European traders first appeared in India at the end of the fifteenth century and began exporting goods to Europe as well as to other parts of Asia. In a detailed analysis of the trading operations of European corporate enterprises such as the English and Dutch East India Com- panies, as well as those of private European traders, this volume considers how, over a span of three centuries, the Indian economy expanded and was integrated into the pre-modern world economy as a result of these interactions. The book also describes how the essentially market-determined commercial encounter between Europe and India changed in the latter half of the eighteenth century as the colonial relationship between Britain and the subcontinent was established. By bringing together and analysing the existing literature, the author provides a fascinating overview of the impact of European trade on the pre-colonial Indian economy which promises to be of great value to students of Indian, European and colonial history.

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Cambridge Histories Online © Cambridge University Press, 2008

THE NEW CAMBRIDGE HISTORY OF INDIA

European commercial enterprise in pre-colonial India

Cambridge Histories Online © Cambridge University Press, 2008

THE NEW CAMBRIDGE HISTORY OF INDIA

General editor GORDON JOHNSON

President of Wolfson College, and Director, Centre of South Asian Studies, University of Cambridge

Associate editors C.A. BAYLY

Vere Harmsworth Professor of Imperial and Naval History, University of Cambridge, and Fellow of St Catharine’s College

and JOHN F. R1cHARDS Professor of History, Duke University

Although the original Cambridge History of India, published between 1922 and 1937, did much to formulate a chronology for Indian history and describe the administrative structures of government in India, it has inevitably been overtaken by the mass of new research over the past fifty years.

Designed to take full account of recent scholarship and changing conceptions of South Asia’s historical development, The New Cambridge History of India will be published as a series of short, self-contained volumes, each dealing with a separate theme and written by a single person. Within an overall four-part structure, thirty-one complementary volumes in uniform format will be published. Each will conclude with a substantial bibliographical essay designed to lead non- specialists further into the literature

The four parts planned are as follows:

I The Mughals and their contemporaries II Indian states and the transition to colonialism III The Indian Empire and the beginnings of modern society IV The evolution of contemporary South Asia

A list of individual titles in preparation will be found at the end of the volume.

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THE NEW CAMBRIDGE HISTORY OF

INDIA

TD =5

European commercial enterprise in pre-colonial India

OM PRAKASH

UNIVERSITY OF DELHI

3 CAMBRIDGE

i) UNIVERSITY PRESS

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PUBLISHED BY THE PRESS SYNDICATE OF THE UNIVERSITY OF CAMBRIDGE The Pitt Building, Trumpington Street, Cambridge cBz 1RP

CAMBRIDGE UNIVERSITY PRESS The Edinburgh Building, Cambridge ca2 2RU, United Kingdom 40 West zoth Street, New York, NY 10011-4211, USA 10 Stamford Road, Oakleigh, Melbourne 3166, Australia

© Cambridge University Press 1998

The book is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press.

First published 1998 Printed in the United Kingdom at the University Press, Cambridge Typeset in Garamond 10.5/13pt [CE] A catalogue record for this book is available from the British Library

Library of Congress cataloguing in publication data

Om Prakash, 1940- European commercial enterprise in pre-colonial India / Om Prakash. p. cm. -(New Cambridge history of India : II.) Includes bibliographical references. ISBN O §21 25758 1 1. India Commerce Europe History. 2. Europe - Commerce India History. 3. India - Economic conditions. I. Title. II. Series. DS436.N47 1987 [HF3788.E8] 954 s—de21 [382’.094054] 97-25536 CIP

ISBN 0 §21 25758 1 hardback

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DEDICATED TO THE MEMORY OF MY PARENTS

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Cambridge Histories Online © Cambridge University Press, 2008

CONTENTS

List of figures page x List of maps xi List of tables xil General editor’s preface xiv Preface xvi Introduction I 1 India in the Indian Ocean trade, circa 1500 8 2 The Portuguese in India, 1500-1640 23 3 The European trading companies: exports from 72

