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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.

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.

Cambridge Histories Online © Cambridge University Press, 2008

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
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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

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

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

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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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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

Xill

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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

XiV

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GENERAL EDITOR’S PREFACE

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.

Cambridge Histories Online © Cambridge University Press, 2008

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

xvl

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PREFACE

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

XVII

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PREFACE

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.

XVili

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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

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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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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

INDIA IN THE INDIAN OCEAN TRADE

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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-
eries, the really important component for the Asian market was the
coarse cotton varieties manufactured primarily on the Coromandel
coast and in Gujarat. There was a large scale demand for these varieties
both in the eastern markets of Indonesia, Malaya, Thailand and Burma
as well as in the markets of the Red Sea, the Persian Gulf and East
Africa. While it is impossible to determine precisely what proportion
of total domestic demand for mass consumption textiles in these
societies was met by imports from India, the available evidence would
seem to point in the direction of this not being altogether insignificant.
India’s capacity to manufacture these textiles in large quantities and to
put them on the market at highly competitive terms made it in some
sense the ‘industrial’ hub of the region surrounded by west Asia on
one side and southeast Asia on the other.

This circumstance also determined to a large extent the nature of
India’s demand for imports from the rest of Asia. This demand
consisted essentially either of consumption goods which were not
produced domestically for soil, climatic or other reasons, or of minerals
and metals of various kinds whose domestic supply was either nil or

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INDIA IN THE INDIAN OCEAN TRADE

substantially below the total demand. In the first category were items
such as fine spices like cloves, nutmeg and mace from Indonesia, and
horses and rosewater from west Asia. The second category included
rubies and other precious stones from Burma, as well as metals — both
precious and non-precious. By far the most important non-precious
metal imported was tin from Malaya. Precious metals, mainly silver,
were imported overwhelmingly from west Asia. It was for this reason
that, from the sixteenth century onward, the port of Mocha was
repeatedly referred to as the ‘treasure-chest’ of the Mughal empire. It is
really immaterial for our purposes whether the imported precious
metals are treated as a commodity import or as a means of settling the
adverse balance of trade that the concerned trading partner of the
subcontinent had with it. The important point to emphasize is that by
virtue of her relatively more advanced structure of manufacturing
production and her capacity to provide large quantities of a basic
manufactured consumption good such as inexpensive cotton textiles at
highly competitive terms, India significantly enhanced the basis of
trade in the Asian continent. She not only provided the textiles and, on
a more modest scale, the foodgrains and the provisions in great demand
in the neighbouring societies but also provided an important outlet for
their specialized agricultural, mineral and other products. Trade satis-
fied different kinds of consumption needs for India as compared with
her numerous trading partners in the Indian Ocean region. This by
itself provided an excellent basis for a significant and growing level of
trade. It is really in this sense that the critically important role of India
in the structure of early modern Asian trade needs to be assessed.

The key position of India in the structure of Asian trade was also
reflected in the important role of the Gujarati and other Indian trading
groups in the actual conduct of this trade. This role, if anything, was
strengthened in the course of the fifteenth century which, as we have
seen above, witnessed the fragmentation of Asian trade into well-
defined segments. Increasingly, the participation of the Arab merchants
became confined to the trade between west Asia and the west coast of
India. This left the trade between the west and the east coasts of India
on the one hand, and the eastern Indian Ocean region on the other,
almost exclusively in the hands of Indians — the Gujaratis more than
anyone else, but also the Chettis, the Chulias and other groups from
the Coromandel coast, besides the Oriyas and the Bengalis. The
participation of the Chinese merchants was now restricted by and large

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

to controlling the trade between China and Malacca, while the Indone-
sian and the Malay merchants hardly seem to have ventured beyond
the inter-island and the port-to-port trade in the Malay—Indonesian
region. In sum, Indian merchants from different regions of the country
constituted an important trading group operating in the Ocean.

From the vantage point of India, the two principal segments of
maritime Asian trade were the western Indian Ocean and the Bay of
Bengal. In the west, the link through the Red Sea and the Persian Gulf
extended overland to the southern coast of the Mediterranean. The
Bay of Bengal littoral extended through the straits of Malacca to the
South China Sea going all the way to Japan. In the west, the area of
operation of the Indian merchants stopped at the Red Sea and the
Persian Gulf ports, while in the east it extended as far as Malacca.
While there were clear-cut and by and large autonomous areas of
operation and linkage in each of these two broad segments and there is
a certain amount of merit in analysing each of these separately, it must
be recognized that there was a considerable amount of interdepen-
dence and interaction across the two segments and that neither of the
two should be regarded as a fully autonomous and self-contained
system. One only needs to refer to the large volume of direct trade
between Gujarat and Indonesia to realize the significance of this
caution. This was equally true at the level of coastal trade as well, and
one only has to remind oneself of the regular trade links in the
fifteenth century between the ports of Bengal on the one hand and
those of the west coast — in both Malabar and Gujarat — on the other.

In both the Arabian Sea and the Bay of Bengal, a considerable
amount of trade was carried on both on the high-seas as well as on the
coastal trade circuits. The coastal circuits were often dominated by
trade in agricultural products such as foodgrains and other bulk
goods, and were usually characterized by the use of relatively small
craft which would ordinarily not be usable on the high-seas runs.
Also, in comparison to the high-seas connections, the role of the
monsoon winds was comparatively limited in determining the rhythm
of trade on the coastal circuits.

THE WEST COAST

The west coast of India could conveniently be conceived of as
consisting of four distinct segments divided roughly at the ports of

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INDIA IN THE INDIAN OCEAN TRADE

Chaul, Karwar and Cannanore. To the north of Chaul lay the Gujarat
coast; from Chaul to Karwar was the Konkan coast; south of Karwar
to Mount Eli immediately to the north of the port of Cannanore was
the Kanara coast; and to its south the Malabar coast. During the
fifteenth century, the ports of Cambay in Gujarat and Calicut in
Malabar were the two major international ports on the west coast of
India, and between them they handled a considerable amount of re-
export trade. Gujarat was a major trading area in the subcontinent
and the Gujaratis — mostly Muslims but also including Hindu traders
— had traditionally been a dominant group amongst the Indian
mercantile communities. Over the course of the fifteenth century, the
trading activities of this group increased to a point where it emerged
probably as the largest of all the groups engaged in trade in the Indian
Ocean. This development would seem to be related to the cessation of
the long-distance trade between west Asia and China, and the rise of
segmented Asian trade. The most important of the new ports to
emerge during the fifteenth century was Malacca, to which the
Gujarati merchants shifted their trade from the Javanese and the
Sumatran ports on which they had concentrated until then in their
eastern trade. The growth of Malacca continued in the second half of
the fifteenth century, and so did the Gujarati share in the trade of the
port. According to Tomé Pires, writing at a somewhat later date,
about a thousand Gujarati merchants travelled each year to Malacca
together with between 4,000 and 5,000 sailors. It is true that the ships
that left Cambay for Malacca each year included many owned and
operated by Arab, Persian, Turkish and other merchants from west
Asia, but all these groups together were overshadowed by the
Gujaratis who controlled the bulk of the trade on the route. The
goods that the Malacca-bound ships leaving Cambay carried were, in
part, coloured woollen clothes and glassware from the Mediterranean,
and items such as rosewater, opium, indigo and silver from west Asia.
But a large part of the cargo would seem to have consisted of textiles
manufactured in Gujarat — mainly of coarse cotton, though more
expensive varieties including those manufactured from fine-quality
cotton and silk also seem to have figured in the list. The cargo
obtained in exchange at Malacca included Chinese goods such as silk
and porcelain, Indonesian spices such as pepper, cloves, nutmeg and
mace, besides woods and aromatics, and precious and non-precious
metals such as Malayan tin. In addition to Malacca, the Gujarati ships

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

from Cambay called at ports such as Acheh, Kedah, Tenasserim/
Mergui and Pegu. The goods carried to these ports were broadly
similar to those carried to Malacca: the goods brought back were
largely of local origin, rather than cosmopolitan as in the case of
Malacca.

There was also a large amount of coastal trade carried on between
Cambay and other smaller ports of Gujarat on the one hand, and ports
on the Konkan, Kanara and the Malabar coasts to the south, and those
in Bengal, on the other. The principal commodity procured in the
Konkan ports of Chaul and Dabhol was textiles, while the main item
procured in Kanara and Malabar was pepper. A certain amount of rice
was also procured in Kanara. At Calicut, limited quantities of Chinese
and Indonesian goods were also picked up. Bengal provided food-
grains and provisions such as sugar, butter and oil in addition, of
course, to textiles of different varieties.

A part of the large conglomerate of goods brought to Cambay was
obviously destined for consumption in Gujarat, as well as the large
north Indian hinterland supplied by it. But a good proportion would
seem to have been re-exported mainly to west Asia, the most
important ports in the region at this time being Aden and Jeddah. The
other important constituent of the cargo to west Asia was textiles
manufactured in Gujarat. These were predominantly those manufac-
tured from coarse cotton and intended for mass consumption, though
superior varieties manufactured from fine cotton and silk also figured
in the list. The route from Cambay to Aden would seem to have been
dominated by the Arab, Persian and other west Asian merchants,
though the Gujarati merchants also operated on this route in an
important way.

The Indonesian spices and other items imported from Cambay into
Aden and other west Asian ports found their way in significant
quantities, in addition to the markets of west Asia, to Europe via the
Mediterranean. The two routes used for the purpose were those via
the Red Sea and the Persian Gulf. While the Red Sea route terminated
at the Egyptian port of Alexandria on the southern coast of the
Mediterranean and involved only a small stretch of overland transpor-
tation, the Persian Gulf route made use of the Tigris or the Euphrates
rivers and a fair amount of caravan transportation across Iraq and the
Syrian desert. Important among the Mediterranean destination ports
on this route were Tripoli (of Syria) and Beirut. This traffic was

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INDIA IN THE INDIAN OCEAN TRADE

handled exclusively by the west Asian merchants. At the Mediterra-
nean ports, the goods were procured mainly by the merchants from
Venice and Genoa. While both the Red Sea and the Persian Gulf
routes had been in use since antiquity, the relative amount of traffic on
either at any given point in time depended partly on_ political
circumstances. While during the eighth and the ninth centuries the
Persian Gulf route was the dominant one, the decline of the Abbasid
caliphate and the rise of the Fatimids in Egypt tilted the balance from
the eleventh century onward significantly in favour of the Red Sea
route. This was also the period which witnessed a significant expan-
sion in the volume of Euro-Asian trade. Evidence from the end of the
fourteenth and the early years of the fifteenth century suggests that
volume-wise the Alexandria trade was considerably larger than —
nearly double on average — the one via Beirut. However, since the
latter handled the expensive spices much more, the difference between
the two ports was much smaller in terms of value.!

Another direction in which the cargo arriving at Aden ~ particularly
the coarse cotton textiles from Gujarat - moved was southwards to the
East African ports of Mogadishu, Malindi and Kilwa through the
agency of the west Asian merchants. There was also a certain amount
of direct trade between Cambay and the East African ports carried on
by the Gujarati merchants, but the extent of this trade was perhaps
quite small.

On the southwest coast, the main ports in Konkan were Chaul and
Dabhol. The principal orientation of these ports was towards west
Asia, though the merchants of Dabhol are also known to have gone on
to Bengal to join the fleet to Malacca. The volume of the latter traffic
would seem, however, to have been quite small. The ports on the
Kanara coast included Mirjan, Honawar, Bhatkal, Barkur, Basrur,
Mangalore and Kumbla. Bhatkal was the principal port, the others
being relatively minor and catering only to the coastal trade. Bhatkal
was oriented exclusively to the west with connections to the Persian
Gulf and the Red Sea. The principal exports from the port were white
rice, sugar, iron, textiles, ginger and pepper, while the imports
included copper, gold and horses from Arabia and Persia. The non-
Islamic components of the trading community operating from the

' C.H.H. Wake, ‘The changing pattern of Europe’s pepper and spice imports, ca.
1400-1700’, The Journal of European Economic History, vol. 8 (2), 1979, pp. 364-9.

ay.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

region consisted of Jains and the Saraswats, while the Muslims, who
seem to have constituted the dominant group, included both the
Navayat Muslims who claimed origins in Persia, as well as the so-
called pardest Muslim merchants, who were temporary residents in the
area and came from the Arabian peninsula, Cairo, Turkey, Iraq and
Persia.

The principal port on the Malabar coast was Calicut followed by
smaller ports such as Cannanore, Cochin and Kollam. The principal
orientation of the high-seas trade from the coast was westward with
the Red Sea and the Persian Gulf, though a fair amount of trade was
also carried on with the eastern littoral of the Bay of Bengal and with
Malacca. The coastal connections stretched both northwards up to
Gujarat as well as around the Cape with Sri Lanka, and via Coro-
mandel as far north as Bengal. The principal exports from the coast
were pepper, other spices such as ginger and cardamom, textiles,
coconut and its ancillary products. The principal imports from west
Asia were gold, silver and horses and, from the east, spices and
aromatics. The pardesi merchants dominated the trade to the west,
while the coastal trade and the high-seas trade to the east was
controlled by the local Mappila merchants.

THE EAST COAST

The two principal trading regions on the east coast of India were the
Coromandel coast and Bengal. The Coromandel coast is convention-
ally defined as including the stretch between Point Godavari and the
island of Manar, south of which lies the Fishery coast. To the north of
Point Godavari is the Gingelly coast which is sometimes also included
in the Coromandel coast. For our purposes, Bengal would be defined
as including the Orissa ports of Pipli and Balasore. There was a fair
amount of coastal trade between the ports of the two regions,
dominated, it would seem, by the merchants of Bengal. At the
beginning of the sixteenth century, the principal Coromandel port was
Pulicat linked via Tirupati and Penukonda to the imperial city of
Vijayanagar to the northwest. The port next in importance was that of
Nagapattinam in south Coromandel, which also had two minor ports
at Kunjimedu and Naguru. The northern Coromandel port of Masuli-
patnam was of little consequence at this time. In Bengal, by far the
most important port was Chittagong which was linked to the capital

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INDIA IN THE INDIAN OCEAN TRADE

city of Gaur. Satgaon was next in importance until about 1580 when,
due to the silting up of the waterway on which it was situated, it was
succeeded by Hugli. Pipli and Balasore in Orissa were the other
important ports in the region.

The high-seas trade from Pulicat was basically in two directions: to
Mergui and the ports of the Irrawaddy delta in southern Burma on the
one hand, and to Malacca and ports further east in the archipelago on
the other. While the trade with Mergui was marginal, that with Pegu
and lower Burma, in particular the ports of Martaban and Cosmin,
was more substantial. The principal exports from Pulicat consisted of
textiles produced all over the Coromandel coast and red yarn from the
Krishna delta. The imports into Coromandel included items such as
gold, rubies, timber, tin, ivory and copper. In 1516, Antonio Dinis,
sometime Portuguese factor at Martaban, reported that on an average
four or five ships were engaged each year in the trade between Cosmin
and Coromandel. The link to Malacca was perhaps even more
important. Until its capture by the Portuguese in 1511, the annual
traffic to the port from Coromandel usually consisted of one large
ship and as many as five smaller ships. The average annual value of the
textiles cargo imported into Malacca from Pulicat in the early years of
the sixteenth century has been put at 175,000 cruzados. There usually
was also an annual ship to Pidie in northern Sumatra, as well as traffic
from Pasai to Coromandel. The principal items imported into Pulicat
included Indonesian spices, various kinds of woods, Chinese silk and
other goods, gold and non-precious metals such as tin, copper,
quicksilver and vermilion. A major trading group at Pulicat was that
of Muslims, a few of Arab origin, but mainly members of the Muslim
communities of coastal southeastern India, known as Chulias in parts
of southeast Asia and Marakkayars on Coromandel. The trading
community also included Telugu-speaking Chettis of the Balija and
Komatti communities as well as Armenians. At the Malacca end, the
mercantile community consisted largely of the so-called keling mer-
chants of Tamil and Telugu origin led by people like Nina Chatu and
Nina Suryadev. The sultan of Malacca himself is also known to have
participated in this branch of commerce.

In addition to the high-seas trade carried on from Pulicat and other
Coromandel ports, there was also a fair amount of coastal trade
carried on with the Bengal ports in the north, the Sri Lankan and
other ports in the south, and with ports on the Malabar coast. The

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precise position at the beginning of the sixteenth century remains
somewhat obscure for the available data pertain mainly to the
sixteenth and the early seventeenth centuries. The changes, if any, over
the intervening period, however, do not appear to have been par-
ticularly marked, except in the matter of the growing role of
Masulipatnam through the sixteenth century in the coastal, as in the
high-seas, network. The available information suggests that there was
regular trade between Bengal and Coromandel based on the import
into ports such as Masulipatnam of rice, gram, wheat, long pepper,
opium, clarified butter and Bihar saltpetre by an annual coastal fleet
from Bengal. In the late sixteenth and early seventeenth centuries, the
number of vessels in the fleet was between thirty and forty. While the
ships from Bengal usually returned from north Coromandel itself,
those from the Gingelly coast went further south to supply central
Coromandel as far as Pulicat and Sao Tomé. The Coromandel cargo
carried back to Bengal was raw cotton, tobacco, iron and crucible
steel, and some textiles, but the profit seems to have been made largely
on the outward journey. The pattern of coastal trade originating in
southern Coromandel, however, was quite different. The ports of the
Kaveri delta were all rice exporters, but this trade was directed south-
wards rather than towards the deficit pockets to the north. Naga-
pattinam supplied rice to the west coast of Sri Lanka, Jaffna and, on a
more limited scale, to southern Malabar in addition to Acheh, on
which route rice was used mainly as a ballast item. The principal items
brought back from Sri Lanka were areca, cinnamon, timber and
elephants. It is somewhat intriguing that the sources do not mention
any coastal contacts between the Coromandel ports on the one hand
and the Kanara, Konkan and Gujarat ports on the other.”

As far as Bengal was concerned, in addition to the coastal trade with
southeastern India, the major commercial links extended to the eastern
littoral of the Bay of Bengal and Malacca, to Sri Lanka, the Maldives
and Malabar, and finally to the Gujarat, the Red Sea and the Persian
Gulf complex. The eastward trade was dominated by the trade to
Malacca. According to Meilink-Roelofsz., five or six ships sailed on
average each year in the early part of the sixteenth century from
Bengal to Malacca and ports such as Pasai and Pidie. Most of these

? Sanjay Subrahmanyam, The Political Economy of Commerce, Southern India
1500-1650, Cambridge, 1990, pp. 50-3, 93-8.

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INDIA IN THE INDIAN OCEAN TRADE

were rather small vessels but they did include one or two larger ones
whose cargoes may have been worth as much as 80,000-90,000
cruzados. The exports from Bengal included textiles, rice, sugar and
conserves, while the imports were a varied lot. These included Borneo
camphor, Moluccan spices, pepper, sandalwood, Chinese porcelain
and silk, precious metals — perhaps mainly silver — as well as base
metals such as copper, tin, lead and mercury. The connection with
Burma was mainly through the ports at Martaban, Dagon and
Cosmin. According to the 1516 testimony of Dinis, four or five
Bengal ships visited Cosmin each year carrying mainly textiles which
were exchanged primarily against silver made into rings or small
hoops.

The exports to Sri Lanka, the Maldives and the Malabar coast were
again mainly textiles and foodstuffs, including large quantities of rice.
Indeed, besides Kanara, Bengal was the principal rice surplus area in
the entire region and areas such as the Maldives depended mainly on
Bengal for their rice requirements. The principal items brought back
by the Bengal vessels were cinnamon and areca from Sri Lanka, cauris
(used extensively in Bengal both for ornamental purposes as well as in
the form of low denomination currency) from the Maldives, and
pepper, of which again Bengal was an important consumer, from
Malabar. The trade to Gujarat was carried on primarily through
Cambay, while the trips to Mocha in the Red Sea were often made
after a stopover at the Maldives. The principal goods carried were
textiles, sugar and long pepper, while the principal item brought back
from Mocha was silver. The evidence regarding the Persian Gulf
connection is, however, somewhat ambiguous.

The accounts of Tomé Pires and Barbosa also enable one to
decipher the principal components of the mercantile community
operating from Bengal. The indigenous merchants of Bengal are
described as ‘merchants with great fortunes’ and were an important
constituent of the trading community. But a large part of the trade
would seem to have been controlled either by merchants based at the
partner ports or by foreign merchant groups settled in the Bengal
ports. Thus the trade with Malacca was dominated by the keling
merchants settled there. The pepper trade with Pasai and Pidie was
carried on by Persian merchants settled at the Port of Chittagong. This
last-mentioned group would seem also to have dominated the trade to
the middle and the western Indian Ocean ports, though the traders on

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

these routes also included Turks, Arabs, Rumis, Abyssinians and
merchants from Chaul, Dabhol and Goa.?

To sum up, around the time that the Europeans’ participation in the
maritime trade of India started, at the beginning of the sixteenth
century, India occupied a position of key importance in the structure
of Indian Ocean trade. Of the three principal segments of this trade,
the Western Indian Ocean, the Bay of Bengal and the South China
Sea, the first two were dominated by India. This domination was
accounted for only in part by India’s midway location. Perhaps more
important was her capacity to put on the market a wide range of
tradable goods — particularly manufactured goods, the most important
amongst which was coarse cotton textiles — at highly competitive
prices. In the process, she helped to expand the basis of trade in the
region. This was a structure of trade in which the Europeans — of
whom the Portuguese were the first — had no problem in finding a
niche for themselves.

> Sanjay Subrahmanyam, ‘Notes on the sixteenth century Bengal trade’, The Indian
Economic and Social History Review, vol. 24 (3), 1987, pp. 265~89.

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CHAPTER 2

THE PORTUGUESE IN INDIA,
1500-1640

The arrival of three Portuguese ships under the charge of Vasco da
Gama at Calicut on 20 May 1498 marked the inauguration of a new
era in the history of Euro-Asian contacts in general, and of trade
between the two continents in particular. Ever since the conquest in
1415 of the Moroccan city of Ceuta, the Portuguese had been
increasingly involved in trading off the Saharan coast of Africa and
importing gold and slaves from there. The legendary Prince Henry the
Navigator participated in the profits from this trade, and in some sense
personified the central role of the Portuguese Crown in encouraging
further thrust into the Atlantic southwards. This phase culminated in
the rounding of the Cape of Good Hope by Bartolomeu Dias in 1488
providing for the first time the potential of an all-water route
connecting Europe to Asia. Apart from anything else, the Cape route
implied the overcoming of the transport-technology barrier to the
growth of Euro-Asian trade. 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.

