On this day, December 31'st 1600, The British East India Company is chartered. The Company was granted an English Royal Charter by Elizabeth I under the name Governor and Company of Merchants of London Trading into the East Indies. Shortly after that, many other European nations would set up similar East India Companies, the largest of which was the Dutch East India Company, charted in 1602. The main goal of the company was to exploit and expand trade with the East Indies, but the companies focus would expand to dominate trade with China.and much of the Indian subcontinent.
Soon after the defeat of the Spanish Armada in 1588, London merchants presented a petition to Queen Elizabeth I for permission to sail to the Indian Ocean.[14] The permission was granted and in 1591 three ships sailed from England around the Cape of Good Hope to the Arabian Sea. One of them, the Edward Bonventure, then sailed around Cape Comorin and on to the Malay Peninsula and subsequently returned to England in 1594.[14]
In 1596, three more ships sailed east; however, these were all lost at sea.[14] Two years later, on 24 September 1598, another group of merchants, having raised £30,133 in capital, met in London to form a corporation. Although their first attempt was not completely successful, they nonetheless sought the Queen's unofficial approval, purchased ships for their venture, increased their capital to £68,373, and convened again a year later.[14]
This time they succeeded, and on 31 December 1600, the Queen granted a Royal Charter to "George, Earl of Cumberland, and 215 Knights, Aldermen, and Burgesses" under the name, Governor and Company of Merchants of London trading with the East Indies.[15] For a period of fifteen years the charter awarded the newly formed company a monopoly on trade with all countries east of the Cape of Good Hope and west of the Straits of Magellan.[15] Sir James Lancaster commanded the first East India Company voyage in 1601.[16]
Initially, the Company struggled in the spice trade due to the competition from the already well established Dutch East India Company. The Company opened a factory (trading post) in Bantam on the first voyage and imports of pepper from Java were an important part of the Company's trade for twenty years. The factory in Bantam was closed in 1683. During this time ships belonging to the company arriving in India docked at Surat, which was established as a trade transit point in 1608.
In the next two years, the Company built its first factory in south India in the town of Machilipatnam on the Coromandel Coast of the Bay of Bengal. The high profits reported by the Company after landing in India initially prompted King James I to grant subsidiary licenses to other trading companies in England. But in 1609 he renewed the charter given to the Company for an indefinite period, including a clause which specified that the charter would cease to be in force if the trade turned unprofitable for three consecutive years.