Europe and the generation of purchasing power

in Asia 4 The companies in India: the politics and the III economics of trade Euro-Asian and intra-Asian trade: the phase of 175

al

Dutch domination, 1600-1680

6 The VOC and the growing competition by the 211 English and the French, 1680-1740

7 The supremacy of the English East India Company, 268

1740-1800 8 European trade and the Indian economy 315 9 Conclusion 337 Bibliographic essay 352 Index 366

ix

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2.1 3.1

3-2 4.1.1-4.1.6

4.L.1 4.1.2 4.1.3 4.1.4 4.5 4.1.6 4.2.1-4.2.4

4.2.1 4.2.2 4.2.3 4.2.4 4-3

5-4 5-5

6.1 6.2 6.3

FIGURES

Pepper imported by the Portuguese Crown, 1503-98 = page 41

The export of precious metals by the VOC to Asia, 1602-1794

English East India Company exports to Asia, 1601-1760 Triennial totals and composition of the Dutch East India Company’s imports into Europe, 1619-1780 1619-21

1648-50

1668-70

1698-1700

1738-40

1778-80

Triennial totals and composition of the English East India Company’s imports into Europe, 1660-1779

1668-70

1698-1700

1738-40

1758-60

Regional distribution by origin of English Company imports into Europe, 1660-1779

Dutch East India Company’s exports from Coromandel, 1608-90

Dutch East India Company’s export of goods from Gujarat, 1621-1792

Dutch East India Company’s exports from Bengal, 1645-1785

Regional distribution of the VOC’s average annual exports from Bengal, 1660-1736

Share of Bengal goods in total Dutch exports to Europe, 1665-1736

Composition of Dutch exports from Bengal, 1675-1785 Dutch exports of textiles from Coromandel, 1691-1770 Dutch exports from Malabar, 1701-85

French East India Company’s imports from Asia

and India, 1725-71

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87

107

116 116 116 117 117 117

I2I 122

122 123

181 187 200 200 203 213 223

229 255

N Am pw bd

MAPS

Important trading centres in Asia in the seventeenth and page 10-11 eighteenth centuries

Portuguese seaborne empire, c. 1580 24-5 The Indian Ocean in the seventeenth and eighteenth centuries 112-13 India: main textile-weaving areas, 1600-1750 176-7 South India: weaving areas, c. 1720 179 Gujarat: textile towns, c. 1700 183 Bengal: main textile towns 197

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2.1 2.2

2.3 2.4 2.5 3.1 3.2 3-3 3-4 355 3.6 4al 4.2 4:3 5.1 5-2

§-3 5-4

6.2 6.3

TABLES

Shipping movements between Portugal and Asia, 1497-1700 page 32

Composition of cargoes imported into Lisbon from Asia, 1505-18

Composition of cargoes imported into Lisbon from Asia, I§13-1610

Pepper imported by the Portuguese Crown, 1503-98

Major concession voyages and the rate of return c. 1580

The export of precious metals (coined and uncoined) by the

VOC to Asia, 1602-1794

The assignaties redeemed by the chambers of the Dutch East

India Company, 1640-1795

Value and the regional distribution of précious metals imported

by the VOC into India, 1640-1785

The Dutch East India Company’s import of precious metals

from Holland and Japan into Batavia, 1621-99

Dutch East India Company shipping arriving at and leaving

Asia, 1602-1794

English East India Company exports to Asia, 1601-1760

French East India Company’s exports to Asia, 1725-69

Triennial totals and composition of the Dutch East India

Company’s imports into Europe, 1619-1780

Triennial totals and composition of the English East India

Company’s imports into Europe, 1660-1779

Regional distribution by origin (percentagewise) of English

Company imports into Europe, 1660-1779"

Dutch East India Company’s exports from Coromandel, 1608-90

Dutch East India Company’s exports from Gujarat, 1621-1792

Dutch East India Company’s exports from Bengal, 1645-1785

Regional distribution of the Dutch East India Company’s average

annual exports from Bengal, 1660-1736

Share of Bengal goods in total Dutch exports to Europe, 1665-1736

Composition of Dutch exports from Bengal (percent), 1675-1785

Value of the Dutch textile exports from Coromandel, 1691-1770

Value of the Dutch exports from Malabar, 1701-85

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35 36 40 58 87 89 98 102 104 106

109 115

203

213

229

TABLES 6.4 The French East India Company’s imports from Asia and India, 254 1725-71 7.1 Average annual value of the Danish Asiatic Company’s imports 310 from India, 1734-1807

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GENERAL EDITOR’S PREFACE

The New Cambridge History of India covers the period from the beginning of the sixteenth century. In some respects it marks a radical change in the style of Cambridge Histories, but in others the editors feel that they are working firmly within an established academic tradition.

