Dutch and English trade to the East: the Indian Ocean and the Levant, to about 1700

JAMES D. TRACY

By about 1700, the Dutch East India Company (Verenigde Oost-Indische Compagnie) and the English East India Company - hereafter the VOC and the EIC - achieved dominant positions in certain sectors of trade in the Indian Ocean region.

First, even if one includes all the other European enterprises in the east - notably Portugal's Estado da India, and France's Compagnie des Indes - ship­ments back to Europe represented only a small fraction of the overall volume of Asian trade. For example, in 1688, the VOC shipped from its stations in Kerala Malabar pepper and other goods worth about 1,000,000 guilders. But for the same year, R. J. Barendse has estimated Kerala's overland trade to Konkan as worth 4,000,000 guilders, and its seaborne trade to Gujarat as worth 3,500,000. (Conversely, overseas trade, from Asia and elsewhere, is now seen as having played but a minor role in Europe's economic development.)^[204]

Second, the balance of trade was overwhelmingly in Asia's favor.

Third, and contrary to what was previously thought, Portugal's Estado da India, based from 1530 in Goa, had relatively little impact on traditional patterns of commerce in Asia. East-West trade across the Central Asian Steppe did fall off in the latter half of the sixteenth century, but this was due to the disruption of the caravan routes by wars between the Safavid Shahs of Iran and the Jochi Khans of Uzbekistan, not to Portuguese caravels rounding the Cape of Good Hope. Even in supplying pepper and what were called fine spices² to Europe, Portugal's dominance was short-lived, as C. H. H. Wake has shown: Thanks to shipments to the Red Sea by Portugal's Asian rivals, Venetian merchants resumed their role as Europe's main purveyors of spices, from about 1560.

Finally, the combined operations of the VOC and the EIC did effect fundamental changes in the structure of trade. Southeast Asia's historic free ports were by about 1680 subjected to European control: Melaka fell to the Portuguese and then to the Dutch, who also took Makassar and Banten. The merchants of Gujarat, who had for generations sailed to the Spice Islands, were now compelled to bargain for cloves and fine spices imported to Surat by the VOC. Along the Coromandel coast, a major cotton-weaving region, some two-thirds of the fabrics produced locally were, by about 1700, destined for Europe. In Bengal, important for the export to Europe of cottons, tea, and silk, the EIC and the VOC were described in 1730 as the greatest traders in the province.

How does one explain the success of the companies? And how does one explain the fact that their principal Asian rivals went into decline by around 1700, or soon thereafter? The first part of this chapter deals with the VOC and the EIC; the second part deals with the indigenous trading communities who were sometimes their partners, and more often their rivals.

Age of Mercantilism, 1650-1770 (Cambridge University Press, 2003). Also, ReneJ. Barendse, The Arabian Seas: The Indian Ocean World of the Seventeenth Century (London: C. M. R. Sharpe, 1998), p. 198.

² Nutmeg and mace. Nutmeg comes from the seed of the myristica fragrans tree, mace from the seed coating. In 1600, almost all of the world's supply of fine spices came from the Banda island chain in the Moluccas (modern Indonesia) - the so-called Spice Islands.

The VOC and the EIC in the Indian Ocean,

1600-1700

The VOC strategy of “armed trading”

For those who live in the country they call Nederland, Holland is the name not of a country but a province. In 1600 Holland was one of seven northern provinces of the former Habsburg Netherlands that were engaged in a long war for independence, against a Spanish monarchy whose king also ruled Portugal and its overseas empire.^[205] With more than half the wealth and population, it was the dynamic center of the Dutch Republic. Its cities, led by Amsterdam, enjoyed a spectacular economic boom, in good part because the Republic had made its border a cordon sanitaire, behind which a battle- free zone of prosperity beckoned to enterprising merchants and craftsmen, especially from the provinces loyal to Spain, the war-ravaged southern Netherlands.^[206] The war against Spain was the soil in which the VOC took root.

Portugal had built a trading empire in the East by exporting to Asia the medieval European practice of armed trading, that is, the use of naval power to compel commercial traffic to follow certain routes.^[207] Prior to its conquest in 1511, Melaka was a great entrepot where cottons from India and silks from China were traded for cloves and fine spices from the Moluccas. Banten, at the west end of Java, and Makassar, on the southern tip of Sulawesi, played similar roles on a smaller scale. Now, while Banten and Makassar remained free ports, Melaka became one of several fortified “choke-points” by which the Estado da India, based in Goa, controlled ocean-going trade along major routes; Portuguese warships patrolled the Straits of Melaka in search of vessels sailing without passes (cartazes).

In 1602, the States-General compelled rival companies to join in a United East India Company, the VOC. The objective of their High Mightinesses, as deputies were called, was to further the campaign against the Hispano- Portuguese crown by undercutting its lucrative spice monopoly. Governance of the company was entrusted to a college of directors, the Gentlemen Seventeen, chosen by five local “chambers” that were to manage the sale of goods brought back from Asia. The major investors (bewindhebbers) who controlled the chambers were also the only authorized issuers of stock to lesser investors who were mere shareholders (participanten). Although capital was to be parceled out to major and minor investors after ten years, in 1612, when the States-General decreed that there would be no re-distribution of capital, those wishing to recover their money could sell stock on the secondary market. This decision left the Gentlemen Seventeen with a per­manent stock of capital^[208] to support their overseas operations, supplemented by money from large loans contracted on the Amsterdam exchange.

