CHAPTER 2: From Trade to Territory – The Company Establishes Power

Table of Contents

CHAPTER 2: From Trade to Territory – The Company Establishes Power

1. What privileges did the East India Company get with the Royal Charter that they got from the Queen of England in 1600?

Solution: In 1600, the East India Company acquired a charter from the ruler of England, Queen Elizabeth I, granting it the sole right to trade with the East. This meant that no other
the trading group in England could compete with the East India Company.

With this charter the Company could venture across the oceans, looking for new lands from which it could buy goods at a cheap price, and carry them back to Europe to sell at higher prices. The Company did not have to fear competition from other English trading companies.

2. Why there was conflict between trading companies of Europe for Indian market?

Solution: The problem was that all the companies were interested in buying the same things. The fine qualities of cotton and silk produced in India had a big market in Europe. Pepper, cloves, cardamom, and cinnamon too were in great demand. Competition amongst the European companies inevitably pushed up the prices at which these goods could be purchased, and this reduced the profits that could be earned. The only way the trading companies could flourish was by eliminating rival competitors. The urge to secure markets, therefore, led to fierce battles between the trading companies.

3. When and where was the first English factory set up?

Solution: The first English factory was set up on the banks of river Hugli in 1651.

4. What right was given to the East India Company with the Farman given by Aurangzeb?

Solution: That Farman granted the Company the right to trade duty free in Bengal.

5. What was the conflict between the Company and the Nawab of Bengal?

Solution: The Nawabs of Bengal refused to grant the Company concessions, demanded large tributes for the Company’s right to trade, denied it any right to mint coins, and stopped it from extending its fortifications.

The Nawab accused the Company of being deceitful, they claimed that the Company was depriving the Bengal government of huge amounts of revenue and undermining the authority of the nawab. It was refusing to pay taxes, writing disrespectful letters, and trying to humiliate the nawab and his officials.

On the other hand, the Company declared that the unjust demands of the local officials were ruining the trade of the Company, and trade could flourish only if the duties were removed. It was also convinced that to expand trade it had to enlarge its settlements, buy up villages, and rebuild its forts.

6. Write a short note on the Battle of Plassey.


  • As the Company started to interfere in the political matter of Bengal, Sirajuddaulah got infuriated and asked the Company to stop meddling in the political affairs of his dominion, stop fortification, and pay the revenues.
  • But when the negotiations failed, the Nawab marched with 30,000 soldiers to the English factory at Kassimbazar, captured the Company officials, locked the warehouse, disarmed all Englishmen, and blockaded English ships. Then he marched to Calcutta to establish control over the Company’s fort there.
  • On hearing the news of the fall of Calcutta, Company officials in Madras sent forces under the command of Robert Clive, reinforced by naval fleets. Prolonged negotiations with the Nawab followed and failed.
  • Finally, in 1757, Robert Clive led the Company’s army against Sirajuddaulah at Plassey.

7. Why did the Company want a ‘Puppet Nawab’?

Solution: The Company wanted a ‘Puppet Nawab’ as he who would willingly give trade concessions and other privileges to the Company.

8. When was the Battle of Buxar fought and between whom?

Solution: In the Battle of Buxar the combined armies of Mir Qasim, the Nawab of Awadh, and Shah Alam II fought against the Company and were defeated by the Company. It was fought in 1764.

9. Who were Nabobs?

Solution: In 1765, when the Mughal emperor granted the Diwani of Bengal to the Company which allowed the Company to use the vast revenue resources of Bengal not only that the Company also acquired more power and authority. Each company servant began to have visions of living like nawabs.

Those Company servants who managed to return to England with wealth led flashy lives and flaunted their riches. They were called ‘Nabobs’, an anglicized version of the Indian word nawab.       

10. What was ‘Subsidiary Alliance’?

Solution: According to the term of Subsidiary Alliance, Indian rulers were not allowed to have their own independent armed forces. They were protected by the Company but had to pay for the “subsidiary forces” that the Company was supposed to maintain for the purpose of this protection. If the Indian rulers failed to make the payment, then part of their territory was taken away as a penalty.

11. Give examples of regions or part of territories which were annexed by the Company by applying the Subsidiary Alliance?

Solution: Part of the territories of Awadh and Hyderabad were annexed by the Company by applying the Subsidiary Alliance.

12. How many Anglo-Mysore wars were fought?

Solution: There were four Anglo- Mysore wars had been fought.

  • First Anglo- Mysore wars – (1767 – 69)
  • Second Anglo- Mysore wars – (1780 – 84)
  • Third Anglo- Mysore wars – (1790 – 92)
  • Fourth Anglo- Mysore wars – (1799)

               Only in the last battle, the Battle of Seringapatam, the Company won the battle.

13. How many Anglo-Maratha wars were fought? How did the Company get control over the Marathas?

Solution: There were three Anglo-Maratha wars had been fought.

  • In the first war that ended in 1782 with the Treaty of Salbai, there was no clear victor.
  • The Second Anglo-Maratha War (1803-05) was fought on different fronts, resulting in the British gaining Orissa and the territories north of the Yamuna River including Agra and Delhi.
  • Finally, the Third Anglo-Maratha War of 1817-19 crushed Maratha’s power.

14. What was the ‘Paramountcy’ Policy?

Solution: Under Lord Hastings (Governor-General from 1813 to 1823) the policy of “paramountcy”
was initiated. According to this policy, the Company claimed that its authority was paramount or supreme, hence its power was greater than that of Indian states. In order to protect its interests, it was justified in annexing or threatening to annex any Indian kingdom.

15. Who was Rani Channamma?

Solution: Rani Channamma was the queen of Kitoor. When the British tried to annex the state of Kitoor with the Paramountcy policy, Rani Channamma took to arms and led an anti-British resistance movement. She was arrested in 1824 and died in prison in 1829.

16. Why did the British want to secure the North-west of India?

Solution: In the late 1830s the English East India Company became worried about Russia. It imagined that Russia might expand across Asia and enter India from the northwest. So the British wanted to secure the North-west of India.

17. What was the ‘Doctrine of Lapse’?

Solution: Lord Dalhousie who was the Governor-General from 1848 to 1856, devised a policy that came to be known as the Doctrine of Lapse. The Doctrine declared that if an Indian ruler died without a male heir his kingdom would “lapse” i.e. the kingdom would become part of the Company.

18. Which Kingdoms were annexed with the ‘Doctrine of Lapse’ Policy?

Solution: By applying the ‘Doctrine of Lapse’ Policy, the Kingdoms of Satara (1848), Sambalpur (1850), Udaipur (1852), Nagpur (1853), and Jhansi (1854).

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