During the summer of 1896, F.W. Maitland and Lord Acton between them evolved the idea for a comprehensive modern history. By the end of the year the Syndics of the University Press had committed themselves to the Cambridge Modern History, and Lord Acton had been put in charge of it. It was hoped that publication would begin in 1899 and be completed by 1904, but the first volume in fact came out in 1902 and the last in 1910, with additional volumes of tables and maps in 1911 and 1912.

The History was a great success, and it was followed by a whole series of distinctive Cambridge Histories covering English Literature, the Ancient World, India, British Foreign Policy, Economic History, Medieval History, the British Empire, Africa, China and Latin America; and even now other new series are being prepared. Indeed, the various Histories have given the Press notable strength in the publication of general reference books in the arts and social sciences.

What has made the Cambridge Histories so distinctive is that they have never been simply dictionaries or encyclopaedias. The Histories have, in H.A.L. Fisher’s words, always been ‘written by an army of specialists concentrating the latest results of special study’. Yet as Acton agreed with the Syndics in 1896, they have not been mere compilations of existing material but original works. Undoubtedly many of the Histories are uneven in quality, some have become out of date very rapidly, but their virtue has been that they have consistently done more than simply record an existing state of knowledge: they have tended to focus interest on research and they have provided a massive stimulus to further work. This has made their publication doubly worthwhile and has distinguished them intellectually from

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other sorts of reference book. The editors of The New Cambridge History of India have acknowledged this in their work.

The original Cambridge History of India was published between 1922 and 1937. It was planned in six volumes, but of these, volume 2 dealing with the period between the first century aD and the Muslim invasion of India never appeared. Some of the material is still of value, but in many respects it is now out of date. The past fifty years have seen a great deal of new research on India, and a striking feature of recent work has been to cast doubt on the validity of the quite arbitrary chronological and categorical way in which Indian history has been conventionally divided.

The editors decided that it would not be academically desirable to prepare a new History of India using the traditional format. The selective nature of research on Indian history over the past half- century would doom such a project from the start and the whole of Indian history could not be covered in an even or comprehensive manner. They concluded that the best scheme would be to have a History divided into four overlapping chronological volumes, each containing about eight short books on individual themes or subjects. Although in extent the work will therefore be equivalent to a dozen massive tomes of the traditional sort, in form The New Cambridge History of India will appear as a shelf full of separate but complemen- tary parts. Accordingly, the main divisions are between 1. The Mughals and their contemporaries, 11. Indian states and the transition to colonialism, 11. The Indian Empire and the beginnings of modern society, and 1v. The evolution of contemporary South Asia.

Just as the books within these volumes are complementary so too do they intersect with each other, both thematically and chronologi- cally. As the books appear they are intended to give a view of the subject as it now stands and to act as a stimulus to further research. We do not expect the New Cambridge History of India to be the last word on the subject but an essential voice in the continuing discussion about it.

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PREFACE

The rise of a pre-modern world economy, facilitated by the great discoveries of the closing years of the fifteenth century, held important implications for the Indian subcontinent. The availability of an all- water route between Europe and Asia via the Cape of Good Hope, and of a growing amount of American silver for export to Asia, involved a substantial expansion in the volume and the value of Euro- Asian trade. The Portuguese monopoly of the all-water route was challenged at the beginning of the seventeenth century by the English and the Dutch East India companies, who eventually came to dom- inate this trade. The only other body of any consequence engaged in this enterprise was the French East India Company. The so-called minor companies the Danish, the Ostend, the Swedish and others never really accounted for more than an insignificant proportion of the total trade between the two continents. At least one of the corporate enterprises, namely the Dutch East India Company, also carried on a substantial amount of trade within Asia. Employees of corporate enterprises also engaged in intra-Asian trade in their private capacity. By far the most important category of these employees was that in the service of the English East India Company.

