The Effects of Europe’s Commercial Expansion into the Indian Ocean on Asian and African Coastal Economies: 1600-1650
By JOHANNES LANG, Vienna, Austria
Mentor: Ruth Schabauer (Department of English, Neulandschule Grinzing)
This work examines the impact of Europeans’ commercial expansion into the Indian Ocean on the local Asian and African economies between 1600 and 1650. By studying this historically important period of time, we can also gain a deeper understanding of modern globalization and of Europe’s continuing political and economic influence today. The different consequences for the various regions bordering the Indian Ocean are compared, contrasted, and evaluated. For my research I use primarily books and articles but also rely on the analysis of economic data. Epic poems from Mughal writers as well as modern studies are included so that the reader may gain thorough insights into the topic. As I try to tell history from an Afro-Asian perspective, I let both 17th century and contemporary voices native to the Indian Ocean have their say.
I conclude in my study that the consequences of trade with the Europeans differed greatly between the heterogeneous regions. The nature of these consequences depended on the socioeconomic structure as well as on the environmental particularities of the regions in question. Some economies profited from the new situation; others suffered from the altered trade system. Interestingly, many effects of 17th century globalization, such as increased competition with countries far away and a heightened reliance on foreign trade, are visible also in today’s process of globalization.
If you take a stroll along the sandy beaches of Kilwa, Tanzania, you just might suddenly feel a little shard pressing against your bare feet. Pick it up and if you are lucky, you may find a fine piece of jade-green Chinese porcelain or vermillion Arabic ceramic. These tiny objects bear witness to one of the greatest pre-modern trade networks in human history that spanned over distances of nearly 15,000 kilometers and connected regions as diverse as the Arabian Peninsula and the Chinese river valleys. Still today the Indian Ocean “carries half of the world’s container ships, one third of the bulk cargo traffic, two-thirds of the world’s oil shipments.” This study concerns itself with the history of trade in the Indian Ocean between 1600 and 1650. To be exact, it aims to examine the effects of European economic expansion on the economies of local political entities in this early period of globalization.
I start by giving a brief overview of the Indian Ocean ancient trade’s unique features and Europe’s history of exploration and conquest prior to the 17th century. After explaining the reasons for the encounter of both parties, I summarize its effects. Therefore, I divide the whole maritime region into six separate economic regions. The last section of my work is an attempt to first compare and contrast the effects to those of modern globalization and then summarize the results of my findings.
Luckily, for my topic there is a broad body of literature available. A global view of world history concentrating in particular on the uniting and dividing effects of seas has been further popularized by Akira Iriye and others. Scholars such as Rudolph P. Matthee and Stephen F. Dale provide important insights for their respective fields of study of the Safavid Empire and the three big Muslim empires of the 17th century.
The objective of this work is threefold. First, it strives to summarize the various effects of Europe’s trade in the Indian Ocean on local economies. Second, it seeks to compare and contrast the different results. Third, it sets out to answer the question whether parallels exist between the period between 1600 and 1650 and modern globalization and what those similarities are.
1. Europe and the Indian Ocean before 1600
1.1. The Monsoon Marketplace
The Indian Ocean trade network existed between nearly all the lands bordering its sea. India, Persia, and South Arabia to the North, East Africa and Madagascar to the West, and all of Southeast Asia to the East were integral parts of the network. Pepper and spices from present-day Indonesia, African ivory and even Arabian horses were transported primarily by dhows and junks, special types of ships that proved especially adaptable to the currents. While silk was exported by China, India shipped textiles abroad.
Although parts of the trade routes have been in existence since the turn of the eras and already satiated the exotic demands of the Roman Empire, the Indian Ocean arguably experienced its Golden Age between 1000 and 1200 CE. Thereafter it suffered due to competition from the Silk Route which connected Europe and Asia by land rather than by sea and was during that period actively fostered by the Mongol emperors. However, no later than since the dawn of the fifteenth century did the Indian Ocean again see large numbers of ships which would continue to sail its waves for at least three more centuries.
In contrast to other seas like the Atlantic, the Indian Ocean had always been a perfect trading ground because of one decisive feature: its currents. The Monsoon winds blow westwards during the winter and eastwards in summertime so that sailors could sometimes narrow down the perfect date for a journey across the sea to a specific day. In one half of the year ships would be travelling smoothly from Africa or Arabia to Malaysia or Indonesia; in the other half the seamen would return (see Figure 1). Ships such as the Chinese junks or the more common dhows with big sails were invented to facilitate trade and travel.