The first two fleets sent out by the VOC had orders to attack Portuguese positions, but managed no more than the occupation of a Portuguese fortress on the island of Amboina, the center of clove production. In 1606, the third fleet joined with the sultan of Johor in an unsuccessful assault on Portuguese Melaka. Meanwhile, the Gentlemen Seventeen had engaged a brilliant young jurist, Hugo Grotius, to work Heemskerk's report on the seizure of the Santa Caterina into a legal brief, the De Jure Predae (On the Law of Prize and Booty). In 1606, Grotius petitioned the States-General on behalf of the VOC, asking (in vain) for support of the company's military expenses in Asia, as part of the overall war against Spain; he emphasized that armed trading would have real benefits for the Dutch state and its people.^[209] In 1609, the Gentlemen Seven­teen established the office of Governor-General. Although major policy decisions had to be ratified by the Gentlemen Seventeen, the Governor­General and his council would subsequently have immediate responsibility for overseas operations. Pieter Both, the first Governor-General, was instructed to strengthen Dutch forts, and to work toward a “monopoly” in the Moluccas. Both took up residence in Banten, and then in Jakarta, a dependency of the sultanate of Banten.

The strategy of armed trading was undercut when Spain and the Dutch Republic agreed to a Twelve Years Truce, beginning in 1609. But while both sides observed the truce, troubling reports came from the Banda Islands, the source of 95 percent of the world's supply of nutmeg and mace: Here, indigenous growers contracted with the VOC and then sold to higher bidders from the EIC. When challenged by the Dutch, the Muslim orang kaya or leading men of Banda Neira - the main island - were bold enough to challenge company warships with their kora-kora outriggers. Representing the VOC in negotiations with the EIC (1613-15), Grotius insisted that the principle of pacta sunt servanda applied to commercial contracts in the Moluccas.

In 1622, the VOC and the EIC collaborated in ousting the Portuguese from their position in Hormuz, a “choke-point” for trade through the Persian Gulf. For Niels Steensgaard, this campaign was a turning point, not merely because the Estado da India lost a key position, but also because the victors repre­sented a superior business rationality. The EIC and the VOC engaged in armed trading, like the Portuguese, but their structure as business corpor­ations meant that they factored military decisions into an overall commercial plan. Steensgaard's critics rightly point out that he fails to take account of how the Estado changed over time, and that he seems at times to contra-pose an essential Dutch character, incarnated in profit-seeking merchants, to an essential Portuguese character, represented by proud and warlike fidalgos. But it does seem that the companies represented a more developed business rationality. Unlike the Portuguese, the Dutch in particular “internalized” their protection costs,¹⁰ that is, they included the costs of overheads in Asia (warships, etc.) in the price of goods sold in Europe.

Again according to Steensgaard, Jan Pieterszoon Coen was the first to see how the VOC's monopsony position in the Moluccas could be built out into a trading empire in Asia. From a contemporary merchant's standpoint, capital realized in Asia was an asset that could be called home as needed. Coen envisioned keeping a permanent stock of capital in Asia, an idea the Company gradually accepted. He also sketched a strategy for intra-Asian trade. In the Moluccas, cloves and fine spices were traded for Indian cottons. But in India cottons were sold for specie, and silver was difficult for the Dutch to obtain, since the war between Spain and the Netherlands had resumed in 1622. As Coen understood, this meant obtaining silver from an Asian source, namely Japan,11 which in turn meant setting up shop on Taiwan to get Chinese silk for trading to Japan. Coen did not live to see the day when warships were used to reinforce the company's trading position in Gujarat,¹² the better to profit from its monopoly of fine spices. But he had created a template that made armed trading profitable, a template that would endure well beyond the 1648 Treaty of Westphalia, in which Spain recognized the independence of the Dutch Republic.

With backing from the Gentlemen Seventeen, later Governors-General sought to replicate in other trades what Coen had done for nutmeg and mace. In the case of cloves, VOC forts on Amboina did not make for a monopsony, because cloves grown elsewhere in the Moluccas were freely traded in Makassar. It took several military campaigns, over four decades, but by 1669 the company had largely snuffed out its rivals' trade in cloves. Cinnamon, grown exclusively in Sri Lanka, commanded prices almost as high as cloves and fine spices. To gain possession of the main cinnamon­producing regions, the VOC fought two series of wars, first against the Estado da India (1638-58), and then against the Sinhalese kingdom of Kandy (1658-65). Control of the pepper trade would have been the greatest prize of all, had the European market for pepper continued to grow. In fact, demand was not insatiable; in retrospect, it can be seen that a point of saturation was reached in the 1660s - just as the VOC conquered Portuguese Cochin in 1663, as part of an effort to exclude European rivals from the market for Malabar pepper. But pepper from southern Sumatra and else­where was still on offer at Banten, where the EIC had ties to the local government. Moreover, company balance sheets were now burdened with war debts, especially from Sri Lanka. In the 1670s, the overall strategy of armed trading was called into question; for example, the idea of dropping the system of mandatory cartazes (taken over from the Portuguese) was con­sidered if not acted on. When the Gentlemen Seventeen decided in 1682 to attack Banten after all, it was not for the sake of the pepper trade, but because Banten was an adversary in the VOC's war in central Java against the sultan of Mataram. The fall of Banten undercut the EIC's pepper exports to Europe, but low prices for pepper made the idea of a monopoly no longer attractive.¹³ In any case, relations between the companies became more relaxed after 1688, when Prince William of Orange ascended England's throne as King William iii.

