8. The East India Company bought into its competition to create a monopoly
In the latter half of the 17th century, a company intended to compete with the EIC and prevent it from becoming a monopoly was created by an act of Parliament. EIC stockholders (all of whom were directors) bought a majority of stock in the new company, and thus controlled it and its finances. In the early 18th century the two companies were merged. The EIC and Parliament became wary of each other, with Parliament controlling the company’s charter, and the EIC controlling vast amounts of British trade, and virtually all of the trade in the critical products of spices and tea. The EIC developed lobby groups to maintain its influence in Parliament.
By the middle of the 18th century, the EIC was in the position of dictating terms to Parliament, which was dependent on the company for loans which enabled it to protect its colonies in North America and the West Indies. The government also depended on the EIC to protect its possessions in the East Indies from the expanding influence of the French. In the early 18th century the East India Company used its influence to receive from Parliament a monopoly on importing tea into England, where it sold it to British merchants, who either sold it in Britain or exported it to the colonies in North America. Tea became a product subject to the highest taxes in Britain, with the EIC paying 25% in taxes as tribute for the monopoly it received.