Why the East India Company was a private rather than government-owned?

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This topic contains 2 replies, has 2 voices, and was last updated by  Anonymous 3 years, 6 months ago.

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  • #16319


    Good day, friends.I have one question and I can't find good answer for it. Maybe you can help me?First of all I am sorry for my English - I am not a native speaker =).Why the East India Company was a private rather than government-owned?Really, it was a state in state. This company carried out functions of the state - colonized new territories, established diplomatic relations in these areas. It has private army and navy. It fought with other similar companies in the sea. So did all the things that usually do the states, but not private companies.The second very important question that can help to answer on the first one is why in the end of the life of the East India Company it become government-owned. I mean why after Indian Rebellion of 1857 The British Crown became the owner of all lands in India and took power into its own hands. Why at this moment such kind of property became optimal?That is not only idle curiosity. I am a grad student and now I want to write a small paper about optimality of contracts between The British Crown and the East India company in sense of Contract Theory. I wanna model contracts between these two sides and see was it optimal for making incentives for company management to make it private? And so, first of all, I should understand the reasons why government decided to make it private.Thank you in advance. Hope to answer =)

  • #20213


    Ajjey, I am not an expert concerning this field by any means but it seems that these companies, British, Dutch, French, etc, were given Royal charters because the monarchies did not want to take on the gamble that these ventures involved. Specifically, Queen Elizabeth I did not want to put up the money for the ships/expeditions. In fact, it took almost 100 years for the British East India company to become a truely successful venture. I think the short answer to your second question, is that the British government had to take on damage control for the messy situation the company's exploitation of India had created.To get real, in depth, answers to these questions you are going to have to do some reading. I am not sure which books will be best but you can always start with Wikipedia's bibliography.Here is a link to one book that you get free access to the full text on line:https://www.questia.com/library/120076623/the-company-state-corporate-sovereignty-and-the

  • #20214


    Thank you a lot for your answer.

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