The British had begun to expand their commerce with China from their bases in India through both private traders and the British East India Company in the late eighteenth century.
The company has occupied a small settlement at Bencoolen (Bengkulu) on the western coast of Sumatra since 1684; from there it had engaged in the pepper trade after being forced out of Java by the Dutch.
Acutely aware of the need for a base somewhere midway between Calcutta and Guangzhou (Canton), the company had leased the island of Penang, on the western coast of the Malay Peninsula, from the sultan of Kedah in 1791.
From these posts at Penang and Bencoolen, the British had begun in 1795 to occupy the Dutch possessions placed temporarily in their care by the Kew Letters, including Malacca and Java.
After war in Europe ended in 1814, however, the British had agreed to return Java and Malacca to the Dutch.
By 1818 the Dutch have returned to the East Indies and had reimposed their restrictive trade policies.
In that same year, the Dutch negotiated a treaty with the Bugis-controlled sultan of Johore granting them permission to station a garrison at Riau, thereby giving them control over the main passage through the Strait of Malacca.
British trading ships are heavily taxed at Dutch ports and suffer harassment by the Dutch navy.
Meanwhile, the British government and the British East India Company officials in London, who are concerned with maintaining peace with the Dutch, consolidating British control in India, and reducing their commitments in the East Indies, consider relinquishing Bencoolen and perhaps Penang to the Dutch in exchange for Dutch territories in India.