Governments tried to profit as much as they could from the revenues of the sprawling trade network, but at the same time seemed to recognize the need for a laissez-faire approach. Still, several polities such as the Malaya empire of Srivijaya existed primarily because of the income from tariffs on passing ships.
Importantly, the “Monsoon Marketplace”, as this network has sometimes been called, not only encouraged the exchange of goods and commodities, but also the spread of powerful ideas. For example, the primarily Muslim traders involved brought Islam to East Africa and Southeast Asia. It is for that reason that regions as far away and different from the birth place of Islam as Indonesia today give home to an overwhelming Muslim majority. Similarly, the inhabitants of the island of Madagascar today speak an Austronesian language which has its roots an ocean away. The true nature of the Monsoon Marketplace, as the Indian Ocean network has been dubbed, is perhaps best characterized by the fascinating story of Zheng He.
Starting in 1405, this Chinese navigator launched several expeditions that brought him as far as Southern Africa and Persia. His fleet carried approximately 30,000 people of all professions and included 252 ships compared to the meagre three of Columbus’s voyage. Unlike the European invaders who would later bombard Swahili cities and take control of Southeast Asian trading posts, he was motivated neither by missionary zeal nor by economic necessity. On the contrary, Zheng He’s mission was primarily a diplomatic one and thus served to tighten commercial ties to China’s trading partners and demonstrate the strength of the Middle Kingdom. He brought back among other things a giraffe and an elephant across an ocean that was vast in scope, non-European in nature, and flourishing economically.
Figure 1. Map of the Indian Ocean, showing trade routes and the monsoon winds
1.2. “In Search of Christians and Spices”
“At two hours after midnight the land appeared”, noted a 41-year old Italian explorer in his diary on Thursday, October 11th 1492. Christopher Columbus’ “discovery” of America is undoubtedly the main reason for Europe’s rapid rise after 1500 and its continuing cultural and political influence today. Europe had during the first four centuries of the second millennium CE effectively been isolated from large parts of the world and lagged behind other civilizations. However, the adoption of new navigational and military technologies – the compass and gunpowder, ironically both products of Chinese innovativeness – combined with Spain’s triumph over the Muslim Emirates of Southern Spain had enabled the subsequent Iberian expansion. Numerous arguments have been put forward to explain the ensuing “rise of the West”, ranging from geographical to cultural explanations. Yet the most influential factor for the European dominance was arguably the great riches extracted from South American mines by indigenous natives and African slaves.
American silver and, to a lesser extent, gold helped European traders pay for Indian or Chinese goods and fund the establishment of lucrative trade companies. In particular the yielding mines of Potosí in present-day Bolivia for the first time made possible the development of a “world currency”. The famous eight reales silver coin was used as a means of exchange around the globe. While inflation would come to haunt Europeans and Asians alike, the ineffable worth of these mines is indisputable. Spanish people today still use the proverb “vale un Potosí”, worth a Potosí, to signify extreme relevance. While GDP per capita was measured at 721.46 US$ around 1500 CE, the figure rose to 916.31 US$ one century later. In contrast, India and China stagnated at an average of 575 US$ between 1500 and 1820 CE.
In Europe, the sixteenth century was characterized by religious strife caused by the Protestant reformation, leading also to the creation of the Dutch commonwealth which played a crucial role in the Indian Ocean trade in the 1600s. However, the continuing exploration of Africa and the Americas was also an important feature of the 16th century.
Already in the 15th century the Portuguese navigator Prince Henry had initiated expeditions to West Africa, Bartholomeu Días rounded the Cap of Good Hope and Vasco da Gama in 1498 travelled to the land Columbus had sought: India. In the same year Pope Alexander VI. authored the infamous Treaty of Tordesillas, officially dividing the world between Spain and Portugal – much to the chagrin of the other European powers who soon started building their own trade empires. In 1600 the British East India Company (EIC) was founded in England; the Dutch East India Company (VOC) followed two years later.
As soldiers started conquering ports and trading hubs and missionaries were preaching the gospel to natives and traders exchanging their raw metals for exotic commodities, the people living on the coast of the Indian Ocean had to face up to a new challenge. The revolution of this ancient trade network would leave none of them unaltered.
2. Effects on the Indian Ocean Economic Zone
2.1 The Swahili Coast
For centuries East Africa had been part of the flourishing Indian Ocean trade network. However, when Portuguese ships shelled Mombasa, Malindi, and other towns along the coast, the golden age of the Swahili city states came to a sudden end.