EURO-ASIAN TRADE

Since it was the Portuguese who had discovered the Cape route, they
promptly monopolized it and even asked the Pope to legitimize the
arrangement. The result was that for a whole century, until this
arrangement was successfully challenged by the Dutch and the English
in the 1590s, the only merchant group engaged in trade between
Europe and Asia along the all-water route was the Portuguese. Partly
because of the absence of a strong mercantile tradition among the
Portuguese comparable in any sense to that of the northwestern
Europeans, and partly because the Crown had taken the lead in
providing finance and the infrastructural support to the efforts which
had culminated in the discovery of the Cape route, the overseas
enterprise in Asia was dominated from the very beginning by the
Portuguese Crown. The principal organizing unit at the Lisbon end

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA THE PORTUGUESE IN INDIA

‘

Muscat

St ecaerte ete,

Colombo

Equator

e@ Main Portuguese settlements with fortresses I i 1 100K
————S
@ Towns with substantial Portuguese population 0 1000 miles
OQ Towns subject to annual Portuguese naval patrol
24 Map 2 Portuguese seaborne empire, c. 1580 25

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

was the Casa da India, a royal trading firm entrusted with the overall
charge of the trade with Asia. The Asian end of the enterprise was
supervised by an administrative set-up described from the 1560s
onwards as the Estado da India. This had its headquarters theoretically
in Lisbon but for all practical purposes in Goa under the charge of the
Viceroy nominated by the Crown. The Viceroy was assisted by,
among others, informal councils which by 1563 had evolved and
become more institutionalized as the Council of State. Its members,
apart from the Viceroy as President, were the archbishop of Goa, the
chief inquisitor, two or three of the older fidalgos resident in Goa, the
head of the High Court, the Captain of the city of Goa and the Vedor
de fazenda or chief financial official. The Viceroy had command over
all Portuguese posts as well as military and naval forces from the
Zambezi valley in Africa to Macao in China. The subordinate settle-
ments followed the structure of control established in Goa. As a recent
study puts it, in the first half of the sixteenth century, ‘Portuguese
India’ did not designate ‘a space that was geographically well defined
but a complex of territories, establishments, goods, persons and
administrative interests in Asia and East Africa, generated by or
subordinate to the Portuguese Crown, all of which were linked
together as a maritime network.”!

The Portuguese enterprise comprised a variety of interest groups
which at times pulled in different directions. At the Lisbon end, in
addition to the Crown, there were the syndicates of merchants,
financiers and bankers of various European nationalities who were an
essential constituent of the operation. Often, these syndicates also
played an important role in the procurement and the transportation of
the return cargo from Asia. Within Asia, also, the Portuguese presence
had a multiplicity of facets. In its economic dimension, there was in
the first place the official presence in the form of the Estado da India,
which was supposed to take care of the commercial interests of the
Crown. But the employees of the Estado from the Viceroy down
simultaneously engaged extensively in trade on their private account
under a variety of arrangements. And, finally, there were the private
Portuguese traders who operated either under the protection of the

' Sanjay Subrahmanyam and Luis Filipe F. R. Thomaz, ‘Evolution of empire: the
Portuguese in the Indian Ocean during the sixteenth century’, in James D. Tracy (ed.), The
Political Economy of Merchant Empires, State Power and World Trade 1350-1750, Cam-

bridge, 1991, p. 304.

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THE PORTUGUESE IN INDIA

Estado or outside of it. It is important to realize that over time
through the sixteenth and the first half of the seventeenth century,
there were important shifts in policy in respect of one or more of these
constituents. The Portuguese enterprise can then be seen to have had
an evolutionary character rather than a well-defined or unchanging
profile.

In keeping with the traditional composition of the Asian imports
into Europe, the principal item sought by the Portuguese Crown in
Asia was spices — overwhelmingly pepper - though some other goods
were also procured. On the basis of the better known cases of the
Dutch and the English East India companies’ trade in pepper and
other spices, one ordinarily associates the spice trade primarily with
the Indonesian archipelago (Sumatran pepper and Moluccan cloves,
nutmeg and mace) and only marginally with Sri Lanka (cinnamon) and
the southwest coast of India (pepper). This characterization, however,
is totally inapplicable to the Portuguese case. Their early occupation of
Malacca (1511) notwithstanding, the overwhelming bulk of their
pepper procurement was done in the Malabar region (and later Kanara
as well) on the southwest coast of India. This made India their
principal theatre of operation throughout the century and a half of
their trading history between Europe and Asia. It was only in the
context of the intra-Asian trade that the Portuguese connection with
other parts of Asia, including China and Japan, became quantitatively
significant. The detailed documentary evidence available in respect of
the Dutch and the English East India companies’ trade is conspicuous
by its absence in the case of the Portuguese. This makes it impossible
to reconstruct in any detail the history of the Portuguese Euro-Asian
trade. But the basic outlines of the story can be put together.

On the return of Vasco da Gama to Lisbon in 1499, the Portuguese
government had formed a syndicate for trade with Asia, in which both
the Crown and certain private interests participated. In the voyage of
Pedro Alvarez Cabral which left Lisbon on 9 March 1500 with
thirteen ships, for example, ten were on the account of the Crown,
while the remaining three belonged to different syndicates of Portu-
guese noblemen and Italian financiers. But from 1506 onward, the
trade in precious metals from Portugal to India, and that in pepper and
other major spices in the reverse direction, was reserved as a royal
monopoly. Private trade in monopoly items was, however, allowed to
naval personnel, and to certain privileged institutions and individuals

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

under royal license. More importantly, it would seem that the
participation of private enterprise in the role of financiers continued.
On occasions, this could be quite important. Thus the fleet of 1510
under the command of Diogo Mendes de Vasconcelos was largely
staffed and financed by the Florentine commercial house of Sernigi
and its associates. The procurement of pepper in India was organized
by the Estado while the sales in Europe were through contract sales
based until the middle of the century at Antwerp and thereafter at
Lisbon.

The mounting liquidity problems of the Crown forced a major
reorganization of the trade with Asia in 1564 when the first of a series
of contracts giving over trade on the Cape route to private parties was
concluded. The remaining part of the century witnessed a variety of
experiments carried out in an attempt to identify the optimal strategy
that would ensure the Crown maximum monopoly revenue without
obliging it to be directly involved in the conduct of the trade with
Asia. In 1570, the trade in pepper and other spices was opened to free
competition, although the Crown also continued to participate in the
trade itself and retained its monopoly on the export of precious metals
to Asia.* The Asian contract system was introduced in 1575. The first
beneficiary of the new arrangement was the Augsburg merchant
Konrad Rott together with his associates who included the Milanese
merchant, Giovanni Batista Rovalesca. Under this arrangement, Rott
received intact the royal monopoly of the Cape route — the procure-
ment of spices in Asia, their shipment to Europe, the provisioning of
the carracks in Lisbon and Goa, and the distribution of pepper in
Europe. Just before his death in 1580, dom Henrique renewed the
Rott-Rovalesca contract for another five years. Under the terms of the
contract, the contractors were supposed to purchase each year in India
a total of 30,000 quintals of pepper — 15,000 on their own account and
15,000 on the king’s account. The contractors were free to sell their
half of the pepper as they chose; the king would also sell all of his
15,000 quintals (which cost him nothing) to the Rott—Rovalesca
consortium at 32 cruzados per quintal. The consortium thus enjoyed
exclusive European distribution of Portuguese pepper.? A sharp
decline in the European price of pepper, however, forced Rott out of

2 Subrahmanyam and Thomaz, ‘Evolution of empire’, pp. 310-11.
3 James C. Boyajian, Portuguese Trade in Asia under the Habsburgs 1580-1640,
Baltimore and London, 1993, p. 20.

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business. In February 1586, a new Asian contract was concluded for a
period of six years with Rovalesca in association with Giraldo Paris.
They were authorized to take in other associates subject to the
approval of the Crown. In April, the Augsburg firm of Welser joined
in with a five-twelfths share. In 1587, the Fugger brothers also came in
with a share of a quarter. This group was required to supply to the
king 30,000 quintals of pepper per annum at a price of 16 cruzados per
quintal.* The Casa da India sold the pepper to the European contrac-
tors at prices negotiated each year in Lisbon. The European distribu-
tors included, besides Welser and Fugger, several investors who were
not party to the Asian contract. The consortium marketed pepper
through a network of correspondents in Hamburg, Lubeck, Middel-
burg, Amsterdam, Leghorn and Venice. By not awarding the Eur-
opean distributorship to the group holding the Asian contract, the
king gambled that he could bargain more effectively in Lisbon for a
premium price for his pepper.> The contract system continued until
1598 when, following the English and Dutch intervention in the
seaborne spice trade, private enterprise was no longer willing to take
up the pepper contracts. In any event, the experiment with the
contract system had not been particularly satisfactory for either side.
The syndicates were consistently unable to import the quantities
specified in the contracts and never managed to make adequate profits.
The bankruptcy of Rott has already been noted: his Milanese counter-
part Rovalesca was also forced to follow suit.

In the context of the continuing problem of liquidity, the formation
of the English and the Dutch East India companies in 1600 and 1602
respectively would seem to have been instrumental in spurring the
Portuguese (and Spanish) Crown to consider the establishment of a
Portuguese India Company.® The Company was finally founded in
1628, but the experiment was not particularly successful, and as early
as April 1633 it was decided to dissolve the Company. The last batch
of cargo on the account of the Company left Goa in 1634. The Crown
monopoly of pepper was partially relaxed in 1642 with the rights of

* Hermann Kellenbenz, ‘Autour de 1600: Je commerce du poivre des Fugger et le marché
international du poivre’, Annales Economies-Sociétés-Civilisations, vol. 11 (1), 1956,
pp. 1-28.

> Boyajian, Portuguese Trade in Asia, p. 22.

© The details of the project can be followed in A.R. Disney, Twilight of the Pepper
Empire, Portuguese Trade in Southwest India in the Early Seventeenth Century, Cambridge,
Mass., 1978, Chapters v and v1.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

the Casa da India being confined to purchasing the pepper on arrival
in Lisbon at a pre-determined price. But the arrangement failed to
stimulate the trade to any significant extent. The tonnage leaving Asia
for Lisbon, which had stood at 13,710 tons during 1631-40, went up
during 1641-50 only to 16,030 tons. In the second half of the
seventeenth century, it was only during 1671-80 that this figure
exceeded 10,000 tons (Table 2.1).”

The exports to Asia

The cargoes sent out from Portugal to Asia to facilitate the procure-
ment of pepper and other return goods included precious metals (West
African gold and, from 1570 onward, primarily rials coined from
American silver), non-precious metals such as copper, lead, tin,
quicksilver and mercury, and other goods such as coral and alum,
wines and olive oil, and fine textiles such as scarlets, damasks, taffetas
and silks. Valuewise, metals overwhelmingly dominated the exports,
and copper was by far the most important of these for quite some
time. Thus, of the average annual value of 103,295 cruzados sent out
to Cochin between 1510 and 1518, copper accounted for 49,464
cruzados (47.88 per cent), silver and specie for 30,274 cruzados (29.31
per cent), while the remainder was accounted for by other non-
precious metals and coral.* According to Magalhaes-Godinho, the
average annual value of the exports to Asia went up during the second
quarter of the century to between 150,000 and 250,000 cruzados. But a
spectacular increase both in the value of the average annual exports as
well as in the share of silver rials in the total took place only over the
last third of the century. He estimates the value of the precious metals
alone sent out over this period at between one and one and a half
million cruzados per annum.’ This, however, would seem to be a
gross overestimate. Elsewhere in his own work, Magalhaes-Godinho

7 Ina recent paper, Glenn Joseph Ames has argued that ‘as opposed to the dismal period
from 1640-1663, when the Carreira was virtually moribund and contact between Lisbon
and Goa was interrupted for years at a time, a regular seaborne trade between the metropolis
and India was definitively re-established’ from 1668 onward when Prince Regent Pedro
assumed power in a palace coup. Ames’ data cover the period between 1668 and 1682 and
are broadly in agreement with the Duncan data. (Glen Joseph Ames, “The Carreira da India,
1668-1682: maritime enterprise and the quest for stability in Portugal’s Asian empire’, The
Journal of European Economic History, vol. 20 (1), 1991, pp. 7-27-)

8 V. Magalhaes-Godinho, Os Descobrimentos e a Economia Mundial, Lisbon, 1963-71,
vol. Ill, p. 11.

° Magalhaes-Godinho, Os Descobrimentos e a Economia Mundial, vol. 1, p. 71.

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has suggested for the 1580s a silver export figure of between 180,000
and 210,000 cruzados per annum.!° Also considering the fact that the
period would seem to have been marked by at least no increase in the
average annual value of the cargoes imported from Asia, the enor-
mously high figure of precious metal exported, as suggested by
Magalhaes-Godinho, would pose the problem of what eventually
happened to all this additional purchasing power in Asia. Based on
data from Luis de Figueiredo Falcao (c. 1610), Niels Steensgaard has
suggested for the years between 1588 and 1592 an average annual
export figure to Asia of 250,000 cruzados. The silver component of
this figure at the end of the century was between 150,000 and 200,000
cruzados.!!

Shipping movement between Asia and Europe

As far as the return cargoes from Asia are concerned, information
regarding value is totally missing and one has to depend entirely on
movements in shipping and tonnage and on some data on the volume
of these cargoes. The number of ships that returned from Asia was
obviously related to that sent out, though in any given year there
could be a fair discrepancy between these two numbers because of
shipwrecks on the way, the holding back of ships in Asia, or,
conversely, the construction of new ships in the Asian shipyards. In a
paper published in 1970, Steensgaard presented three series of ship
departures from Portugal to India based respectively on the lists of
Luis de Figueiredo Falcao (1491/2 to 1610/11), Pedro Barreto de
Rezende (1491/2 to 1630/1) and Faria e Sousa (1491/2 to 1630/r1).!?
According to Steensgaard, the Rezende series was the most reliable.
The estimates given by Magalhaes-Godinho also show that he has
broadly followed the Rezende series.'* More recently, based on a wide
range of materials, T. Bentley Duncan has presented a new series of
shipping movements between Portugal and Asia which largely super-
sedes earlier work not only because of its more comprehensive data
base but also because it provides, in addition, the movements of

10 Magalhaes-Godinho, Os Descobrimentos e a Economia Mundial, vol. 11, graph on
. 113.
'! Niels Steensgaard, The Asian Trade Revolution of the Seventeenth Century: The East
India Companies and the Decline of Caravan Trade, Chicago, 1974, p. 87.
'2 Niels Steensgaard, ‘European shipping to Asia, 1497-1700’, The Scandinavian Eco-
nomic History Review, vol. 18 (1), 1970, Table 1, p. 5.
'3 Steensgaard, ‘European shipping to Asia’, pp. 5— 6.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA
Table 2.1 Shipping movements between Portugal and Asia, 1497-1700

Years Europe-Asia Asia-Europe
Lisbon departures Asiaarrivals | Asiadepartures _ Lisbon arrivals

Ships Tonnage Ships Tonnage Ships Tonnage Ships Tonnage

1497-1500 17 2,665 10 1,640 3 290 2 170
IsQI-10 151 42,775 135 38,695 88 26,085 73 21,115
Is 11-20 96 38,690 87 35,830 60 26,060 §9 25,760
1§2I-30 81 37,720 = «67 32,290 55 28,520 53 27,020
1531-40 80 = 44,660 76 42,610 61 39,110 57 36,410
I54I-so 68 40,800 56 34,100 58 34,550 52 30,550
1551-60 58 39,600 46 32,500 47 33650 35 = -25,750
1561-70 50 37,030 46 35,580 45 36,250 40 32,150
1571-80 50 42,900 48 40,800 42 38,250 39 35,150
1581-90 $9 §$.420 45 42,870 51 48,450 42 39,290
1591-1600 43 49,200 39 42,540 40 459350 22 25,000
1601-10 7177519045 49,540 36 43,390 28 32,290
1611-20 66 60,990 47 44,060 32 40,350 28 355550
1621~30 60 48,000 39 31,410 28 24,150 19 15,050
1631-40 33 20,020 = 28 15,770 21 13,710 15 9,910
1641-50 42 22,840 28 14,280 32 16,030 24 12,030
1651-60 35 14,320 3 18,990 16 7,970 16 8,120
1661-70 21 8,635 14 5:635 14 6,070 13 4,820
1671-80 25 11,700 29 13,900 22 10,730 21 9,680
1681-90 19 11,650 19 11,650 16 9,300 15 8,600
1691-1700 24 14,900 21 13,700 14 8,950 13 75550

1497-1700 1,149 721,705 960 598,390 781 §37215 666 441,965

Source: T. Bentley Duncan ‘Navigation between Portugal and Asia in the sixteenth
and seventeenth centuries’, in E.J. van Kley and C.K. Pullapilly (eds:), Asia and
the West: Encounters and Exchanges from the Age of Explorations, Notre Dame,
1986, p. 22.

shipping in the reverse direction as well as the extent of losses on the
way.'* Duncan’s findings for the period 1497 to 1700 are presented in
Table 2.1.

If one looks at movements in the number of ships departing from
Asia (which would best capture the extent of the Portuguese trading
operations in Asia), it is clear that there was a continuous and

'4 T. Bentley Duncan, ‘Navigation between Portugal and Asia in the sixteenth and
seventeenth centuries’, in E.J. van Kley and C.K. Pullapilly (eds.), Asia and the West:
Encounters and Exchanges from the Age of Explorations, Notre Dame, 1986, pp. 3-25.

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THE PORTUGUESE IN INDIA

significant downward trend in the number of ships operating. From a
peak of eighty-eight ships in the first decade of the sixteenth century,
the number comes down to forty-seven in the sixth decade and to
forty in the last. The trend continues in the seventeenth century with
only twenty-one departures listed during 1631-40. The downward
trend is even more marked if one looks at the number of ships that left
Lisbon for Asia over the same period. What conclusions can be drawn
from this regarding the volume of Portuguese imports from Asia? It
need hardly be emphasized that the movements in the number of ships
alone cannot be a satisfactory index to movements in the volume of
trade, particularly when it is known that the average ship size
increased considerably over the period. Until 1540, Portuguese East
Indiamen rarely exceeded 400 tons. But in the following decades, a
number of ships of 1,000 tons or more were employed, taking the
average up to perhaps 600 tons. By the 1570s, the average nau was a
four-decked carrack of over 1,000 tons and ‘monsters’ of up to 2,000
tons were not unknown. What then is needed clearly is information
on tonnage in addition to the number of ships operating on this route.
Unfortunately, the records of the Carreira da India yield tonnage
figures in respect of only 11 per cent of the total number of ships that
left Lisbon for Asia between 1497 and 1590. But by carefully putting
together the available information on the type of ships, the manner of
their employment, the number of people aboard and the quantity of
cargo carried, Duncan has produced a plausible tonnage series as a
counterpart to his shipping movement series (Table 2.1). The impor-
tant conclusion that his tonnage series brings out is that an increase in
the average tonnage of the ships employed in the Portugal-India run
over time more than neutralized the decline in the number of ships
employed. Thus the decade 1581-90 witnessed more tonnage leaving
Lisbon as well as Asia than any previous decade.'® Duncan’s work
would thus cast serious doubt on the validity of the generally held
notion of a decline in the volume of Portuguese India—Europe trade in
the latter half of the sixteenth century.

The volume, value and composition of the return cargo

The information on the volume of the Portuguese return cargoes from
India is quite limited and in part problematic. On the basis of

'S Bentley Duncan, ‘Navigation between Portugal and Asia’, pp. 9-10.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

information in the Sanudo diaries and the official summaries of the
registers of cargo aboard the returning ships for the years 1501 to 1506
and 1513 to 1548, Magalhaes-Godinho has suggested that the average
annual volume of the return cargo for the first third of the sixteenth
century was not less than 40,000 quintals and was possibly more than
50,000 quintals. Later in the century, according to him, this figure
went up to between 60,000 and 75,000 quintals.!© The substantially
higher figures of Magalhaes-Godinho in comparison with the earlier
estimates of Frederic C. Lane were partly the result of an upward
adjustment to correct for a suspected element of unregistered cargo
not reflected in the books. The unregistered cargo arose because of the
private trade carried on by the mariners and royal officials as
perquisites of office. Magalhaes-Godinho estimated this cargo at
around 25 per cent of the total.'? As for the composition of the
imports, Magalhaes-Godinho’s data for the average annual exports
from the Cochin factory from 1510 and 1518 show that, of the total
value of 50,656 cruzados, pepper accounted for 84.64 per cent. The
percentages for cloves, nutmeg, mace, cinnamon and lac were 3.64,
2.60, 2.76, 2.32 and 4.00, respectively.!® The remainder of the informa-
tion, unfortunately, provides the figures only in terms of weight and
not of value. The data published by Genevieve Bouchon and relating
to 1505 and 1518 respectively are summarized in Table 2.2. Based on
Magalhaes-Godinho’s and C.H.H. Wake’s data for 1513-48 and his
own for 1587-1610, Niels Steensgaard has suggested the scenario
summarized in Table 2.3.

What can be said on the basis of this information? The first point to
be stressed is that in so far as-the bulk of the information is in physical
rather than value terms, its usefulness is somewhat limited. After all,
the comparison of a quintal of pepper or indigo with the corre-
sponding weight of a bale of raw silk or textiles can produce absurd
results. At a general level, it could be argued that, given the nature of
the commodities involved in the return cargoes from Asia, data in
terms of weight would generally overstate the role of pepper and
understate that of high-value spices such as cloves, nutmeg and mace.

'6 Niels Steensgaard, ‘The return cargoes of the Carreira in the 16th and early 17th
century’, in Teotonio R. de Souza (ed.), Indo-Portuguese History; Old Issues, New
Questions, New Delhi, 1985, pp. 13-14.

'7 Steensgaard, “The return cargoes of the Carreira’, pp. 13-14.

