#10 Understanding Colonialism: The Early Monopoly Companies and Colonisation

The Early Monopoly Companies and Colonisation: How They Worked

After having outlined in the previous blog the origins of the early monopoly companies, it is now worth pausing to understand how these monopoly companies operated. Divest yourself of any conception you might possess of a trading company today. From their origins, these companies operated like ships of war. They were designed to combat all aggression from any direction: aggression from the people they might meet on landing, from other ships that might wish to steal their cargoes, and from other European monopoly companies that wished to steal their trade. They set out to take land, and to deal with any eventuality. By any understanding, the early monopoly companies were small war machines, and trade was necessary to pay for everything.

The opportunity for huge profit was the driving force. The Companies were set up originally to provide ocean-going ships to carry goods, to trade, and to create settlements on behalf of their European sovereigns. The Royal Africa Company, for instance, developed ships specifically to carry a large human cargo. They bought slaves along the West African coast, carried them across the Atlantic, and sold them by auction on landing. With the money earned, they bought sugar or cotton goods and sailed back to Europe.

The East India Company ships started with sufficient gold and silver for trades in India. They set up forts where they landed to protect themselves, and then exchanged their gold for linens, cotton goods, precious stones and other goods, which they sold back in English or European ports.

Soon the various European East India companies were fighting one other and growing rich off the back of trade. In Britain, during the 17th century the woollen trades, organised into guilds, complained that the new imports of cotton goods were competing unfairly. When the English East India Company found trade had been blocked in Britain, they began to re-export into Europe.

All of this might have continued along these lines in India – which at this time was a mighty empire with her own historical dynamics - if Clive had not invaded Bengal. Like so much of that era, there were deep entrepreneurial talents among these monopoly companies, and little to restrain head-strong young men. Clive attacked and laid waste to the centre of this empire in 1763. From that date onwards, the East India Company ceased to be primarily a trading enterprise but instead recreated itself as an invading enterprise, determined to rape and plunder. Many Englishmen came after Clive who believed likewise as they hugely enriched themselves at the expense of the Indian people.

Just as the Spanish and Portuguese had behaved in the Americas and begun to create the conditions for our contemporary world, so too had the East India Company did the same in India.

The Destruction of the Ancient Empires in India and China

A major characteristic of the long period under consideration here was the destruction of all the major empires.

Mughal Empire at its maximum extent under Aurangzeb, 1707 Source: Schwartzberg, Joseph E. A Historical Atlas of South Asia (University of Minnesota, 1992), Plate VI.A (p.44–46) and XIV.4 (p.148) by Avantiputra7 is licenced under CC BY-SA 4.0

The Qing Empire circa 1820 by Philg88 is licenced under CC BY 4.0

The Spanish and Portuguese invasions of the Americas in the early 1500s, finished with the Aztec and Inca empires relatively quickly. The destruction and invasion of both the Indian and Chinese empires after the 1760s and 1840s respectively were undertaken under the aegis of the British East India Company. The Russian empire was, relatively speaking, long-lived. Whether you consider it ended in 1917 or continued under the Soviets is a matter of debate. All ancient empires - excluding the Incas and Aztecs, but including those in Europe, Austro Hungarian, the Holy Roman Empire, the Hapsburgs the Ottomans - were unable to reform themselves sufficiently to cope with the new military and technical forces unleashed by the all-conquering Europeans after the first invasions in 1492. All of these Empires attempted to reform militarily, but ultimately they failed.

The destruction of the Mogul Empire in India is said to have begun with Clive’s removal of the emperor at the battle of Plessey, in 1776. This was just the beginning of the British invasion of the huge landmass that was then the Indian continent, now broken up into Pakistan, Indian, Nepal, Shri Lanka and Mynamar.

The Indian empire was in practice ruled as some 500 or so smaller kingdoms, most of which had a long historical ancestry of their own. Each had its armed forces, systems of government, methods of raising taxes and economy. In short, there was a wide range of smaller states, which the English East India Company set out to conquer and dominate, after Plessey. It took the company nearly another hundred years to finish the conquest.

It is argued in many history books that the company ceased to become simply a trading business after the Battle of Plessey (1757) as they soon realised that they made larger profits from gathering in the taxes from the landed peasant populations. Most of these taxes were then used to enrich individual members of the company, instead of being used locally by the monarch largely for the benefit of the peoples and peasantry. It was this exploitative structure that began the impoverishment of the Indian continent.