In contrast to the Asian empires the Europeans encountered to the East, the shores of what is today part of Kenya and Tanzania had been controlled by about 40 wealthy city states between Mogadishu and Sofala. These were in part commanded by kings and in part ruled by mighty waungwana aristocracies. Pale, the island of Zanzibar, and of course Kilwa were perhaps the most famous of these little city states. The latter was ruled by a sultan who exercised considerable power over the whole region and in the 15th and early 16th century absorbed into his kingdom a number of neighboring cities.
In general, the Swahili coast was predominantly Muslim and was inhabited by a hugely diverse population consisting of Africans, Arabs, and, to a lesser extent, Indians, who all spoke the Kiswahili language. Although iron smelting had also been developed in Manda, the region’s wealth stemmed almost exclusively from trade revenues. The city states connected the African hinterland with the Monsoon Marketplace by acquiring gold, ivory, and natural products such as coconuts and exchanging them for foreign clothes, porcelain, or spices. Specifically the gold trade with the kingdom of Great Zimbabwe whose existence is shrouded in mystery and which was suddenly abandoned in the 16th century proved lucrative. Yet the Swahili area was arguably (perhaps in part due to Zimbabwe’s fall) already in decline when the Portuguese arrived. The European newcomers managed to further extend their influence in the Indian Ocean trade without exercising direct control by demanding frequent tributes from their puppet rulers.
In this time the extraction of cowry shells was common. The so-called monetaria moneta had for three millennia been in use as a currency from societies in Western Africa to kingdoms in China. With the emergence of the world trade, the shell, which was especially abundant near the Maldives, might well have lost much of its value and thus accelerated the economic decline of the Swahili coast. According to a modern historian “the addition of vast supplies of the ring cowrie on to the world market caused severe inflation across Africa.” Economic data for the region and the time period selected is unfortunately scarce, but we know that starting in the 1660s the Dutch made profits from the shell’s difference in value between East Africa and the Maldives.
Similar to simultaneous developments throughout Asia, the Portuguese control over their East African possessions waned and eventually ceased in the middle of the 17th century. Their defeat came at the hands of an influential power that had emerged north of the Swahili coastline in today’s Somalia. The Islamic empires of the Horn of Africa had for centuries been engaged in a proxy war against Christian Ethiopia. The Muslims were supported by the Ottoman Empire and their enemies by the Portuguese. This alliance with the Turkish fleet enabled the Islamic Empires to capture of Malindi in 1630 and Mombasa eight years later. In the long run, the Swahili region would escape neither economic dependence on nor political colonialization by the West.
2.2. Inflation in the Arabian Peninsula
“Black as hell, strong as death, sweet as love” – such goes a Turkish saying in describing 17th century coffee. Demand for the exotic “black gold” surged drastically in that time period and thus led to the rise of South Arabia.
The region east of the Red Sea and west of the Persian Gulf had long resisted control by the powerful Ottoman armies. Local Shiite insurgents made the capture of the economically important ports of Maskat and Aden a Herculean task for Suleiman the Magnificent and his successors. Aden was under Turkish domination until 1630, while Ottomans, Portuguese, and Persians were vying for control over the former. The Northwestern part of the Arabian Peninsula, however, home to Islam’s most holy sites, remained relatively firmly under Ottoman rule.
South Arabia had always belonged to the Indian Ocean trade network, building a bridge between the primarily Asian sea trade routes and Europe. Cities such as Aden used to receive caravans from Syria or Egypt and provide a harbor for Indian or African ships. On the other side of the Red Sea, the Somali town of Zeila played an important role in the slave, gold, and myrrh trade. When Yemenites began growing coffee instead of the intoxicating khat shrubs, Mocca and other towns profited from the nascent coffee culture in the Ottoman Empire and later also in Europe. In 1600 Pope Clement had officially condoned the consumption of the “black gold”, purportedly calling it “so delicious, it would be a pity to let the infidels have exclusive use of it.”
While the Hejaz, the western part of the Arabian Peninsula, was ruled by the Ottoman Empire, it was of little use to its rulers. The arid and infertile Arabian deserts allowed for little, if any, commercial use and so the Sublime Porte (the central Ottoman government) heavily subsidized the region. Still, aside from the religious prestige associated with the sultans’ control over Mecca and Medina there were also economic benefits. As all Muslims are required to perform the Hajj to Mecca’s Ka’aba at least once a lifetime, exorbitant numbers of pilgrims were passing through the area. Thus, the “tourism sector” understandably flourished and provided the emperors with substantial tax revenues. But the government also had to provide costly military protection on the pilgrimage and periodically pay the nomadic Bedouin tribesmen to discourage their raids. In addition to the pilgrimage business around the holy sites, gold mining also aided the economy of the Hejaz.