India was at the centre of the Europeans’ trading activities in respect of. both Euro-Asian as well as intra-Asian trade. The Portuguese procured all their pepper for Europe in India: their intra-Asian trading network largely revolved around the Bay of Bengal. When textiles and raw silk dominated Euro-Asian trade from the last quarter of the seventeenth century onward, India also became central to the northern European trading companies’ imports into Europe. India similarly dominated the Dutch East India Company’s as well as the English private traders’ intra-Asian trade.

In this volume, I have tried to analyse the trading operations of both the European corporate enterprises as well as the private traders in so far as these pertained to India within the overall Asian context. The time span covered is the three centuries between the beginning of the sixteenth century and the end of the eighteenth. The period

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witnessed the transition in the latter half of the eighteenth century from an essentially market-determined commercial encounter between Europe and India to the beginnings of a colonial relationship between Britain and the subcontinent. One of my concerns in this volume has been an analysis of the implications of the European trade for the subcontinent’s economy during the pre-colonial period. An investiga- tion into the working of the English East India Company during the early colonial period has helped bring into sharp relief the altered state of affairs between the two phases.

It is inevitable that a synthetic work of this kind would draw upon the scholarship of fellow researchers. In my case this debt has been particularly large and my work made considerably easier by the availability of a large body of high-quality work. In particular, the availability of K. N. Chaudhuri’s definitive study on the English East India Company, published less than two decades ago and still easily accessible, has rendered it unnecessary for me to go into the Compa- ny’s trading operations in India in any great detail. It was only in respect of the period between 1760 and 1800 that a reference to a selected body of material in the India Office Records was found necessary. The absence of a counterpart to Chaudhuri’s work for the Dutch East India Company obliged me to refer to the VOC’s documentation for filling in some of the major gaps in the literature relating to the Company’s trading activities in different parts of the subcontinent, particularly in the quantitative domain. The VOC archives also yielded an interesting body of correspondence between the English and the Dutch East India companies which considerably illuminated the working of the former during the early colonial - period.

Over the past several years when this book was under preparation, a great deal of kindness and help came my way. I can hope to be able to acknowledge only a small part of it. In the early stages, when I was planning the format of the volume, discussions with Sanjay Subrahma- nyam were extremely useful. S. Arasaratnam and Femme Gaastra were kind enough to read the first draft as it was being written. John Richards and Christopher Bayly commented extensively on another draft. The present version owes a great deal to the extremely useful and detailed suggestions made by the two of them. Others who have helped through discussions and advice include Leonard Blussé, Satish Chandra, Jurrien van Goor, Hugo s’ Jacob, Ravinder Kumar, the late

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Denys Lombard, Peter Marshall, Michael Pearson, Roderich Ptak, Hans van Santen and Niels Steensgaard. I am grateful to all of them.

As always, Henk Wesseling, Jan Heesterman and Dirk Kolff have provided support in ways far too numerous to be enumerated. | would also like to put on record the generous intellectual and other support received from Maurice Aymard, Dietmar Rothermund and Wim Stokhof.

This book would never have been written but for the constant and unfailing support of my wife and the continuing love and under- standing of my children.

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INTRODUCTION

The history of commercial traffic in the Indian Ocean goes back to at least the early centuries of the Christian era. Networks of trade covering different segments of the Ocean have a history of remarkable resilience without being resistant to innovation. In other words, without disrupting the rhythm of the overall flow, variables such as the share in total trade of different communities of merchants engaged in a given network, the goods carried, and the relative volume of trade carried on at the ports called at, were fully reflective of evolving situations. Over the centuries, India has played a key role in the successful functioning of these trading networks. This undoubtedly was related in part to her location at midpoint geographically, but it also had a good deal to do with her capacity to put on the market large quantities of relatively inexpensive and highly competitive manufac- tured goods in addition to a whole range of other goods. In return, she provided an important outlet for the specialized agricultural, mineral and other products offered by her trading partners. Trade thus satisfied different kinds of needs for India as compared with her major trading partners, and this by itself provided an excellent basis for a significant and growing level of trade. The key role of India can thus be conceptualized essentially as one of contributing significantly to the expansion of the basis of trade in the Indian Ocean.