The EIC: “a form of business constitutionalism”

The VOC was founded by a national parliament intent on striking a blow against the Spanish monarchy. By contrast, the EIC, which received its charter in 1600, was founded by a corporation of merchants and investors who successfully petitioned Elizabeth ι's government for exclusive rights to conduct trade to the Spice Islands.¹⁴ Shareholders made up the General Court, which elected each year a Governor and a twenty-four member Court of Committees, known as the Directors. Major policy decisions had to be submitted to the General Court, but the Governor and the Directors had executive responsibility, and they showed “remarkable consistency” in maximizing profits and reducing overhead costs,¹⁵ demonstrating that share­holder interests were paramount. Until 1636, the company sold separate issues of stock for each voyage, and re-distributed the capital once accounts were settled. Private trade by officials and employees of the company was discouraged, although not strictly forbidden, as by the VOC.¹⁶

EIC captains were not loath to make use of sea power to gain a commer­cial advantage. But the company lacked the resources for a sustained chal­lenge to the VOC's position in the Moluccas. Between 1613 and 1617, for example, the EIC sent 29 ships east, as against 51 for the VOC. By 1623, the VOC had 90 ships in the East Indies, and 2,000 troops distributed among 20 forts. In 1619 the British and Dutch governments compelled the companies to agree to divide the trade in spices, two-thirds for the VOC, one-third for the EIC. The idea was to boost profits by sparing the companies the expense of fighting a war against each other. But VOC officials in the East saw the treaty as a mere “gift” to their English rivals. In 1621 Coen occupied Banda Neira, as noted above, and in 1623 VOC authorities on Amboina claimed the right to try to execute ten Englishmen and nine Japanese mercenaries on charges of a treasonous plot. At this point the EIC abandoned the Moluccas. From now on, the company would be content to trade for spices in Banten.¹⁷ By default, the focus shifted to India.

1 ⁴ For the phrase “a form of business constitutionalism”: Chaudhuri, Trading World of Asia, p. 22.

1 ⁵ Kirti N. Chaudhuri, The English East India Company (London: Frank Cass, 1965), pp. 31-3, and Chaudhuri, Trading World of Asia, pp. 25-8.

1 ⁶ Peter James Marshall, “Private British Trade in the Indian Ocean before 1800,” reprinted as chapter xιιι of Peter James Marshall, Trade and Conquest: Studies on the Rise of British Dominance in India (Aldershot: Variorum, 1993), pp. 277-8.

1 ⁷ Anthony Farrington, Trading Places: The East India Company and Asia, 1600-1834 (London: British Library, 2002), pp. 41 and 54; M. A. P. Meilink-Roelofs, Asian Trade in the Indonesian Archipelago Between 1500 and About 1650 (The Hague: Nijhoff, 1962), p. 193; Jonathan Israel, Dutch Primacy in World Trade, 1585-1740 (Oxford: Clarendon, 1989), pp. 175-6; and Gaastra, “War, Competition, and Collaboration,” in Bowen, Lincoln, and Rigby (eds.), Worlds of the East India Company, p. 52.

Map io.ι: Indian Ocean in the 1600s

In 1608 an EIC ship called at Surat, the main port of Gujarat, and a good place to obtain the Gujarati cottons that had an established market in the Moluccas. But the English were not allowed to establish a factory here until 1615, after defeating a Portuguese fleet that sought to exclude them (1612), and after King James ι had agreed to send an ambassador to the court of Jahangir, the Mughal emperor. From 1611, the company also had a factory in Masulipatnam, the main port of the sultanate of Golconda, and a major outlet for Coromandel cottons. Then in 1639 the company was invited to establish a presence in the Hindu principality of Madras; the end result was the construction here of Fort St. George, which was to be for some time the EIC's only fortified settlement in Asia.¹⁸ Bengal was another important region for textiles, but opposition from Portuguese private traders - and from pirates based in Arakan in modern Burma - hindered the company's initial efforts there. Whereas the VOC was trading from Hugli as of 1633, the EIC did not establish a factory there until 1651, with a farman from Jahangir's successor, Shah Jahan. Troubles with the Mughal government began in 1660, when Mir Jumla, a man of wide commercial interests, was named subaldar of the province of Bengal. This led to talk among shareholders about the need for forceful action to protect company trade. Josiah Child, the leading advocate of a “forward policy,” became Governor for the first time in 1681. After the company had obtained James ιι's permission to initiate hostilities, the war that Child had wanted began in 1688, but it ended badly for the company when an English expeditionary force failed to capture Chittagong. Emperor Aurangzeb, Shah Jahan's successor, allowed the company to re­establish itself in Bengal in 1690, when Calcutta was chosen as the headquar­ters. During a local rebellion in 1696, company officials took the opportunity to begin fortifying its new settlement.¹⁹

There were separate presidencies for Surat/Bombay,²⁰ Madras, and, from 1700, Fort William in Calcutta. Each president, responsible for the super­vision of several subordinate agencies, reported directly to the Governor and Directors in London. But the lack of a centralized command structure in Asia

1 ⁸ Sinnappah Arasaratnam and Aniruddha Ray, Masulitpatnam and Cambay: A History of Two Port Towns, 1500-1800 (New Delhi: Munshiram Manoharlal, 1994).

1 ⁹ Om Prakash, The Dutch East India Company and the Economy of Bengal, 1630-1720 (Princeton University Press, 1985), pp. 34-9, and Susil Chaudhury, Trade and Commercial Organization in Bengal, 1650-1720 (Calcutta: K. L. Mukhopaday, 1975), pp. 21-30 and 36-51.