Yet there was one major impediment to prosperity in the first half of the 17th century – the specter of inflation was haunting the realm of the sultan. Perhaps nowhere throughout Asia were the massive consequences of Europe’s entry into the world trade as apparent as in the Middle East. Since the Ottoman economy and tax system was based on the silver akçe, the influx of New World silver proved disastrous. In 1580 a gold coin could be bought with 60 coins of silver; 60 years later 250 silver coins were equivalent to one gold coin. Therefore, the Porte frequently debased the akçe currency by reducing the amount of silver grams per coin. In 1624 the silver proportion was halved, resulting in a rapid spike in prices. At the start of the 17th century the consumer price index ranked at 4.79, 22 years later at 7.34. While flour could be purchased for 50.2 akçes in 1600, the price at the height of the inflation lay at 136.4.
Only at the end of the first half of the century did the currency after a deflationary period stabilize again. This development was likely brought about by the period of peace between 1639 and 1663. The price for woolen cloth, for example, even halved in these five decades that saw dizzying fluctuations due to the changing world market. All in all, however, prices are estimated to have risen fivefold during that period of time. As the Europeans now chose the waterway around Africa, the Ottomans forfeited their important role as an intermediary between Europe and India. Therefore, the effects of inflation were exacerbated by a simultaneous loss of trade revenues.
Although silver bullion is certainly the chief culprit in the Ottoman economic crisis, some scholars have argued that military actions executed in the 17th century were also influential in bringing about inflation. It is true that the Ottoman Empire between 1600 and 1650 lived only through six years of peace and was waging strenuous wars on many fronts. Whatever the cause, the Arabian Peninsula had been forced to grapple with the painful dangers that go hand in hand with globalization.
Figure 2. Map showing the three great Muslim empires of the 17th century
2.3. Silk, Silver, and the Safavids
Early in the 16th century Portuguese soldiers subjugated Bahrain and Hormuz on the Persian Gulf, but were driven away by the Persian shahs in 1602 and 1622, respectively. Hormuz profited especially from its pearl industry which was promoted by the Europeans. In general, the Safavid economy was invariably altered by Europe’s entry into world trade. Both Iran’s chronic scarcity of raw metals and its reliance on the silk trade impacted the region’s reaction to the globalization of commerce.
In the 17th century, present day Iran as well as temporarily parts of Afghanistan and Iraq were under the control of the Safavid Empire. As illustrated in Figure 2, the Safavids were wedged between the two other great Islamic empires of the time, Ottoman to the West and Mughal to the East. They lived through countless wars and stood in almost continuous conflict with its Ottoman neighbors. Thus, despite the two rulers’ dependence on each other, trade was severely hampered and at times even completely banned between the Ottomans and Safavids who were also divided by their common faith (whereas the Ottomans were Sunni Muslim, their Persian counterparts adhered to the Shia).
The advent of the Portuguese and later English on the Persian coast also provided much needed relief for the emperor’s treasury. “In […] Persia there are no mines of gold and silver, nor even of copper, but only of iron; those who bring silver from Turkey into Persia gain 20 per cent, gold 14 to 15 per cent: on copper sometimes 15 and sometimes 20 percent”, reported Italian traveler Vincentio d’Alessandrini, highlighting Iran’s desperate need for currency imports. This problem was alleviated by the inflow of European silver with which “the same caravans carried from the East valuable materials and goods such as musk, rhubarb and Chinese porcelain, while European woolens, brocades, velvets, gold and silver went in the opposite direction.” Still, the dearth of currency remained so pressing that Abbas the Great prohibited the export of precious metals. He strived to regulate the thriving trade with Mughal India, in the course of which in the early 17th century reportedly about three million reals in gold left Basra. In addition, he demanded that one third of VOC imports to his empire be in currency. Later, a dwindling silver influx from abroad saw the shah’s treasury running dry.
Aside from currency imports, the Safavid economy also depended heavily on silk exports. The entrance of Europeans into world trade and the subsequent “maritimization” thereof made the Silk Road on which Iran had previously relied significantly less important. Thus, Safavid Iran had to rely on new markets for their goods and on silk as their primary product. Revenues from the silk trade with the European powers were so vital that Abbas even established a state monopoly. However, a plague epidemic between 1633 and 1639 which severely damaged silk production, and growing competition from China and Bengal engendered the demise of the Safavid silk trade.
