Bengal Bubble of 1769
Encyclopedia
The Bengal Bubble, caused by the increasing overvaluation of the East India Company
stock between 1757 and 1769, led to the Great East Indian Crash, a major financial crisis that occurred in 1769. The bubble and crash occurred in the wake of the conquest of Bengal by the East India Company
in 1757 by Robert Clive. Following the battle, Clive and the company acquired increasing powers in Bengal, through the installation of the puppet regime of Mir Jafar
, including control of the tax collection rights for the province from the weak and declining Mughal Empire. By 1769, the East India Company stock was trading at £284. By 1784, the stock had declined to £122, a fall of 55%, and a series of bailout measures and increasing control by the crown led to the demise of the company.
Several historical events, including the attack on Company holdings by Hyder Ali
in 1769, the Bengal famine of 1770
, and growing revelations of the company's actions, were the immediate causes of the crash, but the primary cause was the predatory governance of the province by the company, which led to the collapse of the 18th century Bengal textile industry.
In the wake of the crash and the resulting outcry in England, attempts were made to reform the company, but, due to the complicated situation in England at the time, it was only in 1784, with the passage of Pitt's India Act
, that reform was seriously undertaken.
East India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...
stock between 1757 and 1769, led to the Great East Indian Crash, a major financial crisis that occurred in 1769. The bubble and crash occurred in the wake of the conquest of Bengal by the East India Company
East India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...
in 1757 by Robert Clive. Following the battle, Clive and the company acquired increasing powers in Bengal, through the installation of the puppet regime of Mir Jafar
Mir Jafar
-Notes:# "Riyazu-s-salatin", Ghulam Husain Salim - a reference to the appointment of Mohanlal can be found # "Seir Muaqherin", Ghulam Husain Tabatabai - a reference to the conspiracy can be found...
, including control of the tax collection rights for the province from the weak and declining Mughal Empire. By 1769, the East India Company stock was trading at £284. By 1784, the stock had declined to £122, a fall of 55%, and a series of bailout measures and increasing control by the crown led to the demise of the company.
Several historical events, including the attack on Company holdings by Hyder Ali
Hyder Ali
Hyder Ali was the de facto ruler of the Kingdom of Mysore in southern India. Born Hyder Naik, he distinguished himself militarily, eventually drawing the attention of Mysore's rulers...
in 1769, the Bengal famine of 1770
Bengal famine of 1770
The Bengal famine of 1770 was a catastrophic famine between 1769 and 1773 that affected the lower Gangetic plain of India...
, and growing revelations of the company's actions, were the immediate causes of the crash, but the primary cause was the predatory governance of the province by the company, which led to the collapse of the 18th century Bengal textile industry.
In the wake of the crash and the resulting outcry in England, attempts were made to reform the company, but, due to the complicated situation in England at the time, it was only in 1784, with the passage of Pitt's India Act
Pitt's India Act
The East India Company Act 1784, also known as Pitt's India Act, was an Act of the Parliament of Great Britain intended to address the shortcomings of the Regulating Act of 1773 by bringing the East India Company's rule in India under the control of the British Government...
, that reform was seriously undertaken.