'8 Calculated from Magalhaes-Godinho, Os Descobrimentos e a Economia Mundial,
vol. IH, p. 11.

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Table 2.2 Composition of cargoes imported into Lisbon from Asia,
1sos—18 (percent by weight)

1505 (first estimate) 1505 (second estimate) 1518
Number of ships = 13 Number of ships = 13 Number of ships = 6

Cargo imported = — Cargo imported = Cargo imported =
21,826 quintals 22,237 quintals 2,242,112 kg =
38,196 quintals
(at 58.7 kg per quintal)
Pepper 95-73 94.84 94-95
Ginger 2.53 2.38 -
Cloves 0.63 0.78 0.24
Cinnamon 0.78 1.§7 0.06
Indigo O.11 - -
Lac 0.03 0.26 2.96
Silk - - O.1T
Red sandalwood - - 1.24
Miscellaneous —o.15 0.14 0.40
TOTAL 99.96 99-97 99.96

Source: The estimates for 1505 are from Genevieve Bouchon, ‘L’inventaire de la
cargaison rapportée de I’Inde en 1505’, in Mare Luso Indicum, vol. 111, Paris, 1976.
The estimate for 1518 is from Genevieve Bouchon, Navires et cargaisons retour de
l’Inde en 1518, Paris, 1977.

Thus against 95 per cent in physical terms in 1505 and 1518, valuewise
pepper accounted for less than 85 per cent between 1510 and 1518.
The reverse was the case with the finer spices. As long as this particular
inbuilt bias in the physical figures is kept in mind, a comparison in
terms of such figures over time can generate a reasonably accurate
picture. The other problem that is encountered in this is that of the
coverage of the data. While Bouchon’s figures would seem to take into
account all the incoming ships (note that her numbers are 13 for 1505
and 6 for 1518 against an annual average of 7.3 between 1501 and 1510
and of 5.9 between 1511 and 1520), the coverage in the Steensgaard
data is incomplete. In blocks of years such as 1608-10, when the
coverage is particularly incomplete, perhaps it is not safe to derive any
conclusions from these data. For the rest, a certain amount of care in
their interpretation is called for. Thus against the figure of 95 per cent
for pepper given by Bouchon, the Steensgaard data for 1513-19
suggest a figure of only 80 per cent, though the figure for 1523-31

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Table 2.3 Composition of cargoes imported into Lisbon from Asia, 15 13-1610 (percent by weight)

I§13-19 1523-31 1547-8 1587-8 1600-3 1608-10
Number of Number of Number of Number of Number of Number of
ships = 24 ships = 17 ships = 10 ships = 8 ships = 12 ships = 3
Average cargo Average cargo Average cargo Average cargo Average cargo Average cargo
per ship = per ship = per ship = per ship = per ship = per ship =
6,223 quintals 45345 quintals 6,789 quintals 6,638 quintals 7,891 quintals 6,110 quintals
Pepper 80.00 84.00 89.00 68.00 65.00 69.00
Moluccan spices 9.00 6.20 4.50 1.60 5.00 0.03
Ginger 7.30 6.10 4.20 3-70 2.50 1.60
Cinnamon 2.10 3.30 0.90 6.30 8.70 9.30
Indigo 0.00 0.00 0.00 8.40 4.40 7.70
Textiles 0.20 0.00 0.00 10.50 12.20 7.80
Miscellaneous 1.40 0.40 1.40 1.50 2.20 4.60
TOTAL 100.00 100.00 100.00 100.00 100.00 100.03

Source: Niels Steensgaard, “The return cargoes of the Carreira in the 16th and early 17th century’, in Teotonio R. de Souza (ed.),
Indo-Portuguese History; Old Issues, New Questions, New Delhi, 1985, Tables 2.2 and 2.3, p. 22.

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goes up to 84 per cent. These limitations notwithstanding, the totality
of the data would strongly suggest the declining role of pepper in the
second half of the sixteenth century to less than 70 per cent. The
Moluccan spices and ginger also become proportionately less impor-
tant over time. Sri Lankan cinnamon, on the other hand, becomes
increasingly more important. Also, indigo emerges in the cargoes in
the second half of the century in a reasonably important way: the same
is even more true of textiles, though, as pointed out earlier, one has to
be particularly careful while interpreting weight figures in relation to
textiles.

James Boyajian has recently suggested a major reformulation of this
broad scenario for the period 1580 to 1640. He has argued that during
this period the volume and the value of the Portuguese Euro-Asian
trade was in fact much larger than has traditionally been believed. At
the heart of Boyajian’s analysis is his almost revolutionary revision of
current orthodoxy in the matter of the relative role of the private
Portuguese traders in the Euro- Asian carreira trade. It has traditionally
been conceded that the carreira ships operated on the account of the
Estado da India did indeed transport on a regular basis a certain
amount of private cargo under a variety of arrangements. The novelty
of Boyajian’s estimates consists in his view of the magnitude of the
private cargoes carried aboard these ships overwhelmingly on the
account of the New Christian merchants who were descendants of
Iberian Jews forcibly converted to Christianity at the end of the
fifteenth century. According to Boyajian, private cargoes accounted
for an almost unbelievable go per cent of the total value imported over
the period 1580-1640 from Asia. By far the most important consti-
tuent of this cargo was textiles, accounting for as much as 62 per cent
of the total imports valuewise, followed by items such as precious
stones (14 per cent), pepper (10 per cent), indigo (6 per cent) and
spices other than pepper (5 per cent).!? In all of these items, except for
pepper, the private traders accounted for nearly the whole of the trade.
What is the statistical basis of these estimates? As the 1755 Lisbon
earthquake destroyed the Casa da India’s records, Boyajian is obliged
to use other evidence. According to him, Luis de Figueiredo Falcao’s
data and a few manifests from 1586-98 indicate that total shipments of
royal pepper and private goods of the carreira da India (excluding

'9 Boyajian, Portuguese Trade in Asia, p. 44.

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privileged cargo not subject to duties) amounted to 67 million
cruzados, giving an average of 5.1 million cruzados for each of thirteen
years. Of this total, private cargo constituted almost 60 million
cruzados, or just about go per cent, averaging 4.6 million cruzados
annually. The inclusion of additional shipments of non-dutiable
liberties and unregistered private cargo would raise the total value of
the private cargo to well above 5 million cruzados per year.?°

A close examination of the Boyajian estimates, however, suggests
that the picture is indeed not quite as straightforward and unambig-
uous as he would have us believe. The data that form the basis of
Boyajian’s estimates are put together in Appendix A of the book,
entitled ‘Some manifests of carreira shipping, ca. 1580-1640’. For the
period between 1586 and 1598, the information in respect of the years
1587 and 1588 has been taken from Steensgaard’s Asian Trade Revolu-
tion of the Seventeenth Century, Table 10, p. 166, with chests of cloth
being converted into bales at the rate of 1.5 bales per chest (1 bale =
2 quintals). This information lists the volume of imports separately in
respect of each important commodity and is based on bills of lading of
the relevant ships. For the remaining years over the period 1586-98,
however, in the absence of similar detailed and original information,
Boyajian imputes values in respect of the two principal commodity-
groups, namely cloth and miscellaneous drugs (the precise coverage of
this category is not defined but would seem to consist of a number of
items including spices other than pepper), on the basis of ‘an average
taken from total deliveries’ of these commodity-groups during
1586-92 and 1593-8. But these total deliveries are again not based on
direct evidence such as bills of lading or anything similar, but are
assumed following the procedure explained in note 68 on pp. 271-2 of
his book. Basically, Boyajian uses information relating to obra pia
duties to fund charitable establishments in Lisbon assessed on private
shipments of drugs and cloth at a rate of 200 reis per quintal to
estimate the volume of private imports. For the period 1586-92, this
gives him a figure of 37,879 bales and’ chests of drugs and cloth
together. He next calculates the drug component of this as 25,739
bales by using information relating to the ‘colegio duty to support the
Jesuit College of Santo Antao in Lisbon collécted at the rate of 100 reis
per bale. This leaves the cloth component at 12,140 bales. A similar

20 Boyajian, Portuguese Trade in Asia, pp. 41-4.

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procedure for the period 1593-8 gives him a figure of 27,922 bales of
drugs and 11,741 bales of cloth. The total for the period then is
assumed to be 53,661 bales of drugs and 23,881 bales of cloth. These
quantities are then distributed pro rata over years with the missing
information according to the number of vessels known to have arrived
in a given year. Clearly, the critical elements in this procedure are the
reliability and the coverage of the information relating to both the
obra pia and the colégio duties.

The considerable infirmity of the Boyajian estimates of the physical
imports of cloth and drugs is compounded a great deal by the
procedure he follows for converting these into value figures at an
assumed uniform rate for the entire period. While talking of import
and export figures, one ordinarily speaks in terms of invoice values so
that the information one looks for relates to cost price. But, curiously,
Boyajian instead calculates sale values by assuming a sale price of 2,000
cruzados per bale of cloth and 150 cruzados per bale of miscellaneous
drugs. Given the extreme heterogeneity characterizing each of these
two items with no clue with respect to the relative weights of different
varieties in the case of cloth or different commodities in the case of the
package of miscellaneous drugs, any figure assumed with respect to
the average sale price will not command adequate respectability. Also,
considering that the mark-up assumed in the case of both cloth and
drugs is considerably greater than that in the case of pepper (where the
sale price is assumed to be 45 cruzados per quintal except for 1686
when it is assumed to be 49 cruzados), calculating the relative shares of
the Crown and the private trade in terms of sale values rather than
invoice values would considerably vitiate the results in favour of the
private traders and against the Crown. These problems with the
Boyajian estimates, however, raise questions only about the precise
extent of the private Portuguese merchants’ inter-continental trade
between Europe and Asia, not about their considerably more impor-
tant role in this trade than has traditionally been believed. Boyajian’s
significant upward revision of this role is certainly in the right
direction and must be duly taken note of.

The import of pepper

The data regarding the quantity of pepper imported by the Portuguese
Crown into Lisbon over the sixteenth and the early part of the
seventeenth century are limited and characterized by wide gaps.

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Table 2.4 Pepper imported by the Portuguese Crown, 1503" -98
(in quintals)”

Year Quantity Year Quantity
1503 26,000) 1548 23,827
1504 10,000 1587 10,378
1505 22,000 1588 22,963
1506 >17,300 1589 26,750
1513 20,020) 1590 23,682
1514 20,415 1592 9,939
1517 44,032 1§93 4,994
1519 35,000 1594 6,516
1523 7,$00 1595 17,611
1526 >20,000 1596 2,714
1530 15,438 1597 16,927
1531 18,870 1598 7,895
1547 36,412

Note:

1. The years 1501 and 1502 have not been included because the figures for these
years appear to be very incomplete.

2. Generally, the transactions in Europe were in terms of the lesser or lighter
quintal of Lisbon, equivalent to 51.4 kg. That is the quintal used by Magalhaes-
Godinho throughout his work (for example, see vol. 11, p. 196, where figures
are given in both quintals and kilograms).

3. The figure given by Magalhaes-Godinho is 18,000 quintals but following
C.H.H. Wake, it has been revised up to 26,000 because the figure of 6,000 to
10,000 for cinnamon would in fact seem to pertain to pepper.

4. The figures for 1513 and the first figure for 1514 have been put together,
because the 1514 figure relates to the two naus of 1513.

Source: V. Magalhaes-Godinho, Os Descobrimentos e a Economia Mundial,

Lisbon, 1963-71, vol. I, pp. 73-5.

The findings of Magalhaes-Godinho for the sixteenth century are
summarized in Table 2.4. An independent check on the reliability of
Magalhaes-Godinho’s figures is not possible, but the two observations
for 1505 and 1518 respectively available in Bouchon’s work broadly
corroborate his figures. Against Magalhaes-Godinho’s figure of 22,000
quintals for 1505, Bouchon’s two estimates for the year are 20,895 and
21,090 heavy quintals. Converted into the light quintal of 51.4 kilo-
grams used by Magalhaes-Godinho, these would be 23,862 and 24,085
quintals respectively. As for 1518, against the Magalhaes-Godinho

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Quantity (in quintals)

1503 1511 1519 1527 1535 1543 1551 1589 1567 1873 1583 1891 1899
1507 1515 1523 15301 1539 1547 1558 1563 1871 1879 1587 1595

Years

Fig. 2.1 Pepper imported by the Portuguese Crown, 1503-98

figure of 44,032 quintals for 1517, the Bouchon figure of 2,128,962
kilograms would amount to 41,419 light quintals.

If one looked at the Magalhaes-Godinho evidence in specific blocks
of years, it turns out that the average annual figure of pepper imported
goes up from 18,825 quintals in 1503-6 to 29,866 quintals in 1513-19.
After a trough of 15,452 quintals during 1523-31, the figure of 30,119
quintals is reached during 1547-8. But the last fourteen years of the
century witness a sharp down-trend with the annual average imports
standing at only 20,943 quintals during 1587-90 and at an incredibly
low figure of 9,513 quintals during 1592-8. A part of the explanation
of the particularly low figure in the 1590s is to be found in the
extraordinarily high rate of losses at sea during the decade amounting
in terms of both the number of ships as well as tonnage to as much as
45 per cent.2! The shipwrecks, together with delayed departures
forcing ships to return to Goa, created a situation where extraordina-

2! Calculated from Bentley Duncan, ‘Navigation between Portugal and Asia’, Table 1,
p- 22.

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rily large gaps emerged between the amount of pepper loaded at Goa
in a particular year and that eventually reaching Lisbon.?2

Later researchers have sought to plug the gaps in the Magalhaes-
Godinho series by using the information on shipping and imputing
pepper carrying capacity to these ships. C.H.H. Wake attempts such an
exercise for the period between the 1530s and the 1580s where the gaps
in the Magalhaes-Godinho evidence are the most striking. He assumes a
figure of 6,000 quintals of pepper per vessel for the 15 40s, 5,872 quintals
for the 1550s and the 1560s, and 5,000 to 5,353 quintals per vessel for
the 1570s and the 1580s. On this basis, and after allowing for such
things as spoilage and shipwrecks, he works out a net figure of 22,000
quintals of pepper per annum in the 1540s (and probably also in the
1530S), 17,100 quintals in the 1550s and the 1560s, and 19,500 to 20,800
quintals in the 1570s and the 15 80s.7? Wake’s figures would thus change
the Magalhaes-Godinho scenario quite drastically, but, of course, the
basis of the Wake calculations must remain a matter of debate.

Finally, for the seventeenth century, reasonably complete informa-
tion is available for the period between 1612 and 1634. The average
annual imports over the period were 10,054 light quintals: for the
years between 1630 and 1634 alone when the Portuguese India
Company carried on this trade, the figure was 8,840 light quintals.7*

Pepper procurement in India

Throughout the sixteenth and the first half of the seventeenth century,
an overwhelming proportion of the pepper imported into Lisbon was
procured on the southwest coast of India. Thus, against the total of
approximately 17,300 quintals imported into Lisbon in 1506, the
average amount imported each year from Cochin alone during 1506
and 1507 was 13,214 quintals. Between 1510 and 1518, the latter figure
went up slightly to 13,293 quintals. As against this, the total amount
imported into Lisbon was 20,020 quintals in 1513 and 20,415 quintals
in 1514.7° In the early part of the seventeenth century, the significance

22 Thus against 21,679 quintals loaded at Goa in 1594, only 6,516 quintals reached
Lisbon. The corresponding figures for 1596 were 18,131 and 2,714 quintals, and for 1597,
21,299 and 16,927 quintals (Magalhaes-Godinho, Os Descobrimentos e a Economia Mundial,
vol. Ill, p. 75)-

23 C.H.H. Wake, ‘The changing pattern of Europe’s pepper and spice imports
ca. 1400-1700’, The Journal of European Economic History, vol. 8 (2), 1979, pp. 382-3.

24 Disney, Twilight of the Pepper Empire, Appendix 2.2, p. 162.

25 For the total amount imported, see Table 2.4. For the amounts imported from Cochin,
see Magalhaes-Godinho, Os Descobrimentos e a Economia Mundial, vol. i, pp. 10-11.

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of Malabar/Kanara pepper increased even further. Thus between 1612
and 1634 pepper procured at Malacca, the only source other than the
southwest coast of India, accounted for only 3.26 per cent of the total
amount of pepper shipped to Lisbon.”¢

On the southwest coast of India, the procurement of pepper was
begun at Calicut on the Malabar coast, where the Portuguese had first
arrived. But relations with the pardesi merchants of the town as well as
the Samudri raja deteriorated fast. The conflict with the merchants had
its origin mainly in the Portuguese insistence on being provided with
pepper before the Red Sea merchants had been served. The Portuguese
attack on a sambuk was retaliated by their factory being looted which,
in turn, led to an attack on the port and a bombardment of the town in
1so1 that lasted for two days. The era of peaceful trading which,
occasional instances of violence notwithstanding, had been the norm in
the Asian waters for centuries, had finally been shattered by the
Portuguese. At any rate, it was found more expedient to shift the centre
of pepper procurement to Cochin where the more cooperative Mappila
and the Syrian Christian merchants were used as brokers and inter-
mediaries. With the aid of the dependent raja of Cochin, the Portuguese
tried to establish a monopoly in pepper there. But since the raja had no
real control over the areas where pepper was grown or over the routes
used for its transportation, the monopoly never really worked in any
effective sense. At his own level, of course, the raja provided all help by
giving protection to the river boats bringing pepper to Cochin, by
guaranteeing loans raised by the Portuguese from private sources, as
well as by providing loans himself.?” The friendly relationship between
the Estado and the Mappila merchants at Cochin, however, did not last
very long. By the end of the third decade of the century, the merchants
had declared a holy war — jihad — against the Estado. This hostility
continued in one form or another into the seventeenth century.

In the second half of the sixteenth century, in addition to Cochin,
Kollam and marginally Cannanore on the Malabar coast, the Estado
also began procuring pepper on the Kanara coast. Shipments from the
mid-1560s onward generally included some Kanara pepper and, from
the last decade of the century onward, Kanara definitely outstripped

26 Calculated from Disney, Twilight of the Pepper Empire, Appendix 2.2. p. 162.
27 Jan Kieniewicz, “The Portuguese factory and trade in pepper in Malabar during the
sixteenth century’, The Indian Economic and Socal History Review, vol. 6 (1), 1969, pp.

68-9.

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Malabar as a source of pepper. Information available for the period
1612 to 1634 suggests that, roughly speaking, Kanara provided two-
thirds of the total Indian supplies as against Malabar’s one-third.?°

The new route vs the old route

Until the English and the Dutch challenged it in the last decade of the
sixteenth century, the Portuguese enjoyed a largely unqualified mono-
poly of the trade along the Cape route. Was their trade on this route a
net addition to the Euro-Asian trade in spices and other goods or did
it represent largely a diversion of the trade along the long-established
water-cum-land route via the Levant? There is very little doubt that in
the early years of the sixteenth century the Portuguese policies were
indeed instrumental in spelling almost a total disaster for the trade
along the old route. The attempt at monopolizing the spice trade was
unambiguous. It called for a total exclusion of Asian shipping from the
Persian Gulf and the Red Sea: the instructions to Pedro Alvares
Cabral, in charge of the first major commercial voyage to India that
left Lisbon in March 1500, included the initiation of steps designed at
blockading the passage to the Red Sea. The rest of the Asian trade
would be regulated to exclude trade in spices. The instrument used to
implement this policy was the cartaz, a safe-conduct that all Asian
ships were obliged to carry on pain of seizure in the event of non-
compliance. The document obliged the Asian ship to call at a
Portuguese-controlled port and, following the establishment of the
Portuguese customs houses there, to pay customs duties before it
proceeded on its voyage. Enemies of the Portuguese and banned
goods such as spices were not to be carried. There is some evidence
that an equivalent of the cartaz existed in the Asian seas before the
arrival of the Portuguese, but there can be little doubt that the scale on
which this restrictive measure was used by the Portuguese was
unprecedented. The measure indeed represented an institutional con-
straint on the freedom of navigation on the high seas.

The policy of exclusion of the merchants from Calicut, Cambay and
other ports on the west coast of India from the Red Sea and the

28 Between 1612 and 1634, the share of Kanara pepper in the total amount procured on
the southwest coast of India was 63.38 per cent as against 36.06 per cent from Malabar. If the
small quantities procured at Malacca are also included, the share of the Kanara pepper works
out at 61.31 per cent, that of the Malabar pepper at 34.88 per cent, and that procured at
Malacca at 3.26 per cent. (Calculated from Disney, Twilight of the Pepper Empire, Appendix
2.2, p. 162.)

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Persian Gulf was highly successful. Ormuz at the entrance to the
Persian Gulf was captured in 1515: the failure to capture Aden was
made up for by the dispatch each season from Goa of a fleet to lie off
the entrance to the Red Sea, usually cruising between Aden and Bab-
el-Mandeb and returning to Ormuz in April. Raids on departing fleets
at Calicut were common and the result was practically a ruination of
the spice trade with the Persian Gulf and the Red Sea. It was reported
as early as 1504 that the Venetian galleys calling there found no spices
at either Alexandria or Beirut. Two years prior to that, concerned at
the loss of the substantial revenues that the spice trade used to bring
him, the Mamluk of Egypt had sought the good offices of the Pope to
try and dissuade the Portuguese from choking the flow of spices
through the Red Sea!

The dislocation in the spice trade, however, proved only temporary.
By the second decade of the sixteenth century cracks had already
begun to appear in the Portuguese system. A series of circumstances
combined to produce this result. A key element in the situation was
the financial priorities and compulsions of the Estado da India. Given
the rather precarious state of the finances of this body, it was
imperative that no opportunity of taxing Asian shipping by making it
call and pay duties at Portuguese controlled ports such as Malacca,
Goa and Diu be missed. Ormuz, taken in 1515, was one such
strategically located port. Pepper and other spices passing through the
port and destined for consumption within west Asia posed no
problem: the choice between tax revenue and the cost of the infringe-
ment of the European monopoly arose only in respect of that part of
the cargo which would eventually reach Venice or Genoa via Aleppo.
The choice was made in favour of the tax revenue and, as Steensgaard
has suggested, between 1524 and 1543 an average of 90,000 xerafins
was earned as customs duties per annum at Ormuz. Steensgaard’s
characterization of the Portuguese enterprise as ‘redistributive’ in
character has in part at its base such parasitical siphoning off of a part
of the profits of Asian trade. Another circumstance that prompted
the Portuguese to allow pepper shipments to pass Ormuz was the
desire to earn the goodwill of Persia against an increasingly aggressive
Ottoman empire. Whatever the motivation, the Portuguese decision
involved a diversion of the spice trade from the Aden—Cairo—
Alexandria axis to the Basra~Baghdad—Aleppo axis.