Increased competition had weakened the tenuous fundament of the Safavid economy. A development that was only slowly starting in the mid-1600s would eventually contribute to the fall of the empire at the dawn of the 18th century. As of the 1690s, silk exports from Iran only accounted for 4% of the global silk trade, while Bengal silk had risen to a share of 90%.
In conclusion, an excessive reliance on silk exports to Europe and a dependence on currency imports from Europe had attenuated the Safavid economy. Abbas’ emphasis on exporting has at times been compared to European mercantilism during the 1600s. The advent of the Europeans and the influx of silver had at first provided necessary currency reserves, but later made the Safavid emperors dependent on maritime trade. In addition, global competition in the silk trade had facilitated Iran’s demise.
2.4. The “King of the World” – Gujarat and Goa
Six years after Columbus’ failed attempt to reach India the Portuguese finally arrived at their desired destination. Soon after, the cities of Goa and Diu were incorporated into the nascent Portuguese colonial empire. The grand hopes of the foreign explorers were justified when they discovered the cornucopia of riches India had to offer. A flourishing trade relationship ensued that changed the lives not only of the inhabitants of the region surrounding Diu, Gujarat, but also of many other Indians.
Most of the Indian subcontinent, including parts of present day India, Pakistan, Afghanistan, and Bangladesh were in the 17th century under the rule of the ever expanding and belligerent Mughal Empire. At its pinnacle the Mughal Empire both in size and in wealth far exceeded any European kingdom of its time. Therefore one Mughal ruler called himself “Shah Jahan”, the “king of the world.” The gross domestic product of Mughal India in 1600 CE was estimated at about 24.3% of the world economy, the second largest in the world. The annual revenue of Akbar’s treasury around 1600 CE is estimated to have been around £17.5 million. This is more than the entire British treasury had two hundred years later. Thus, when Portuguese and British travelers set foot in India, they encountered a gargantuan economy much larger than their own.
Europeans longed for the exotic goods the Indians had to offer and paid for them with silver bullion. Different from other emperors, the Mughals fostered trade and encouraged prosperity within the subcontinent. The Mughal emperors sponsored the cultivation of cotton, sugar cane, silk, tobacco, and indigo. In addition to their luxury expenses on lavish mausoleums or thrones, the monarchs also provided for the poor who perhaps profited from trade revenues through a kind of “trickle down-effect”. Abdul Hamid Lahori reports in his eulogy of Shah Jahan that “the Emperor [directed his officials] to establish soup kitchens, or alms houses […] for the benefit of the poor and destitute.” Foreign trade had, especially in specific regions such as Gujarat where contact with Europeans was frequent, significantly benefited the Mughal economy.
However, the extent of the importance of commerce and the subsequent enormous silver influx for India’s 17th century economy still remains a matter of debate. Mughal India was the biggest recipient of Spanish-American silver, but some scholars don’t emphasize the foreign influence. Rather, they hold that business benefited also from a modest inflation as well as low interest rates. Still, not only the public finance, but also the employment rate was clearly elevated because of the increase in commerce. European products were commonly used in everyday life and foreign trade accounted for about a sixth of the Mughal economy’s GDP. In spite of the massive influx of currency in the form of European (i.e. American) silver bullion, inflation remained low.
Portuguese profits meanwhile staggered and Goa was ravaged by a fatal epidemic in the 1630s. As the Mughal Empire slowly started to decline in the late 17th century and the British East India Company established its hold over the subcontinent, the wealth and power India had exercised under regents such as Akbar was quickly forgotten. But the “jewel in the crown of the British empire” remained of great importance to the queen and later to the world economy.
2.5. The Land of the Elephants – Ayutthaya and Melaka
To be able to trade with the two great East Asian powers of the time, India and China, Europeans knew they had to first control what lay in between – the landmass that is sometimes referred to as Indochina. In 1511, the great port of Melaka, situated on the isthmus between the Malaya archipelago and Sumatra, was among the first Indian Ocean ports to fall to the Portuguese. While the conquest gave them an important footing for the spice trade, the invaders were met with hatred by the local Malay rulers and ire by the Chinese emperor who had regarded the Melaka Sultanate as an ally and tributary. Portuguese traders were largely boycotted and the nearby sultanate of Johor supported as Melaka’s adversary.
