The first English factory was set up on the banks of
the river Hugli in 1651. This was the base from which
the Company’s traders, known at that time as “factors”,
operated. The factory had a warehouse where goods
for export were stored, and it had offices where Company
officials sat. As trade expanded, the Company persuaded
merchants and traders to come and settle near the
factory. By 1696 it began building a fort around the
settlement. Two years later it bribed Mughal officials
into giving the Company zamindari rights over three
villages. One of these was Kalikata, which later grew
into the city of Calcutta or Kolkata as it is known today.
It also persuaded the Mughal emperor Aurangzeb to
issue a farman granting the Company the right to trade
The Company tried continuously to press for more
concessions and manipulate existing privileges.
Aurangzeb’s farman, for instance, had granted only
the Company the right to trade duty free. But officials
of the Company, who were carrying on private trade on
the side, were expected to pay duty. This they refused
to pay, causing an enormous loss of revenue for Bengal.