Coins and the arrival of the English EIC in India

Have you ever wondered how India’s history would have carved out if the English East India Company had never set foot?  Well, perhaps another European nation might have colonised India. Alternatively, the Mughal rule might have still continued and we would be a monarchy today. Or we might have found democracy somewhere along the way. Economically, we could have advanced our own quality textile and spice trade and be a global market today.  I am sure a fertile mind can imagine a ton of other outcomes. But the fact does remain that the English did come to India, and ultimately dominated it for about two centuries.

While this is true, it might be interesting to know that the coming of the English East India Company(EIC) to India was just a mere circumstantial outcome and not part of any planned strategy. India was not in the mind of the English EIC when they initially setup. And the circumstance that changed this is closely tied to coins, yes Coins! Want to find out more? Do read on….

The reason why the Europeans spent so much wealth and manpower to undertake new and dangerous voyages to discover the far east was of course spices. The Ottoman Turks captured Constantinople in 1453 CE and blocked the land route for spices to enter Europe from the east. The small volumes of spices that continued trickle into Europe via Venice by sea automatically became very expensive by way of demand. While Italy became rich, the rest of Europe suffered. Spice was indispensable to Europe at that time as it was required to provide taste to the otherwise bland salted preserved meat during the winter period. And the reason why only preserved meat was available in winter was that there was no fodder in winter to maintain their cattle stock. And thus started the voyages to search for those far off lands that would yield precious spices at a reasonable cost and without middlemen. Owing to their importance and cost, these voyages were royally sponsored. Of the various west European nations, it was Portugal that took the first step in the voyages and they had some of the best ships for this job. We do know from history the voyage of Vasco da Gama and his arrival finally in Calicut (now  Kozhikode) in 1498 by passing along the Cape of Good Hope. From Calicut, reaching to other far east ports in Java, Sumatra ,Borneo, etc. where the bulk of the spice market existed was only a matter of time.

With this, a new saga of east-west interactions started. Other European powers soon followed suit, namely the Dutch and the Danish. All of them concentrated mostly on far east, and understandably so as the bulk of the spices were there. A few ships also came into Malabar ports, mainly for pepper and ginger, as these were Indian specialities. These European powers used the Spanish silver dollar which weighed about 27.5 grams and 93% purity for their purchases. They were more popularly known as “pieces of eight” as each Spanish silver dollar equalled eight Spanish reals. Owing to its reliability in terms of weight and fineness, these coins soon became popular and gained acceptance in the far east markets.

Spanish Dollar

Eyeing these successes, the English EIC was formed to trade with the far East by way of a royal charter from Queen Elizabeth I on 31 December 1600. When the English arrived in the far east, they tried to use their own silver shillings to buy the spices. However, owing to the popularity of the already circulating Spanish “pieces of eight”, the English could not pass off their coins easily. This created a huge problem. The English EIC quickly went back to Queen Elizabeth I asking permission to use the Spanish “pieces of eight” to conduct their trade. However, at that time, England and Spain were at loggerheads with each other. So granting English EIC’s request would be a direct blow to the pride of the English crown and was hence swiftly rejected. Now the English EIC were at a loss. They could not use their own coins for trade nor could they use the logical alternative, namely the Spanish “pieces of eight”. So they had to find another alternative, and quickly so. They made a study of what else was in demand in these far east markets. They found their answer in Indian cotton textiles and decided to procure it. They learned that Surat was the main centre of Indian cotton textiles. Now the question was what they would use to buy these textiles at Surat. English wool and silver seemed to be viable options. And so began their journey towards Surat. The modus operandi was as follows. EIC Ships loaded with wool would start from England and arrive first at Persia where some of the wool was sold for silver. The ships, with remaining wool, would next arrive at Surat.  Using the remaining wool and the silver procured from Persia, Indian cotton textiles were purchased at Surat. These textiles would then be used in the far east to buy spices. These spices finally made their way back to the English markets. This rather complex exchange became quite a success. And so it was wool that finally saved the day for the English. Infact, even today, as a park of respect, a bag of wool is placed under the chair of the speaker of the House of Commons.

All this sustained well till around the 1650s when England had their agricultural revolution. This resulted in increased sustained farming and crop rotation. Now food for cattle became available all through the year, thereby ceasing the requirement to preserve meat in winter. This subsequently resulted in a fall of demand for spices. Now the English EIC had to quickly innovate to this changing scenario or close shop. Luckily, the agricultural revolution in England was soon followed by the Industrial Revolution, which the rich East India company stakeholders also sponsored in part. This Industrial revolution caused a huge hunger for raw materials. And who else could feed the newly emerging mechanical looms that the omnipresent English EIC. The EIC soon monopolised the cotton trade at Surat and also expanded into the cotton-rich Bengal. Raw cotton started flowing directly from India to England, and profitably so. Soon they started to enter into domestic politics to make more profitable outcomes for themselves. And what happened next, we do know from history.


The author gratefully acknowledges the valuable inputs provided by Shri Mahesh Jambulingam, Bengaluru towards this article.

The ‘Spanish Dollar’ image is taken from Wikimedia Commons, User Hispalois, and is licensed under the ‘Creative Commons Attribution-Share Alike 3.0 Unported’ license.


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