The 17th century, however, saw a decline of the Iberian colonizers in favor of Northern European contestants. As the number of Portuguese ships to Asia halved from the 16th to the 17th century, Dutch involvement increased from meagre 65 to 1,770 voyages. Roughly 130 years after the Portuguese victory a coalition of VOC and Malay forces wrested the allegedly impregnable Melaka from the Portuguese.
Yet there was an empire in Southeast Asia that had celebrated the fall of the Sultanate and risen up to become one of the major local forces of the 17th century. Ayutthaya was a powerful Thai kingdom under the control of god kings. It became one of the primary designations of European caravels who supplied the militaristic kingdom with modern armor. This was desperately needed as the Thai empire had been fighting its Burmese neighbor for domination over the Western part of Southeast Asia for centuries. English and even Danish traders sailed the coasts of Ayutthaya in addition to the omnipresent VOC. Although Europeans marveled at the splendor and tolerance of the monarchs, they lamented the absence of valuable commodities on Siamese soil.
The region was blessed with huge rice paddies, but the trade with deer skin proved even more lucrative. Since skins were in high demand in Japan for the production of Samurai armament; Dutch traders concentrated on buying said goods for export to their Japanese enclave in Nagasaki. In the 1620s, four embassies were sent by King Phra Jing Tham to the Japanese shogun in order to deepen the blooming trade relations.
In general, Ayutthaya proved in this period of time especially welcoming to foreigners, established the praxis of regarding the post of chancellor only to a Chinese or European man and sent envoys to Western rulers. The city and its surroundings also profited from the trade that ushered in a Golden Age for the Thai kingdom. Maps of the capital’s partition into several quarters for Europeans, Chinese, Malayans, and natives attest to the increased cosmopolitanism of the empire. In the second half of the century, King Narai avidly exchanged letters with his French counterpart Louis XIV. and with the pope who tried to convert him to Christianity. Continuing to shrewdly outplay the European powers against each other, the Siamese kings steered clear of foreign control until the 20th century and kept their empire relatively prosperous.
2.6. The Islands of the Indian Ocean
The elongated island called Manhattan valued today at roughly 3 trillion US dollars was in 1674 exchanged by the Dutch for the small Indonesian Banda Island. Still, this transaction would prove at first extremely beneficial for the Netherlands.
When Vasco da Gama reached the Indian Ocean, he claimed to be “in search of Christians and spices”. Thus, it is not surprising that the Portuguese later prioritized the Spice Islands of present-day Indonesia in the emerging world trade. They encountered a region that was with the exception of Hindu Bali Muslim and dominated by the sultanates of Mataram and Banten. The latter controlled both sides of the Sunda Strait and became very prosperous through the spice trade.
But there was one commodity that was especially in demand in Europe – nutmeg. As this plant was only found on the Banda and Run islands, the Dutch East India Company occupied these islands and annihilated the local population. Due to the scarcity of the good, the monopoly of the VOC (Dutch East India Company), and the insatiable European demand traders were able to make profits of 2000% in cloves and nutmeg. In addition, the ruthless Dutch governor Jan Pieterszon Coen established a trading post in Batavia to control the flourishing spice trade.
Nearly 3,500 kilometers east of this settlement, the Dutch in 1620 conquered Jaffna in the Northern part of Sri Lanka. There it was in particular cinnamon that was exported en masse. Sri Lanka had always been tied closely to the Indian Ocean trade network because of its great strategic position and received saffron, coral and cotton cloths from Bengal or Melakan ships. The famous explorer Vasco da Gama had in 1502 remarked about the Lankan traders: “Yet their greatest profit is in gold and silver, for they are worth here more than elsewhere.” As the island lacked mines, great profits could apparently be made through arbitrage with gold and silver. Although Sri Lanka in 1600 with 1,095,000 inhabitants had a large population, allegedly only 5,000 people short of Portugal’s, the European invaders managed to extend their influence and until the Dutch takeover according to the 17th century Maha Hatana poem “levied taxes as they pleased and lived in comfort”.
In contrast, the Maldives rid themselves of Portuguese oppression in the 1580s and thereafter experienced a relatively prosperous period of time under Sultan Muhammad Thakurufaanu who initiated vital judicial and administrative reforms. As aforementioned, cowry shells were ubiquitous in the Maldive waters and therefore employed as currency for minor transactions. While elsewhere a few cowries were worth a cow, here several thousand shells were equivalent only to a single gold dinar. Thakurufaanu adopted a currency based on metallic coins in lieu of the cypraeria moneta.