²⁰ Bombay came to the English crown in 1661 as part of the dowry of Portugal's Catherine of Braganza, the bride of Charles ii. The Surat presidency re-located to Bombay in 1666. seems not to have prevented company officials from following a common strategy: cottons obtained in India would pay for homebound cargoes of pepper and spices. Like the VOC, the EIC had a plan - although, as things turned out, not a very good plan - for trading silks to Japan to obtain silver for buying cottons in India. The fact that the company had to withdraw from the Moluccas after 1623 did not in itself effect a fundamental change, because EIC agents were still able to procure pepper in Banten and cloves in Makassar. But the VOC captured Melaka in 1641 and thereafter exerted increasing pressure on Makassar. As of 1661 or 1662, the EIC's Directors made a formal decision to withdraw from intra-Asian trade; shipment of Indian cottons to Banten continued, but in the hands of British private traders, who could now apply for licenses from the company. This shift in policy was pregnant with implications for the future, for British private traders, under the protection of EIC warships, would become a dominant presence in the Indian Ocean during the course of the eighteenth century.

Oliver Cromwell's Navigation Act of 1651 may be seen as the beginning of an economic struggle, punctuated by war,²¹ which pitted England against the Dutch Republic during most of the second half of the seventeenth century. In India, competition between the two companies focused on a rivalry to supply Europe's seemingly insatiable demand for calicoes. Overall, the VOC shipped more in goods to Europe, by a factor of roughly 3:2. But the EIC had directed its attention to Indian textiles earlier, and cottons continued to be relatively more important in its homebound cargoes. For example, textiles represented 64.5 percent of the invoice value of EIC imports from Asia for the years 1696-1705, while for the VOC the comparable figure was 54.7 percent for the years 1698-1700.²² Both companies dealt with brokers who passed on their orders to village weavers. The Dutch were more aggressive about trying to bypass the middlemen and deal directly with producers, but they never managed to command the local market. In Gujarat the VOC had an advantage, because the company was able to enforce its monopoly on the import of cloves and fine spices from the Moluccas. Along the Coromandel coast as well, the VOC outdid the EIC in textile exports. But by about 1700 Bengal was the most important source of textiles for both companies, and here the English had an edge, because of a favorable customs agreement

²¹ J. R. Jones, The Anglo-Dutch Wars of the 17th Century (London: Longman, 1996).

²² Niels Steensgaard, “Growth and Composition of the Long-distance Trade of England and the Dutch Republic,” in James Tracy, The Rise of Merchant Empires (Cambridge University Press, 1991), vol. i, pp. 102-52, specifically p. 110 (table 3.2), pp. 114-15 (table 3.5), and p. 126 (table 3.8). granted by the Mughal government. Moreover, in the absence of a hierarch­ical structure of governance like the VOC's, local officials could react more quickly to market opportunities.

Banker-brokers in India

In Gujarat and in Bengal, provinces of the Mughal Empire, both companies faced interference from local officials who did not always respect farmans granted by the court in Agra. Timing was an even more serious problem. Prices for commodities to be purchased varied greatly depending on the season, and “supply” from Europe - mainly in the form of specie - seldom arrived soon enough to take advantage of opportunities. Accordingly, the bullion sent out from Europe was used more as collateral for loans than for direct purchase of goods: “The trade of all Companies and of the Estado floated on the credit of Indian bankers.”^[212] Many bankers also acted as brokers, buying from or selling to company agents on behalf of their clients. Surat's Virji Vora was a famous example. On one occasion, having cornered the market in pepper, he forced the Dutch to accept his price (they sent to the Deccan in quest of pepper, but Vora's men had gotten there first). Making accommoda­tions with such men was easier than doing battle with them. In 1666, com­plaints reached Batavia that the VOC factory in Surat was selling to Vora at artificially low prices. In 1669, the EIC owed him a total of 6,000,000 rupees. In Madras, Beri Timanna and Kasi Veeranna, recognized by the EIC as Chief Merchants, were also major suppliers of textiles for export, and monopoly purchasers of goods imported by the EIC. These “portfolio capitalists,” as they have been called, could also be found farming taxes, or lending great sums to princes.^[213] Like the Fuggers and the Spinola of sixteenth-century Europe, it may be said of them that they held in their hands the destiny of states.

Partners and rivals of the companies: Asian trading networks

The study of settler trading communities, sharing a common religion and ethnicity, was stimulated by Philip Curtin's Cross-Cultural Trade in World History (1984). But Curtin's “trade diasporas” included trader-settlements that had behind them a state or a state-like power (like the European companies) as well as those that did not. For Indian trader communities, most of which did not have the direct support of a state or a navy, the term “trading networks”^[214] is more appropriate.

Kelings

Owing to a Hindu taboo against ocean-sailing, Indian merchants who settled abroad were usually Muslim. The Tamil-speaking Kelings, mostly Hindu, were an interesting exception, possibly because they represented a region of the Subcontinent whose trade with the Indonesian Archipelago went back more than five centuries. Prior to 1511, Kelings and Muslim Gujaratis made up the largest Indian communities resident in Melaka. As the Portuguese contemplated an attack, they needed an ally in Melaka, and the Gujaratis were an unlikely choice, since the attack on Diu by a Portuguese fleet (1509) had made the sultan of Gujarat an enemy of the Estado. The Kelings, seeing a chance to push the Gujaratis aside, aided the Europeans in the conquest of Melaka, and then in the organization of trade with the Moluccas. As for the Gujaratis, they migrated to the sultanate of Aceh, a state in northern Sumatra, which soon became the main foe of Portuguese sea power in this region. Melaka still had a significant community of Keling traders more than a hundred years later, when they offered their services to the VOC after the Portuguese were ousted in 1641. But the Dutch proved more difficult partners. From their perspective, Keling merchants who brought cottons from south India for trade in Aceh were competing directly with the company. Accordingly, they sought to force ships from India to call at Melaka. As these measures took hold, Melaka's Kelings began their exodus to Aceh, where they built a flourishing trade in Indian cloth.^[215]