But that diversion was strictly temporary, and from the late 1530s

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onward the Red Sea spice trade began to revive. After an initial
vigorous and successful phase, the Portuguese blockade of the Bab-el-
Mandeb became increasingly ineffective for a variety of reasons. For
one thing, considerations of strategy as well as of economics often
obliged the Portuguese authorities to issue a limited number of
cartazes for the Red Sea ports. Thus, as early as 1515 Albuquerque
found it necessary to grant the Samudri raja a certain number of
cartazes for the merchants based at his port, enabling them to resume
trade with Aden and Jeddah. On other occasions, a similar concession
was extended to other puppet rulers. Important business associates
such as Khwaja Shams-ud-din Gilani as well as merchants providing
credit to the Estado had to be similarly accommodated. In some cases,
such as in that of Gilani, trade in pepper was explicitly permitted,
while in most others the understanding was that pepper would
continue to be treated as a prohibited article. But for all practical
purposes, the distinction made little difference and nearly all ships
going to the region carried pepper legitimately or clandestinely. And
then, of course, there was the trade in pepper carried on by various
categories of the Portuguese in contravention of the official policy.
The network of this trade included the Red Sea and there was very
little the Portuguese official machinery was able to do about it.

It needs to be emphasized that the Estado simply lacked the
resources in men and ships to sustain an effective blockade of the Red
Sea year after year. The only area in which the Portuguese were
reasonably successful was in preventing ships from Malabar from
going to the Red Sea. But shipping from Kanara and the Bay of Bengal
continued to carry Indian pepper to the Red Sea from the late 1530s
and the early 1540s onward, mainly through the agency of the Gujarati
merchants. It seems that considering the expense and the poor rate of
success, the Portuguese abandoned the Red Sea expeditions around
1569, clearing the way for a full-fledged revival of the Red Sea traffic
in pepper. C.R. Boxer, who has traced this revival, is of the opinion
that the volume of Acheh pepper reaching Jeddah at the end of the
sixteenth century was larger than what the Portuguese were taking to
Lisbon by the Cape route.??

29 C.R. Boxer, ‘A note on Portuguese reactions to the revival of the Red Sea spice trade
and the rise of Atjeh, 1540-1600’, Journal of Southeast Asian History, vol. 10 (3), 1969, pp.
415~28.

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Portuguese share of the European pepper market

That brings us to the question of the Portuguese share of the European
pepper market during the sixteenth and the first half of the seventeenth
century. In the late 1570s or the early 1580s, Konrad Rott estimated
the size of the European pepper market at 28,000 light quintals.?° In
1611, Hans Kampferbek, the Hanseatic Consul at Lisbon, put this
figure at 30,000 light quintals.3! Magalhaes-Godinho’s figure of 10,378
light quintals in 1587 would put the Portuguese share in the 1580s at
37 per cent: the figure would go up to 75 per cent if the annual average
of the Portuguese imports between 1587 and 1590 was taken into
account. As for 1611, the Portuguese import figure of 10,869 light
quintals in 1612 would account for 36 per cent of the total European
market: the figure is not changed perceptibly even if the average of the
imports between 1612 and 1634 is taken into account.

The historiography on this question is quite extensive and wide-
ranging. In two papers published in The American Historical Review
in 1933 and 1940 respectively, Frederic C. Lane first talked of the
revival of the Levantine trade to Europe and suggested that the
economic importance of the Cape route in the sixteenth century may
have been seriously exaggerated. According to him, Venice imported
as much or more pepper from Alexandria in the 1560s as it had done
in the late fifteenth century.>? In his 1974 book, Steensgaard argued
that in the 1570s and the 1580s the Portuguese average annual import

3° The regional distribution of this figure was as follows:

Portugal (including Africa and Peru) 1,500 light quintals

Spain = 3,000 » "
France = 2,500 " "
England, Scotland and Ireland = 3,000 « "
Italy = 6,000 « a
Poland, Bohemia, Hungary, etc. = 12,000 * "
TOTAL 28,000 * "

(Kellenbenz, ‘Autour de 1600’, pp. 1-28)
3! The regional distribution of this figure was as follows:

Spain and Portugal 3,000 light quintals

Italy = 2,000 * "
France = 3,000 « "
Flanders = 2,000 * "
Germany (and other northern provinces) = 20,000 * "
TOTAL 30,000 * "

(Kellenbenz, ‘Autour de 1600’, pp. 1-28)
3? Frederic C. Lane, ‘Venetian shipping during the commercial revolution’, American

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-~COLONIAL INDIA

of about 20,000 quintals would have accounted for only about 4o per
cent of the total amount of pepper brought into Europe. In the decade
of the 1590s marked by unprecedented shipping losses, this would
have been halved to about 20 per cent.>> In a paper published in 1979,
C.H.H. Wake maintained that the Steensgaard scenario needed a
drastic revision because he had both overestimated the size of the
European market and underestimated the extent of the Portuguese
imports. On the basis of his reinterpretation of the Magalhaes-
Godinho data on pepper imports, Wake argued that until 1550, and
again in the 1570s and the 1580s, the Portuguese accounted for
upward of 75 per cent of Europe’s pepper imports. Regarding the role
of the Levant trade, Wake emphasized the existence of an important
spice market in west Asia itself and the consequent need to distinguish
between the total Asian supplies entering the Red Sea and the Persian
Gulf, and the part that eventually reached Europe. He then argued
that the supplies bought by the Venetian and other European mer-
chants in the Levant were regulated strictly in accordance with the
quantities brought to Lisbon earlier in the year by the Cape route. As
a result, ‘the Levantine trade ebbed and flowed with the changing
fortunes of the Portuguese enterprise’. In the 1560s, for example,
when the Portuguese imports are known to have been limited, the
Venetian imports from Alexandria are generally believed to have been
very large. The Venetian revival was cut short by the Cyprus war of
1570-3 which, in the analysis of Wake, coincided with the recovery in
the Portuguese trade. Finally, when Portugal’s imports were marked
by unprecedented maritime disasters in the 1590s, the Venetian trade
again enjoyed a revival.*4

As for the period from the early part of the seventeenth century
onward, the area of disagreement is considerably less. It is generally
agreed that the rise of the Dutch and the English East India companies
spelt the near ruination of both the Levant routes as well as the
Portuguese Euro-Asian trade. Pieter van Dam, the historian of the
Dutch East India Company writing at the end of the seventeenth
century, refers to an estimate dated 1622, according to which the

Historical Review, vol. 38, pp. 228-9; ‘The Mediterranean spice trade, further evidence on its
revival in the sixteenth century’, American Historical Review, vol. 45, p. 586.

33 Niels Steensgaard, The Asian Trade Revolution, pp. 163, 168.

34 C.H.H. Wake, ‘The changing pattern of Europe’s pepper and spice imports’,

pp. 385-7.

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THE PORTUGUESE IN INDIA

Portuguese were supplying only 20 per cent of the total European
demand of 7 million pounds of pepper, the remainder being divided
between the Dutch and the English.>°

INTRA-ASIAN TRADE

Throughout the sixteenth and the first half of the seventeenth century,
trade between Portugal and Asia remained the raison d’étre of the
Portuguese enterprise in the East. But that should not lead us to lose
sight of the fact that trade within Asia — or what the Portuguese
termed ‘trade from India to India’ — was also a very important
component of the Portuguese commercial presence in Asia. Indeed,
beginning as early as the period of Afonso de Albuquerque (1509-15),
the intra-Asian trade of the Portuguese was considerably larger in
value and substantially more lucrative than the trade between Goa and
Lisbon. It is another matter that, while a large part of the profit in the
intercontinental trade went to the Portuguese Crown, the profit from
the intra-Asian trade accrued overwhelmingly to private individuals.
Precise quantitative data are hard to come by but the available evidence
would seem to establish the broad orders of magnitude. A Dutch
estimate pertaining to 1622 put the working capital invested annually
by the Portuguese Crown and country traders in the intra-Asian trade
at the enormously high figure of f.50 million. But in all likelihood,
this particular estimate was grossly inflated on purpose in order to
obtain larger amounts of capital from the Netherlands. That the value
of the Portuguese intra-Asian trade around this time was nevertheless
quite impressive is, however, borne out by the 1630 Bocarro-estimate
of the annual investment in this trade from Goa alone being 2.85
million xerafins (the equivalent of f.6.6 million) — about fifteen times
the value of the Portuguese India Company merchandise exported to
Lisbon that year.2° The Portuguese participation in intra-Asian trade
was substantial during the sixteenth century as well. Luis Filipe F.R.
Thomaz has argued, for example, that even in respect of an item such
as cloves, of the total amount bought by the Crown factors (which did

35 Pieter van Dam, Beschrijvinge van de Oost-Indische Compagnie (ed. F.W. Stapel and
others), The Hague, 1927-54, Book 1, Part , p. 167. Quoted in K. Glamann, Dutch-Asiatic
Trade 1620-1740, Copenhagen/The Hague, 1958, p. 74.

36 George B. Souza, The Survival of Empire: Portuguese Trade and Society in China and
the South China Sea, 1630-1754, Cambridge, 1986, p. 169; Disney, Twilight of the Pepper
Empire, p. 24.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

not amount to more than 12.5 per cent of the estimated output in the
Moluccas), less than a third (32 per cent) found its way to Lisbon, the
rest being sold in places such as China, Burma, Indonesia, India and
Persia. As for profitability, Thomaz has pointed out that against an
annual average of 33,000 cruzados earned by the Captain-Major
together with the captains of each of the naus of the returning fleet
from Goa to Lisbon between 1570 and 1590, the average annual profit
earned in the intra-Asian voyages around 1580 was five times as
much.”

Some of the Portuguese intra-Asian trade fed the export of
Moluccan spices to Lisbon: indeed these spices were procured over-
whelmingly against Indian textiles. But the bulk of this trade was
aimed simply at earning profit. Quite early in the sixteenth century,
mainly with the help of Tamil keling merchants settled at Malacca, the
Portuguese managed to make their way into a complex intra-Asian
trading network of goods and routes with Malacca as the centre-point.
The goods that figured in this network originated, apart from south-
east Asia, in China, in India and, on a limited scale, in the Middle East.
The southeast Asian goods included cloves from the Moluccas,
nutmeg and mace from Banda, and pepper from Sumatra and Sunda,
besides items such as sandalwood from Timor, camphor from Borneo,
gold from Sumatra, tin from Malaya and precious stones from Burma.
These goods were first collected at Malacca and then re-exported to
China, Japan, and to various ports in the Indonesian archipelago as
well as those around the Bay of Bengal. Some of the cargo was also
sent on to the west coast of India, whence a part found its way to
Persia and the Near East and another to Europe via the Cape route.

The principal item procured in China was porcelain, though silk,
lacquer, jewellery and copper coins were also obtained there. Malacca
served as the principal transit point for redistribution to the western
India, Near East and Europe complex as well as to the archipelago and
the Bay of Bengal complex. After the founding of Macao in 1557,
however, the transit role of Malacca for the archipelago was increas-
ingly eroded and direct connections were established. India, as noted
earlier, mainly provided textiles which were used primarily to buy the

37 Luis Filipe F.R. Thomaz, ‘The Portuguese in the seas of the Archipelago during the
16th Century’, pp. 81-5. Originally published as ‘Les Portugais dans les mers de l’Archipel
au XVle siecle’, Archipel, 18 (1979). Available in translation in Trade and Shipping in the
Southern Seas, Selected Readings from Archipel (18), 1979, Paris 1984, pp. 75-91.

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THE PORTUGUESE IN INDIA

Indonesian spices and drugs. This practice was so established and so
extensive that in many of the treaties concluded between the Portu-
guese and the suppliers of spices the prices of the latter were specified in
terms of Indian textiles, rather than in any currency. As far as goods
available in the Middle East were concerned, the Portuguese involve-
ment was rather limited and confined to goods such as silk, carpets and
worked leather, and base metals such as iron, copper, lead and mercury.

The voyages undertaken included both those on the high-seas
circuits as well as those on the coastal ones. From Tomé Pires, we
know the details of one of the coastal voyages from Malacca to the
Moluccas. A direct route via Brunei, which the Portuguese initiated
around 1525, would have taken only forty days. But the preferred
route was a much longer one taking as many as eleven months to
traverse. The principal commodity carried on the outward trip was
Indian textiles and the first stop was in eastern Java at ports such as
Gresik and Panarukan where the better quality textiles were ex-
changed against caxas and sapecas, Chinese copper coins of small
value. The coins were employed to buy rice as well as low-quality
cotton textiles at Bima which, in turn, together with the remainder of
the Indian textiles loaded at Malacca, were used to buy mace, nutmeg
and cloves in Banda and the Moluccas respectively. The hopping trip
was extremely profitable and fully justified the much longer time
taken.

Crown participation in intra-Asian trade

The extensive Portuguese network of intra-Asian trade grew basically
along the lines defined by the pre-existing commercial system. As it
happened, the period of the Portuguese apprenticeship was shortened
considerably by the advice and assistance provided by the keling
merchants of Malacca. In the wake of the Gujarati merchants’
increasing withdrawal from the city following its conquest in 1511, the
Tamil keling merchants had emerged as the single most important
group of Indian merchants operating from Malacca. Amongst the
Portuguese, the lead in the matter of getting into intra-~Asian trade in a
big way was taken by the Crown, though the period over which the
Crown’s involvement in this trade lasted was not very long.

An important branch of Asian trade that the Crown initially
monopolized for itself was the spice trade with the Moluccas.
However, from the very beginning, the monopoly was a rather loose

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

one with crew members of the royal ships being allowed participation.
In addition, rights were also granted to selected state officials to
engage in a limited amount of trade in the ‘forbidden goods’. On
occasions, a shortage of resources also obliged the Crown to permit
private participation: thus in 1523 a cargo of cloves was loaded in
Ternate on private ships because the royal factory did not have the
wherewithal to buy it. This was repeated two years later because the
factory did not have a Crown ship with adequate capacity. There were
also cases, as in 1524 and 1536, when private Portuguese traders
managed to violate the royal monopoly by paying more for the cloves
than the Crown factor was willing to pay. All these problems
persuaded the Crown in 1539 formally to declare the trade in cloves
and nutmeg free subject only to the condition that anybody dealing in
these spices would be obliged to provide one third of the quantity
bought to the Crown factors at cost price.>8

The Crown also participated in several other branches of Asian
trade — mostly those linking Malacca to the Bay of Bengal but margin-
ally also in the western Indian Ocean — basically as a ‘merchant among
merchants’. In the decade 1511-20, the Fazenda Real (or royal
treasury) carried out a number of exploratory commercial voyages and
a whole series of crown routes (carreiras) was created. This was done
in close cooperation with the keling merchant community of Malacca,
whose doyen at the time was one Nina Chatu. The cooperation often
took the form of ventures undertaken jointly by the Crown and Nina
Chatu. One such venture was the voyage of the Sao Joao which left
Malacca for Martaban in Burma in August 1512, returning in May
1513. The same ship was then sent to Pulicat, again in partnership with
Nina Chatu and on similar terms. There was an equal division of the
cargo space between the Crown and Nina Chatu, each party sending
factors on board to administer its share of the cargo. All expenses
during the voyage, whether on repairs, maintenance, food for the
sailors, or loading and unloading charges, were divided equally
between the two parties. On its trip to Pulicat, the vessel also carried
individual Portuguese and other merchants on board together with
their goods, evidently paying freight charges to the party in charge of
the relevant shipping space. Persons not travelling aboard also partici-
pated in the venture by handing over money to those on board in

38 Thomaz, “The Portuguese in the seas of the Archipelago’, pp. 75-91.

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THE PORTUGUESE IN INDIA

commenda. One Afonso Galego, for example, had handed over 200
cruzados to two chatys on board ship, on the understanding that they
would give him 300 cruzados on their return, at 50 per cent on the
principal sum.?? According to Thomaz, this percentage usually was 35
to 50 on trips from Malacca to southeast Asia and 80 to 90, going up
to as much as 200, on trips to India and China.*°

By the late 1520s, the practice of sending a ship each to Pegu and
Pulicat annually on the independent account of the Crown had
become increasingly established. The Pegu run moved from an initial
Malacca~Pegu-Malacca route to a Goa—Pulicat-Pegu-Goa pattern.
The Coromandel voyage similarly moved from the Malacca—Pulicat~
Malacca route to a Goa—Pulicat-Malacca—Goa route. The original
practice of the nakhuda (or captain) of the vessel being an Asian was
also given up, and all principal posts on board were now occupied by
Portuguese officials. The posts of captain and factor were sometimes
granted to the same individual and were remunerated by a share in the
cargo space. This space could be used by the official himself or he
could rent it out: in either case the goods carried in it were exempt
from customs duties at Malacca.*!

In 1518, a fleet of two vessels under the command of D. Joao da
Silveira arrived in Chittagong on the newly created carreira de
Bengala. Gradually, the Bengal voyage took on an annual character,
and while most of the ships went to Chittagong, some called at
Satgaon as well. Initially, these voyages originated in Goa and went to
Bengal via Coromandel, but in the 1530s they are also known to have
occasionally originated in Malacca. By the 1540s, there were two
regular carreiras to Bengal, one each to Chittagong and Satgaon.
Vessels operating on these routes were either owned or hired by the
Crown and, as usual, the captain carried as perquisite a proportion of
the cargo space and exemption from the payment of customs duties at
Portuguese customs houses, whether at Malacca or Goa.*?

As pointed out earlier, the period over which the involvement of the
Portuguese Crown as an entrepreneur in intra-Asian trade lasted was
comparatively brief. Indeed, already in the 1530s and the 1540s

39 Sanjay Subrahmanyam, ‘The Coromandel-Malacca trade in the 16th century: a study
of its evolving structure’, Moyen Orient et Océan Indien, vol. 3, 1986, pp. 55-80.

‘© Thomaz, ‘The Portuguese in the seas of the Archipelago’, p. 79.

4" Sanjay Subrahmanyam, “The Coromandel—Malacca trade’, p. 60.

*2 Sanjay Subrahmanyam, ‘Notes on the sixteenth century Bengal trade’, The Indian
Economic and Social History Review, vol. 24 (3), 1987, pp. 265-89.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

changes in both the nature and the scale of Crown involvement in this
trade were discernible. In the first place, Crown shipping was increas-
ingly giving way to private shipping. Thus it was reported around the
middle of the century that of the seven or eight ships that sailed each
year from Malacca to Coromandel, only one belonged to the
Crown.*? Also, even on trips operated with Crown shipping, the
investment of Crown capital in the cargo was on the decline and they
were increasingly being converted into some kind of a freight service.
Sanjay Subrahmanyam has discussed this development in relation to
the carreira that operated on the route Goa—Pulicat-Malacca—Goa. A
detailed account of the annual nau operating on this route is available
for 1550 which shows that the Crown no longer invested capital of its
own in the cargo on the Pulicat—Malacca run. The business was run
purely as a freight service, the total charge on goods freighted being 12
per cent of value, half on account of freight charges and the other as
customs duty in Malacca. The captain of the vessel received one-
fourth of the freight space as a perquisite which he normally rented
out, retaining the entire 12 per cent to himself. On the Malacca—Goa
voyage, on the other hand, he was given only a sixth of the freight
space, which again was free from duties at Goa.#

The 1540s and the 1550s witnessed a growing debate regarding the
advisability of continued Crown participation in Asian trade in
whatever capacity. The poor profitability of the venture in its incarna-
tion as a freight service had a lot to do with this. It was repeatedly
pointed out that the group that benefited most from this pattern of
trading was that of the ships’ captains. They almost always redistrib-
uted the cargo in such a way that the most profitable part of it (value
for volume) fell to their share of the cargo space. The alternative of
going back to the status quo ante of the Crown itself owning the cargo
carried was scarcely practical given the state of the finances of the
Portuguese state in India at this time. Available evidence points very
strongly in the direction of a severe contraction in customs receipts —
the principal component of state finance ~ in Portuguese Asia in the
1540s and the rssos. Other circumstances also contributed to the
gradual withdrawal of the Crown from participation in intra-Asian
trade. One was what Magalhaes-Godinho has termed the ‘Atlantic

“> Thomaz, “The Portuguese in the seas of the Archipelago’, p. 78.
“* Subrahmanyam, “The Coromandel-Malacca trade’, pp. 64-5.

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Turning’ of Portuguese policy in consequence of the successful first
stage of the colonization of Brazil. Another was the fact that the
‘official perception of the Portuguese influence in the East became
closer to the idea of empire, and put the emphasis on the sovereign
role of the state to the neglect of its commercial activities’.4° The result
was a virtual completion of the process of Crown withdrawal from
intra-Asian trade by about 1570. Only one carreira voyage — that from
Goa to the Banda islands — is believed to have survived intact into the
1580s. But the Crown kept for itself the right to give benefices as
rewards for service. Thus was born the so-called system of concession
voyages, which came to constitute the backbone of the Portuguese
private merchants’ trade in Asia.

Portuguese private traders’ participation
in intra-Asian trade

The bulk of the Portuguese private traders engaged in intra-Asian
trade were residents of the settlements which together constituted the
Estado da India (as Portuguese Asia came to be termed from the mid-
sixteenth century). These people operated under the jurisdiction and
the patronage of the Estado. Those operating outside its jurisdiction
were derisively called chatins. Within the Estado framework, the
various categories of residents at a settlement such as Goa included
government officials, soldiers, ecclesiastics, Jews and New Christians,
and the casados moradores or married settlers. Members of each of
these groups participated in trade to varying degrees. The government
officials engaged in trade, for example, included persons at all levels
beginning with the Viceroy himself. Thus, D. Miguel de Noronha,
Fourth Count of Linhares and Viceroy between October 1629 and
December 1635, is known to have been fairly active in intra~Asian
trade, particularly that channelled through Goa. There is evidence that
he extensively abused his official position in a variety of ways
including trading in prohibited goods.*®

But while each of the components of the Estado settlements
community is known to have participated in Asian trade, by far the
most important group would seem to have been that of the casados

*° Thomaz, ‘The Portuguese in the seas of the Archipelago’, p. 77.