Farther west, tiny Mauritius was made a Dutch colony and Madagascar which had economically been bound closely to the African coast came to deal with the effects of the European advent. Though each of the myriad isles scattered throughout the giant Indian Ocean experienced the new situation differently, they were probably the regions most directly affected by Europe’s influence. Almost all had to accept unequal trade treaties or were subjected to foreign occupation which affected them both politically and economically.
Figure 3. Painting of the genocide committed on the Spice Islands by the Dutch with the help of Japanese mercenaries
3. Analysis and Conclusion
3.1. Globalization then and today
This work began with the hidden riches of the Kilwa beaches: objects that had travelled thousands of miles in an ocean that connected dozens of empires, hundreds of regions, thousands of cities. Today our daily usage of objects from far places far away attests to one of the most decisive trends of the 21st century.
While the meanings and manifestations of globalization are countless, this ubiquitous word is perhaps best described as “the worldwide movement toward economic, financial, trade, and communications integration”. It means, in other words, that our world has become “a small world”. In this small world all human livelihoods are interwoven through the forces of economics and culture that can lead countries to prosper or to fail. Both the spread of democracy and the emergence of the jihadist movement have been interpreted as results of this phenomenon. The global economic crisis of 2008 as well as the global rise in GDP, the most common indicator of growth, can be explained by it.
While globalization has long been regarded as a phenomenon of the two most recent centuries, modern historians have argued that this trend is not a modern invention. Already Genghis Khan’s Mongol Empire, which spanned from Korea to Poland, succeeded in bringing the world together, enabling also the rapid spread of the “black death”. However, the world only fully became connected when the Americas became part of the global trade network and Europeans started entering the Indian Ocean. All parts of this planet with sizable populations were now connected. Therefore, the period between 1600 and 1650 perfectly illustrates the effects of globalization, in a time period were the phenomenon was novel but already extant. Although the world of the early 17th century is so different from today’s, the parallels are striking and worthy of further analysis.
The silver flood from America is unique to the early modern period, but would not have been as influential had the continents not been as closely knit together. While new world silver brought desperately needed currency reserves for the Safavid rulers, it threw the Ottoman economy into chaos. Inflation was rampant in the realm of the sultan and did away with almost all gains from trade. Mughal India’s monetary balance, on the other hand, was not considerably affected by the silver imports and experienced only slight inflation rates. All in all, the American metals led for the first time in world history to the existence of a “global currency”. The ocho reales coin was valued from Acapulco to Aden and the preferred medium of exchange in trade with the Europeans. The existence of a “global currency” and the ensuing importance of changes in the value of the American metals made the 17th century world in a way even more connected than today’s multi-currency world. Today the exchange rate of a currency may well affect other economies, but there exists no currency that can be used around the globe.
One of the great advantages of globalization is undoubtedly the transportation revolution. While it took Vasco da Gama 262 days to travel from Lisbon to Kolkata, today only 13 hours and 34 minutes are needed for such a flight. Still, the 16th and 17th century arguably also saw a groundbreaking transformation in how people commuted from one place to another. Suddenly Europeans could travel to places they never before had dreamt of seeing and hundreds of ships were sailing the world’s oceans. This development was of course also aided by a technological revolution not so much unlike today’s. New navigational and military technologies reached the world so that empires like Ayutthaya, for example, started to increasingly request European firearms.
Many supporters of globalization praise the increase in (free) trade between all nations which according to economic theory is supposed to increase social welfare. Gujarat and the whole of India did, in fact, in the 1600s see rapid economic growth due to trade with the Europeans. Employment levels rose and revenues for the state increased substantially during this period of time. Similarly, Melaka or Ayutthaya benefited from trade. Other regions’ prosperity, however, was impeded by foreign colonialization that resulted in high taxes and the drain of profits from commerce.
Not unlike today big corporations played a big role in the Indian Ocean trade. The VOC and EIC not only through their monopolies exercised great economic influence, but also had much political power, commanding armies and waging wars like governments.
Yet profits from international trade are never evenly distributed among the trading partners. Critics of globalization such as Joseph Stieglitz have warned against the exploitation of poor countries and the global gap between North and South. In his book “Globalization and its Discontents” he criticizes the neoliberal orientation of our world’s economic system. Today’s unequal balance is arguably as much due to modern globalization as to developments around the 17th century in which the “rise of the West” started. GDP per capita in this century rose by 17.78% in Atlantic Western Europe, but in Asia shrank by 0.45%. Both then and now “Westerners” took the lion’s share of profits.
