Between Monopoly and Free Trade

Between Monopoly and Free Trade: The English East India Company, 1600-1757

Emily Erikson
Copyright Date: 2014
Pages: 272
https://www.jstor.org/stable/j.ctt6wq02h
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  • Book Info
    Between Monopoly and Free Trade
    Book Description:

    The English East India Company was one of the most powerful and enduring organizations in history.Between Monopoly and Free Tradelocates the source of that success in the innovative policy by which the Company's Court of Directors granted employees the right to pursue their own commercial interests while in the firm's employ. Exploring trade network dynamics, decision-making processes, and ports and organizational context, Emily Erikson demonstrates why the English East India Company was a dominant force in the expansion of trade between Europe and Asia, and she sheds light on the related problems of why England experienced rapid economic development and how the relationship between Europe and Asia shifted in the eighteenth and nineteenth centuries.

    Though the Company held a monopoly on English overseas trade to Asia, the Court of Directors extended the right to trade in Asia to their employees, creating an unusual situation in which employees worked both for themselves and for the Company as overseas merchants. Building on the organizational infrastructure of the Company and the sophisticated commercial institutions of the markets of the East, employees constructed a cohesive internal network of peer communications that directed English trading ships during their voyages. This network integrated Company operations, encouraged innovation, and increased the Company's flexibility, adaptability, and responsiveness to local circumstance.

    Between Monopoly and Free Tradehighlights the dynamic potential of social networks in the early modern era.

    eISBN: 978-1-4008-5033-4
    Subjects: Economics, History, Sociology

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. PREFACE
    (pp. vii-xvi)
  4. Chapter 1 INTRODUCTION
    (pp. 1-30)

    The English East India Company has long sat at the center of debates on the relative virtues of monopoly forms of organization and free trade. The Company figures prominently in the work of Adam Smith, Thomas Mun, James Steuart, James Mill, David Ricardo, and John Stuart Mill, among others, and was a significant influence on the development of economic thought in Britain (Barber 1975, Khan 1975, Muchmore 1970: 498–503). Supporters of the Company argued that monopoly rights were necessary to create and maintain the expensive infrastructure that made long-distance trade with Asia both possible and profitable. Free trade advocates...

  5. Chapter 2 MERCHANT CAPITALISM AND THE GREAT TRANSITION
    (pp. 31-50)

    The period in which the English East India Company grew and expanded is known under several names: the early modern period, the mercantilist period, and the era of merchant capitalism. Stretching roughly from 1500 to somewhere between 1750 and 1800, it can be understood as having begun with the Reformation and ended with the Industrial Revolution. The Industrial Revolution ushered in a new era of industrial capitalism, which has also been referred to as modern capitalism, or simply modernity. During the Industrial Revolution the English Company’s commercial interests declined as the organization transitioned into a colonial power and was eventually...

  6. Chapter 3 THE EUROPEAN TRADE WITH THE EAST INDIES
    (pp. 51-76)

    The core commodities of the European trade with the East, carried by all East India Companies, were spices, textiles, coffee, and tea. The relative share of these goods changed over time and across Companies as the firms attempted to identify and exploit new areas of profitability. Spices were the chief concern for the first fifty years, with textiles growing in importance as the century progressed. Coffee and tea became increasingly important during the course of the eighteenth century. Bulk goods, like indigo, saltpeter, and chinaware, as well as thousands of other smaller commodities, filled out the lists. A short sample...

  7. Chapter 4 SOCIAL NETWORKS AND THE EAST INDIAMAN
    (pp. 77-106)

    The English East India Company began the seventeenth century much like a smaller, less confident version of the Dutch Company. Over the course of the next two centuries the situation was reversed. Where the Dutch appeared to be trapped by the routine behaviors and the sunk costs of their significant investment in establishing control over the islands of the Indonesian Archipelago, the English Company adapted to shifting market conditions by incorporating new ports and goods into its trade. In the East Indies trade one of the largest problems the companies faced was expanding beyond their initial pursuit of pepper and...

  8. Chapter 5 DECENTRALIZATION, CORRUPTION, AND MARKET STRUCTURE
    (pp. 107-124)

    In the preceding chapter, the analysis showed that when the English Company had a decentralized organizational structure, which is to say that significant autonomy lay in the hands of employees, social networks encouraged the transmission of local information and led to the incorporation of more ports and goods into the English trade network. A heterogeneous mix of captains and private traders participated in these social networks. Many captains successfully wove their personal business interests in with the Company trade without directly disturbing the conduct of official business. Others put their personal profit ahead of the obligation to abide by Company...

  9. Chapter 6 THE EASTERN PORTS
    (pp. 125-153)

    As a general rule, organizations are shaped by the environment around them. The East India Company was particularly susceptible to external influences. It was not based on a preexisting template. The company form was novel in the seventeenth century. The East India Company also did not appear as a fully formed, fixed entity. It began as a series of joint investments that coalesced over time into a stable organization with a pool of permanent capital. The administrative apparatus, the Company’s relation to the British state, and its operating procedures shifted and evolved over time in response to changing environmental pressures...

  10. Chapter 7 EASTERN INSTITUTIONS AND THE ENGLISH TRADE
    (pp. 154-172)

    The contribution of Eastern ports to the nature of the English trade in the East becomes clear when the entire set of ports included in the Company trade is considered. In this chapter, I categorize the 264 ports recorded in the logs of the English East India Company ships into the types described in the previous chapter to uncover regular patterns of English interactions with the Eastern ports. Looking across these larger patterns reveals that the English were consistently drawn to commercially sophisticated societies with decentralized market institutions. As in Batticaloa, centralized trade in ports blocked off avenues of opportunity...

  11. Chapter 8 CONCLUSION
    (pp. 173-182)

    Before the founding of the East India Company, Europe was a relative, if rapidly developing, backwater. England was a rural country with a largely agricultural economy, soon to find itself scrambling to emerge out from under the shadow of the Dutch in their golden age. By the time of the Company’s dissolution, India was a colony of Britain, which had become the preeminent global political power. The Industrial Revolution had transformed Britain into “the workshop of the world,” while the City played home to the most dynamic financial sector the world had yet seen. State capacity had increased dramatically. Economics...

  12. Appendix PORTS
    (pp. 183-192)
  13. NOTES
    (pp. 193-202)
  14. BIBLIOGRAPHY
    (pp. 203-230)
  15. INDEX
    (pp. 231-252)