To the east of India, there were very long-standing and wide- ranging links between the Indian Ocean and the South China Sea. In addition to the Indonesian archipelago, a considerable amount of trade was traditionally carried on with China and Japan. Westward, however, the link with the Mediterranean through the Persian Gulf and the Red Sea channels involved the use of a certain amount of river-cum-land transportation, more so in the case of the Persian Gulf route than in that of the Red Sea route. In the western sector, the European merchants’ involvement in the trade in Asian goods began only after the goods had reached the southern coast of the Mediterranean, to which these merchants regularly travelled to buy them.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

This pattern of trade between Asia and Europe, which had been in operation for centuries, underwent a structural modification following the discovery by the Portuguese at the end of the fifteenth century of the all-water route to the East Indies via the Cape of Good Hope. Among the historic consequences of the discovery was the overcoming of the transport-technology barrier to the growth of trade between the two continents. The volume of this trade was no longer subject to the capacity constraint imposed by the availability of pack-animals and river boats ‘in the Middle East. Both the old and the new routes were in use throughout the sixteenth century, but by the early years of the seventeenth, when the northern European companies had successfully challenged the Portuguese monopoly of the all-water route, the new route had almost completely taken over in the transportation of goods between the two continents. In addition to their transportation, the procurement of the Asian goods also was now organized by the Europeans themselves, who had arrived in the East in any number for the first time. The goods procured had to be paid for overwhelmingly in precious metals. This was an outcome essentially of the inability of Europe to supply goods which could be sold in Asia in reasonably large quantities at competitive terms. The new vistas of the growth of trade between the two continents opened up by the overcoming of the transport-technology barrier could have been frustrated by the shortage of silver for export to Asia that the declining, or at best stagnant, European output of this metal might have occasioned. But, fortunately, the discovery of the Cape route had coincided with that of the Americas. The working of the Spanish American silver mines had tremendously expanded the European silver stock, a part of which was available for diversion to Asia for investment in Asian goods. A continued expansion in the volume and the value of the Euro-Asian trade could now take place.

The Portuguese had been followed in the early years of the seventeenth century by the English and the Dutch, and on a much smaller scale by the Danes. The French East India Company was established in 1664, though it was not until the 1720s that the French presence in India became significant. The short-lived Ostend Company also functioned in India during this decade. In addition to these corporate groups, there were the private European merchants operating simultaneously. An overwhelming proportion of these

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INTRODUCTION

persons had travelled to the East with one or the other of the corporate groups. Many of them engaged in private trade while still in the service of the relevant corporate group with or without permission. Others engaged in private trade on a full-time basis. The Euro-Asian trade was carried on overwhelmingly by the corporate groups, leaving the trade within Asia by and large to the individual traders, the largest group amongst whom eventually was that of the English private traders. The only major exception to this pattern was the large scale and systematic participation in intra-Asian trade by the Dutch East India Company (VOC) as an integral part of its overall trading strategy. In the sixteenth century, the Portuguese Crown had also participated in intra-Asian trade, but the scale and the duration of that operation had been relatively limited.

Throughout the sixteenth and the first half of the seventeenth century, the Euro-Asian trade carried on by the Portuguese was centred on India. But since the Dutch and the English procured their pepper and other spices mainly in Indonesia, the Asian loci of the Euro-Asian seaborne trade shifted at the beginning of the seven- teenth century from India to the Indonesian archipelago. It was nearly three quarters of a century before the Asian loci shifted back to India. This was a consequence of the change in European fashions assigning an increasingly important role to textiles and raw silk in the Asian imports into Europe. It was only in the second half of the eighteenth century that the growing role of Chinese tea in these imports again deflected somewhat from the central position of India in Euro-Asian trade. India also played a key role in the Dutch intra- Asian trade. Indeed, it was the long-established pattern of the Indonesian spice growers asking for Indian textiles in exchange for their wares which had set the VOC on the path of intra-Asian trade in the first place. Later in the seventeenth century, Bengal raw silk and opium had played an extremely important role in the successful functioning of the Dutch network of intra-Asian trade. Among the private European traders engaged in this trade, the largest group, namely the English private traders, also operated overwhelmingly from India.

