Dr Tim Davies & Meike Fellinger
The English East India Company – Private Trade and Monopoly
Ian Bruce Watson succinctly and usefully defined ‘private trade’ as a ‘portmanteau term delimiting all
trade with the East Indies and within the East Indies, not conducted for the Company’s benefit.’
Within the private trade system, there were several different commercial actors at work. Company
servants stationed in the East engaged in their own trade within Asia and also with Europe, illicitly.
The Commanders and seamen of East India vessels also formed an important group of private
traders, and were also heavily involved in conveying the profits created by Company servants in their
East Indian trade back home. There were also so-called ‘free merchants’, often ex-Company servants,
who were permitted to carry on trade in the East provided they did not encroach on the Company’s
monopoly.1
This paper provides a short overview of English ‘private trade’ in Asia, focusing on two major
strands of this branch of commerce: intra-Asian trade around the Indian Ocean, and the China trade
to Europe. Much has been written about English private trade and a great deal of scholarly attention
has been paid to these two major areas; yet it remains an incredibly fruitful area for new research.
Here, we offer both a historiographical overview and some signposts to exciting avenues for future
work.
Intra-Asian trade and the Foundation for Empire
In the seventeenth century, private trade was generally viewed with hostility by the English
East India Company’s Court of Directors, and was considered to pose a threat to the stability of the
corporate structure. While the EIC continued to monopolise the trade of Asian goods to Europe, a
series of decrees issued from the 1660s eventually granted permission to its own servants, mariners
and free merchants to engage in intra-Asian trade however. The Company effectively withdrew from
the ‘country trade’, and legally permitted its servants to conduct business between Asian port-cities
on their own accounts, alongside their role as Company servants. 2 In formal terms, the right to trade
privately was extended in 1675 to “any commodity… to any port or places in the East Indies to the
northward of the equator, except to Tonkin and Formosa”. Company employees resident in the
factories established across the Indian Ocean world freely and successfully engaged in intra-Asian
trade throughout the eighteenth century; private fortunes became ‘increasingly visible perquisites’
of Company service.3 Although private trade had the potential to facilitate the acquisition of sizeable
fortunes, few men actually returned home to England as ‘men of means’ anyway; most were unable
to enjoy the fruits of their labours in Asia.4
1
Ian Bruce Watson, Foundation for Empire: English Private Trade in India 1659-1760 (New Delhi: Vikas, 1980),
pp. 61-62.
2
Søren Mentz provides a very concise description of this: ‘In 1665 the EIC abandoned Asian country trade,
legalized private trade, and encouraged the servants to concentrate their activities in the Indian Ocean. In the
century that followed, private trade expanded and British merchants emerged as the most successful Western
traders in the Indian Ocean, surpassing not only the declining VOC, but also rivalling Asian commercial groups.’
Mentz, ‘European Private Trade in the Indian Ocean, 1500-1800’, in The Trading World of the Indian Ocean,
1500-1800, ed. by Om Prakash (History of Science, Philosophy and Culture in Indian Civilization, Vol. VII; Delhi:
Pearson, 2012), p. 500.
3
Nicholas Dirks, The Scandal of Empire: India and the Creation of Imperial Britain (Cambridge, Mass., London:
Harvard University Press, 2006), pp. 38-39.
4
Tillman W. Nechtman, Nabobs: Empire and Identity in Eighteenth-Century Britain (Cambridge, 2010), p. 70;
Anthony Farrington, Trading Places: The East India Company and Asia, 1600-1834 (London: British Library
Publications, 2002), p. 76.
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Over the course of the eighteenth century, British merchants emerged as probably the
largest and most successful group of Europeans engaged in ‘private trade’ in Asian waters.5 This
branch of Indian Ocean commerce has received a great deal of scholarly attention in its own right.
The pioneering work of Holden Furber, Ian Bruce Watson and P.J. Marshall provided a detailed
picture of the extent, scope and mechanics of intra-Asian private trade, from the late seventeenth
through to the end of the eighteenth century.6 This work emphasised the extent to which private
trade played a central role in transforming the Indian Ocean economy and supporting the East India
Company’s commercial hegemony from the middle of the eighteenth century.
Imperial historians have, therefore, had a long-standing concern with the ways in which the
private trade of Company employees precipitated the expansion of empire in the eighteenth century.
