The East India Company: The World's Most Powerful Corporation (The Story of Indian Business) Read Online Free PDF Page A

line with territorial ambitions. In the Spanish case the colonies would soon be draining the mother country.
    That these powers could be defeated was tellingly demonstrated by the great ‘pirate’ Francis Drake. In the 1560s, Drake built his career by raiding Spanish treasure trains in the Panama isthmus, and sending the loot home. These raids also gave him possession of ships captured from the Spaniards, and in turn, brought him the status of merchant. His daring and ruthlessness made him an ideal candidate to lead an ambitious enterprise to raid Spanish possessions in the Pacific, sponsored by a number of ‘equall companions and frindly gentlemen’, among whom was included the Queen herself. Drake’s dramatic exploits on the Pacific coast of South America capturing one ship after another exposed the weakness and unpreparedness of the Spanish naval presence. Along with much gold and silver, theseraids yielded a cluster of maps that eventually helped Drake cross the Pacific itself. In 1588, Drake and other commanders orchestrated the defeat of the greatest fleet in Europe, the Spanish Armada. Drake’s Pacific journey was closely followed by another under Thomas Cavendish.
    Unlike trips to the Atlantic and the Pacific, which were primarily for territorial control, the Indian Ocean expeditions of the West European nations were motivated mainly by the prospect of commercial profits though they had to reckon with Portuguese resistance. When the West Europeans ventured into Asian trade, they formed a mercantile company. It was this organizational innovation, as well as the propensity to trade overseas, that distinguished the English and other Europeans at this time from the Indians or the Chinese.
The meaning of a ‘company’
    Although long-distance trade was not more developed in Europe than Asia, the company form of organization, together with monopoly charter and the backing of the king were unique features of commerce in western Europe and had no counterpart in the Asian business tradition. Partly reflecting this institutional ability of pooling large amounts of money together, interest rateswere lower in western Europe than in India.
    Interest rates in India were generally much higher, but when lenders and borrowers were linked by caste and kinship, the rates came down. Therefore, organized enterprise that involved much risk and large capital tended to be confined to castes and communities, between the members of which there was sufficient trust. Interest rates did not ordinarily need to cover the risk of default when lending was done between a father and a son, or an uncle and a nephew. For most large trading or banking firms in early modern India, principals and agents tended to belong in the same caste or community. Both were merchants, often related by blood and marriage, and had similar commercial interests, ambitions and capacities.
    The English association or corporate firm was an alternative to this, Asian, organizational model. Like the community, it was founded on common interest, but unlike the community, it did not stand on a foundation of ethnic and filial loyalties. It was potentially more unstable in the short run than a family. The ambitions of the principals and the agents were not perfectly matched. But it was a more powerful, and therefore stable, entity in the long run than a family. It was more powerful because it could embrace innovative yet risky ideas more readily than could a community, beingunencumbered by family ties; and it was more stable because it could change with the times. The association form allowed the company to consider financing maritime expeditions that involved uncertainty, whereas the Indian merchants were known for their risk-averse mentalities.
    The association form lowered the entry bar to private enterprise for all kinds of wealthy people, and thus enabled a collaboration to develop between diverse forms of capability. The decision to put money into expeditions seemed