*6 Anthony Disney, “The Viceroy as entrepreneur: the Count of Linhares at Goa in the
1630s’, in Roderich Ptak and Dietmar Rothermund (ed.), Emporia, Commodities and
Entrepreneurs in Asian Maritime Trade, c. 1400-1750, Stuttgart, 1991, pp. 427-44.

»)

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

moradores. While a small segment of the casado community in
Portuguese Asia did have a landed character, the bulk of the group
made its money by engaging in maritime trade. Some of these traders
are known to have amassed enormous fortunes. Thus four members of
this group declared bankruptcy in 1633 in Japan to the amount of 1.25
million taels’ worth of silver.*” The group consisted of both white and
black casados — the latter being native Christians. The whites them-
selves were subdivided between the reimois born of white parents in
Portugal, the casticos born of white Portuguese parents in Asia, and
the mestizos, born in Asia usually of a Portuguese father and an Asian
or Eurasian mother. The exact number of the casado population in
Portuguese Asia is not known for any point in time, but Bocarro does
provide approximate numbers for 1635. These were 4,800 for white
casados and 7,485 for black casados. The largest settlement was in Goa
with 800 white and 2,200 black casados.4® The casado traders had
extensive dealings with other European and Asian trading groups as
well as the Estado da India, in relation to which it also constituted
some kind of a pressure group.*? The privileges extracted from the
Estado included occasional limited commodity monopolies and special
rates of customs duties etc.

The casado traders were also a major, though by no means the only,
beneficiary of the concession system introduced in the 1550s. A
concession conferred on the grantee the right to make a voyage
between two specified ports in the Indian Ocean and/or the China
Sea. A concession route could either be to a so-called ‘reserved’ port in
which case the concession holder, in principle, had the exclusive right
to operate on the route. Or, alternatively, it could pertain to an ‘open’
route in which event the grantee was designated the captain-major of
the fleet (including both Portuguese and non-Portuguese ships) oper-
ating on the route. The perquisites carried by this position included
appointment as purveyor of the estates of the deceased in respect of all
persons on the trading fleet, the right to buy and sell before anyone

47 CR. Boxer, The Great Ship of Amacon, Annals of Macao and the Old Japan Trade,
1555-1640, Lisbon, 1959, p. 131; Souza, The Survival of Empire, p. 30.

48 Subrahmanyam and Thomaz, ‘Evolution of empire’, p. 322.

# It is known, for example, that Ferdinand Cron, an important casado trader, lent his
own money or money raised using his personal credit and standing on numerous occasions
to the Portuguese State in Goa. (Sanjay Subrahmanyam ‘An Augsburger in Asia Portuguesa:
further light on the commercial world of Ferdinand Cron, 1587-1624’, in Ptak and
Rothermund (ed.), Emporia, Commodities and Entrepreneurs, p. 405.)

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THE PORTUGUESE IN INDIA

else, an occasional concession in the customs duty and so on.
Important among the ‘reserved’ routes were those between Coro-
mandel and Malacca and between Coromandel and Pegu. An example
of an ‘open’ route was that between the ports of Orissa and Malacca.
Some of the concession routes (viagem) were replacements for old
Crown routes (carreira): others were newly created. Thus the voyage
between Malacca and Pegu was a replacement: that to Pipli was a
newly created one. In view of the privileges attached, all concession
grants enjoyed a premium in varying degree and were fully transfer-
able to another resident of the Estado settlements.°°

While in its origin the grant was probably designed as a reward to
members of the nobility or the army for services rendered, its
character changed considerably over time. All residents of the Estado
settlements, and even individuals/institutions not resident or func-
tioning in Asia, eventually came to qualify for the grant. Thus in the
second decade of the seventeenth century Queen Dona Margarita of
Spain was allotted two Japan voyages. A few years earlier, on the
intervention of the Queen, the Augustine monastery of Encarnacion
had similarly been allotted two of the Japan voyages to facilitate the
construction of its building near the royal palace in Madrid.°! Such
grants were almost always transferred at a premium. At times, conces-
sion grants were attached to particular offices as one of the perquisites.
Thus in the 1580s the Captains of Malacca are known to have enjoyed
the right to a number of concession voyages in the Bay of Bengal and
the Indonesian archipelago. While ordinarily the Crown expected no
quid pro quo, in times of grave financial stringency concession
voyages are known to have been auctioned to the highest bidder.

The concession system began in the 1550s, and by the 1580s had
become a major component of the Portuguese trading network in
Asia. Thomaz has listed a total of thirty-four concession voyages in
operation in the 1580s covering the China Sea, the Indonesian
archipelago and the Bay of Bengal. The more important of these
voyages are listed in Table 2.5.

In the Bay of Bengal, all the important concession voyages oper-
ating from Coromandel in the 1580s were, in principle, on reserved
routes. These included two from Sao Tomé (one each to Malacca and

5° Subrahmanyam, ‘The Coromandel-Malacca trade’, pp. 55-80.
5! Subrahmanyam, ‘An Augsburger in Asia Portuguesa’, pp. 407-8.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Table 2.5; Major concession voyages and the rate of return c. 1580

Route Net average profit Selling price
(in cruzados) (in cruzados)
Goa—Macao—Nagasaki 35,000 20,000
Goa-Moluccas: captain 9,500 NA
Goa-Moluccas: factor 3,000 NA
Coromandel~Malacca 6,000 NA
Coromandel~Pegu 6,000 NA
Coromandel-Pipli 9,000 NA
Malacca—Macao 10,000 $500
Malacca—-Sunda 10,000 $3500
Malacca—Borneo 5,500 NA
Macao-Sunda 6,500 NA

Note: NA stands for not available.
Source: Thomaz, ‘The Portuguese in the seas of the Archipelago’, pp. 87-8;
Subrahmanyam and Thomaz, ‘Evolution of empire’, p. 315.

Pegu) and four from Nagapattinam (one each to Martaban, Mergui,
Ujang Salang (Phuket) and Kedah). Since the concession to Malacca
provided for only one ship in a year, usually a large carrack was used
laden, among other cargo, with the freight goods and persons of a
hundred or more merchants. Given the Portuguese control over
Malacca, the concession holder on this route could be reasonably
certain of enjoying his monopoly status. But the same was not true of
those operating between Coromandel and the Malayan ports, bringing
down considerably the premium on the concession voyages to these
ports.°? The concession routes to Bengal were three in number. The
ones to Chittagong and Satgaon (later to Hugli) were replacements of
Crown routes, while the one to Pipli was a new route. None of these
routes carried monopoly concessions.>?

An analysis of the Goa—Malacca-Macao-Nagasaki concession
voyage brings out certain interesting details. The voyage, started in the
1550s, resumed the practice of a single voyage connecting all the three
geographical segments of Asian trade, namely the western Indian
Ocean, the Bay of Bengal and the South China Sea — a tradition that
had been lost ever since the cessation of the Cheng-Ho voyages in the
1430s. Until 1618, the annual voyage consisted of a single large carrack

52 Subrahmanyam, “The Coromandel—Malacca trade’.
>3 Subrahmanyam, ‘Notes on the sixteenth century Bengal trade’, pp. 265-89.

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THE PORTUGUESE IN INDIA

of between 1,200 and 1,600 tons, making it one of the largest ships
engaged in intra-Asian trade. The voyage consisted of three segments
- Goa-Malacca, Malacca-Macao and Macao—Hirado/Nagasaki. Dif-
ferent rates of return marked the three segments, often a characteristic
feature of long-distance trade. On the Goa—Malacca segment, the
outward voyage was not particularly profitable probably because of
the competition faced. The Malacca-Macao segment presented other
problems because the Captains of Malacca had the exclusive right to
trade in pepper and other spices on this route. This often necessitated
cooperative arrangements between the Captain of Malacca and the
concession holder of the voyage. The real profit was made on the
Macao-Nagasaki sector, and on the return trip from Nagasaki to Goa.
The Macao—Nagasaki sector was, in principle, a monopoly sector, but
other vessels are known to have plied this route, probably with the
permission of the concession holder. The volume of trade carried on
by the ‘great ship’ between Macao and Hirado/Nagasaki was quite
substantial. As Boxer has noted, the chief of the Dutch factory at
Hirado, Jacques Specx, reported in 1610 that

the ship coming from Macao usually has about 200 or more merchants on board
who go ashore at once, each one of them taking a house wherein to lodge with his
servants and slaves; they take no heed of what they spend and nothing is too
costly for them; and sometimes they disburse in the seven or eight months that
they stay in Nagasaki more than 250,000 or 300,000 taels, through which the
populace profit greatly; and this is one of the reasons why they are still very
friendly to them.>*

There was a large demand for Chinese silk in Japan used mainly for
the manufacture of ceremonial clothing for the ruling classes. In return
for the silk, Japan provided large quantities of silver, the domestic
output of which had been growing spectacularly throughout the
sixteenth century as a result of the opening of new mines, better
mining techniques and the application of the mercury amalgamation
method to the refining of silver. These large quantities of silver were
then exchanged against gold in Macao, where the gold/silver parity
was much more favourable to silver. In addition to gold, copper and
other Chinese goods were obtained in Macao and carried to India.

As Table 2.5 shows, the profitability of the Goa—Nagasaki voyage
was estimated in the 1580s at 35,000 cruzados per annum. In the case

54 Boxer, The Great Ship of Amacon, pp. 15-16.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

of the concession holder deciding to alienate the privilege to another
person, the selling price was reported to be around 20,000 cruzados,
which suggests that ordinarily the share of the actual operator of the
voyage in the total profit from the venture was somewhat smaller than
that of the concession holder. Even after the entry of the Dutch (and
marginally of the English) into the Japan trade in the early years of the
seventeenth century, the Portuguese concession voyage to Nagasaki,
which for security reasons was conducted after 1618 in groups of swift
pinnaces or galliots, continued to be highly profitable. The profit
figure mentioned for 1635 is as much as 172,000 xerafins (= 129,000
cruzados). Evidently the Dutch were not as yet in a position to
interfere effectively: it would be highly risky to offend the many
influential Japanese, including the Shogun, who invested in the cargoes
carried by the Portuguese Japan ships. But circumstances favoured the
Dutch when, in the late 1630s, the Japanese closed the country to all
outsiders except the Chinese and the Dutch. The Portuguese of Macao
even sent a deputation to plead with the Shogun’s court for read-
mission into Japan. On 4 August 1640, sixty-one members of the
mission, including the ambassador, were beheaded for having dis-
obeyed the orders not to return!

The trade outside the jurisdiction of the Estado was carried on by
the so-called Portuguese chatins. These were mainly deserters from the
Portuguese garrisons in quest of fortunes that they could never
visualise making by continuing to work for the Estado. The principal
region to which they spread out was the Bay of Bengal littoral. As early
as the decade 1511-20, there is evidence of fair numbers of these people
making contact with Bengal ports such as Satgaon and Chittagong, as
well as with ports such as Pulicat on the Coromandel coast. At each of
these ports, these Portuguese constituted one or more resident commu-
nities with their own communal structure and leadership. As early as
1519, the number of these persons at Pulicat alone was reported to be
between 200 and 300. In the early 1530s, there were some forty
Portuguese households at Nagapattinam and a roughly equal number
at Sao Tomé. In the decades that followed, their numbers went on
increasing. The figure suggested for 1565 of these men settled in China
as well as in the ports of the Bay of Bengal is 2,000.°° On the ground

55 Maria Augusta Lima Cruz, ‘Exiles and renegades in early sixteenth century Portuguese
India’, The Indian Economic and Social History Review, vol. 23 (3), 1986, p. 259.

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THE PORTUGUESE IN INDIA

that ‘one more merchant was one less soldier’, the Estado generally
adopted a hostile attitude towards these communities. As Luis Filipe
Thomaz has pointed out, at Malacca, where the Hindus and the
Muslims paid no more than 6 per cent as customs duty, these
Portuguese private traders were obliged to pay as much as 10 per
cent.°© The Estado’s hostility could take other forms as well, such as
extending formal jurisdiction over such communities and subjecting
them to taxes. Thus, the discovery in 1518 of a tomb, believed to be
that of the Apostle St Thomas, in Mylapore, south of Pulicat, provided
Goa with an excuse for extending its administrative network over
Coromandel. A Portuguese Captain was appointed, probably in 1521,
for the Coromandel and Fishery coasts. This man, with his head-
quarters at Pulicat, had jurisdiction over all Portuguese residents on
the Coast and was supposed to enforce the issuing of cartazes to
shipping that operated in and around Coromandel.°”

The decade of the 1630s witnessed catastrophic losses for the
Portuguese country traders at the hands of the VOC. One Portuguese
source estimated their losses between 1629 and 1636 at some 155 ships
destroyed or captured, besides goods worth 7.5 million xerafins (=
5-62 million cruzados) lost.>® This, however, does not imply, as is
sometimes assumed in the literature, that the private Portuguese trade
from India practically came to an end around this time. The 1640s
were a peaceful decade for Dutch—Portuguese relations, which was a
positive factor in the Portuguese merchants’ trade from Nagapattinam.
However, the Dutch pass policy forced a movement away from the
Malay peninsular ports. But this turned out to be only temporary and,
following a relaxation in the Dutch policy, trade with these ports was
resumed in the 1670s. The loss of Nagapattinam to the Dutch in 1658
indeed constituted a setback to the Portuguese trade from Coro-
mandel. But their response was to relocate themselves in large
numbers at the port of Porto Novo to the north, which over the last
quarter of the seventeenth century emerged as a major country trading
port. An analysis on the basis of information available in the Dutch
shipping lists of the ownership pattern of the ships, excluding
Company ships and small coastal craft, that left this port between
1681-2 and 1685-6 for various Asian destinations shows that the

°6 Thomaz, “The Portuguese in the seas of the Archipelago’.
5? Subrahmanyam, ‘The Coromandel—Malacca trade’.
58 Souza, The Survival of Empire, p. 172.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Portuguese were a major group of merchants owning ships and
operating from this port. The number of ships departing and owned
by this group was seven out of a total of nineteen in 1681-2, six out of
fourteen in 1682-3, six out of ten in 1683-4 and 1684-5, and seven out
of fourteen in 1685-6. The single most important shipowner amongst
the Portuguese was one Manuel Teixeira Pinto. By far the most
important port of destination for the Portuguese shipping from Porto
Novo was Acheh, followed by Pegu, Malacca, Goa and Manila.>?

The Portuguese merchants’ trade from Bengal too survived their
expulsion from the port of Hugli in 1632. Francois Bernier noted the
existence of a prosperous Portuguese mercantile community in Hugli
in 1666. It included substantial traders and shippers such as Joao
Gomes de Soto, who had the Bandel church at Hugli rebuilt, and who
traded not merely on his own account, but also had close relations
with the English Company. The Dutch shipping lists for the ports of
Hugli and Balasore, pertaining to the last quarter of the seventeenth
and the early years of the eighteenth century, do contain the names of
several Portuguese merchants, ships on whose account arrived at and
departed from the two ports over this period. The scale of this
shipping would, however, seem to be somewhat smaller than that
from southern Coromandel.®°

The Portuguese merchants based at partner ports also carried on a
certain amount of trade with ports on both the east and the west coasts
of India. During the eighteenth century, by far the most important
group of these merchants was the one based at Macao. The growing
problems faced by this group in the early years of the century in the
neighbouring markets of the South China Sea forced it to turn
increasingly to markets in the Indian Ocean. An analysis of the Dutch
shipping lists, as well as the information available in the English
Company records for the period 1719 to 1754, shows that Portuguese
ships called with varying frequency at the ports of Bengal, at Madras
and Nagapattinam on the Coromandel coast, at Cochin, Tellicherry
and Anjengo on the Malabar coast, and at Surat. Some of these ships,

59 Sanjay Subrahmanyam, ‘Staying on: the Portuguese of southern Coromandel in the late
seventeenth century’, The Indian Economic and Socal History Review, vol. 22 (4), 1985,
PP. 445-63.

6° Om Prakash, ‘The Dutch East India Company and the economy of Bengal
1650-1717’, unpublished PhD dissertation, University of Delhi, 1967, pp. 479-82; Sub-
rahmanyam, ‘Staying on’.

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THE PORTUGUESE IN INDIA

particularly those calling at Surat, are known to have in fact been
owned by Asian merchants flying the Portuguese flag for convenience.
By far the most important ports of call for the genuine Portuguese
shipping were Cochin, Tellicherry and Madras. Over the period 1719
to 1754, Portuguese shipping called at Cochin regularly between 1723
and 1742 except in 1733, with the number of ships each year varying
between two and six. Between one and four of these ships were Macao
based. From the early 1740s onward, the main Malabar port of call
was Tellicherry, with the number of ships in a year often being as
many as six and reaching the top figure of eight in 1749. This shipping
was also dominated by that from Macao. The principal commodity
carried to Malabar was Chinese sugar which was exchanged there
mainly against pepper and sandalwood. In the case of Madras, the
only years between 1719 and 1754 when Portuguese shipping did not
call at the port were 1734, 1741, 1747 to 1749, and 1754. The numbers
each year, however, were generally more modest than those at Cochin
and later Tellicherry, varying between one and five. Most of these
ships were also Macao based.®! The emergence in the second half of
the eighteenth century of English private traders as major competitors
in the Indian Ocean and the South China Sea undoubtedly affected the
trade of the Macao merchants adversely. But this did not prevent them
from continuing to be an important segment of the trading community
in the region.®?

THE PORTUGUESE AND THE INDIAN
MARITIME MERCHANT

As far as the Indian maritime merchant was concerned, the Portuguese
intrusion into the western Indian Ocean at the end of the fifteenth
century initially created a situation of utter chaos. We noted earlier
that the Portuguese attempt at monopolizing the spice trade called for
a total exclusion of Asian shipping from the Persian Gulf and the Red
Sea. This involved frequent raids on ships departing from Calicut with
pepper for the Red Sea. But this phase was a rather short-lived one

6! Souza, The Survival of Empire, pp. 156-68.

62 The Dutch shipping lists for the 1760s, for example, record the continuing arrival of
Macao shipping at Nagapattinam. (See shipping list for 1764, Algemeen Riksarchief (ARA)
VOC 3077, ff. 1139-40 and for 1766, VOC 3164, ff. 607-8.)

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

and the financial compulsions of the Estado da India soon made it opt
for taxing Asian shipping in the area rather than trying to smother it.
This was done by requiring all Asian ships to ask for and to carry a
cartaz. In the event of non-compliance, the vessel ran the risk of being
seized by the Portuguese cruisers. The document authorized the vessel
concerned to embark upon a specified trip and prohibited it from
carrying goods monopolized by the Portuguese. The ports of call
were specified and generally included a visit to a Portuguese-con-
trolled port to pay duties on its cargo before proceeding to its
destination. The fee charged for the grant of a cartaz was quite small:
the principal pecuniary advantage derived by the Portuguese was the
duties collected. The Portuguese were able to enforce such an arbitrary
and high-handed requirement essentially because of the near absence
of effective naval capability on the part of the Indian and most other
Asian states at this time.

In order to ensure that the Indian vessels carrying the cartazes were
not able to evade calling at the Portuguese-controlled ports and paying
duties there, as well as to obviate the risk of Malabari pirate attacks on
these vessels, the Portuguese introduced on the west coast of India the
so-called gafila or caravan system in the second half of the sixteenth
century. Under this system, Asian vessels operating between specified
points were encouraged to sail in a group escorted by a Portuguese
fleet. The practice was reasonably well established by the 1570s: in
1596, sailing in a qafila was made obligatory. Apart from the
Cambay-Diu gafila and a more spasmodic one centred at Ormuz, all
the gafilas came to Goa. The escorting vessels themselves also carried
goods. For example, the private cargoes for the homeward-bound fleet
were normally carried by such vessels. Two or three gafilas left Goa
each year for Cambay via Chaul, Bassein, Daman and, in the seven-
teenth century, Surat as well. The Kanara gafila was also a regular one
and made two to four voyages each year to Basrur, Mangalore and
Honawar to fetch rice for the city of Goa. Yet another qafila travelled
from Cape Comorin, via Cochin and Cannanore, to Goa. It included
larger ships from Malacca, Siam, Bengal and Coromandel which were
met by the guard fleet at Cape Comorin. In Cochin many smaller
ships were picked up, and they all proceeded together to Goa.

63 M.N. Pearson, Merchants and Rulers in Gujarat, The Response to the Portuguese in the
Sixteenth Century, Berkeley, 1976, pp. 39-47.

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What implications did the Portuguese trade and policies have for
the coastal and the high-seas trade carried on by the Indian merchants?
Given the significant differences in this regard between one part of the
subcontinent and another, an answer to this query is best attempted at
a regional level.

