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Updated February 11, 2023The EIC differed from other enterprises of its time by advancing from merely spending money (for the purchase of Indian goods) from which a profit was expected. Their “investments” put money and goods to another use. It is the transformational power of investment that changes one commodity into another commodity, then into a profit. This productive or “value-added” use of capital was used to drive profitability and provide a substantial return to the company’s investors.
According to Thomas Mun, a director of the EIC and author of texts including A Discourse of Trade from England unto the East-Indies and England’s Treasure by Forraign Trade, it was completely legitimate to procure produce from India at a low cost, transform those produce into English-owned goods, and then sell those “transformed” commodities in Europe at a significant profit to enrich the UK.
He wrote: “It is plain, that we make a far greater stock by gain upon these Indian Commodities, than those nations do where they grow, and to whom they properly appertain, being the natural wealth of their Countries. … Wares do not need to “properly appertain” (to belong as a possession) to England for them to represent (or “procure”) potential profits for England.”
Furthermore, he claimed that “neither is there less honor and judgment by growing rich (in this manner) upon the stock of other Nations, than by an industrious encrease of our own means.”
In addition to the transformation of one commodity into another or of a raw material into an artificial product, there is also a transformation of ownership that is justified by (imaginary) English industry. According to Mun, the “natural wealth” of India now “properly belongs” to the English, both materially, as a result of their industry, and discursively, as a result of his own series of substitutions that provide a mirror image of the EIC’s complex multilateral trade. Consequently, men from modest origins returned to the UK extremely wealthy, while enlisted men were motivated to fight by the appeal of the money that could be made from pillaging conquered resources.
This business model flowed through the core of the EIC’s economic activities, and the West African slave trade was an essential element of ensuring that profits were maximized. The profits gained paid off the debts on factories in Surat, Madras, and Bengal. West African slaves were also integral to the company’s success in colonizing St. Helena—an island in the Atlantic Ocean, 1,200 miles off the coast of Angola, which served as a port for the company’s Indian Ocean trade. On his first journey, the island’s first governor, Captain John Dutton, was told to acquire “five or six Blacks, all able men and women,” from St. Iago in the Cape Verde Islands to begin colonizing the deserted island.
The volume of the EIC’s slave cargos was another distinguishing factor in its methods of trade. Between 1622 and 1772, the average EIC ship carrying slaves carried only 47 people.* A comparative British slave ship belonging to the Royal African Company typically logged 299 slaves embarking and 241 slaves disembarking. In the Atlantic, where slave ships only carried human cargo, the sale of 47 slaves was insufficient to cover the expenses of the transoceanic voyage. However, by layering its slave trade onto its established networks for transporting fabric, spices, tea, and handicrafts, the EIC was able to perpetuate what would have otherwise been an economically unviable trade in human cargo. On the majority of slave-carrying EIC ships, slaves were neither the primary cargo nor the primary goal of the voyage. Small slave shipments through mixed-cargo slave ships aided the company in lowering the enormous overhead costs connected with the slave trade. Mixed-cargo trade and its related advantages became achievable as a result of the company’s response to its own internal demand for slave labor, profiting not from the sale of slaves but rather from their productive capacity of slaves within the company. Innovatively, EIC’s main benefit from the slave trade was the productivity of its slave labor force.
Smaller slave cargoes allowed the EIC to mitigate the inherent dangers and expenses of large-scale slave trading. Despite the fact that the slave trade might be a successful enterprise—in the Atlantic, the average rate of return for investors was approximately 9%—slave voyages were nonetheless high-cost ventures.* Because they required ship modifications, larger crews, and, notably during times of war, more wages, these expeditions had a greater risk and higher fixed expenses than others. The majority of ships used by Europeans to transport slaves in the Atlantic and Indian Ocean trades were not originally designed to handle human cargo, they therefore needed to be adapted to safely transport people. A ten-foot wooden bulkhead, which bisected the ship and used to separate male and female slaves, was one of the most common characteristics of slave ships. The bulkhead might also assist the crew in establishing a strong defensive position in the case of a slave revolt. Modifications such as the bulkhead were not as important for small numbers of slaves in mixed-cargo holds, since the potential of rebellion was far smaller. Avoiding alterations lowered the overhead expenses for slave-carrying EIC ships and provided the company with an incentive to pursue mixed-cargo trading. On one occasion in 1670, the EIC ordered four ships to purchase 40 slaves from St. Iago in the Cape Verde Islands. These ships were the Unicorn, the John and Martha, the Satisfaction, and the John and Margaret.* Although all four ships were en route to the same destinations, the captains were directed to split the captives evenly among the vessels. If there were only ten slaves on board, the ships would not have required adaptations to secure the human cargo.
Because carrying fewer slaves reduced the risk of insurrection, company ships were able to sail with smaller crews while maintaining similar crew-to-slave ratios. During the Atlantic slave trade, a ship’s crew was often double that of a merchant vessel of comparable size. The expenses associated with maintaining a big crew on a slave ship could account for as much as 18% of the total journey expenses. Smaller slave loads allowed the company to maintain a steady, commercially successful slave trade. Smaller, integrated slave cargoes permitted EIC ships to spend less time in port waiting for cargo. In addition to boosting the voyage’s efficiency, minimizing time at port lessened the ship’s vulnerability to pirate attacks.
The EIC’s mixed-cargo slave trade was further distinctive in that not all of the slaves were purchased by the company; many were born into slavery at the company’s holdings and then moved to another fort. When EIC directors in London received a request for slaves from one of their agents, they would first look to the slaves they already owned and attempt to transfer them. The EIC’s slave trade strategy relied heavily on the transfer of slaves between holdings. According to the estimations of Richard Allen, as many as one-third of the slaves aboard EIC ships were transfers—a sizeable proportion given that transfer requests were consistently smaller than purchase requests. The company authorized at least 77 transfer voyages involving at least 1,040 slaves between 1639 and 1787.
Similar to the mixed-cargo slave trade, the company fused transfers onto its existing trading networks, making transfers both possible and efficient. If the directors deemed a transfer necessary, they would assign it to the next ship that would pass both ports, thereby reducing costs and voyage durations. The transfer of slaves rarely incurred any additional sunk costs, as the ships used needed to pass through both destinations to accomplish its primary objective. The only expense incurred by the company was the captain’s wages—typically four pounds per slave.
The EIC was able to reap additional benefits from the specialized skills and knowledge of English culture that its slaves acquired as a result of the reorganization of its non-free labor force that was made possible by slave transfers. At St. Helena, where the company frequently experimented with new crops and goods to maximize the island’s productivity and value, these reorganizations were particularly advantageous. During the first five years that the company possessed St. Helena, it sent multiple requests to its agents in Surat, requesting that they send indigo seeds and slaves who “knew how to sow it and then perfect it, and advised the Governor of St. Helena on the particulars.” Bencoolen, the company’s primary fort on the island of Sumatra, was a particularly dangerous location for EIC employees due to environmental and diplomatic factors, which increased the value of having experienced slaves.* The fort at Bencoolen is frequently described in company correspondence as a “sickly” and “fever-infested” location that sent Englishmen “to their eternal homes.” Despite the fact that slave transfers reduced the EIC’s overall trade volume, they demonstrate the crucial role slavery played in the company’s ability to control territory and maximize profits.