The growth and success of British private trade across the Indian Ocean world has also been seen as
inextricably intertwined with the East India Company’s move from ‘trade to dominion’ in the second
half of the eighteenth century.7 Holden Furber was the first to argue that it was the commercial
aggressiveness and entrepreneurship of private traders that helped the British gain a competitive
advantage in the Indian Ocean over other commercial powers. For Furber, growing private trade was
also one of the catalysts for a widespread ‘commercial revolution’ that fundamentally altered the
balance of power between different polities in the mid eighteenth-century Indian Ocean.8 P.J.
Marshall’s work also comprehensively articulated the importance of Company servants’ private intraAsian trade for drawing the British into imperial expansion in mid eighteenth-century Bengal. The
success of this trade meant that British merchants came to have immense leverage in Bengali
economic and political life. As commercial hegemony mutated into full-blown political control, the
connections and alliances formed between Company men, senior Indian merchants and local rulers
via private trade further extended British influence in the region.9 Other historians agree that private
merchants critically undermined the stability of Indian regional states and therefore had a direct
impact on the Company’s territorial expansion in eighteenth-century India.10 This research has
concentrated predominantly on the eastern Indian seaboard, especially on the Coromandel Coast
and Bengal, although scholars have also explored the repercussions of private trade in the western
Indian Ocean world.11
More recent research has moved away from this preoccupation with Empire however,
looking at how private trade functioned as a merchant network and an ‘independent structure’
5
Holden Furber, Rival Empires of Trade in the Orient (Minneapolis, London: University of Minnesota Press), pp.
272-275, Om Prakash, European Commercial Enterprise in Pre-Colonial India (Cambridge: Cambridge University
Press, 1998), pp. 88-90.
6
Furber, Rival Empires, P.J. Marshall, East Indian Fortunes: The British in Bengal in the Eighteenth Century
(Oxford: Oxford University Press, 1976), Ian Bruce Watson, Foundation for Empire: English Private Trade in
India 1659-1760 (New Delhi: Vikas, 1980).
7
Emily Erikson and Peter Bearman, ‘Malfeasance and the Foundations for Global Trade: The Structure of
English Trade in the East Indies, 1601-1833’, American Journal of Sociology 112/1 (2006), p. 198.
8
Holden Furber, John Company at Work: A Study of European Expansion in India in the Late Eighteenth Century
(Cambridge, Mass., London: Harvard University Press, 1948), pp. 161-163.
9
See Marshall, East Indian Fortunes.
10
Seema Alavi, The Eighteenth Century in India (New Delhi: Oxford University Press, 2002), p. 23. Elizabeth
Saxe’s thesis Fortune’s Tangled Web and Ian Bruce Watson’s Foundation for Empire both extend the ideas of
Furber and Marshall back into the seventeenth century, arguing that the seeds of these colonial developments
related to private trade had a much longer genealogy Elizabeth Saxe, Fortune’s Tangled Web: Trading Networks
of English Entrepreneurs in Eastern India (Ph.D. thesis, Yale University, 1979); Watson, Foundation for Empire.
11
See Ashin Das Gupta, Indian Merchants and the Decline of Surat, c.1700-1750 (Weisbaden: Steiner, 1979),
Lakshmi Subramanian, Indigenous Capital and Imperial Expansion: Bombay, Surat and the West Coast (Delhi:
Oxford University Press, 1996) and Pamela Nightingale, Trade and Empire in Western India, 1784-1806
(Cambridge: Cambridge University Press, 1970).