The Western Indian Ocean

(a) Gujarat

To begin with Gujarat, one finds that, after an initial resistance, the
response of the local merchants was one of acquiescence in the
Portuguese system. By the middle of the sixteenth century, all Gujarati
ships leaving the ports of the Gulf of Cambay were obliged to call at
Portuguese-controlled Diu and pay duties there. This involved an
additional fiscal burden of around 5 per cent of the value of the goods
carried. The sixteenth century also witnessed a certain amount of
reorientation of the Gujarati merchants’ trade, with the share of the
Red Sea sector in the total trade perhaps going up substantially. It is
significant that the English and the Dutch documentation of the 1620s
relating to Surat stresses the dependence in an important way of the
merchants of the city upon the Red Sea trade. If this assessment is
correct, Gujarat’s trade with its other major trading partner, namely
southeast Asia, would have suffered a possibly severe decline. What is
likely to have been the role of the Portuguese in this process? Since a
growth in the textile trade with the Red Sea would have brought them
higher customs revenues at Diu, they would probably have welcomed
this development and assisted it in whatever way they could. The
picture is somewhat more complex in respect of the trade with south-
east Asia. As Boxer has shown, the pepper shipments originating at
Acheh and destined for the Red Sea operated in an important way
through the half century starting around 1540. He has also pointed to
the continuing important role of Gujarati shipping in this trade. If the
Gujaratis increasingly withdrew from the spice trade from the closing
years of the sixteenth century onward, this probably had more to do
with the growing substitution of the old water-cum-land route to the
Mediterranean by the Cape of Good Hope route after the appearance
on the scene of the Dutch and the English East India companies,
rather than to any specific Portuguese policies.®*

& MLN. Pearson, The Portuguese in India, vol. 1.1 in The New Cambridge History of

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

(b) The Kanara coast

From about 1510 on, the Portuguese are known to have attacked the
shipping from Bhatkal, particularly that bound for the Red Sea. But
between 1518 and 1530, this port figured in the network of Portuguese
Crown shipping, and annual voyages were organized to Ormuz with
pepper and other goods such as iron, rice, sugar and ginger. In theory,
the Indian merchants were not allowed to export pepper or import
horses into Bhatkal which could be sold only at Goa, but the
restrictions do not seem to have always been observed. The sailings to
the Red Sea and South Arabia often seem to have been carried out
even without a cartaz. From about 1530 onward, the amount of
pepper exported from Bhatkal to the Red Sea went up considerably.
Of the huge quantities of pepper reaching Jeddah in the 1560s, a large
part would seem to have been from Kanara, the other part having
originated in Acheh and the Sunda straits. But by about 1575, Bhatkal
had suddenly disappeared from the Indian Ocean trading network.
This would seem to be the combined outcome of the decline of the
Vijayanagar empire and of Portuguese policies. Goods from west Asia
designed for sale in the capital city of the empire no longer had a
market, and the horse trade was adversely affected too. As for the
Portuguese, the establishment of three fortresses — two to the south
and one to the north of Bhatkal — in 1568-9 had involved a consider-
able tightening up of the vigil against the transportation of pepper to
the Red Sea.

The Kanara port that took over the role of Bhatkal as the leading
port of the coast from the late sixteenth century onward was Basrur. A
Saraswat-dominated mercantile community: referred to by the Portu-
guese as ‘chatins de Barcelor’ had traditionally carried on a fair
amount of trade in rice, pepper and other goods from the port. By the
early years of the seventeenth century, Basrur had become the leading
rice-trading port of the Kanara coast. The rice was sent to Muscat, the
Red Sea and the Persian Gulf, as well as to Goa and the Malabar ports.
A Portuguese fort had been set up at Basrur in 1569 and a small
settlement of white and black casados had come up there in the 1570s.
The ‘chatins de Barcelor’ resisted the setting up of a customs house at
the fort, which was eventually removed. There is evidence that the

India, Cambridge, 1987, pp. 52-5; Boxer, ‘A note on the Portuguese reactions to the revival
of the Red Sea spice trade’; Ashin Das Gupta, Indian Merchants and the Decline of Surat c.
1700-1750, Wiesbaden, 1979, pp. 4-5.

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THE PORTUGUESE IN INDIA

chatins’ trade continued into the seventeenth century and, in addition
to the rice trade, increasing amounts of pepper were now carried to
Konkan and the Gujarat ports.©

(c) The Malabar coast
Given the Portuguese policy of monopolizing the trade in pepper, it is
not surprising that a situation of conflict with the pardesi merchants
developed very early in the history of Portuguese contact with the
Malabar coast. The pepper fleets from Calicut, Kollam and Cannanore
to the Red Sea were systematically attacked by the Portuguese
squadrons both off the Malabar coast as well as at the entrance to the
Red Sea. The relations with the Mappilas, however, were generally
cordial at this time, and they were indeed used as intermediaries and
brokers in the procurement of pepper. But the resistance and the
successful evasion of the Portuguese control by the Mappilas of
Cannanore under the leadership of their chief, Mamale, an ancestor of
the Ali Rajas, must be recorded. They had resented, among other
things, the forced diversion of the trade in horses and ginger from
their port to Goa. By taking advantage of a palace revolution in Male,
Mamale claimed sovereign rights in the Maldives and began collecting
duties from ships calling there. The importance of this development
lay in the fact that the Gujarati and other ships on their way from
southeast Asia to the Red Sea carrying pepper and other goods could
now call at the Maldives and evade the Portuguese on the Malabar
coast. Malabarese pepper, Sri Lankan cinnamon and other goods were
brought to these ships at the Maldives by the merchants of Bengal and
Cannanore. The Portuguese attempts to disrupt this arrangement by
operating from their fortresses at Pasai, Colombo, Male and Kollam
were not particularly successful. With the cooperation of the Mappila
traders from Calicut, who had put together an armed fleet under the
command of the Kunjalis, spice shipments were also sent clandestinely
to the Gujarat ports. This trade received a setback after the Portuguese
gained control of the Gulf of Cambay. But a certain amount of spices
continued to be smuggled, hidden in the bales of textiles.®

By about the middle of the sixteenth century, a change in the relative

65 Sanjay Subrahmanyam, The Political Economy of Commerce, Southern India
100-1650, Cambridge, 1990, pp. 124-35, 260-5.

6 Genevieve Bouchon, ‘Sixteenth century Malabar and the Indian Ocean’, in Ashin Das
Gupta and M.N. Pearson (ed.), India and the Indian Ocean, Calcutta, 1987, pp. 162-84.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

stature of different Malabar ports had begun to be evident. Both Calicut
and Cannanore were on the decline, while the rising port was that of
Cochin which was now handling more and more of the trade both with
Gujarat and the Persian Gulf as well as with southeast Asia. Needless to
emphasize, the Portuguese were largely responsible for this. Indeed,
from the very beginning of their contacts with the Malabar coast, they
had consciously promoted Cochin at the expense of both Calicut and
Cannanore. Before they had moved on to Goa in the second decade of
the sixteenth century, the headquarters of the Portuguese administra-
tion was at Cochin and in course of time an important Portuguese
settlement had arisen there. Quite early in the century, Cochin had also
occasionally figured in the Crown shipping network.

In the second half of the sixteenth century, the trade from Cochin
extended in both directions. There was, in the first place, the trade to
the west coast north of Goa, mainly to Chaul, Surat and Diu. The
goods exported were mainly pepper, ginger and other spices, as well as
the goods brought in from Malacca and China. The imports were
mainly opium, raw cotton and textiles, together with some grain. Since
both pepper and opium were prohibited goods, it would seem that the
trade was carried on with the connivance of the Estado. The other
important trading link in the west was with Ormuz, while a relatively
minor trade was also carried on with the Red Sea. Eastward, the
principal links of Cochin were with the Coromandel coast, Malacca,
Macao, Manila and, most important of all, Bengal. The trade to
Coromandel was coastal and involved the export of timber, pepper,
areca and other spices against the import of textiles and rice. The trade
to Malacca and to Macao was essentially a re-export trade: Ships from
Goa to Macao called at Cochin on both the outward and the return
voyages to take in or to offload goods belonging to the casado
merchants at Cochin. As for Bengal, Antonio Bocarro estimated that,
in its heyday, the total value of the trade on this branch was as much as
400,000 xerafins per annum, amounting perhaps to half of the total
trade from Cochin. The exports to Bengal consisted above all of
pepper, though some minor drugs and other spices also formed part of
the cargo. The main items imported were opium, foodstuff, rice and
textiles. The textiles included mainly khasas and malmals which often
found their way into the liberty-chests of the carracks bound for
Lisbon. The Cochin—Bengal link, however, nearly snapped after the
Mughal expulsion of the Portuguese from Hugli in 1632, and this

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THE PORTUGUESE IN INDIA

accounted in large measure for the decline of Cochin in the subsequent
period.®”

The Bay of Bengal

(a) Bengal
The Portuguese involvement in the trade of the Bay of Bengal began
almost immediately after the capture of Malacca in 1511. As far as
Bengal was concerned, the initial phase of Crown shipping was
replaced from the 1560s onward by concession voyages. In addition,
there were a certain number of private Portuguese individuals —
traders and mercenaries — living in and operating from Bengal. Soon
after the Mughal takeover of the province in 1576, the Portuguese
settlement at Hugli was legitimized by a farman granted by Emperor
Akbar in 1579. By the end of the sixteenth century, however, the
Portuguese were expelled from Chittagong by Arakan’s rulers. As
noted above, the Mughals took similar action at Hugli in 1632.

Neither the carreira nor the concession routes to Bengal were
monopoly routes and the Indian merchants’ trade is known to have
co-existed together with that of the Portuguese. There was, however, a
certain amount of reorientation of the Bengal trade in the process. In
the Bay of Bengal, the trade with Acheh increased substantially at the
expense mainly of that with Malacca, which registered a progressive
decline from the 1540s onward. The trade with the Coromandel coast,
however, continued uninterrupted. As far as the trade with the ports
west of Cape Comorin was concerned, one finds that by the middle of
the sixteenth century, Indian merchants’ trade with Gujarat and the
Red Sea had ceased altogether. The only link with the region -that
survived at the end of the century was the casado merchants’ trade
between Hugli and Ormuz. It was only around the middle of the
seventeenth century that the link between the Bengal ports and those
in Gujarat and the Red Sea was revived.®

(b) The Coromandel coast

The situation was somewhat more complex on the Coromandel coast.
Casado and other private Portuguese trading groups had already
begun to settle down at Pulicat and the neighbouring port of Sao
Tome de Mylapore in the second decade of the sixteenth century. In

6? Subrahmanyam, The Political Economy of Commerce, pp. 137-42.
®8 Subrahmanyam, ‘Notes on the sixteenth century Bengal trade’.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

the 1530s, another important Portuguese settlement had arisen at
Nagapattinam. The monopolistic nature of some of the carreira routes
to Coromandel notwithstanding, private Portuguese merchants’ as
well as Indian merchants’ trade between Pulicat and Malacca is known
to have continued on an important scale throughout the 1520s, 1530s
and 1540s. But as Crown shipping gave way to the concession voyages
to Coromandel on a reserved-route basis, the Indian merchants found
themselves almost totally excluded from the Pulicat-Malacca run.
They were now obliged to hire freight space aboard the concession
holders’ ships. An increase in the import duty at Malacca, combined
with a rise in the freight charges, created further problems. This
situation, together with the decline of the imperial city of Vijayanagar,
led to an irreversible decline in the fortunes of the port of Pulicat. By
the end of the sixteenth century, the port was only a shadow of its
former self.

The port that succeeded Pulicat as the premier port of the Coro-
mandel coast was that at Masulipatnam, which until the middle of the
sixteenth century was a relatively minor port. The rise of Masuli-
patnam was in part related to the consolidation of the Sultanate of
Golconda under Ibrahim Qutb Shah (1550-80). But it also had a good
deal to do with the emergence of an alternative network of trade in the
Bay of Bengal. This basically represented the Indian merchants’
response to the Portuguese stranglehold over the Pulicat-Malacca
sector. The other constituent ports of the newly emerging network
were Acheh, Malay peninsular ports such as Perak and Kedah, and the
Burmese ports of Pegu, Bassein, Tavoy and Martaban, all of which had
taken on an anti-Portuguese character. In the 1590s, two or three ships
regularly left Masulipatnam for Pegu laden with textiles and yarn. The
links with Acheh were even stronger. In exchange for Coromandel
textiles and rice, Acheh provided horses and elephants, southeast
Asian pepper and spices, and the gold and copper of Minangkabau and
the Far East. Acheh had turned out to be a worthy successor of
Malacca as a major entrepot port in the region. The other Coromandel
port that traded with Acheh extensively was that of Nagapattinam.

The rise of the alternative network greatly alarmed the Estado
which tried very hard to destroy it. Through official or unofficial
armadas, attempts were made to disrupt trade both at Acheh and at
Masulipatnam. The merchants of the latter port, who freely navigated
without seeking the Portuguese cartazes, were sought to be countered

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THE PORTUGUESE IN INDIA

by the grant of licences by the Estado to privateers to lie in wait
outside Masulipatnam with ships with a view to capturing the local
shipping. But these attempts were not particularly successful at any
point: indeed, there were occasions when Portuguese captives from
such attempts had to be ransomed from Masulipatnam by private
Portuguese citizens. However, while the Portuguese authority could
be ignored in the Bay of Bengal, it would have been dangerous to do
so in the western Indian Ocean. Thus when a new link was established
between Masulipatnam and the Red Sea in the 1580s in which Sultan
Muhammad Quli Qutb Shah also participated, accommodation with
the Portuguese became necessary. An agreement concluded between
the Sultan and the Estado in 1590 provided for cartazes to be issued
for the Mecca-bound shipping in exchange for 300 khandis of rice to
be delivered to the Portuguese annually at Malacca or Sri Lanka. In
1598, it was decided to appoint a captain at Masulipatnam for the
purpose of issuing cartazes. But while the Portuguese by and large
kept their part of the agreement, the rice was never handed over to
them. By the time the Dutch arrived at Masulipatnam in 1605, the
Portuguese captain probably had been withdrawn from the port.®?

To sum up, from the standpoint of the Indian maritime merchant,
the Portuguese cartaz system, in so far as it entailed only a small
additional fiscal burden, was indeed no more than a minor irritant. But
to the extent that this device was used to keep the Indian merchants
out of trade in specific commodities or on specific routes, the
Portuguese were indeed at least partly instrumental in forcing certain
changes in the structure of Indian maritime trade. One such change
was an alteration in the relative stature of various Indian ports.
Striking cases include the decline of Bhatkal in Kanara, that of Calicut
and Cannanore in Malabar accompanied by the rise of Cochin, and
the replacement of Pulicat by Masulipatnam as the principal port of
the Coromandel coast. The Indian merchants, however, generally
adjusted quite well to the evolving situations and did not allow the
changes forced by the Portuguese to overwhelm them. Probably the
best example of this resilience is the emergence of an alternative
network of trade in the Bay of Bengal centred on Masulipatnam,
Acheh and several Malay and Burmese ports which had assumed an
anti-Portuguese character.

®? Subrahmanyam, The Political Economy of Commerce, pp. 15 5-66.
71

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CHAPTER 3

THE EUROPEAN TRADING
COMPANIES: EXPORTS FROM
EUROPE AND THE GENERATION
OF PURCHASING POWER IN ASIA

The early years of the seventeenth century mark a sharp discontinuity
in the volume and the value of the seaborne trade between Asia and
Europe. This was the direct outcome of the successful challenge by the
Dutch and the English of the Portuguese monopoly of this trade. The
lead provided by these two countries was followed almost immediately
by the Danes, though on a very modest scale, and, later in the century,
by the French. The first half of the eighteenth century also witnessed
the entry into the fray of motley groups of merchants from Ostend and
other places trying to find ways and means of evading the great East
India Companies’ monopoly of this trade. On the whole, the two
centuries witnessed not only a tremendous expansion in the volume and
the value of the Euro-Asian trade, but also an enormous diversification
in the composition as well as the origin of the cargo arriving from Asia
into the ports of northwestern Europe. A related development was the
near-wiping out early in the seventeenth century of the water-cum-land
route between the two continents that had. been in use for centuries.

THE DUTCH EAST INDIA COMPANY

The Dutch East India Company was founded in 1602 by a charter
granted by the States-General, the national administrative body of the
Dutch Republic. We have already noted that the Euro-Asian trade in
pepper carried on by the Portuguese was running into serious
problems in the last quarter of the sixteenth century. This, coupled
with the loss, in 1585, of Antwerp’s position as the staple market for
Asian goods in northwestern Europe as a result of the blockade of the
Scheldt, gave the merchants from the northern Netherlands a strong
incentive to challenge the Portuguese monopoly of the Cape route and
participate directly in the Euro-Asian spice trade. The substantial
capital resource base of this group had recently been augmented by

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THE EUROPEAN TRADING COMPANIES

the arrival in Amsterdam of a number of wealthy merchants, who had
folded up their business in Antwerp. Critically important inputs were
provided by the technical/navigational expertise available in the
person of the Flemish clergyman, Petrus Plancius, and the useful tips
in the information provided on sailing instructions and other matters
by Dutchman Jan Huyghen van Linschoten, who had served the
Portuguese in the East for many years. In April 1595, the Amsterdam-
based ‘Company of Far Lands’, which was the first among the so-
called ‘precompanies’ and which had managed to raise a capital of
f.290,000, sent out four ships to the East Indies under the command
of Cornelis de Houtman. One of the ships was lost but the remaining
three came back in August 1597 with a cargo of pepper, nutmeg and
mace. In the meantime, a number of new companies had been
organized for trade with the East Indies. One of these was in
Amsterdam, two in Zeeland, and another two in Rotterdam. The two
Amsterdam companies were merged in 1598 and came to be known as
the ‘Old Company’. It was on the account of this company that eight
vessels were sent out to the East in the spring of 1598. The profit on
the voyage was estimated at around 400 per cent. By 1600, yet another
four companies had been formed in the various provinces of the
Netherlands. The inevitable result was an increase in the cost price of
the pepper and other spices and a decline in their sale prices. To all
those who realized the enormous potential of the East India trade, it
was imperative that something be done to curb the cutthroat competi-
tion among the various companies.

The initiative was taken by the Old Company which, on the
strength of being the: pioneer in the East India trade and the most
important participant in it, petitioned the States of Holland in 1601 for
a monopoly of all trade east of the Cape of Good Hope for a period of
twenty-five years. The request was turned down, but it was instru-
mental in setting in motion other moves to eliminate competition
among the various companies. Mainly through the mediatory efforts
of Johan van Oldenbarnevelt, the various units agreed to come
together, and the Verenigde Oost-Indische Compagnie (VOC) was
chartered on 20 March 1602. The Company was given the sole right
for a period of twenty-one years to sail east of the Cape of Good
Hope and west through the Strait of Magellan.

In view of the nature of its ancestry, the organizational structure of
the Company was rather complicated. The precompanies which had

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

been merged to form the VOC constituted the six kamers or chambers
of the Company. These were Amsterdam, Zeeland, Rotterdam, Delft,
Hoorn and Enkhuizen. The directors of these chambers nominated
the all-powerful Board of Directors of the Company known as the
Heren XVII. As the name indicates, the Board consisted of seventeen
members and met consecutively for six years at Amsterdam and for
the following two at Middelburg, which was the seat of the Zeeland
chamber. Eight of the members were nominated by the Amsterdam
chamber, four by that of Zeeland and one each by the four smaller
chambers. The seventeenth member was nominated by one of the four
smaller chambers by turn except during the two years in the eight-
year cycle when the meetings were held at Middelburg and the right to
nominate the seventeenth member was vested in the host chamber of
Zeeland. The Amsterdam chamber accounted for half the overall
business of the Company and Zeeland for a quarter. The remaining
quarter of the business was shared equally by the two clusters of
Rotterdam and Delft on the one hand and of Hoorn and Enkhuizen
on the other. Although the charter provided that a stockholder might
withdraw his stock at the close of each decade, this clause was
withdrawn even before the first decade had closed. Shares could be
sold but no longer withdrawn, so that a permanent joint stock was
guaranteed. The initial share capital of the Company was f.6.42
million subscribed in holdings ranging in value from f.20 to
f.100,000.' Over the following two centuries, the charter of the
Company was renewed at regular intervals. Just before the charter of
1776 was due to expire in 1796, however, the Revolution of 1795 made
the Heren XVII’s position untenable. They were obliged to hand over
control and were replaced by a ‘Committee for the Affairs of the East
India Trade and Possessions’. But simultaneously, the Company’s
charter was extended until the end of 1798, when it was decided to let
it expire at the end of 1799.

All important decisions pertaining to the number of ships (all of
which the Company owned) to be sent to the East each year, together
with the volume and the value of the goods and the precious metals to
be carried aboard them, the range and the volume of the goods to be
ordered from the East, the procedure to be adopted with regard to the

! J.R. Bruijn, F.S. Gaastra and I. Schoffer, Dutch—Asiatic Shipping in the 17th and 18th
Centuries, vol. 1, The Hague, 1987, p. 9.

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THE EUROPEAN TRADING COMPANIES

sale of the Asian goods in the Netherlands, and so on were taken at
the meetings of the Heren XVII. The presiding chamber for the year
determined in advance the agenda of the meetings and delegates from
each of the other chambers came to them with specific briefs relating
to each item on the agenda. Until 1751, these meetings were held
thrice a year when their frequency was reduced to two per annum.
The principal meeting of the year was held in the autumn and lasted as
long as four to six weeks. The spring meeting where, among other
things, the rate of dividend to be paid was usually determined, was
held in February or March. The Heren XVII were assisted by a
number of committees, which looked after matters such as the
preparation of accounts, the organization of the auction sales and so
on. A ‘committee for secret affairs’ determined the sailing routes for
the fleets. A committee called ‘Haags Besogne’ met each spring for a
period of four to eight weeks in The Hague to read and examine the
voluminous correspondence received from Asia during the year.

The organization of the sale of the goods received from Asia was an
elaborate affair. There were basically three devices the Company used
to dispose of the Asian goods — contract sales, sales at a fixed price, and
sales by public auction. Contract sales based on negotiations with
major Dutch syndicates for the disposal of the entire lot of a particular
commodity and often involving an undertaking by the Company not
to sell any more of the commodity in question for a specified period of
time giving the syndicate an absolute monopoly in the item, were the
dominant device used during the first half of the seventeenth century,
particularly in relation to pepper, by far the most important single item
figuring in the list of goods imported by the Company: Some idea of
the upper end of the size of a deal negotiated through this device can be
formed by reference to the contract finalized by the Company on 19
October 1623 with a syndicate consisting of Gert Dircksz. Raedt,
Cornelis van Campen and Hans Broer relating to the sale of the entire
lot of pepper available in the Company’s warehouses in addition to the
lots that might arrive into the Netherlands before 1 May 1624. The
stilstand — the period of no further sales by the Company agreed upon
between the two parties — was twenty-four months. The value of the —
sale was a staggering four million florins.” The device of sales at a fixed
price was followed in respect of spices such as cloves, nutmeg and mace

2 Kristof Glamann, Dutch—Asiatic Trade, 1620-1740, Copenhagen/The Hague, 1958, p. 33.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

following the attainment of an absolute monopoly in these items by
the Company during the second half of the seventeenth century. The
identification of an optimal monopoly price was, of course, not an easy
task. The Company had to take into account the impact of a given
price on sales as well as on the inducement it might offer for potential
smuggling. Hard to believe as it is, it is nevertheless true that, for the
entire period between 1677 and 1744, the Company sold cloves in
Amsterdam at the fixed price of 75 stivers per Dutch pond.’ The third
device of sale by public auction was the dominant device used by the
Company during the eighteenth century.

