Abolition of EIC monopoly on Indian trade and its impact

In the last decades of the 18th century, there was a rapid expansion of the country trade between India and China, which benefitted the British East India Company (EIC).^[1] The country trade comprised commodity trade, as distinguished from the trade in British manufactured goods, that plied between India and China.^[2] Before the export of Indian opium, Indian produce was unattractive to Chinese consumers. As Chinese tea, silk and ceramics were popular with consumers in Britain and Europe, British merchants in India were in dire need of valuable commodities that could be traded for the Chinese produce. Southeast Asian ports and produce became connected to this growing country trade for they provided British merchants with the badly needed exports to augment Indian goods for the Chinese market. These produce were acquired through the exchange of Indian produce, mainly rice and textiles, for Southeast Asian produce such as pepper, spices, dammer and tin.^[3] The trade in Southeast Asian produce grew in importance in the latter half of the 18th century, and by the first decades of the 19th century, it had become the principal function of British trade in Southeast Asia.^[4]

Several agency houses in Bengal were heavily involved in organising the export of Indian and Malay products to Canton. They prospered from the opportunities caused by the temporary British rule in Java while the Dutch were being occupied in Europe.^[5] Before the opening of Singapore as a port in 1819, Riau was the preferred port of call for British private traders based in India. At Riau, these traders could freely buy many of the much sought-after products of the Archipelago and at the same time, offload their quantities of cloth and opium from India.^[6]

In 1813, the EIC lost its monopoly of the Indian trade, grievously hurting its profits as well as that of the agency houses. Both the EIC and the agency houses had jointly used the monopoly to regulate the supply of British imports and trading licences in an effort to reap the highest returns from the China trade and its corollary country trade. By 1815, six of the original Bengal agency houses that had previously controlled most of the country trade faced unwelcome competition from other newer houses that were later established.^[7] The liberalisation of the Indian trade resulted in a glut of both English and Indian goods in Bengal, which needed a new outlet. The British then looked to Southeast Asia as a potential market, paramount to which was securing a British port.^[8] The need to stabilise the old colonial economic order that was developed from the EIC’s monopoly of the Indian trade prompted the founding of Singapore. When a trading settlement was established in Singapore in 1819, many British private traders arrived in great numbers to the island.^[9]

References
1. Larson, J. L. (2001).  Bonds of enterprise: John Murray Forbes and Western Development in America's railway age (p. 5). Retrieved February 21, 2014, from Google Books.
2. Sardesai, D. R. (c1977).  British trade and expansion in South East Asia, 1830–1914 (p. 27). Columbia, Mo.: South Asia Books. Call no.: RSEA 382.0941059 SAR.
3. Webster, A. (1998). Gentlemen capitalists: British imperialism in Southeast Asia 1770–1890 (pp. 33, 34, 56–57).  London: Tauris Academic Studies. Call no.: RSING 959 WEB.
4. Webster, 1998, pp. 33–34.
5. Webster, 1998, pp. 56–57.
6. Lewis, D.  (1970). The growth of the country trade to the Straits of Malacca, 1760–1777. Journal of the Malaysian Branch of the Royal Asiatic Society, Vol. 43, No. 2 (218), 114–115. Retrieved February 21, 2014, from JSTOR.
7. Webster, 1998, pp. 68–69.
8. Webster, 1998, p. 70.
9. Webster, 1998, p. 84; Chiang, H.D. (1970). Sino-British mercantile relations in Singapore’s entrepot trade 1870–1915.  In J. Ch’en & N. Tarling (Eds.), Studies in the social history of China and Southeast Asia; essays in memory of Victor Purcell (pp. 247–248). London: Cambridge Univ. Press. Call no.: RSEA 961 CHE.