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Dr Tim Davies & Meike Fellinger
within the global economy.12 Søren Mentz’s volume, The English Gentleman Merchant at Work,
examines the activities of private traders based at Madras between 1660 and 1740, offering a new
way of thinking about British commerce in the East Indies. It imagines merchants in India not solely
as products of an Asian trading world but as part of a global mercantile community, inextricably
linked with transnational commercial processes. Mentz argues that global connections, particularly
the flow of capital from London, were critical to the operation and success of private trade within the
East Indies. The focus on private trade’s relationship to later imperial expansion has obscured the
independent dynamics of this merchant group and precluded situating them within a global
commercial milieu.13
Other recent studies have extended our understanding of private trade, especially by placing
it within a broader global framework. A 2006 article by Emily Erikson and Peter Bearman
characterises the British private trade system as a multifaceted merchant network, situated within an
emerging global economy.14 The authors make an important contribution to the field by revealing
the structure of British intra-Asian trade, neatly incorporating China into the larger picture of
European commercial expansion.15 Employing innovative network visualisation techniques, Erikson
and Bearman trace the activities of East India Company captains’ private trade in the Indian Ocean
using shipping records. They argue convincingly for the critical role of private trade in forming new
transnational economic ties and its role in the development of a global economy, integrating
previously unconnected markets.16 Om Prakash’s most recent work on private trade also argues that
British commerce was a central part of the process by which the economy of the Indian Ocean was
drawn irrevocably into a global economy.17
The Canton System and Private Trade
Private trade is also a topic that features prominently in the literature on the collapse of the Canton
trade system.18 A large body of literature has dealt with the official trade that was carried on by the
different East India Companies in Canton between roughly 1700 and 1833. Thanks to the extensive
archival work of Louis Dermigny, H. B. Morse and more recently Paul A. Van Dyke, Cynthia Viallé and
Weng Eang Cheong, we have a detailed picture of the volume, timing and organization of European
12
See Mentz, ‘European Private Trade in the Indian Ocean, 1500-1800’ in Trading World, ed. by Prakash, pp.
485-518.
13
Mentz states that ‘Historians have found it more interesting to describe this process of conquest rather than
the slow and continuous building up of the private English trading sector in the period prior to the assumption
of power.’ Mentz, English Gentleman Merchant, p. 38.
14
Erikson and Bearman, ‘Malfeasance and the Foundations for Global Trade’, pp. 195-230.
15
Emily Erikson and Peter Bearman, ‘Malfeasance and the Foundations for Global Trade’. Holden Furber’s and
P.J. Marshall’s earlier work on the intra-Asian trade (including China) is still crucial to the debate. See Furber,
Rival Empires of Trade; P.J. Marshall, East Indian Fortunes.
16
Lauren Benton has also echoed this view, arguing that ‘Changing our vantage point and looking west and east
from India, we might see seventeenth-century English traders as assisting the expansion of Gujarat and, later,
Bengal merchants’ markets through the global circulation of textiles.’ Lauren Benton, ‘The British Atlantic in
Global Context’ in David Armitage and Michael Braddick (eds), The British Atlantic World, 1500-1800 (2nd edn,
Basingstoke: Palgrave, 2009), p. 276.
17
Prakash, ‘English Private Trade’.
18
Most recently James R. Fichter, So Great a Proffit: How the East Indies Transformed Anglo-American
Capitalism (Cambridge, MA: Harvard University Press, 2010); Paul A Van Dyke (ed.), Americans and Macao:
Trade, Smuggling, and Diplomacy on the South China Coast (Hong Kong: Hong Kong University Press, 2012);
Thomas N. Layton, The Voyage of the ’Frolic’: New England Merchants and the Opium Trade (Stanford, CA:
Stanford University Press, 1997).
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trade with China.19 At the same time, new and exciting scholarship on Canton and Macao has
challenged the long-held view of a rigid and unchanging Canton trade system that was exclusive,
impersonal and strictly functional.20 A focus on individual groups of traders, the role of women and
sociability, shopkeepers and local manufacturing, friendship and knowledge transfer has opened up
new questions about informal cross-Company networks and the functioning of private trade in Asia
at a time when the China trade system was in full bloom.21 The sophisticated but rather time- and
cost-intensive bookkeeping system that was developed by subsequent generations of directors and
commissioners of the East India Companies has kept historians busy in studying the complex financial
mechanisms that linked China, India and London.22 A lot more research is needed, however, to
explore the dense private trade networks that linked the South China coast to the Indian Ocean
world as both macro-regions are usually studied as separate units. What is often forgotten is that
there was considerable English private trade happening throughout the era of monopoly control.
Private enterprise should be seen as a crucial element of the success of the East India Company in
China throughout the eighteenth century.
It is well known that all Company trade was mediated and thus controlled by a small group of
Chinese wholesalers at Canton (the hong merchants) who placed orders on behalf of foreign
merchants with producers of all major export goods such as tea, porcelain and silk. The management
of the Company affairs in China lay in the hands of a small group of Company representatives, called
supercargoes. During the trading season, these supercargoes (representing a curious mix between
commission agent, entrepreneur and diplomat) rented apartments (factories) in Canton on a small
strip of land facing the river from where they conducted their daily business. The trading season was
limited by the changing monsoon winds, but would usually last for five to six months.23 During this
short period of time, both official and private trade was conducted; chiefly by those who had the
means and the privilege to do so. Commanders of East Indiaman, high-ranking officers and
passengers on board (together with the supercargoes just mentioned) all engaged in extensive
private trade.24
East India Company servants actively traded in a wide range of Chinese luxury export wares.