Gujaratis

Surat owed its prosperity as an entrepot to a fortunate convergence of geo-political circumstances. When Akbar, the third Mughal Emperor (1556-1605) captured Gujarat, Surat became the port of choice for overseas luxury goods imported by the court. Moreover, unlike Cambay, which had been more prominent during the fifteenth century, Surat had an insurance trade to hedge the risks of ocean-going traffic; it also boasted one of the few maritime fortresses on the west coast of India that was not in Portuguese hands. Meanwhile, trade from Iran was promoted by Shah Ismail ι (r. 1501-24), the first ruler of the Safavid dynasty. Then the Ottoman conquest of Aden (1538) secured the Red Sea against Portuguese incursions, making it safe for hajj pilgrims (and merchants) sailing from Gujarat. Increased demand in West Asia for the spices pro­cured by Gujarati merchants at Aceh created a trade circuit that spanned the Indian Ocean, with its mid-point in Surat. More so in Surat than in some urban centers, members of the bania castes also had the benefit of mutual-aid societies formed along ethno-religious lines, the mahajans. The mahajans lacked an umbrella organization, but there was a nagarseth who could speak for the whole trading community in time of crisis. Prominent bankers - like Virji Vora - were likely to be found in the Hindu or Jain mahajans, while overseas trade was largely in Muslim hands. As subjects (from 1573) of the Mughal emperor, Gujarati Muslims were no friends of the Portuguese, at least not initially. But Estado outposts in Melaka and Hormuz did not inhibit their traffic to Aceh in the east or to the Red Sea in the west. When the EIC and the VOC called at Surat, starting around 1610, Gujaratis and Portuguese joined in an unsuccessful effort to keep the newcomers out.^[216]

In Surat as in Melaka, it was the Dutch who made life difficult for indigenous traders. With Melaka in company hands, as of 1641, the VOC deployed its naval power to interdict Gujarat's trade to Aceh. At one point the company's factory in Surat was burned in retaliation. The Dutch then detained two rich Gujarati merchantmen en route back from Mocha, extorting promises not to trade to the east, except to Melaka. But the blockage of eastbound traffic could not be made airtight, and in 1651 the company lifted its ban on sailing from Surat to Aceh. Meanwhile, the Gujaratis enhanced their position in the Persian Gulf and in the Red Sea, often at the expense of the EIC and the VOC; for example, they undercut the Dutch at Mocha by offering Gujarati cottons that were cheaper than the company's Coromandel fabrics.^[217] Mulla Abdul Ghafur (d. 1718), wealthiest of the Red-Sea traders, used his fleet to combat English and Dutch efforts to restrict traffic into and out of Surat. If Surat's westward trade declined in the early eighteenth century, it was due not to competition from the companies, but rather to the break-up of the geo-political configuration on which Surat's prosperity had always depended.^{[218] [219]}

The Persians of Masulipatnam

Among the port cities of the Coromandel coast, Masulipatnam grew in importance during the fifteenth century because of the rise of the Hindu kingdom of Vijayanagara (1356-1565). In the sixteenth century, Golconda was one of five sultanates that emerged in the Deccan after the break-up in 1518 of a larger Muslim state that had been ruled by a dynasty of Persian origin. Since Golconda's Qutb Shahi sultans were Shi'ites, they looked to Persia as a “cultural pole,” and Persians formed a distinct and important element among their court elite. The powerful Ibrahim Qutb Shah (r. 1550-1580) extended his rule to Masulipatnam, and became fabulously wealthy when tribute was transferred to Golconda after the sack of Vijayanagara in 1565. Masulipat- nam's ship-owners, mainly Persian, now developed what the Portuguese saw as a rival trading network round about the Bay of Bengal, with connections to Aceh, Arakan (modern Burma), and Kedah (modern Malaysia). Ibrahim Qutb Shah himself was suspected by the Portuguese of having financed an unsuccessful assault on Melaka by the sultan of Aceh in 1568. He also had ships of his own sailing to the Persian Gulf and the Red Sea, a route that allowed the Safavid shahs of Persia to send ambassadors to Golconda, without their having to cross the lands of Golconda's enemy, the Mughal

30

emperor.

The VOC and the EIC gained access to Masulipatnam early on, but the companies preferred to center their Coromandel operations in places under their control, the Dutch at a re-built Portuguese fort in Pulicat (1609-12), and the English at Fort St. George in Madras (1639-41). The Persians who continued to dominate Masulipatnam's trade included high officials at the court of Golconda. Before he moved on to the Mughal court, MirJumla, who rose to the position of vizier or prime minister in Golconda, is said to have had his own fleet of ten ocean-going vessels. Having conquered Melaka in 1641, the VOC sought to force ships crossing the Bay of Bengal to call at Melaka, but Coromandel's indigenous merchants found ways of evading restrictions; for example, if the VOC would not issue passes for Kedah or Arakan, cartazes could be obtained from the Portuguese or the English. Coromandel traders also equipped ships and organized trade for Thailand's rulers, and they used their profits from specialized trades (like bringing elephants to Thailand) to sell Indian cottons at prices the Dutch could not afford to match. Over time, however, continuous Dutch pressure had an effect, and Masulipatnam shippers chose to send their cottons west, to the Red Sea or the Persian Gulf, rather than across the Bay of Bengal. The departure for the Middle East in 1656 of Muhammad Sayyid, a leading overseas merchant, marks an early stage in Masulipatnam's decline. Of the Persians who stayed on, many left in 1687, when Golconda was conquered and absorbed into the Mughal Empire.³¹

