustaining”. This vastly benefitted Britain as money spent on upgrading their defence was always earned back and allowed Britain to spend as much as they liked. Not only was there a massive navy now, but more ports were being built which would protect their territories.

War was a key element in the expansion of the Empire mainly because it help gain more trade and territory. In the 17th century, a balance of power was prominent in Europe, making each Empire virtually equal and sharing the same amount of power. But some countries like France under Louis XIV craved more and wanted to “dominate the sea” and with France having the highest population, army and navy in 1689 they were capable. The British were relatively successful with war because of the government’s fiscal military state, meaning that Britain was able to raise large sums of money in times of war to maintain it and practically guarantee success. The war of Spanish succession in 1701 was arguably the most beneficial war of the Empire – France and Spain against Britain, Holland and Austria. The outcome of this 12 year war was the treaty of Utrecht, specifically the Asiento dos Negros, allowing the British to take over Spanish/African slave trade all together. The treaty also gave the country more territory, therefore more trading and exploitation opportunities and showed glorious amounts of power, marking the “successful containment of French ambition” – the British’s long enemies.

The seven years war also contributed to the build up of the Empire. Starting in 1756, the British captured many French bases and in the end, cleared France out of Britain’s area of interest – India. After the war, the government taxed the whole of India containing a total of “twenty to thirty million people” and gained hundreds and thousands of pounds.

However, war had its limitations. It was vastly unpopular with the population and many wars were lost. The declining morale that came with the tragic deaths in the navy and the large taxes were putting people off: “over 30 per cent of the total government expenditure during the Nine Years war and the War of Spanish Succession was financed by public borrowing”. Wars like Jenkins’ ear and Austrian succession were, arguably, pointless – nothing seemed to be gained from these wars. Tax payer’s money was being wasted on these wars while relatives were dying.

In conclusion, these three factors are all symbiotic and all completely supported each other: government helped trade which helped government which helped war which helped trade, and each built the Empire in their own ways. It would not have been possible to expand it in such a short space of time in such a magnitude without war, the government or trade. The booming trade industry and the Navy opened up jobs, increasing total output of the country making the Empire a bigger and economically better place. The development of ports due to trade boosted Britain, too. However, saying this, I believe that government had a larger effect because of its introduction of sophisticated banking. Others may argue against by mentioning that this would not have been needed if it wasn’t for trade but overall, each had an astounding effect on the economy and the strength of the Empire. If it wasn’t for these very reasons, we wouldn’t be the nation or world we are today living in.

Bibliography:

Jeremy Black, Eighteenth Century Britain 1688-1783, Palgrave Macmillan 2008
P. J. Marshall, British Empire, CUP 1996
Kenneth R Andrews, Trade, plunder and settlement, CUP 1984