The organizational structure of procurement and trade that the trading companies as well as the European private traders encountered in India was both efficient and sophisticated. The production for the

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

market was organized mainly on the basis of contracts between merchants and producers, specifying the quantity to the supplied, the price and the date of delivery. The contract system was a variant of the standard European putting-out system in so far as in the Indian system raw materials were provided by the merchants only rarely. A highly developed credit organization contributed to the efficient working of the system. Merchants could raise short-term loans at remarkably low rates of interest. The institution of the respondentia loans was also quite widespread. Funds could be transferred from one place to another relatively cheaply by using the hundi. The sarrafs who ran the credit and the banking structure were also indispensable to the working of the currency and the monetary system. The Mughal coinage system, with its uniform imperial standards of weights and measures, was imposed throughout the empire over dozens of local monetary systems. Centrally appointed functionaries of the imperial mints accepted bullion or coin from local sarrafs or other private individuals. The system of free minting ensured that the Mughal coins retained their high degree of fineness without any known debasement for nearly two centuries. Following the incorporation of Golconda into the Mughal empire in the closing decades of the seventeenth century, the only major region in the subcontinent where Mughal coinage did not circulate was the Malabar-Kanara coast.

The Europeans both the companies as well as the individual traders had no option but to operate within the given organizational structure of procurement and trade. An important group with which they had to deal all the time was that of the intermediary merchants of various kinds. It could be an easy relationship, but it could also be an. exasperating one, with the merchants ordinarily calling the tune. The following description of the Bengal merchants by the Dutch Commis- sioner Hendrik Adriaan van Rheede is at one level indicative of who the Europeans were up against. Van Rheede wrote:

The merchants . . . are exceptionally quick and experienced. When they are still very young and in the laps of their parents and hardly able to walk, they already begin to be trained as merchants. They are made to pretend to engage in trade while playing, first buying cauris, followed by silver and gold. In this training as moneychangers, they acquire the capability of engaging in large-scale trade. They are always sober, modest, thrifty, and cunning in identifying the source of their profit, which they are always at pains to maximize. They have an exceptional capacity of discovering the humour of those who are in a position to help or hurt

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INTRODUCTION

them. They flatter those they know they need to be in the good books of. In case of loss, they console themselves easily and can hide their sorrow wonderfully . . . In general, they are a people with whom one could get along well so long as one is on one’s guard.!

An important problem that the Europeans faced on an almost perennial basis while procuring goods for export was that of bad debts. This happened in situations where, under the contract system, the value of the goods supplied to and accepted by a European company from a particular contract-merchant was less than the sum of money given to him in advance. The VOC tried to tackle this problem on the Coromandel coast by encouraging the merchants supplying textiles to it to form ‘joint stock companies’. Under this arrangement, the merchants operated on the basis of funds contributed by them- selves to a central pool and were jointly responsible for the contract given out to them. The innovation indeed worked for a while on the coast, but does not seem to have been found to be feasible elsewhere. On the whole, however, one could argue that the organizational framework within which the Europeans were obliged to work oper- ated with a reasonable degree of efficiency and effectiveness. In the course of time, the Europeans not only mastered the intricacies of the system but indeed came to dominate many elements of it, forcing the indigenous merchants to adapt themselves to the new situation.