The Armenians of New Julfa

Armenia's history as an independent kingdom ended with the Byzantine conquest in 1045, and the Seljuk conquest in 1065. From around 1500, merchants from Julfa, an ancient Armenian city, rose to prominence as dealers in silk; their caravans traveled east to the silk-growing regions of northern Iran, and west to markets in Damascus (later Aleppo) and Bursa.³² For much of the sixteenth century, Armenia was a battleground in wars between the Ottoman sultans and the Safavid shahs of Iran. Between 1603 and 1605, Shah ‘Abbas ι (r. 1587-1629) occupied Julfa and deported most of its residents, including the merchants. Whether the shah had a conscious plan for the economic development of his realm is disputed. But he settled his Armenian subjects in what became a separate quarter of his new capital of Isfahan, known as New Julfa, where the skyline was soon dominated by the spires of Armenian churches. In 1615, ‘Abbas ι made the export of silk a state

³¹ Arasaratnam, Merchants, Companies, and Commerce, pp. 123-5, 142-5, 218, and 224-5; Subrahmanyam, Political Economy, pp. 216-17; and Chaudhuri, Trading World of Asia, pp. 198-9.

³² For this paragraph and the next: Aslanian, From the Indian Ocean to the Mediterranean; Ina Baghdianz McCabe, The Shah's Silkfor Europe's Silver: The Eurasian Trade of the Julfa Armenians in Safavid Iran (1530-1750) (Atlanta: Scholars Press, 1999); and Stephen P. Blake, Half the World: The Social Architecture of Safavid Isfahan, 1590-1722 (Costa Mesa, CA: Mazda Press, 1999). monopoly. In 1619, the community of New Julfan merchants outbid the English East India Company to win the auction; they thus became the exclusive suppliers of Persian silk, by sea from Hormuz to Surat, and by land to Aleppo. Although their caravan route crossed the border of two empires that were often at war, their Christian identity exempted the New Julfans from Ottoman regulations aimed at keeping out Shi'ite merchants. After the royal monopoly was abolished in the 1630s, they controlled the market for silk through negotiations with the Safavid governors of silk­producing provinces, many of whom were ethnic Armenians.

By the end of the seventeenth century there were Armenian settler­communities in Surat, Madras, and, in Bengal, at Chinsura, north of Calcutta. On important matters, merchants living overseas looked for direction to the Kalantar of New Julfa. Once established on the Coromandel Coast, they sensed an opportunity in the distant east, where Spanish government regula­tions excluded British and French shipping from Manila. By 1700, Armenian vessels, with a red-yellow-red flag and a superimposed Lamb of God embla­zoned on their sails, had a regular route from Madras to the Philippines, with a stop in Canton. Meanwhile, agents of the EIC noted possibilities for collaboration. In 1675, for example, John Fryer found huge stocks of English broadcloth in Isfahan, brought back by caravans from Aleppo. He recom­mended an arrangement with the Armenians whereby the company would trade Spanish silver for Persian silk. In 1688, an agreement was signed in London between Josiah Child, representing the EIC, and Khwaja Panos Kalandar, a merchant residing in London who had authorization to act for the New Julfan community. The agreement gave Armenians the same rights as English subjects in all EIC settlements in India, and allowed them to freight their goods on the company. The whole arrangement depended on the continued ability of the New Julfans to supply Persian silk. In fact, their Persian trading network functioned into the eighteenth century, at least until the imposition of heavy taxes under Nadir Shah (r. 1736-47).

State power and stateless trading networks

There were a few Asian states that did deploy naval power to protect their commercial interests.^[220] Perhaps the most notable example was the sultanate of Aceh, which provided a safe harbor for numerous merchant communities, including Kelings, Gujaratis, and Persians. As of about 1500, the power in this region, and the main enemy of the Estado da India, was the sultanate of Johor. But as Aceh grew stronger, all three governments competed for dominance in the Straits of Melaka, and for extending the pepper plantations they controlled, especially in Sumatra. By 1536, Melaka's Portuguese governor was forced to ally with Johor against Aceh. Sultan Alauddin al-Kahar (r. 1537/ 9-71) then launched several attacks on Melaka, albeit in vain. For the assault in 1568, he had support from Istanbul: following the arrival of an ambassador from distant Aceh, Sultan Murad ιιι sent a fleet of war galleys from the Red Sea, bringing war material and cannon-founders.³⁴ Sultan Iskandar Muda (r. 1606-37) made the trade in pepper a state monopoly. Like the Portuguese and the Dutch, he sent out armed outriggers to burn the crops of growers who refused to co-operate. He too attacked Melaka, in 1629, but he suffered a devastating defeat at the hands of the Portuguese governor, Nuno Alvares Botelho. According to Portuguese sources, Aceh lost hundreds of ships, and some 19,000 men. Iskandar Muda then took cognizance of changing power dynamics in the region: in the same year, 1629, he and Alvares Botelho signed an alliance against the Dutch. Under Aceh's forceful sultans, resident foreign merchants were implicit collaborators with Aceh's navy. Merchants boosted the value of imports and thus added to the sultan's revenue base. In turn, they could expect that losses they suffered at the hands of the Portuguese or the Dutch would be taken into account as plans were made for retaliatory strikes. After 1641, however, Aceh's elite “asserted their influence and self­interest and prevented the emergence of another strong ruler” until the nineteenth century. This did not mean an end to profitable business. For example, Keling merchants did very well selling Indian cloth in Aceh under Queen Taj ul-Alam (r. 1641-75).³⁵ But the fact that the VOC no longer had to fear Aceh's war galleys was surely one reason why traders in Surat and Masulipatnam gradually lost interest in shipping to Aceh.

