In the 250th anniversary celebrations of Adam Smith, we should not forget what he said about the East India Company who were given a Royal Charter to trade with Asia. 

Adam Smith famously condemned the East India Company (EIC) as a “strange absurdity” and a “nuisance in every respect,” focusing his critique on its status as a “bloodstained” monopoly that harmed both India and British consumers. He argued that separating sovereign power from commercial profit was disastrous, accusing the company of corruption, mismanagement, and horrific exploitation.

Smith’s critique of East India Company had three key aspects. Firstly it was a “Monopoly Nuisance”. Smith viewed the EIC’s exclusive trading privileges as a violation of free trade principles, arguing that such monopolies “burdened” consumers with high prices to maintain high profits for the company.

Secondly, he also commented  on their Misrule and Corruption. He accused the company of widespread “plunder” and mismanagement in Bengal, arguing that merchant companies are ill-equipped to act as sovereign rulers.

And finally he opposed their Expansion. Smith opposed the EIC’s territorial expansion in India, viewing the blending of trade and political rule as a “contradiction” between the company’s nationalist responsibility and the private interests of its merchants.

In his work, notably The Wealth of Nations, Smith emphasised that the “wretched spirit of monopoly” in the East Indies was economically and ethically disastrous for Great Britain. Smith believed the best way to correct these issues was to abolish the EIC’s monopoly, end their sovereign administration of Indian territory, and encourage free trade. So while Adam Smith wrote about the limits of mercantile administration in The Wealth of Nations he supported the termination of the firm’s charter.