Furthermore, modern globalization is characterized by regional specialization in the growth or production of a specific good. When Europeans with their fickle demands entered the Monsoon Market place, the Banda islands were relegated to the plantation of nutmeg and South Arabia to the provision of coffee beans. Engendered by our globalized trade system, competition, leading not only to lower prices for consumers, but also to lower profit margins for suppliers, was increased. As European demand concentrated on Bengal instead of Iranian silk, the country’s dependence on silk exports made the Safavid economy plunge into a recession. Ironically, Iran’s mullahs are today no less reliant on revenues from oil export as Safavid shahs were on profits from silk production.
Although this work focuses on the economic effects of globalization, the cultural consequences should be examined quickly as well. Modern globalization has led to the establishment of a US-American dominated civilization, sometimes mockingly referred to as McWorld. Moreover, it has also caused an increase in diversity and cosmopolitanism. While the former effect was not observable in the 17th century, accounts from empires such as Ayutthaya point to the development of increasingly cosmopolitan attitudes in this period of time.
All in all, the similarities between modern day globalization and early globalization between 1600 and 1650 are manifold. The integration of the world caused a major economic upheaval across all continents by establishing New World silver as a global currency. In addition, the 17th century foretold both the positive and the negative effects going hand in hand with globalization. Increased trade aided economies such as the Mughal, but made others such as that of the Spice Islands dependent on Europe. Wealth from commerce, however, was not evenly distributed. Thus, the Western hemisphere would later rise to wealth and power, while former superpowers sank into oblivion. Understanding the effect of Europe’s entry into world trade on economies surrounding the Indian Ocean will also help us understand globalization in our days.
3.2. Summary and Evaluation
In conclusion, the economic situation in all areas along the coast of the Indian Ocean was decisively altered by the arrival of European explorers, soldiers, and traders. This study has taken into account the different experiences of all the regions affected – only the African coast south of Sofala and the Burmese kingdoms of Ava and Arakan were ignored because of their relative insignificance to the trade network. Also, the question of the effect of the Indian Ocean trade between locals and Europeans on the European economies might be an interesting subject for a future study. The size of the available material has varied greatly between the different locales. While accounts for Africa or the many little islands across the ocean were scarce and difficult to find, reliable sources and even economic data for India, Persia, or the Ottoman-controlled South Arabia could be found in abundance. Though some governments or societies reacted differently to the new situation than others, there was not a single region that was left unaffected.
Firstly, some areas came under direct control of the Portuguese and later sometimes Dutch domination. These include the Swahili Coast, for a short time before 1600 the Maldives, Sri Lanka, Melaka, and the Spice Islands. In all of these territories, taxes levied on the local population and foreign control over the trade likely hampered economic growth. However, commerce mainly continued as it had before in Melaka or Sri Lanka. East Africa and the Maldives might have been affected by the globalization of the trade in cowry shells. Unfortunately, research on this topic is still rare, but would definitely be interesting. The Banda islands, on the other hand, had the questionable honor of being the only place of nutmeg production – resulting in the near eradication of the local population due to the inhumane working conditions. Foreign occupation was in almost all of the said areas met with fierce resistance. Both in the case of the Swahili cities as in that of Melaka around the 1630s the Portuguese were driven out by local Muslim coalitions.
Secondly, the three big Muslim empires of the 17th century, Ottoman, Safavid, and Mughal, were not colonized. Only minor trading post such as Aden, Hormuz or Goa were at least temporarily conquered and thus provided an important link between Europeans and Asians. Yet all of the three economies were affected by the silver exported by Europeans from America to Asia. The Ottoman part of the Arabian Peninsula suffered immensely from rampant inflation caused by the silver influx. In contrast, the silver imports provided much needed relief for the chronically currency-starved treasuries of the Safavid shahs. Both in present-day Yemen and in Iran the production of a single good, coffee and silk, respectively, was relied on. Mughal India’s inflation rate remained surprisingly stable and its economy surged due to increased foreign trade. Thus, each showed a different reaction to the challenge arising with the new “global currency”.
Lastly, Ayutthaya seems neither to have been affected greatly by new world silver nor to have faced the danger of colonialization. As the benefits from trade with the pale newcomers became apparent, the Thai god-kings fostered commerce. In the capital city, Europeans, Muslims, and Chinese were all active and thus proved exemplary for the positive effects of diversity.
Since the results for the various regions are as aforementioned as different as the regions themselves, simple deductions are not expedient. Nor can we oversimplify by stating that the consequences were either all good or all bad. Instead, the consequences of Europe’s entry into the Indian Ocean trade network reminds us of the many aspects of one of the big issues of today – globalization.
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