Except in the case of Aceh, indigenous trading networks in the Indian Ocean rarely had military backing from the governments of their home states.

Germs, and Steel: European Expansion and Maritime Asia, 1400-1750,” Journal of Early Modern History 14 (2010): 165-86.

³⁴ M. C. Ricklefs, A History of Modern Indonesia since c.1200 (Stanford University Press, 2001), pp. 36-8; Meilink, Asian Trade and European Influence, pp. 137-43; and Giancarlo Casale, The Ottoman Age of Exploration (Oxford University Press, 2010).

³⁵ Ricklefs, History of Modern Indonesia, pp. 38-40; Denys Lombard, Le Sultanat d 'Atjeh au Temps d'Iskandar Muda, 1607-1636 (Paris: Ecole Franςaise de l'Extreme-Orient, 1967); and Arasaratnam, Merchants, Companies, and Commerce, pp. 116-23.

But these stateless communities were nonetheless indirectly supported by state power. Trade over long distances always relied on geo-political configurations that made traffic relatively safe, especially across land routes that might otherwise be tempting targets for bandits. The Mughal emperors did not often deploy their military might in defense of the interests of their merchant subjects, but the trade of Surat - the empire's greatest port - depended on reliable access to inland production centers for export goods, and to markets in Delhi and Agra. After the death of Aurangzeb (r. 1658-1707), however, “security of transport disappeared in the regions of Delhi and Agra.” There were changes in Iran as well. Shah ‘Abbas ι had promoted Persia's trade to India and elsewhere by joining with the VOC and the EIC to expel the Portuguese from Hormuz in 1622. But under the last of his dynasty, Shah Sultan Husayn (r. 1694-1722), non-Shi'ite merchants were discriminated against, and the military power of the state was allowed to waste away. Finally, Ottoman sultans had in the sixteenth century sometimes responded to requests from co-religionists in the east for help against the infidel Portu­guese. From Ottoman ports on the Red Sea, there were naval expeditions to Gujarat, and a diplomatic mission to Aceh. But in a recent and authoritative survey of Ottoman history in the seventeenth and eighteenth centuries, the Indian Ocean does not merit a mention.^[221] Taken together, the waning strength of these three great empires of the Islamic world made life more difficult for largely Muslim sea-going traders in the Indian Ocean.

Conclusion

How does one understand the success attained by the two companies, as of about 1700? Some scholars have emphasized the advantages of that distinct­ively European form of commercial organization, the joint-stock company, with its capacity to plan for the long term, and to raise funds on the capital markets of Amsterdam and London. Others contend that the companies represented not so much a superior business model, but rather the applica­tion of superior force to achieve their objectives. The two perspectives are not mutually exclusive. Both came together in Niels Steensgaard's “internal­ization of protection costs” thesis: the companies made sure that money spent on deploying naval power to beat down their competitors was duly reckoned into the cost of getting goods to market. Indeed, in the long history of the Indian Ocean trade, what was peculiar about the companies was that, like the Portuguese Estado da India, they assumed that a proper business enterprise should have military force at its disposal. As K. N. Chaudhuri has said, “The phenomenon that is in need of explanation is not the system of peaceful but of armed trading.”^[222]

More generally, this assumption was common for Europeans doing busi­ness abroad, not just in the Indian Ocean. The point can perhaps be made clear from a brief glance at Europe's trade with the Levant - that is, with the complex of lands under Ottoman rule, from Egypt north and west around the coast of the Mediterranean as far as Dalmatia. In the waning decades of the sixteenth century, the Venetian Republic still controlled the bulk of the trade in Asian spices and silks sent on to Europe, even if the rise of Ottoman naval power had put an end to the control of sea lanes of the eastern Mediterranean by Venetian war galleys. But during the seventeenth century, even as the VOC and the EIC superseded the Portuguese in the Indian Ocean, British and Dutch merchants superseded the Venetians in the Levant. Ships of the Atlantic nations were lighter and more maneuverable than the heavy carracks favored by Venice, and their high walls and heavy armament gave them an edge in naval combat. Dutch and English captains found they could profit from raiding as well as trading, and the increase in piracy that made the Mediterranean unsafe for commercial shipping is usually dated from the coming of the Dutch and especially the English, around 1580. For those looking to go corsairing, or merely to ensure safe passage, English ships, known as bertoni, were much sought after for hire or purchase.^[223]

The Dutch had an initial advantage, because they led the way in carrying Baltic rye and wheat to a grain-starved Italy.^[224] Dutch traders to the Mediter­ranean never formed a monopoly corporation, like the VOC or the West Indies Company, but they had a strong position in Venice, built up from the 1570s; in 1597, twenty-four newly arrived Dutch vessels staged a parade across the lagoon, to honor a newly crowned Dogaressa. Dutch shipping to the Mediterranean expanded during the Twelve Years' Truce with Spain (1609-21), but contracted thereafter, owing to the imposition of new restric­tions by Spain. England's Levant Company, chartered in 1581, used Livorno as its base in Italy. The British advantage was that England had in abundance what the Dutch lacked - a store of home-produced light woolens, suitable for crowding out the more expensive Venetian cloth that had an established market in the Levant. By the middle decades of the seventeenth century Levant Company ships controlled traffic between Italy and the eastern Mediterranean, with only minor competition from the Dutch. In light of the continuing menace from Barbary corsairs, both governments intervened to protect their merchants. From 1621, Dutch merchantmen sailing to the Mediterranean were convoyed by warships. In England it was only in 1649 that the House of Commons voted to support convoys for merchant­men, without charge to the traders. The first report of naval vessels on convoy duty in the Mediterranean comes from 1651. The British convoy system was regularized and expanded in 1662; for example, in addition to a squadron that patrolled the Mediterranean, merchantmen bound from Livorno for Izmir or Iskanderun were always to be accompanied by two warships.

