The Bengal Bubble, caused by the increasing overvaluation of the

East India Company The East India Company (EIC) was an English, and later British, joint-stock company founded in 1600 and dissolved in 1874. It was formed to trade in the Indian Ocean region, initially with the East Indies (the Indian subcontinent and Sou ...

stock between 1757 and 1769, led to the Great East Indian Crash, a major

financial crisis A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and man ...

that occurred in 1769. The bubble and crash occurred in the wake of the conquest of Bengal by the

in 1757 by

Robert Clive Robert Clive, 1st Baron Clive, (29 September 1725 – 22 November 1774), also known as Clive of India, was the first British Governor of the Bengal Presidency. Clive has been widely credited for laying the foundation of the British ...

. Following the battle, Clive and the company acquired increasing powers in Bengal, through the installation of the puppet regime of

Mir Jafar Sayyid Mīr Jaʿfar ʿAlī Khān Bahādur ( – 5 February 1765) was a military general who became the first dependent Nawab of Bengal of the British East India Company. His reign has been considered by many historians as the start of the expa ...

, including control of the tax collection rights for the province from the weak and declining

Mughal Empire The Mughal Empire was an early-modern empire that controlled much of South Asia between the 16th and 19th centuries. Quote: "Although the first two Timurid emperors and many of their noblemen were recent migrants to the subcontinent, the d ...

. 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 ( حیدر علی, ''Haidarālī''; 1720 – 7 December 1782) was the Sultan and ''de facto'' ruler of the Kingdom of Mysore in southern India. Born as Hyder Ali, he distinguished himself as a soldier, eventually drawing the att ...

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 The East India Company Act (EIC 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 und ...

, that reform was seriously undertaken.

References

{{DEFAULTSORT:Bengal Bubble of 1769 1769 in economics 1769 in India Financial crises Bengal Presidency Economic history of India Stock market crashes British East India Company