FRENCH EAST INDIA COMPANY

FRENCH EAST INDIA COMPANY The French East India Company (La Compagnie Française des Indes Orientales), was founded as a monopoly by royal edict of Louis XIV in 1664 at the strong urging of his finance minister Jean-Baptiste Colbert. The king was its largest investor, and the crown effectively controlled the company. After an inauspiciously disastrous beginning, it eventually became moderately successful and profitable but was always undercapitalized and dependent on loans, often from the treasury.

The establishment of the French East India Company was part of Colbert's ambitious mission to revamp France's economy. Its founding implied the removal of the monopoly from the Compagnie de l'Orient started by Cardinal Richelieu in 1642. Richelieu's company had become entangled in the colonization of Madagascar, which it saw as a necessary way station on the sea-lanes to India. As a consequence, it was unable to meet the demand for fine Indian silks and cotton goods, and a substantial market share had been taken by "foreign businesses." Colbert, a mercantilist, wished to slow, if not prevent, the steady export of wealth required to pay for the trade balance. At the time, it is estimated that the French market was purchasing 30 percent of the textiles and spices imported by other joint stock companies, chiefly the English and Dutch East India Companies.

Colbert's company was granted a fifty-year monopoly of trade east of the Cape of Good Hope, given charge of the colonization of Madagascar, two adjacent isles (Réunion and Mauritius), and trading centers in India, Sri Lanka, and Indonesia. Unfortunately, the initial reaction of French merchants was tepid; of the 15 million livres envisaged, just over eight million livres (three million from the king) were raised. Colbert's company was nearly always undercapitalized and often had to borrow money to operate from season to season.

Personnel were a second problem, solved by recruiting among the Dutch. The Dutch were hardy mariners and skilled shipwrights. Dutchmen had been crews on Portuguese vessels when that country had a monopoly on the spice trade. Once Dutch crews learned how to navigate to the Moluccas, they went into business for themselves. By 1664 there were experienced Dutch captains and sailors to be had. A third obstacle was the lack of adequate vessels, so Colbert established a port and shipyard named, appropriately enough, Lorient, on the Atlantic coast.

The first decades of the Compagnie Française des Indes Orientales were checkered. The company faced stiff competition from the Dutch East India Company, which harassed the French merchant marine and occasionally confiscated cargoes. Support from French merchants was never enthusiastic for they were subject to strict royal control. Furthermore, the company's administration deteriorated after the deaths of Colbert in 1683 and his son, the marquis de Seignelay, in 1690. The initial voyages were so commercially disastrous that Colbert had to resort to lies to hide the magnitude of the losses in order to raise more capital.

Affairs in India were better, however. François Martin, left behind after a French defeat by the Dutch and the qutbshah (king) of Golconda in San Thomé, founded Pondicherry in 1674. Pondicherry became the center of French India, lying about 85 miles (137 km) south on the Coromandal coast from the English East India Company's trading center at Fort St. George (Madras, now Chennai). Even though port facilities were inconvenient, the commercial viability of Pondicherry was based on the availability of silk and cotton textiles, calicoes and muslins, produced by nearby village cottage industries. The profitable commercial activity caught the jealous attention of the Dutch East India Company, which drove out the French in 1693. The Compagnie Française des Indes Orientales, facing deficits due to failed adventures in Madagascar and Thailand, was helpless. After a sojourn in France, where he was received cordially by king and company, Martin was named governor of Pondicherry for the third time and as director of all French factories in Surat, Chandarnagar, Calicut, Dhaka, Patna, Qasimbazar, Balasore, and Jogdia. He remained in Pondicherry, the Indian capital of the French East India Company, until his death in 1706.

With the Treaty of Utrecht in 1713, the Dutch East India Company withdrew to Indonesia, leaving England and France the only rivals in India, much as their rivalry was to dominate European affairs for the next hundred years.

When the fifty-year monopoly of the Compagnie Française des Indes Orientales expired the next year, a ten-year extension was granted to the by-then moribund company. Shortly afterward, Louis XIV died, and the duke of Orleans succeeded as regent. In 1717 the regent granted monopoly trade rights in the Caribbean, Canada, and Louisiana to a publicly traded French West India Company, La Compagnie Française des Indes Occidentales, founded by John Law, a Scottish financier. Two years later, Law persuaded the regent to meld the dormant East India and the nascent West India companies, and the conglomerate was titled simply the Company of the Indies (La Compagnie des Indes).

The new company's public stock offering was a brilliant success, briefly doubling and redoubling in value. It immediately purchased the tobacco monopoly, which was a steady source of revenue, allowing it to pay its promised dividends even as the stock was becoming grossly overinflated. The bubble burst, and by the summer of 1720, panic set in. There was a run on the Royal Bank, and the company's shares plunged. The company offered to accept all its shares at face value in return for a perpetual monopoly (its ten-year extension was due to expire in 1725), and it was restyled the Perpetual Company of the Indies (La Compagnie perpétuelle des Indes).

The crash tarnished the reputation of the Perpetual Company, however, which had to be restructured in 1723 into a private regulated monopoly, but one in which the king and regent still had substantial investments. However, the Perpetual Company was successful for several decades, becoming a serious rival to the English East India Company, and was responsible for the major French impact on India. After the Seven Years' War, the Perpetual Company declined steadily, and was completely moribund by the French Revolution.

J. Andrew Greig

See alsoFrench Impact

BIBLIOGRAPHY

Bouche, Denise, and Pierre Pluchon. Histoire de la Colonisation Française. 2 vols. Paris: Fayard, 1991.

Furber, Holden. Rival Empires of Trade in the Orient, 1600–1800. Minneapolis: University of Minnesota Press, 1976.

Malleson, George. History of the French in India. Delhi: Renaissance Publishing, 1984.

Weber, Henry. La Compagnie Française des Indes (1604–1875). Paris: Libraire Nouvelle de Droit et de Jurisprudence, 1904.