(Note: There are 18 articles in the volume. I have read and incorporated 10, listed below, in this review)
In their introduction to this excellent volume, Pieter Emmer and Femme Gaastra say: "If we are to construct a link between the expansion of Europe and the rapid economic growth due to industrialization after 1760, we must look to changes in the organization of capitalism within Europe itself and to nothing else." In other words, the gains made through trade with the areas outside of Europe were not nearly as significant as the gains made through trade within Europe. This is an odd start for a book entitled The Organzation of Interoceanic Trade, and it may not be that all the authors in this volume agree that trade had so little impact, but it makes for a solid start. Emmer and Gaastra see two expansions, and say that the first, the Spanish and the Portuguese expansions, were badly mismanaged by their respective states. In the second expansion merchants cooperated to share profit and limit risk. They formed monopolies and joint-stock companies, not all of which were successful. "The reasons for the lack of success of trading companies with a monopoly in the Atlantic remain to be discovered." (xxi) What this volume does make clear, however, is persistent arrangements that Dutch, French, Portuguese and Scandinavian companies made in order to involve their respective states in order to minimize risks. Also evident is the remarkably rapid construction of social hierarchies in the colonies among merchants.
The articles in this volume give a fair understanding of why trade was so volatile. Even a representative of a fairly well-capitalized firm had severe difficulties in getting his goods across the Atlantic, selling his goods, and returning the profit home. Herbert Heaton's "A Merchant Adventurer in Brazil," suggests that only someone with a high tolerance for risk could have been successful in the Brazilian environment. John Luccock regularly suffered the loss and breakage of his goods, even when they weren't piled on the bottom of the boat. Goods stored lower down in a ship might take two weeks to remove from a ship, and his competitors might have flooded his market while his goods, which took two and three months to arrive, and were ordered almost a year before, were sitting in plain view, but unavailable. Luccock succeeded in his work, but it was most certainly a stressful and difficult post.
Both "Merchants in Seventeenth Century Mexico City: A Preliminary Portrait," and "The People and the Politics of Portuguese India During the Sixteenth and Early Seventeenth Centuries" give a fascinating and repellant view of social mores and structures in the colonies. In Portuguese India mercenary relations between soldiers and their captains became clear when soldiers were "laid off" while not in action. Those captains who kept their companies fed had their loyalty in all situations. In such a society, there were precise names for persons of every racial background and even accepted political roles for each. Those who had no formal rights nevertheless managed to make their voice heard through councils and sometimes direct protest. Mexico City had something of the same rigidity, and also something of the same flexibility. Merchant families were always being "refreshed" from Spain as the children of merchants chose the church or other professions, as merchants retired and as others went bankrupt. These merchants were the creditors for many public offices, and had good tactical control within the city, although no strategic influence on European rule. However, they did quietly smuggle immense amounts of gold through the Manilla trade, and so undermined Spanish crown rights.
By way of comparison, Niels Steensgaard's "The Dutch East India Company as an Institutional Innovation" argues that the Dutch were unique in their organizational/social structure. They took a long-range view of their work, not always attempting to maximize profits. Then, they ploughed profits back into their trade as often as possible. (They paid rather low dividends at first). They pioneered country trade, making profits while in Asia, and not just coming to and from Asia. They also had excellent communications network centered in Batavia. In technology, they had an edge and were tough to beat. In "Spanish Ships and Shipping in the Sixteenth and Seventeenth Centuries," Abbot Payson Usher explains that although the Spanish Bisccayan coast had a history of shipbuilding, and had at one time produced tonnage comparable to the Dutch, by the 17th century its shipbuilders could not manage, even with plans and proportions, and state support, to create the Dutch flute with the correct proportions. The Dutch managed to rationalize supplies and production at their docks, so and hold down costs in an apparently inimitable way. "Dutch and English Merchant Shipping in the Seventeenth Century," by Violet Barbour, supports Usher's view. The Dutch were able to produce ships for a third of the cost of the English, and because they focused on the northern bulk trades, and not the rich Mediterranean trades, they were able to spend less on defense. Their expertise in money matters was also significant. They were able to attract even peasants and foreigners to invest in their ships. In "The Phases of the Dutch Straatvaart, 1590-1713: A Chapter in the Economic History of the Mediterranean," Jonathan Israel makes the point, however, that even the Dutch suffered reversals and difficulties, especially in the rich trades that they did attempt. Their violent relationship with the Spanish meant that they had to contend with blockades and embargoes, re-aligning themselves and their trade each time.
In his "French Mercantilism, Commercial Companies and Colonial Profitability," Pierre Boulle argues that private merchants did their best to shift losses to the State. They also transferred costs of development to parent companies, (and so through to the State) while taking profits out for themselves. Colbert, it seems, even encouraged such plans as long as colonial trade was developed. It was also possible to drum up State support by citing non-mercantile reasons (glory, global strategy, future profits) even if the reasons were, in fact, ordinary profit-making ones. "In effect, Acien Regime commercial companies were plundered from above and from below; it is little wonder why they so often failed." (253) The EIC struggled with just the same shortfalls, mis-orders and payment problems that the individual John Luccock suffered. In "The English East India Company in the 17th and Early 18th Centuries: A Pre-Modern Multinational Organization," Chaudhuri argues that thre three reasons the EIC was successful so long were the support of the Crown (which came at some considerable cost, p. 204); the commerce rights it had in the Mughal empire, and the company's own internal structure, which allowed it to filter decisions through the Court of Directors(24 members) and the Council in the Indies, in ways that minimized individual influence.
Finally, I wish to highlight a terrific short article which clearly outlines roles in the shipowning trade. C. Koninckxs' Ownership in East India Company Shipping: Prussia, Scandinavie and the Austrian Netherlands in the 18th Century, allows the reader to see just how investors were found and profits were set. (n.b. I will copy for myself and for you -- too good to pass up -- it also addresses the problem I mentioned in our second-to-last meeting -- who has the power to make decisions besides the owners and investors?)
1) A Merchant Adventurer in Brazil, Herbert Heaton
2) The People and the Politics of Portuguese India During the Sixteenth and Early Seventeenth Centuries,
M. N. Pearson
3) Spanish Ships and Shipping in the Sixteenth and Seventeenth Centuries, Abbot Payson Usher
4) Merchants in Seventeenth-Century Mexco City: Preliminary Portrait, Louisa Schell Hoberman
5) Dutch and English Merchant Shipping in the Seventeenth Century, Violet Barbour
6) The Dutch East India Company as an Institutional Innovation, Neils Steensgaard
7) The Phases of the Dutch Straatvaart, 1590-1713: A Chapter in the Economic History of the Mediterranean,
Jonathan I. Israel
8) The English East India Company in the 17th and Early 18th Centuries: A Pre-Modern Multinational Organization,
K. N. Chaudhuri
9) French Mercantilism, Commercial Companies and Colonial Profitability, Pierre H. Boulle
10) Ownership in East India Company Shipping: Prussia, Scandinavie and the Austrian Netherlands in the 18th Century, C. Koninckx