Thus while in the Indian Ocean the VOC invested more in armaments and the EIC invested less, in the Mediterranean the Dutch were outgunned by the British. Dutch merchantmen could be quite effective as gun-platforms, but the Levant Company's bertoni were even better. Also, the English government proved more willing to recognize the protection of its Mediter­ranean merchant fleet as a matter of state interest. The salient point of this comparison is that the strategy of armed trading was not peculiar to any single European trading nation. In Asia, some merchant groups competing with the companies showed a fighting spirit, like the Islamicized orang kaya of Banda Neira, who paid dearly for their resistance to the VOC. More often, they sought non-violent ways of thwarting the companies. In Europe, by contrast, “merchant warriors” were a dime a dozen. K. N. Chaudhuri rightly sees a precedent for armed trading in the medieval Mediterranean, where Venice battled Genoa for control of traffic to the Levant. One might equally

1993), p. 24; and Sari R. Hornstein, The Restoration Navy and English Foreign Trade, 1674-1678: A Study in the Peacetime Use of Sea Power (London: Scolar, 1991), pp. 21-5. well invoke the Hanseatic League, of towns in Germany and the Low Countries, whose wars with one another often had to do with control of local streams. In sum, armed trading - the phenomenon to which Chaudhuri called attention, and which is still in need of an explanation - was a common inheritance of the European nations.^[225]

FURTHER READING

Adshead, Samuel A. M., Central Asia in World History (New York: St. Martin's, 1993). China in World History (New York: St. Martin's, 1988).

Arasaratnam, Sinappah, Merchants, Companies, and Commerce on the Coromandel Coast, 1650-1740 (Oxford University Press, 1986).

Aslanian, Sebouh David, From the Indian Ocean to the Mediterranean: The Global Trade Networks of Armenian Merchantsfrom New Julfa (Berkeley, CA: University of California Press, 2011).

Aymard, Maurice (ed.), Dutch Capitalism and World Capitalism (Cambridge University Press, 1982).

Barendse, Rene J., The Arabian Sea: The Indian Ocean World of the 17th Century (London: C. M. R. Sharpe, 2002).

Bouchon, Genevieve, “Regent of the Sea”: Cannanore's Response to Portuguese Expansion, 1507-1528, Louise Shackley (trans.) (Delhi: Oxford University Press, 1988).

Bowen, H. V., Margarette Lincoln, and Nigel Rigby (eds.), The Worlds of the East India Company (New York: Boydell, 2002).

Chaudhuri, Kirti N., The Trading World of Asia and the English East India Company (Cambridge University Press, 1978).

Trade and Civilization in the Indian Ocean (Cambridge University Press, 1985).

Curtin, Philip D., Cross-Cultural Tradein World History (Cambridge University Press, 1984). Dale, Stephen Frederic, Islamic Society on the South Asian Frontier: The Mappilas of Malabar, 1498-1922 (Oxford University Press, 1980).

Das Gupta, Ashin, Indian Merchants and the Decline of Surat (Wiesbaden: Steiner, 1979). Gaastra, Femme S., De Geschiedenis van de VOC (Zutfen: Walburg, 1991).

Goor, Jurrien van, De Nederlandse Kolonien: Geschiedenis van de Nederlandse Expansie, 1600-1795 (The Hague: SDU, 1993).

Israel, Jonathan, Dutch Primacy in World Trade, 1585-1740 (Oxford: Clarendon, 1989).

Ittersum, Martine van, Profit and Principle: Hugo Grotius, Natural Rights Theories and the Rise of Dutch Power in the East Indies, 1595-1615 (Leiden: Brill, 2006).

Marshall, PeterJames, Trade and Conquest: Studies on the Rise of British Dominance in India (Aldershot: Variorum, 1993).

Morineau, Michel, and Susil Chaudhury (eds.), Merchants, Companies, and Trade: Europe and Asia in the Early Modern Era (Cambridge University Press, 1999).

Prakash, Om, Precious Metals and Commerce: The Dutch East India Company in the Indian Ocean Trade (Aldershot: Variorum, 1994).

The Dutch East India Company and the Economy of Bengal, 1630-1720 (Princeton University Press, 1985).

Steensgaard, Niels, The Asian Trade Revolution of the Seventeenth Century (University of Chicago Press, 1974).

‘The Growth and Composition of the Long-distance Trade of England and the Dutch Republic Before 1750,” in James D. Tracy (ed.), The Rise of Merchant Empires, 1350-1750 (Cambridge University Press, 1990), vol. ι, pp. 102-53.

Subrahmanyam, Sanjay, Explorations in Connected History (New Delhi: Oxford University Press, 2005).

The Political Economy of Commerce: South India, 1500-1650 (Cambridge University Press, 1990).

The Portuguese Empire in Asia, 1500-1700: A Political and Economic History (London: Long­man, 1990).

Tracy, James D. (ed.), The Rise of Merchant Empires, 1350-1750 (Cambridge University Press, 1990).

Wake, C. H. H., “The Changing Pattern of Europe's Pepper and Spice Imports, c.1400-1700,” Journal of European Economic History 8 (1979): 361-404.

Winius, George, and Markus Vink, The Merchant Warrior Pacified: The VOC and its Changing Political Economy in India (New Delhi: Oxford University Press, 1991).