They developed lucrative niche markets in Europe for these goods, in which the EIC never showed
any sustained interest.25 With the partial exception of the French and Dutch East India Companies,
19
See Louis Dermigny, La Chine et l'Occident: Le Commerce à Canton au XVIIIe siècle, (1719-1833), 4 vols (Paris,
1964); the now slightly dated work of Hosea Ballou Morse, The Chronicles of the East India Company Trading to
China, 1635-1834, 4 vols (Oxford, 1926); Paul A. Van Dyke, The Canton Trade: Life and Enterprise on the China
Coast, 1700-1845 (Hong Kong, 2005); Weng Eang Cheong, Hong Merchants of Canton: Chinese Merchants in
Sino-Western Trade, 1684-1798 (Richmond, 1997); Paul van Dyke and Cynthia Viallé, The Canton-Macao
Dagregisters, 1762 (Macao: Instituto Cultural do Governo da R.A.E. de Macau, 2006).
20
Especially the work of H.B. Morse (long the foundation of research on Anglo-Chinese trade) has been
dismissed more recently for reifying Eurocentric stereotypes of a static Chinese bureaucracy. His Chronicles of
the East India Company also focussed very strongly on notions of ‘corruption’ versus ‘loyality’ in explaining the
changing role of individual British Company servants in China. His broad generalisations about the competition
between commanders and supercargoes and traders of different Companies is deeply misleading and obscures
the mechanisms of private trade that were in place for much of the eighteenth century.
21
See, for instance, the PhD research of Lisa Hellman (University of Stockholm) on social relations between the
Swedish East India Company employees and other groups of traders in Macao, Whampoa and Canton; Paul A.
Van Dyke, ‘Armenian Footprints in Macao’ Revista de Culture 8 (2003), pp. 20-39.
22
Paul A. Van Dyke, ‘Bookkeeping as a Window into Efficiencies of Early modern Trade: Europeans, Americans
and Others in China Compared, 1700-1842', in Kendall Johnson (ed.), Narratives of Free Trade: The Commercial
Cultures of Early US-China Relations (Hong Kong: Hong Kong University Press, 2012), pp. 17-32.
23
Silvia Marzagalli and Hubert Bonin, Négoce, Ports et Océans XVIe-XXe siècles (Pessac, 2000), p.322-23.
24
Earl C. Pritchard, ‘Private Trade between England and China in the Eighteenth-Century (1680-1833), Journal
of the Economic and Social History of the Orient, 1:1 (1958), p. 111-26 (p.109).
25
Fine overviews concerning the main export arts in Canton for the Western market are provided by Margaret
Jourdain and R. Soame Jenys, Chinese export art in the eighteenth century (London: Coutry Life Limited, 1950);
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who regularly included things like fans, lacquerware and wallpaper into their shopping lists (although
further research must test whether this was not also part of the pacotille of their servants), the
general trend for the Companies was to reduce the range of commodities to a few fairly standardised
products. The English East India Company, for instance, narrowed their portfolio considerably and
invested in the 1770s only in tea, cheap blue & white porcelain, raw and woven silks.26 Tea (moving
from green to black teas of middling quality) quickly became the principal export good of the English
East Company leaving a wide range of consumer goods to the investment of their servants (including
the directors). By contrast, British private traders kept a very wide portfolio by dealing in customized,
high-end products or fashionable souvenirs in addition to goods like arrack, gunpowder, drugs and
gold. Over the course of the eighteenth century private traders ordered a stunning variety of Chinese
export wares ‘by which the company either cannot gain at all by, or are not so gainful as others they
prefer to engage in’.27
Regulations
Earl H. Pritchard in the 1950s, and Huw Bowen more recently, sought to detect long-term trends in
the volume, value, and structure of Euro-Asian private trade.28 Regulations for private trade changed
considerably over the course of the eighteenth century, but the research conducted by Bowen,
Pritchard and others suggests that despite the many restrictions and constraints that were put in
place to safeguard the profitability of the chartered companies in China, private traders had
considerable space for manoeuvring. In fact, every alteration of private trade regulations created a
new set of opportunities which individual Company servants were quick to discover and use to their
own advantage. When the Company prohibited the import of tea in private trade in 1730 for
instance, China traders did not simply stop buying tea. Instead, they interpreted this prohibition as
referring to Bohea tea only (the cheapest available black tea) and quickly moved into buying the fine
and expensive teas such as Hyson, Chulan, Congo and Kaywon that the Company was not trading in.