The Europeans’ dependence upon and assimilation into existing networks comes out even more clearly when one looks at their participation in intra-Asian trade. Within two decades of their arrival in the East, the Portuguese had managed to carve out for themselves a trading network of goods and routes with Malacca as the centrepoint. But it is important to realize that this network grew basically along the lines defined by the pre-existing commercial system. The period of Portuguese apprenticeship was shortened considerably by the advice and assistance provided by the Tamil keling merchants of Malacca. In the seventeenth century, the Dutch East India Company’s extensive participation in intra-Asian trade also grew along carefully chosen but pre-existing routes. It is another matter that by the middle of the century, the Company had emerged as the largest single participant in this trade with trading stations all over what one might call the great

' Instructions by Commissioner van Rheede to the Dutch factors at Hugli, 21.2.1687, Algemeen Rijksarchief (ARA), Verenigde Oost-Indische Compagnie (VOC) 1435, ff. 132V-133, Ifov—I52v.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

arc of Asian trade stretching from the Persian Gulf in the northwest to Japan in the northeast. It was only in the latter half of the eighteenth century that, on the basis of their newly found political leverage and expanded resource base, the private English traders operating from India were able to make their way beyond the eastablished networks of trade and carve out new niches and routes for themselves.

The relationship between the Europeans and the Indian maritime merchants engaged in coastal and high-seas trade was, of course, not always one of cooperation but, at times, also one of conflict. An early example of the latter is the resistance offered by the pardesi and later the Mappila merchants of Malabar to the Portuguese pepper mono- poly in the western Indian Ocean. But overall, the Indian maritime merchants adjusted remarkably well to the pressures generated by the Europeans’ presence. If it was there at all, the negative effect on the volume and the value of the Indian merchants’ maritime trade would seem to have been quite small.

As we noted earlier, the European companies were obliged to pay for the goods they procured in India predominantly in precious metals. The export surplus generated in the process, coupled with the reasonably high degree of market orientation and flexibility in the structure of output in the economy, involved, at a macroeconomic level, an increase in the level of income, output and employment in the subcontinent. There were, of course, variations in this regard across both space and time. Thus the Malabar coast, where the Portuguese, and later the Dutch, enjoyed, in principle, monopolistic privileges, was different from the other regions of the subcontinent. Across time, the availability in Bengal of special privileges to the English East India Company following its emergence as the formal ruler of the province in the second half of the eighteenth century basically altered the nature of the impact of the European trade on the economy of the region.

In analysing the trade of the Europeans, an attempt has been made to incorporate the trading operations of the various corporate groups as well as of individual traders functioning in India over the three centuries starting with the arrival of the Portuguese at the end of the fifteenth. In respect of the corporate groups other than the Portuguese, the story has been woven around the trading operations of the Dutch East India Company. The benchmarks used are those of the VOC and to facilitate comparison, the value of the trade carried on by the English and the French East India companies has often been expressed

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INTRODUCTION

in terms of the Dutch florin. This reflects basically the fact that the VOC was the only major European trading body to engage in intra- Asian trade on a substantial scale with India playing a key role in the network, besides being the largest carrier of goods from India to Europe well into the eighteenth century.

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CHAPTER 1

INDIA IN THE INDIAN OCEAN TRADE, CIRCA 1500

An analysis of the structure and the mechanics of the early modern Indian Ocean trade, alternatively referred to as Asian trade, ought perhaps to start with a recognition of the simple fact that this trade transgressed the boundaries of both the Indian Ocean and Asia. While in the east it intruded prominently into the South China Sea, in the west it embraced maritime trade with East Africa. Traditionally, the great arc of Asian trade included the Persian Gulf and the Red Sea in the northwest and Japan in the northeast. The principal natural divisions of this huge area were the Arabian Sea, the Bay of Bengal and the South China Sea. Within each of these zones, there were important blocks of ports across which a large amount of trade had traditionally been carried on. The western or the Arabian Sea zone included ports in the Persian Gulf, the Red Sea, those on the East African coast and on the west coast of India. The Bay of Bengal network included ports in Sri Lanka, the Coromandel coast, Bengal, Burma, Thailand, Malayaand Acheh in Sumatra. Ports such as Canton and Zaiton in the South China Sea had extensive contacts both with the Indonesian ports as well as with ports in the straits of Malacca.

Within each of these zones, there were also clearly identifiable sub- zones. To take an example, in the west the ports of Aden, Ormuz, Cambay and Calicut formed one such sub-zone, while those of Kilwa, Mogadishu, Aden and Jeddah constituted another. Needless to empha- size, in terms of the ability of different constituents of a given zone to put important tradable goods on the market, for which there was adequate demand elsewhere in the zone, there was a very definitive basis for trade within each of the zones. Such a basis also existed to an important degree across zones, leading to the creation of significant long-distance trade flows in the Indian Ocean and beyond.

