Is Trade Always Better?

The East India Company (EIC) was formed for pursuing trade with the East Indies. English traders frequently engaged in hostilities with their Dutch and Portuguese counterparts in the Indian Ocean.

 

The Company decided to explore the feasibility of gaining a territorial foothold in mainland India, with official sanction of both countries, and requested that the Crown launch a diplomatic mission.

In 1612, James I instructed Sir Thomas Roe to visit the Mughal Emperor Nuruddin Salim Jahangir (r. 1605 – 1627) to arrange for a commercial treaty that would give the Company exclusive rights to reside and build factories in Surat and other areas. In return, the Company offered to provide the Emperor with goods and rarities from the European market. This mission was highly successful as Jahangir sent a letter to James through Sir Thomas Roe:

 

"Upon which assurance of your royal love I have given my general command to all the kingdoms and ports of my dominions to receive all the merchants of the English nation as the subjects of my friend; that in what place soever they choose to live, they may have free liberty without any restraint; and at what port soever they shall arrive, that neither Portugal nor any other shall dare to molest their quiet; and in what city soever they shall have residence, I have commanded all my governors and captains to give them freedom answerable to their own desires; to sell, buy, and to transport into their country at their pleasure. For confirmation of our love and friendship, I desire your Majesty to command your merchants to bring in their ships of all sorts of rarities and rich goods fit for my palace; ..."

 

So People respond to incentives in the same way as Jahangir did to get rare goods from East India Company.

 

During the period, 1780–1860, India changed from being an exporter of processed goods for which it received payment in bullion, to being an exporter of raw materials and a buyer of manufactured goods. More specifically, in the 1750s, mostly fine cotton and silk was exported from India to markets in Europe, Asia, and Africa; by the second quarter of the 19th century, raw materials, which chiefly consisted of raw cotton, opium, and indigo, accounted for most of India's exports.

• In 1800 India's share of the world manufactured product was four times that of Britain, and China's share was even higher. By 1900 India was fully under British control and the ratio was 8-1 in England's favour.
  
  
• Indian and Chinese rulers actually had before 1800 a good record of mitigating famines, and one British statistician suggested that whereas for the previous two millennia there was one major famine a century, under British rule there was one every four years." 

 

Based on such scholars as Bairroch, Parthsarathi, Gura and Pomeranz, Davis brings forth many facts that shore up his argument.

 

So we see that how India’s standard of living decreased immensely after its ability to produce goods and services decreased. Also we can say that the trade with East India Company made India worse off. So it's not always that Trade can make you better off.