They successfully developed the top-end market of tea in which the Company never attempted to
compete.29
The amount of goods supercargoes registered as private trade on their homeward journey
from China gradually decreased over the course of the eighteenth-century (as rightly pointed out by
Pritchard), but this downward trend was cushioned by the substantial amounts of ‘presents’ that
suddenly appear in the commerce journals of China voyages (especially in the 1760s and 1770s).
These ‘presents’ seem more likely to be commissions as they were registered by individual
Carl Crossman, The Decorative Arts of the China Trade: Paintings, Furnishings and Exotic Curiosities (Antique
Collectors Club, l99l); Craig Clunas (ed), Chinese Export Art and Design (London: V&A Museum, l987).
26
Anthony Farrington, Trading Places: The East India Company and Asia, 1600-1834 (London: The British
Library, 2002).
27
Malachy Postlethwayt, The Universal Dictionary of Trade and Commerce, translated from the French of the
celebrated Monsieur Savary ... with large additions and improvements, incorporated throughout the whole
work ; which more particularly accommodate the same to the trade and navigation of these kingdoms, and the
laws, customs, and usages, to which all traders are subject, 2nd edition, vol. 1 of 2 (London: John Knapton,
1757), p. 683.
28
Earl H. Pritchard, ‘Private Trade between England and China’; H.V. Bowen, ‘Privilege and Profit’.
29
Compare the China diary and transaction book in which the supercargoes noted their own and the officers’
‘privilege trade’ featuring substantial amounts of fine and rare sorts of tea with the actual instructions for that
year by the Court of Directors directing that ‘We have for divers good reasons...resolved to restrain all our
Captains from bringing in Private Trade, any Raw Silk or Tea for Europe for the future, excepting only Tea for
their Private use in the Voyage and therefore we hereby order, That you take care neither your self, nor any
others do load on board your Ship, any Raw Silk or Tea, except so much only as you may reasonably expect to
expend in the Voyage.’ British Library, IOR/G/12/30, (p. 69-72) and IOR/E/3/105, (p. 11).
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Dr Tim Davies & Meike Fellinger
supercargoes, intended for delivery to numerous EIC directors, MP’s and their wives.30 Around that
time, supercargoes started to remain in China for more than one year and were thus participating
increasingly in the intra-Asian trade. In a parallel development to the descending commodity trade of
supercargoes in the direct trade with Europe (that was still substantial in the mid-eighteenth
century), we see the rise in tonnage occupied by commanders and officers on China voyages.
Whereas simple seamen were allowed to fill their seaman’s chest (and often half a tea-chest extra)
with decorative knick-knacks from the famous shopping street in Canton, a commander in 1788
could legally import thirty-eight tons of merchandise from China.31 Another twenty-four tons were
distributed among the officers of the ship according to rank. In addition to that, commanders were
allowed to fill the hull of the ship with ballast (preferably porcelain) on private account. Depending
on rank and personal circumstances, private trade privileges or licences (that had to be paid for)
were generously distributed among the China traders.