THE ENGLISH EAST INDIA COMPANY

The other major company engaged in the Euro-Asian trade was the
English East India Company. The great success attendant upon the
venture of the ‘Old Company’ of Amsterdam into the Euro-Asian
trade with the successful return of its vessels in 1599 had caused great
consternation among the English merchants engaged in the spice trade
from the Levant. The fear of the Dutch domination of the spice
market in northwestern Europe thus served as the catalyst that led a
group of London merchants to apply to the Crown for a monopoly
charter for the East India trade. The request was granted and on 31
December 1600 was born the ‘Company of Merchants of London
trading into the East Indies’. Between 1601 and 1612, the twelve
voyages organized by the Company were on separate and terminable
account. The capital subscribed for the first voyage in 1601 was
£68,373 with the highest figure of £80,163 being reached -in the sixth
voyage sent out in 1609. The first joint stock lasted from 1613 to 1623,
the second from 1617 to 1632 and the third from 1631 to 1642.*

In the meantime, in 1637, Charles I had granted a patent to the so-
called Courteen’s Association to trade to those parts of the East Indies
where the English Company had not established a factory. But the
Association turned out to be a dismal failure and constituted no real
threat to the monopoly of the Company. The outbreak of the civil war
in the 1640s caused a certain amount of dislocation for the Company’s
trade, but matters improved considerably after the charter of 1657

3 Glamann, Dutch-Asiatic Trade, p. 92.
* K.N. Chaudhuri, The English East India Company: The Study of an Early Joint-stock
Company 1600-1640, London, 1965, pp. 22, 28, 209.

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THE EUROPEAN TRADING COMPANIES

which provided for a permanent joint stock. The monopoly privileges
of the Company were threatened yet again in July 1698 when a rival
body — usually described as the New English East India Company —
received a charter from the Crown. This body was in effect a ‘general
society’ of subscribers to a loan of £2 million to the State. But in April
1702, the two companies agreed to have a joint Board of Directors.
The final amalgamation came in 1709 under an award by the Earl of
Godolphin. From this point on there was no further challenge to the
‘United’ Company’s monopoly until 1813, when the new charter
legalized the entry of private traders into the East Indian trade.
Twenty years later, the Company ceased to be a trading body and was
entrusted solely with the running of the colonial administration of
India, a process that had started in 1765 with the Company wresting
from the Mughal emperor Shah Alam the diwani (revenue collection)
rights in the province of Bengal. The Company was liquidated in 1858
following the assumption by the British Crown of direct responsibility
for Indian affairs.

The general controlling body in the Company responsible for all
entrepreneurial decisions — the counterpart of the Heren XVII in the
case of the VOC - was the Court of Directors composed of twenty-
four members. This larger committee was further subdivided into
smaller working units, the most important of which in the early
eighteenth century were the Committee of Correspondence, the
Committee of Treasury, the Committee of Shipping, and a shadowy
but extremely powerful body known as the Committee of Secrecy,
composed of four members including the Chairman of the Company.°

In-the early part of the seventeenth century, the Company built all
its ships in one or other of its two shipyards on the Thames. But as the
trade became well established and the possible demand for shipping
required by the Company became known, the practice of direct
construction was discontinued and the Court was able to charter its
entire annual tonnage from shipowners who bore all the risks.®

As far as the organization of the sale of the goods imported from
Asia was concerned, from the 1650s onward the Company adopted

> K.N. Chaudhuni, ‘The English East India Company in the 17th and 18th centuries: a
pre-modern multinational organization’, in L. Blusse and F. Gaastra (eds.), Companies and
Trade, The Hague, 1981, p. 38.

® K.N. Chaudhuri, The Trading World of Asia and the English East India Company
1660-1760, Cambridge, 1978, p. 133.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

the practice of auctioning its goods in four quarterly sales held in
London. The Company’s main homeward fleet generally arrived back
from the Indies during August and September, though a few ships
could arrive earlier or later than during these two months. It was
clearly inadvisable to try and sell the entire stock of goods brought
home by the summer and autumn ships in one single auction. By
spreading out the stocks over the whole year, the Company not only
hoped to prevent a sudden slide in prices, but also provided the buyers
with a means of predicting the market. In some cases, the Committee
of Warehouses was prepared to go so far as to give a definite guarantee
that once a certain quantity of a particular commodity was sold in an
auction, no further stocks would be released on the market before a
specified date. Such an assurance at once reduced the risk of market
fluctuations arising from the Company’s own action and it encouraged
the buyers to offer higher prices at the public sales. Clearly the
underlying assumption in the economic behaviour of the Company, as
in the case of the VOC, was typically monopolistic. The crucial
decision variable was the control over supplies, and demand was
treated more or less as a given factor which varied according to a
known random function. The quarterly sales were attended by dealers
from Holland, Germany and eastern Europe. They knew intimately
the actual conditions in these distant regional markets, the volume of
stocks left in the hands of retailers, the price of substitute goods, the
precise time for shipment through inland waterways before they froze
up in winter, and changes in consumer taste.”

THE DANISH EAST INDIA COMPANY

The Dansk Ostindiske Kompagni chartered by King Christian IV on
17 March 1616 owed its origin to the initiative of two emigrants from
the Netherlands. The influence of the Dutch East India Company
was, therefore, quite evident in the Company’s charter, valid in the
first instance for twelve years. The capital resources available to the
Company, however, were grossly inadequate from the very beginning
and the enterprise could sustain itself even in the limited way it did
only on the basis of continued state support. Indeed, from about 1630
on, Christian IV owned half the share capital of the Company. But

? Chaudhuni, Trading World of Asia, pp. 131-5.

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THE EUROPEAN TRADING COMPANIES

that was not good enough, and the Company went into liquidation in
1650. A second East India Company chartered in 1670 lasted until
1729 and engaged partly in the smuggling trade in spices from Borneo
and in the illicit trade with Manila. The Danish Asiatic Company,
chartered in April 1732, did much better than its predecessors, but
concentrated mainly on the China trade. The Asian trade, except that
with China, was declared free in 1772 and private Danish enterprise
also came to play a role, to a certain extent, in the trade between India
and Denmark. But the Danish involvement in Indo-European trade
was never particularly significant, except perhaps during the so-called
golden age between about 1780 and 1807.

THE GENOESE COMPANY

The only other East India Company to be constituted in the first half
of the seventeenth century was the Genoese Compagnia Genovese
delle Indie Orientali founded in 1647. Dutch merchants Willem and
Hendrik Meulman together with their associate Jakob van den Heuvel
actively participated in the floating of this Company. But the venture
really came to nothing and there is no evidence of any Genoese ships
being sent to India.

THE FRENCH EAST INDIA COMPANY

The element of state support was particularly marked in the case of the
French Compagnie des Indes Orientales founded by Jean-Baptiste
Colbert on 1 September 1664, as well as in that of its successors. But
in so far as state support involved state management to a degree not
encountered in the case of any other East India Company, it con-
stituted in the long run more of a liability than an asset and may
perhaps legitimately be held largely responsible for the eventual failure
of the French enterprise in Asia. The Company established in 1664
went into liquidation in 1684 and was succeeded the following year by
a new Company subject to even greater control by the government.
As many as 87 per cent of the shareholders of the defunct Company
had now withdrawn from the enterprise.® The performance of the new

8 Philippe Haudrere, La Compagnie francaise des Indes au XVIIle siecle (1719-1795),

Paris, 1989, vol. I, p. 28.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

unit turned out to be extremely unsatisfactory as well, and in May
1719 the Edict of Reunion merged the Compagnie des Indes Orien-
tales with John Law’s expanding enterprise. The new Compagnie des
Indes had to be restructured only four years later into the Compagnie
Perpetuelle des Indes, whose life-span lasted until 1769. From this
point on, the East India trade was open to private individuals except
between 1785 and 1790 when yet another East India Company had
the monopoly of this trade.

THE OSTEND, THE SWEDISH AND OTHER
MINOR COMPANIES

The eighteenth century witnessed the establishment of East India
companies in several other European countries. By far the most
interesting of these were the Ostend and the Swedish East India
companies. Basically, these units were no more than ‘covers’ for
groups of merchants of various European nationalities come together
to get around the monopoly privileges of the great East India
companies. The Ostend Company, which was a conglomerate of
Dutch, Irish, Danish and Flemish interloping interests, was chartered
by the Habsburg Emperor Charles VI at Vienna in 1722, though
voyages to the East had been organized by this group from as early as
1713 when Austrian administration had been established in the
Netherlands. Perceiving a threat to their respective monopoly privi-
leges, both the Dutch and the English East India companies brought
pressure on the emperor through their respective governments to have
the enterprise withdrawn. Since the emperor needed the Anglo-Dutch
support against Spain to secure for his daughter Maria Theresia the
succession to all his dominions, the strategy worked. The Ostend
Company was suspended in 1727 and abolished in 1731.

Several of the merchants involved in the Ostend venture transferred
their capital to the Danish Asiatic Company of 1732. Others joined up
with Scotsmen Hugh and Colin Campbell and the Goteborg merchant
Henry Koenig and had a Swedish East India Company chartered in
1731. But as in the case of the Danish Asiatic Company, the principal
preoccupation of the Swedish Company was with the China trade
rather than with the trade to India. As the recent work of C. Koninckx
shows, of the sixty-one voyages returning to Europe between 1733
and 1767 on the account of the Swedish Company, only three (those

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THE EUROPEAN TRADING COMPANIES

of 1735, 1740 and 1742) carried cotton and silk textiles and raw silk
from Bengal. The other Indian port occasionally visited by the
Swedish Company ships was Surat, from where again small quantities
of cotton textiles were carried by the voyages of 1752, 1756 and 1762.?

Finally, mention might also be made of the Prussian ‘Bengal’
Company chartered in 1754 and based at Emden, an imperial
company established at Trieste in the 1770s and the Philippine
Company of the 1780s representing the Spanish attempt to enter the
East India trade. The Prussian Company had been founded by the
English country captains and company servants at Calcutta for remit-
ting funds illicitly to Europe. The imperial East India Company of
Trieste financed voyages from Ostend, Leghorn, Trieste and other
European ports during the 1770s, but went into bankruptcy in
1782-3. Recognizing the impossibility of stopping such ventures, the
English Company even supplied goods itself to the Philippine
Company.!° Quantitatively speaking, however, the trading activities
of all these enterprises almost certainly added up to very little.

THE ASIAN TRADE REVOLUTION

While a whole host of East India companies participated in Euro-
Asian trade, it was really the two giants, the Dutch and the English
East India companies, who between themselves accounted for an
overwhelming proportion of this trade through the seventeenth and
the eighteenth centuries. The French East India Company was of
importance only between about 1725 and 1770 and the Danish Asiatic
-Company over the last quarter of the eighteenth and the first few
years of the nineteenth century. Niels Steensgaard has put forward the
hypothesis that the Dutch and the English companies were instru-
mental in bringing about an institutional revolution in the organiza-
tion and conduct of Euro-Asian trade as of the early years of the
seventeenth century. He draws a sharp contrast between the
seigneurial and redistributive nature of the Portuguese enterprise and
the rational and productivity-maximizing policies of the companies.
Thus, ‘the Portuguese pepper monopoly was not a business but a

° C. Koninckx, The First and Second Charters of the Swedish East India Company
(1731~1766), Kortrijk, 1988, pp. 456-9.

'© Holden Furber, Rival Empires of Trade in the Orient 1600-1800, Minneapolis and
Oxford, 1976, p. 226.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

custom house’.'! On the other hand, the success of the companies was
not based upon government monopolies or the use of violence but on
their ability to compete in the market. For by adopting specific
policies in relation to stocks, pricing and the mode of the disposal of
their goods, the companies made impressive gains in the transparency
and the predictability of the markets in which they operated.

While the core of Steensgaard’s formulation is certainly valid, some
of its components, when stretched to their logical outcome, present
problems of one kind or the other. To begin with, in so far as the
Dutch monopoly of finer spices (the details of which we will go into
presently) involved a gross under-payment to the producers in the
Spice Islands, the label of ‘redistributive enterprise’ would apply as
much to this segment of the Dutch Company business as it would to
the Portuguese pepper trade. Indeed, Steensgaard himself recognizes
this when he says, ‘the Dutch East India Company was not a “pure”
type: it contained features in its constitution, in its structure and its
policy, more reminiscent of a redistributive enterprise than of a
business.’1? Again, the absence of the ‘use of violence’ by the
companies is a construct that poses certain problems at the margin. As
we Shall see later in detail, in its trade within Asia the Dutch East India
Company took extensive steps to obtain exclusive rights in particular
products and markets and to minimize competition by indigenous
merchants, making a judicious use of violence in the process.'> The
Company also made an optimal use of the pass system, originally
introduced by the Portuguese, to keep Asian competitors out of the
trade in monopoly products such as spices and to regulate their trade
in several others, such as Malayan tin.’* If some violations of the
prescribed policies and procedures, say by the Indian traders, was
tolerated, it was only because the cost of unlimited conflict in the form

'' Niels Steensgaard, The Asian Trade Revolution of the Seventeenth Century: The East
India Companies and the Decline of Caravan Trade, Chicago, 1974, p. 100.

12 Steensgaard, The Asian Trade Revolution, p. 141. A few pages earlier, Steensgaard
writes, ‘One may therefore raise the question as to whether the Dutch East India Company
ought not to be considered a redistributive enterprise using organized violence with a view
to the acquisition of income’ (p. 133).

13 As the Dutch historian Hans van Santen has put it, ‘Violence was a necessary part of
the market strategy of the VOC.’ H.W. van Santen, De Verenigde Oost-Indische Compagnie
in Gujarat en Hindustan, 1620-1660, Leiden, 1982, p. 208.

'4 Om Prakash, ‘Asian trade and European impact: a study of the trade from Bengal
1630-17207, in Blair B. Kling and M.N. Pearson (ed.), The Age of Partnership, Europeans in
Asta Before Dominion, Honolulu, 1979, pp. 43-70.

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THE EUROPEAN TRADING COMPANIES

of possible disruptions to its trade in the Indian subcontinent would
have been unacceptably high for the Company.'*

If we go beyond Steensgaard and define the notion of ‘ability to
compete’ to include both belief and confidence in competitive trade,
the sustained opposition of the English and the Dutch companies to
the entry of rival European companies into Euro-Asian trade creates
problems. The Dutch Company, for example, was clearly hostile to
the first Danish expeditions of the 1610s and the early 1620s to
India.1° The VOC’s action in seizing two of the Genoese East India
Company’s vessels in the Sunda Straits in April 1649 was a clear
example of the use of force to keep a potential competitor out, though
ostensibly the step was taken because the vessels were carrying Dutch
crews and merchants.'” Also, as we shall note in some detail later, in
the 1720s the Dutch and the English companies successfully formed a
coalition both in Europe as well as in Bengal to keep the newly
formed Ostend Company out of the lucrative Bengal trade. It was
basically the pressure by the two companies that led to the suspension
and later the abolition of the Ostend Company. There was, of course,
nothing they could do about the same set of merchants regrouping
themselves under different nomenclatures. It is, therefore, imperative
that the question of the differences between the policies followed by
the Portuguese on the one hand, and by the Dutch and the English on
the other, which certainly were by no means inconsiderable, be kept in
perspective.

EURO-ASIAN TRADE

Quite independently of whether or not there indeed was an institu-
tional ‘Asian trade revolution’ at the beginning of the seventeenth
century, it certainly is true that the process of the phenomenal
expansion in the volume and value of Euro-Asian trade as well as of a
diversification in the composition and the origin of the Asian cargo

'S Om Prakash, ‘Asian trade and European impact’; Sanjay Subrahmanyam has argued
that the term ‘age of contained conflict’ captures the realities of the situation more
appropriately than Holden Furber’s ‘age of partnership’. (Sanjay Subrahmanyam, The
Political Economy of Commerce, Southern India, 1500-1650, Cambridge, 1990, ch. v.)

16 Om Prakash (ed.), The Dutch Factories in India, 1617-1623, New Delhi, 1984,
Pp- 31-3, 353 Furber, Rival Empires of Trade, pp. 201-2; Subrahmanyam, The Political
Economy of Commerce, p. 282.

'7 Subrahmanyam, The Political Economy of Commerce, p. 293.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

entering this trade got under way around this time. Initially, both the
Dutch and the English concentrated on the procurement of pepper
and other spices which, as in the sixteenth century, continued to
account for an overwhelming proportion of the total Asian imports
into Europe. But unlike, and indeed mainly because of, the Portu-
guese, the Dutch and the English procured their pepper in Indonesia
rather than on the southwest coast of India. The result was a marked
shift in the Asian loci of the Euro-Asian seaborne trade from India to
the Indonesian archipelago. This was the Asian counterpart of the
shift of the European loci of this trade from Lisbon to Amsterdam and
London. It was nearly three quarters of a century before the Asian loci
shifted back to India in response to 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 again deflected
somewhat from the central importance of India in Euro-Asian trade.

THE ROLE OF BULLION

The central characteristic feature of Euro-Asian trade, namely the
necessity for the Europeans to pay for the Asian goods overwhel-
mingly in precious metals, however, remained unchanged throughout
the entire period between the sixteenth and the eighteenth centuries.
This particular phenomenon has sometimes been ascribed to the
rigidity of consumer tastes in the East, which rendered the Asian
markets for European goods extremely small and static. Alternatively,
it has been suggested that the absorption of precious metals by India
or China reflected the hoarding habits in these societies.!® But perhaps
a more convincing explanation of this phenomenon is the inability of
Europe to supply western products with a potential market in Asia at
prices that would generate a large enough demand for them to provide
the necessary revenue for the purchase of the Asian goods. Europe at
this time had an overall superiority over Asia in the field of scientific
and technological knowledge but as yet did not have the cost
advantage that came with the Industrial Revolution in the nineteenth
century. This put the Asian, and particularly the Indian, producers,

'8 Rudolph C. Blitz, “Mercantilist policies and the pattern of world trade, 1500-1750’,
Journal of Economic History, vol. 27, 1967, pp- 39-55.

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THE EUROPEAN TRADING COMPANIES

with their considerably lower labour costs and a much longer history
of sophisticated skills in handicrafts of various kinds, in a position of
advantage over their European counterparts in the production of a
variety of manufactured goods. The only major item Europe was in a
position to provide to Asia was precious metals. The growth of the
Euro-Asian trade, therefore, was critically dependent upon an increase
in the availability of these metals. In this context, the working of the
South American silver mines and the enormous import of American
silver into Europe during the sixteenth and the early seventeenth
centuries was a development of critical significance. Although the
American silver initially arrived into Spain, a large part of it eventually
found its way to Amsterdam, mainly via Hamburg. In fact, from the
early years of the seventeenth century the Dutch were the undoubted
masters of the European bullion trade and Amsterdam the leading
world centre of the trade in precious metals.!? It is an indication of the
international standing of this city as a market for precious metals that
the English East India Company also obtained a large part of its
requirements of these metals in Amsterdam. An important implication
of this ‘bullion for goods’ model of Euro-Asian trade was that as far as
the Europeans were concerned, the profit from the trade was derived
almost entirely from the sale of Asian goods in Europe rather than
also from the sale of European goods in Asia.

DUTCH EXPORTS TO ASIA

An analysis of the Dutch and the English East India companies’
exports to the East Indies over the seventeenth and the eighteenth
centuries testifies to an unambiguous pattern where precious metals
dominated the total exports throughout the period. In the case of the
Dutch Company, the goods exported were woollen, silk and other
textiles manufactured mainly at Leiden, and non-precious metals such
as lead, iron, vermilion and mercury, besides sundry items such as
wines and beer. Since the Company’s accounts do not permit a clear-
cut distinction between the cost of these goods and that of the
equipment and consumption goods also sent along, a systematic
analysis of the proportion that trade goods formed of the total exports

'9 J.G. van Dillen, ‘Amsterdam als wereldmarkt der edele metalen in the 17de en 18de
eeuw’, De Economist, vol. 72, 1923, pp. 538-50, 583-98, 717-30.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

is not feasible. But some information available for the eighteenth
century in respect of the Amsterdam chamber alone suggests that this
proportion was usually between 10 and 20 per cent.”° The information
base for the seventeenth century is much more fragmentary. But on
the whole, it would seem to suggest a somewhat higher average figure
for this century. According to the information available in the
Generale Missiven, there were even some years in the second half of
the seventeenth century when the value of trade goods exported
matched that of the precious metals.?!

Mercantilist prejudice against the export of precious metals not-
withstanding, the Company never really had to face any particular
restrictions on its export of these metals. The only restriction it had to
contend with in the early stages of its trade was the prohibition on the
export of precious metals in the form of bullion. In 1647, the States-
General withdrew even this restriction, provided an amount equal to
one third of that exported was surrendered to one of the state mints
or the Amsterdam Exchange Bank. At any rate, practically
throughout the period, the export of coins including Dutch coins
specifically intended for export — the so-called negotie-penningen —
was freely allowed.?? The bulk of the Company’s export of precious
metals was in silver - mainly in Spanish rials, ducatons, negotie-
penningen and bars. The limited amount of gold exported was in the
form of dukaats and bars. As the proportion of the total precious
metals absorbed in the Company’s Indian trade increased consider-
ably from the last quarter of the seventeenth century on, the fineness
of the silver and the gold bars sent was sought to be regulated as far as
possible by the fineness of the Bengal rupee and the Coromandel
pagoda, respectively.”

The data on the Dutch Company exports of precious metals given
below are actually the totals of the allotments made to individual
chambers each year, but these corresponded closely to the actual
amounts exported. The decadal totals are set out in Table 3.1.

20 Bruijn, Gaastra and Schoffer, Dutch-Astatic Shipping, vol. 1, p. 183.

2! This assumes that the term koopmanschappen (merchandise) has been used carefully to
include only trade goods. (F.S. Gaastra, “The exports of precious metals from Europe to Asia
by the Dutch East India Company, 1602-1795’, in J.F. Richards (ed.), Precious Metals in the
Later Medieval and Early Modern Worlds, Durham, 1983, p. 461).

22 van Dillen, ‘Amsterdam als wereldmarkt’, pp. 541~50.