The destruction of the Chinese continent begins with the invasions of the British in 1842. The British private investors in India had been selling opium into China for some years, and the demand had grown rapidly. The Chinese government decided to ban this trade, and when that did not work they intercepted the boats carrying the drug cargoes and tossed them into the sea. The British were furious; they insisted that they had a right to 'free trade' to import opium.

The opium was grown in India by smallholders, as it had been for generations for private use. The British gave themselves a monopoly over the trade; as a result, all opium had to be sold centrally to British owned opium factories. As demand increased, so the pressure on the peasants to increase output also grew. The finished exportable opium was then sold to English merchants in India, ready boxed to sell into China.

When the Chinese authorities threw the opium into the sea, the British navy was called in and the first invasion of China began in 1846. As in the previous situations, the military discipline and superior technologies of war were sufficient to defeat a sophisticated Chinese armed force. The terms of the peace treaty were heavily weighted in favour of the British who took free trade agreements over certain ports and a large volume of silver to pay for their expenses of the invasion. The opium trade continued, with greater ferocity than before.

China had a centrally based government for many hundreds of years at this point. Given the technologies in the 19th century, invasion, destruction and settlement could not occur like the Americas, nor even like India. Instead, every major European state, and all the newer growing industrialised states - the United States of America, Russia, Italy, Germany, and Japan - all invaded, and took similar terms as had the British in the 1840s: large amounts of silver, and freedom to trade within a given geographical area. By the end of the 19th century, the centralised Chinese government was denuded of resources and had departed from its ancient seat of government. The 1914 war intervened, and although China was never fully conquered and colonized her ancient structures of control had been broken.

The British East India Company played a major role in the destruction of the ancient kingdoms on the Asian continent. Invasion, conquest and colonisation were inherent parts of the global dynamic until 1945. Not until the Europeans turned against one another in the hugely destructive wars of the 1914 to 1945 period did anyone seriously question that colonisation was not the way forward to their economic development

---

Suggested Reading

The Early Monopoly Corporations:

Nick Robins, The Corporation that Changed the World, Pluto Press, 2012 provides an important stepping-off point.

Most general textbooks contain details of the early monopoly companies, however few give the emphasis given in this chapter.

Destruction of Ancient Empires:

General textbooks on the period will provide details missing here. The emphasis in this blog is that all the older empires, with no exceptions, had to give way before the military dominance of the new capitalist powers.

John Channon with Rob Hudson, The Penguin Historical Atlas of Russia, Penguin, 1995​

John k.Fairbank Edward O. Reischauer​, East Asia: The Modern Transformation: A History of East Asian Civilisation​, Houghton Mifflin, 1965

Rana Mitter,​ China's War with Japan: 1937-1945, The Struggle for Survival, Allen Lane​, 2013

Philip Longworth, Russia’s Empires: Their Rise and Fall: From Prehistory to Putin, John Murray, 2006

Early Spanish and Portuguese Colonisation of the Americas:

William Howitt, Colonisation and Christianity: A Popular History of the Treatment of the Natives by the Europeans in all their colonies, Originally 1838, reprinted by Good Press, 2019

Laila Laami, The Moor's Account, Garnet Publishing, 2015: provides an excellent account of the search for gold; the violence of the invaders, and the general view of slavery at the time.

Patrick Wolfe, Trace of History: Elementary Structures of Race, Verso, 2016

Wolfe begins his academic life as a historian of the Australian genocide. This book has some excellent accounts of the dispossessions of the American Indian dealing with both North and South America

The Colonisation of India and China:

I deal with the colonisation of India and China separately in later blogs where you find more detailed reading suggestions.

Amitav Ghosh, three superb novels:

Sea of of Poppies; River of Smoke, and Flood of Fire provide an accurate account of opium in India, the British Indian monopoly and the trade to China and finally the invasion.

Amiyra Kumar Bagchi, The Poltical Economy of Underdevelopment, Cambridge University Press, 1982,

Amiyra Kumar Bagchi, Perilous Passage: Mankind and the Global Ascendancy of Capital, Rowman & Littlefield Publishers, 2005

Rosie Llewellyn-Jones , Engaging Scoundrels, Oxford University Press, 2000

There is a volume of writing on the Opium Trade, of which Amitav Ghosh is one example, but much less on the actual British invasion of China, and even less on invasions by France, the Dutch, Itlay, the USA, and Japan which followed the British.

---

Copyright Notice: This blog is published under Creative Commons license. If anyone wishes to use any of the writing for scholarly or educational purposes they may do so as long as they correctly attribute the author and the blog. If anyone wishes to use the material for commercial purpose of any kind, permission must be granted from the author.