New Directions: Private Trade Regulations and ‘Malfeasance’
We believe that much work remains to be done on the relationship between private trade, the
Company’s monopoly and issues of ‘malfeasance’. Most scholarship in this area has been dominated
by a concern with the agency problem. Similar to many large companies, the EIC faced a complex
principal-agent problem: how to control and discipline its employees and others under its
jurisdiction, as well as minimising inefficiencies and corruption, especially with geographically
dispersed centres of operation.32 Private trade has often been characterised as something which was
tolerated as it could not be effectively controlled from London. Watson wrote that ‘The English
company … could not control its servants, and the desired monopoly was eroded from within.’ 33
From this perspective, the extension of private activities, often in ways the Company did not foresee,
resulted from the imperfect control of employees from the centre. Santhi Hejeebu’s research on
contract enforcement and the agency problem in the Company has made important strides in reframing prevailing views of private trade. She argued that the private trade ‘privilege’ acted as a
critical tool in ensuring the robust nature and effectiveness of the Company’s employment contracts
and their enforcement.34 Although the Directors often continued to see private trade as prejudicial to
their interests, permitting private trade undoubtedly provided benefits for the Company as well as its
servants. Despite the dangers inherent in sailing to Asia to trade, the potential to cultivate a fortune,
or a ‘competency’ through trading in the East Indies was attractive to many young merchants and
aspiring traders. The Company could therefore offer low salaries whilst continuing to attract men
into the service and ensuring their loyalty. As long as servants’ activities did not threaten the
Company directly then, the Directors concentrated on controlling rather than eliminating private
trade during the eighteenth century.35
Yet, a major shortcoming of this body of literature is that it presumes a rigid distinction
between the Company Directors as ‘principals‘ and its servants as ‘agents‘. Exploring both intra-Asian
private trade, and the trade to China can help shed new light on this area. Both private and Company
trade were intertwined in interesting ways. High-ranking Company servants in Asia acted both as
30
See, for instance, the manifest of private trade on board of the Granby, Capt. Johnson (1776/77). See, British
Library, IOR/G/12/61, p. 9.
31
See, H.V. Bowen, ‘Privilege and Profit’, p. 51.
32
Philip Stern, The Company State: Corporate Sovereignty and the Early Modern Foundations of the British
Empire in India (New York, Oxford: Oxford University Press, 2011), p. 12. On the agency problem and chartered
Companies see Julia Adams, Ann Carlos and Stephen Nicholas, ‘Principal–Agent Problems in Early Chartered
Trading Companies: A Tale of Two Firms’, American Economic Review, 82/2 (1992), 140-45.
33
Watson, Foundation for Empire, p.17.
34
See Santhi Hejeebu, ‘Contract Enforcement in the English East India Company’, Journal of Economic History,
65/2 (2005), 496-523.
35
Mentz, in Prakash, p. 487.
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Dr Tim Davies & Meike Fellinger
principals to lower ranking merchants as well as agents to their superiors in London. They ran their
own complex and sophisticated intra-Asian private trading operations, making use of the Company’s
‘architecture’ of trade in the East Indies: ships, forts, and factories; as well as taking advantage of
their customs concessions granted by local rulers. The Company’s directors, often experienced
private traders themselves, were well aware of the extensive intra-Asian private trade carried on by
their servants in India and elsewhere, and were often directly involved in private ventures.
Equally unconvincing then, is the notion of private trade as an act of ‘malfeasance’ per se.
Captains and supercargoes on board of East Indiamen were fully-fledged merchants of high
reputation (not petty criminals) and felt the right (which they negotiated and defended rigorously) to
conduct substantial private trade in compensation for their nominal salary and the high risks involved
in this business.36 Of course, private trade also incorporated many illegitimate elements, but to
assume that port-to-port trade (to new and old destinations in Asia) was mostly based on free-riding,
misses the point that the Company profited from private trade activities of its employees as well. 37
As partners of individual Company directors or managing owners of East Indiamen commanders
enjoyed a great deal of support and rarely came into trouble because of their trading activities. As
Huw Bowen has rightly noted, a commander usually ‘stood at the head of a small group of investors
on whose behalf he then acted as he sailed between Britain, India and China.’38 Crucially, such a
group of investors could (and often did) include members of the Court of Directors. The fact that
generations of Company directors were at the same time principals as well as agents should
complicate any attempt to define the relationship between the Company and its ‘disobedient’
servants as well as the boundaries between monopoly and private trade as a whole.
