Founded in the 4th century, Dhaka first received principal status in 1610, when the Mughals transferred the capital from Rajmahal to Dhaka, and renamed it Jahangirnagar. During the Mughal period, Dhaka became the chief commercial emporium. This encouraged a much greater concentration of commerce: maritime trade brought industry, Islamic education and increasing sophistication in the arts. Dhaka’s prosperity was also considerably enhanced – the Mughals built mosques, palaces, caravanserais (accommodation for camel caravans), bazaars and gardens. This development began to attract European traders from southern India.
In 1666 the British East India Company established a trading post in Dhaka; however, Dhaka’s decline as a maritime trade centre had already begun. Dhaka remained the capital under the Mughals until 1704, when they moved it to Murshidabad.
The British East India Company extended its power to such an extent that by 1757 it controlled all of Bengal except Dhaka, which it took eight years later. It was under the British, during the late 18th and early 19th centuries, that the dominant forms of current economic development were established: indigo, sugar, tobacco, tea and, of course, jute.
In 1887 Dhaka became a district capital of Bangladesh, and in 1905 Bengal was divided into east and west, the eastern section incorporating Assam (with Dhaka as its winter capital). From this point on Dhaka again began to assume some measure of importance as an administrative centre. Government buildings, churches, residential enclaves and educational institutions transformed it into a city of great prosperity. During the existence of East Pakistan, Dhaka was classed as a subsidiary capital, and it was not until Independence in 1971 that Dhaka once again achieved its former capital-city status.