By far the longest distance was covered by the route that connected Aden to Canton traversing a very large part of the total area covered by the great arc of Asian trade. There is evidence to suggest that this route was in regular use at least from the seventh century. The principal group which had initiated trade on the route was the Persian

8

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INDIA IN THE INDIAN OCEAN TRADE

merchants who had, however, been supplanted by and large by Arab merchants since about the ninth century. The principal stops on the way were either Cambay or Calicut on the Indian west coast and a port such as Palembang in Sumatra. It would seem that at some time during the twelfth century Chinese junks also began operating on this route. There is evidence that the Chinese merchants established commercial contacts with places such as Sri Lanka, Kollam on the Malabar coast and Ormuz in the Persian Gulf. The Chinese participa- tion in trade on this route would appear to have reached important levels by the early years of the fifteenth century. Between 1404 and 1433, a series of seven commercial-cum-naval expeditions was dis- patched from China under the command of Admiral Cheng Ho. The first of these expeditions is believed to have consisted of as many as 62 ships and 28,000 men. The fourth voyage is reported to have reached Ormuz and Aden, while those that followed claimed to have touched even the East African ports of Mogadishu and Malindi. But in 1433 the Chinese authorities abruptly withdrew from these ventures and, indeed, there is no record of these long-distance voyages having ever been resumed. The precise circumstances behind this development are not quite clear but it would seem that the depredation of pirates infesting the South China Sea and the criticism that the profit earned from these voyages was not sufficiently attractive contributed to the decision of the Chinese authorities. In the meantime, the Arabs had also gradually pulled out of this long-distance route.

Whatever the reasons behind the Chinese and the Arab withdrawal from long-distance trade, it signalled a basic alteration in the organiza- tional structure of Asian trade. The new structure was based on the segmentation of the great arc of Asian trade into the three divisions mentioned earlier the Arabian Sea, the Bay of Bengal and the South China Sea. The ports of Cambay or Calicut and Malacca (founded at the beginning of the fifteenth century), which had until then served essentially as victualling and stopping points on the long route between west Asia and China, now became terminal ports. The role of these ports in providing a reasonably assured market in the goods brought in, as well as in making available those sought after by the visiting ships, besides offering facilities such as anchorage, ware- housing and banking, cannot be overemphasized. In the course of the fifteenth century, Malacca became a truly major centre of international exchange and a meeting point of traders from the East and the West.

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Cambridge Histories Online © Cambridge University Press, 2008

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

INDIA IN THE INDIAN OCEAN TRADE

4, 0 1000 miles 3 Ld : 0 1500 km

Mediterranean Sea

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10

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Map 1 Important trading centres in Asia in the seventeenth and eighteenth centuries

Cambridge Histories Online © Cambridge University Press, 2008

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Allegedly, as many as eighty-four languages were spoken at this port. Also, each of the four major communities of merchants resident in and operating from Malacca - the Gujaratis, other ‘western’ merchants mainly from India and Burma, the merchants from southeast Asia up to and including the Philippines, and finally the East Asians including the Chinese, the Japanese and the Okinawans were allowed to have shahbandars of their own who managed the affairs of their commu- nities autonomously of the local authorities.

India played a central role in this structure of Asian trade. In part, this indeed was a function of the midway location of the subcontinent between west Asia on the one hand and southeast and east Asia on the other. But perhaps even more important was the subcontinent’s capacity to put on the market a wide range of tradable goods at highly competitive prices. These included agricultural goods, both food items such as rice, sugar and oil as well as raw materials such as cotton and indigo. While the bulk of the trade in these goods was coastal, the high-seas trade component was by no means insignificant. The real strength of the subcontinent, however, lay in the provision of large quantities of manufactured goods, the most important amongst which was textiles of various kinds. While these included high value varieties such as the legendary Dhaka muslins and the Gujarat silk embroid-