To our knowledge, the first serious attempt of suppressing the involvement of Company
directors in private trade was made as late as 1794 with a motion put before the General Court of EIC
proprietors (stockholders) by the famous tea dealer Richard Twining regarding the question of
‘Whether Directors ought to be allowed to trade to India on their own account, or act as agents for
others?’ The first Report from the Committee of EIC by-laws on the subject generated considerable
debate amongst the ‘Proprietors’, since a lot more detail about the dealings of the Company
managers were suddenly made public.39 The final resolution of the Court of Directors concerning the
motion in question read as follows:
‘It is ordained that no Director of this Company shall trade, either as principal or as agent, or
execute any mercantile commission, either directly or indirectly, under any colour or pretence
whatsoever, to or from India, otherwise than in the joint stock of the Company … Provided
always, that nothing in this By-Law contained, shall be construed to prevent any Director
continuing any mercantile or other concern, in which he is present engaged, or receiving any
Commission or consignment before the General Election in April 1797.’40
36
Freight-free shipping to and from Asia was also seen as a necessary requisite for compensating commanders
for their very high capital investment. Bowen has written conclusively about the ‘custom of paying for
commands’ in the eighteenth-century Asian trade. The initial costs for an experienced officer in the Company
service for purchasing a command of an East Indiaman (from another captain willing to retire) was staggeringly
high. As he writes, ‘those who wished to reap the rewards of a command had to find between £5000 and
£10,000 to purchase it in the first place’. See, H.V. Bowen, ‘Privilege and Profit: Commanders of East Indiamen
as Private Traders, Entrepreneurs and Smugglers, 1760-1813’, International Journal of Maritime History, XIX,
No. 2 (2007), pp. 43-88 (p. 46). Although this practice was officially prohibited by Company by-laws, it was
carried on unchallenged until the late eighteenth century.
37
Commanders paid freight at all Company trading posts in Asia and various fees and brokerage were paid to
the Company on all public sales.
38
Ibid.
39
See, Whitehall Evening Post on Thursday, 20 March 1794, issue 7137 (British Library, 17th and Eighteenth
Cenuries Burney Collection Newspapers), accessed: 21 March 2013.
40
See, Courier and Evening Gazette, issue 830, 27 March 1795 (British Library, 17th and 18th Centuries Burney
Collection Newspapers), accessed: 21 March 2013.
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Dr Tim Davies & Meike Fellinger
This incident marks a change of course in the understanding of the monopoly trade at a time when it
was under pressure both at home and in Asia. Throughout the eighteenth century, Company
directors were heavily involved in private trade (often illegally under different flags) without causing
much of an outcry among the many stockholders of the Company. The existence of powerful
syndicates within the Company did not lead to reform despite some direct complaints from foreign
merchants who felt that private trade goods were sold in an ‘unfair’ manner at the Company
auctions, because buyers were often arranged in advance. 41 The close cooperation between
Company directors and individual traders in the purchase of private trade cargo has only started to
be uncovered but promises to yield interesting results. Especially in the first half of the eighteenthcentury for instance, the directors were also among the most conspicuous consumers of customised
export wares from China, ordered via special commission with those whom they appointed to a
lucrative post on a China voyage.
In order to appreciate the full range of activities that went under the label of ‘private trade’, it
is not possible to rely solely on official documentation produced by the English East India Company
for monitoring the behaviour of their servants in China. Instead, it is the private correspondence,
cash and account books, wills and letters of attorney as well as the objects traded, through which we
can gain a more complete picture of the cross-Company networks, privileges and profits of the China
trader. Only by comparing private and official records it is possible to see the extent to which private
trade was tolerated and indeed encouraged by the East India Company. The micro-study that is
needed for matching the ever-changing regulations for private trade (considering the different
variables of volume, value and weight in relation to the type of commodity and the place of the
private trader in the company hierarchy) with the actual investments of individuals provides
important evidence for challenging the marginal position that private enterprise still has within the
broader historiography of Indian Ocean trade. Down to the present day, a few spectacular cases of
fraud (that are well documented in the India Office Records) dominate the image of private trade as
‘illegal’, ‘corrupt’ or ‘malfeasant’ – but in reality high-ranking India and China traders enjoyed a great
deal of liberty to engage in their own commerce, the detail of which remains to be uncovered to its
full extent.
41
See, the communication of Mr Liell (former commander) and Sir Matthew Decker two of the Directors of the
East India Company to the Board about two memorials written by ‘Mr David Elers Merchant giving an Account
that several parcels of Goods in private Trade had not been fairly Sold and that Some of them had not been
Exposed to the View of the Buyers’. British Library, IOR/E/1/14 folio 5, 2 January 1722. There were a lot more
possibilities that Company directors and individual supercargoes and officers used to make sure that a certain
parcels would be bought by the right person (who commissioned them in the first place). See, for the private
sale of East India drugs, Godelia Yogev, Diamonds and Coral: Anglo-Dutch Jews and Eighteenth-Century Trade
(Leicester: Leicester University Press, 1978), p. 218-19 and p.234-38.
8