23 Gaastra, ‘The exports of precious metals’, p. 453; Bruijn, Gaastra and Schoffer, Dutch—-
Asiatic Shipping, vol. 1, p. 225.

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Table 3.1 The export of precious metals (coined and uncoined) by the
VOC to Asia, 1602-1794 (decadel totals in million florins rounded
off to the nearest thousand)

1602-10 5.207 1700-10 39.275
1610-20 10.186 1710-20 38.827
1620-30 12.360 1720-30 66.030
1630-40 8.500 1730-40 40.124
1640-50 9.200 1740-50 38.275
1650-60 8.400 1750-60 58.958
1660-70 12.100 1760-70 ; §3-§42
1670-80 11.295 1770-80 48.317
1680-90 19.720 1780-90 47.896
1690-1700 28.605 1790-94 16.972
Total 573-789

Source: J.R. Bruijn, F.S. Gaastra and I. Schoffer, Dutch—Asiatic Shipping in the
17th and 18th Centuries, The Hague, 1987, vol. 1, Table 39, p. 187.

LSE EEE EEE SS

NS
S
N
N
N
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s
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S
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|

amount in million florins
CLL,

SERIE EES EEE
EEA EEE rns

UMMA

CSO OE ELE

ULL

ty
VALLE

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7 1780-00
1690-20 1869040 1650-60 1670-80 1890-1700 1710-20 1730-40 1750-60 1770-80 1700-4
Years

Fig. 3.1 The export of precious metals by the VOC to Asia,
1602~1794 (annual average)

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It will be seen from the table that a relatively high figure of f.12
million had already been reached by the decade 1620-30. The big
increase took place from about 1680 with an all-time peak of f.66
million being reached during 1720-30. A generally very high level was
maintained throughout the second half of the eighteenth century. It
should, of course, be realized that the decadal totals smooth out
enormous annual fluctuations so characteristic of the entire period. To
take an extreme example, the decade 1740-50 with an annual average
of f.3.82 million included a year such as 1742-3 when the figure was
no more than f.1.6 million, and the preceding one of 1741-2 when it
was as high as f.7 million.*4

THE BILLS OF EXCHANGE

The purchasing power made available to the factors in Asia did not
consist only in the goods and precious metals sent aboard the outward
bound ships. A second component of the ‘assistance received from
Holland’ (‘secours uit het lieve vaderland’) was the funds raised locally
by the factors in Asia (initially only at Batavia but later also by those
at selected factories such as Bengal) by issuing bills of exchange
(redeemable by the Heren XVII), which generally carried a 4 per cent
interest. The bills were bought predominantly by the Company’s
servants on the look-out for a safe channel to remit their savings
home. The Company realized very well that an overwhelming bulk of
the savings was made by engaging in illicit private trade. But a refusal
to accept these funds would simply have involved their diversion to
rival companies. The other source used by the-purchasers to buy the
bills (called assignaties) was the private funds smuggled out from
Holland to Asia to take advantage of the differential in the exchange
rate. At the beginning of the eighteenth century, a silver ducaton could
be bought in Holland at 63 stivers and converted into an assignatie at
Batavia at 78 stivers, making a neat profit of nearly 24 per cent in
addition to the 4 per cent interest. In 1734-5, a sum of as much as f.4
million is believed to have been smuggled out of Holland for the
purpose.*> In 1738, the Heren XVII issued instructions that the

24 Bruin, Gaastra and Schoffer, Dutch—Asiatic Shipping, vol. 1, Table 46, p. 240.

25 FS. Gaastra, ‘De Verenigde Oost-Indische Compagnie in de 17de en 18de eeuw: de
groei van een bedrijf. Geld tegen goederen’, Bijdragen en Mededelingen betreffende de
Geschiedenis der Nederlanden, vol. 89 (2), 1976, pp. 244-72.

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Table 3.2 The assignaties redeemed by the chambers of the Dutch East
India Company, 1640-1795 (decadel totals in million florins rounded
off to the nearest thousand)

1640-50 3.765 1700-10 6.387 1750-60 23.619
1650-60 4.506 1710-20 11.219 1760-70 37-900
1660-70 2.492 1720-30 7.956 1770-80 35.878
1670-80 4.304 1730-40 16.814 1780-90 40.015
1680-90 8.024 1740-50 13.982 1790-5 13.375

1690-1700 7-555

Source: F.S. Gaastra, ‘De Verenigde Oost-Indische Compagnie in the 17de en
18de eeuw: de groie van een bedrijf. Geld tegen goederen’, Bydraden en
Mededelingen betreffende de Geschiedenis der Nederlanden, vol. 89 (2), 1976, pp.

244-72.

conversion rate at Batavia be reduced to 72 stivers and interest
payment stopped. The transaction was still quite profitable and large
sums of money continued to be smuggled out of Holland. The
Company, on its side, considered the 13 per cent premium now
involved reasonable in return for the use of the money for a fairly long
period of time, and the fact that the risk involved in sending out
equivalent sums of money to Asia was averted. In view of the liquidity
crisis in Asia caused by the Fourth Anglo-Dutch War, the exchange
rate of 78 stivers was restored in 1782. The amounts for which the
assignaties were issued in Asia grew at a significant pace throughout
the period. The valuewise decadal totals of the assignaties redeemed at
the various chambers of the Company between 1640 and 1795 are
tabulated in Table 3.2.

It will be seen from the table that from a relatively modest sum of
f-3.76 million in 1640-50, the value of the assignaties redeemed had
risen to f.11.22 million in 1710-20 and to an all-time peak of f.40
million in 1780-90. Read together with Table 3.1, this table brings out
the important role of the assignaties in the total purchasing power
made available by the Heren XVII particularly in the second half of
the eighteenth century.

DUTCH INTRA-ASIAN TRADE

The ‘assistance received from Holland’ was supplemented consider-
ably by the profits earned by the Company through participation in

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trade within Asia. Throughout the seventeenth century, not only were
these profits considerable, but a large part of them was earned in
precious metals. Indeed, the one characteristic feature that more than
any other distinguished the Dutch Company from the other European
enterprises operating in Asia was its large-scale official involvement in
a highly profitable network of intra-Asian trade. Extensive participa-
tion in this trade was in fact an integral part of the overall trading
strategy of the Company. In so far as the Crown had initiated and
then sustained for a while the Portuguese involvement in intra-Asian
trade in the sixteenth century, one could perhaps discern in the
Portuguese case some kind of a precedent for the Dutch Company
involvement in Asian trade. But after a brief phase of active participa-
tion, the Crown had withdrawn from the trade to become basically a
dispenser of patronage through the concession system. More impor-
tantly, there was no specific commercial strategy involved in the way
the Portuguese Crown had gone about participating in the intra-Asian
trade. By and large, the Portuguese had simply become yet another
group participating in an existing framework of trade, and initially at
least operated with the assistance of and in collaboration with Indian
and other Asian merchant groups. It is true that one of the branches of
trade the Crown monopolized for itself was the trade in spices other
than pepper designed to feed into the Euro-Asian trade. But, as we
have seen, the control was rather lax throughout. The only important
innovation that could be attributed to the Portuguese participation in
Asian trade was the opening up of the long-distance trade between
Goa and Nagasaki in the second half of the sixteenth century. But this
was done not under the auspices of the Crown but under those of the
private merchants operating under the concession system. The Dutch
pattern of involvement in intra-Asian trade, on the other hand, had a
definitive logic behind it besides involving the forging of important
new commercial links across the Indian Ocean and the South China
Sea.

The starting point of Dutch participation in the trade of the East
Indies was, of course, the procurement of pepper and other spices for
the European market. They realized from the very beginning that, if
the spice trade was to continue to be highly profitable, they must
strive to gain control of both the total amount reaching Europe and
the cost price in the Indies. The 1602 merger of the precompanies into
the United Company was only the first step in this direction. The

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ultimate aim was to eliminate the rivals in this trade — the Portuguese,
the English and the Asian merchants. Between 1605 and 1609, the
Company managed to wrest from the authorities in Amboyna and
Ternate agreements obliging the producers to supply their cloves
exclusively to the Dutch. A similar agreement was concluded in 1605
with the Banda group of islands regarding the procurement of nutmeg
and mace. The latter agreement was renewed after the conquest of the
islands by the Company in 1621.

By the early 1620s, then, the Dutch had acquired effective mono-
psony rights in nutmeg and mace. The case of cloves was somewhat
more complex. There was a large-scale smuggling trade carried on
between the producing areas and Makassar, enabling the English,
among others, to obtain large quantities of this spice. Though from
1643 onward the Company had managed to reduce such smuggling, it
was only after the conquest of Makassar in 1669 that the Dutch fully
controlled the trade in cloves. As for pepper — which was a substan-
tially more important item for investment in the Indies than all the
other spices put together - in spite of the availability of formal
monopsony rights in a number of states in the region, the Company
never acquired effective monopsony rights in the spice.

The control exercised by the Company on the Spice Islands enabled
it to procure spices other than pepper at incredibly low prices. This
ensured a very high rate of gross profit on these spices, often exceeding
1,000 per cent. Before the arrival of the Dutch, the spice growers had
been used to exchanging their wares for Indian cloth, rice and other
necessities brought to them by Indian and other Asian merchants as
well as by the Portuguese. The Company could have obtained the
Indian textiles — by far the most important medium of exchange in the
Spice Islands - at Acheh and other places in Indonesia, but its acute
business instinct drove it to their source, the Coromandel coast, where
four factories were established between 1606 and 1610 covering both
the northern and the southern stretches of the coast. Gujarat, on the
west coast of India, the other major Indian region supplying textiles to
the Indonesian archipelago, was reached in 1618 with the establish-
ment of a factory at Surat. Within a few years, subordinate factories
had been opened at Cambay and Broach, and at Agra in northern
India. Thus began the Company’s participation in intra-Asian trade,
which in course of time assumed important proportions and became
an object of as much concern as the Euro-Asian trade itself.

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It is important to realize that the idea of extensive participation in
intra-Asian trade had originated not with the Heren XVII but with
the officials at the Company’s eastern headquarters established at
Bantam in 1609 and shifted in 1618 to Jacatra, renamed Batavia in
1621. As early as 1612, Hendrik Brouwer, a future governor-general
of the East Indies, had described the Coromandel coast as the ‘left arm
of the Moluccas and the surrounding islands because without textiles
that come from there, the trade in the Moluccas will be dead’.?® The
driving force behind the project was a remarkable man, Jan Pietersz.
Coen, who was named Governor-General of the East Indies in April
1618 at the young age of thirty-one years. The way Coen went about
the whole thing displayed a remarkable grasp of the realities of Asian
trade. He devised a carefully worked out strategy and followed it up
with great tenacity. In 1619, he sent to the Directors a blueprint of the
Company’s intra-Asian trade: cloth from Gujarat (obtained against
spices, other goods and Spanish rials) to be exchanged against pepper
and gold in Sumatra; cloth from Coromandel (obtained against spices,
Chinese goods and gold, and rials) to be exchanged against pepper at
Bantam; sandalwood, pepper and rials to be exchanged against
Chinese gold and goods, the latter also being used to obtain silver
from Japan. Finally, rials of eight could be obtained in Arabia against
spices and other sundry items. Since the Company already had spices
available to it, all that was needed to turn this blueprint into reality
was an adequate number of ships and enough capital for some time to
establish the intra-Asian trading network — ‘a little water to prime the
pump’. The Company already had a permanently circulating capital of
between f.2.5 million and f.3.5. million in the East Indies at this time,
but Coen wanted more.

The Directors, however, found it very difficult to meet Coen’s
demands. Though there were no serious objections to the export of
precious metals from Holland, there was a limit to the amount of
capital that the Directors were in a position to send to the East Indies.
Whereas the total share capital of the Company was less than f.6.5
million, its total debts in 1623 stood at f.8 million. Although mer-
chants of good standing could obtain credit in Amsterdam at between
3 and 4.5 per cent, the Dutch East India Company in its early years

26 J.E. Heeres (ed.), Corpus-Diplomaticum Neerlando-Indicum, The Hague, 1907, vol. 1,
P- 154.

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had to pay as much as 6.25 per cent. Resources for the development of
intra-Asian trade, therefore, had to be found largely within Asia.

In addition to pepper and other spices, the key commodity in
Coen’s blueprint was Indian textiles, which had to be paid for in
Coromandel mainly in gold, and in Gujarat mainly in silver. It was,
therefore, imperative to establish trade relations with Asian sources of
precious metals — whether they were themselves producers of these
metals or were obtaining them through trade. By far the most
important Asian producer of precious metals at this time was Japan.
The discovery and working of new silver mines in the sixteenth
century had turned Japan into the second largest producer of silver in
the world next only to the Spanish American mines in the New
World. In addition to its own output, Asia also received considerable
quantities of the New World silver through trade. In addition to the
lots brought in by the Portuguese and the European companies via the
Cape of Good Hope, large quantities of this silver also reached the
Red Sea and the Persian Gulf region via the Levant. Another route
through which American silver reached Asia was the galleon trade
between Acapulco and Manila. Since the Manila trade, controlled by
the Spanish, was out of the reach of the Dutch, the two principal areas
of interest to them were Japan and the Middle East.

A factory was established at Hirado in southwestern Japan in 1609.
Although items such as fine-quality cotton textiles, spices, sugar, lead,
quicksilver and musk could be sold in Japan, the principal items in
demand there during the early period of Dutch trade were Chinese
silk, silk textiles and other Chinese goods. The Dutch initially tried to
obtain Chinese goods in the Indonesian archipelago and the Malay
peninsula. Indeed, the establishment of trade relations with places such
as Patani and Siam, and later with Cambodia, Annam and Tonkin, was
partly in the quest for Chinese goods. But success was limited, and
attempts were made almost from the very beginning of trading
relations with Japan to establish a trading post, by force if necessary,
on the coast of China or in its immediate vicinity. The efforts to
blockade Chinese trade with Manila were followed by an attack on
Macao in 1622 and the subsequent occupation of the Pescadores. But
soon thereafter, in 1624, the Dutch were persuaded to move to Taiwan
in return for an informal agreement that Chinese merchants would be
allowed to go there to trade with them. The principal commodities
procured by the Company in Taiwan were Chinese silk and silk

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textiles for the Japanese market. A part of the silver obtained from
Japan in exchange for the Chinese goods was then invested in getting
not only the next round of silk in Taiwan but also gold needed chiefly
for the crucial Coromandel trade. Gold was procured in Taiwan rather
than directly in Japan until the former was lost to the forces of
Coxinga in 1662. This was done chiefly to take advantage of the very
different gold/silver parity in the two places until 1637 favouring the
procurement of gold in Taiwan. From 1641 in any case the export of
gold from Japan was banned. This was a sequel to the 1636 closure of
the country to all foreigners except the Chinese and the Dutch, the
latter being required in May 1641 to move to the islet of Deshima off
the Nagasaki harbour.

In the meantime, efforts had been going on to widen further the
supply base of the raw silk and the silk textiles required for the Japan
trade. From the early 1640s on, Bengal emerged as a major supplier of
raw silk for Japan. Ever since 1615, the factors at Coromandel had
been trying to find a foothold in Bengal, which at that time was
looked upon basically as a potential source for textiles, sugar and
saltpetre. But in so far as the Bengal goods could be procured at
Coromandel itself, where they were regularly imported by the Indian
merchants, the efforts to establish a factory in Bengal lacked intensity
and seriousness of purpose. It was only after the factors at Agra drew
Batavia’s attention in 1630 to the import by Indian merchants of a
large quantity of relatively inexpensive raw silk from Bengal into Agra
each year and enclosed a sample of the product with their report that
the requisite urgency was imparted to the Bengal project. The Mughal
expulsion of the Portuguese from Hugli in 1632 helped. A factory was
established at Hariharpur in Orissa in 1633, and another at Hugli in
1635. Bengal raw silk was included in the Dutch cargo for Japan for
the first time in 1640 and soon became a major constituent item of this
cargo.

The last of the major Indian regions figuring in the Company’s
intra-Asian trade was the southwest coast of India, comprising the
Malabar and the Kanara coasts. After several abortive visits to the
region by the Dutch factors, a treaty was signed between the
Company and the Samudri raja of Calicut in January 1626. The treaty
stipulated that all pepper and ginger grown in the region would be
supplied to the Dutch at a fixed price, and that no export or import
duties would be charged from the Company. But since no ships or

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THE EUROPEAN TRADING COMPANIES

capital could be spared for Calicut over the following several years,
the treaty remained a dead letter. In 1633 and 1634, the fleets sent
from Batavia to Surat were asked to call at the Malabar ports and trade
there, without, however, setting up factories. Between 1636 and 1643,
the Dutch fleet sent each year to blockade Goa also put in at Malabar
and carried on a limited amount of trade there. In order to facilitate
the blockade and generally to serve as a watchtower (uitkijkpost) over
Goa, the Company established a small factory in 1637 at Vengurla in
the kingdom of Bijapur on the Kanara coast under the direct jurisdic-
tion of Batavia. In Malabar, a factory was eventually set up in
Kayakulam in 1647. But the resumption of hostilities with the
Portuguese after the end of the Ten Years’ Truce in 1652 forced a
withdrawal of the factory. It was only in 1663 when the Dutch,
collaborating with the Raja of Cochin, managed to throw the
Portuguese out that the Dutch trade at Malabar began on a regular and
substantive basis. The strategic role of the Vengurla factory now came
to an end. It was placed under the charge of the chief factory at Surat
in 1673 and for all practical purposes abandoned in 1685, though
formal orders for its closure were not issued until 1692.

Efforts to reach the other major Asian source of precious metals,
namely the Red Sea and the Persian Gulf region at the other extremity
of the great arc of Asian trade, had also been initiated quite early,
using the Company’s establishment at Surat as the base. As early as
1616, attempts were made to establish trade relations with Mocha.
But in 1624, following problems arising out of the seizure of two
ships belonging to the port of Dabhol, the Company had no option
but to abandon the factory for good. As far as Persia was concerned,
a factory was established at Gombroon in 1623. Initially, Persia was
in fact a net absorber of precious metals rather than a net supplier.
The principal item procured there at this time was raw silk in
exchange for goods such as pepper and other spices, Japanese copper
and Indian textiles, and precious metals. Between 1622 and 1634,
several of the ships from Holland were sent directly to Surat and
Persia with fair amounts of capital. In 1624-5, for example, three of
these ships carried f.600,000 to these factories, constituting nearly one
third of the total precious metals sent to Asia that year.?” But this
pattern lasted only for a brief while, and from 1643 Persia emerged as

2? Gaastra, ‘De Verenigde Oost-Indische Compagnie in the 17de en de 18de eeuw’, p. 261.

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a net supplier of silver abassies and gold ducats, which were smuggled
out on a regular basis, often by concealing them in cavities made into
the bales of raw silk.?® The resultant loss in the value of silk was
evidently an acceptable price to pay for getting hold of the silver and
gold coins. From a comparatively modest sum of f.235,000 in 1642-3,
the value of these coins came to exceed a million florins in 1649-50.
The average annual value of the coins smuggled out over the
following decade was f.660,712.7? But over the rest of the seventeenth
century, the sums involved were extremely modest, if they were at all
positive, and it was only around 1700 that, for a few years, Persia
again became a major - in fact the most important — provider of
precious metals in Asia.*°

What the above analysis establishes quite definitively is that by
about the middle of the seventeenth century the Dutch East India
Company had become a major participant in intra-Asian trade with
trading links all along the great arc of Asian trade. The crucial role
played by this trade in the overall commercial strategy of the
Company was summed up neatly by the Heren XVII in 1648 as
follows: “The intra-Asian trade and the profit from it are the soul of
the Company which must be looked after carefully because if the soul
decays, the entire body would be destroyed.”?! Three years later, the
Directors even expressed the hope that at some point it would be
possible for Batavia not only to finance the exports to Europe (which
in 1650-1 amounted to f.2.49 million) wholly out of the profits from
intra-Asian trade, but also to send to them in addition some Asian
precious metals. Although such extravagant hopes were never realized,
- the fact remains that, throughout the seventeenth century, participa-
tion in intra-Asian trade was of great advantage to the Company.
Note that between 1640 and 1688 the invoice value of the return cargo
from Asia amounted to approximately f.150 million as against f.120
million-worth of precious metals and goods exported to Asia over the
same period. Thus about 20 per cent of the return cargo represented
the profits from intra-Asian trade. Considering that the total proceeds
from the sale of the return cargo amounted to f.420 million, the sales

28 Glamann, Dutch-Asiatic Trade, p. 120.

?9 Gaastra, “The exports of precious metals from Europe to Asia’, Appendix 4, Table 1.

3° The average annual sum exported. between 1700-1 and 1703-4 was f.873,560 (calcu-
lated from Gaastra, “The exports of precious metals from Europe to Asia’, Appendix 4, Table

2, P. 475).
31 Algemeen Rijksarchief (ARA), Heren XVII to Batavia, 22.9.1648, VOC 317, f.120v.

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THE EUROPEAN TRADING COMPANIES

value of 20 per cent of the cargo would amount to f.84 million. This
amount was more than sufficient to cover the sum of f.67 million paid
out as dividend by the Company over the period.*?

The expansion of trade into vitally important areas was critically
dependent on the growing availability of precious metals, a large
chunk of which was found throughout the greater part of the century
within Asia. Evidence available in the Company’s archives, including
the ‘General journals kept by the Bookkeeper-General at Batavia for
the period 1700-1 to 1789-90’, enables us partially to reconstruct the
resource flows to the Indian factories over the two centuries of the
Company’s trade in the region. The findings are summarized in Table
3.3. It need hardly be emphasized that there are significant gaps in the
information available. The non-availability of the regional distribution
on a systematic basis of the origin of the precious metals brought by
the Company into Gujarat and Bengal during the seventeenth century
is only one of these. Even when such a distribution is available for the
eighteenth century, and in the case of Coromandel also for the
seventeenth, the degree of precision that can be achieved is limited.
This is because the precious metals exported from Batavia included
lots received from Holland as well as from sources within Asia. The
figures in the column numbered 5 of the table, therefore, constitute
only the floor of the amounts originating within Asia. But even if only
the figures in this column are taken into account, the overwhelming
role of Asia in the precious metals brought into Coromandel right
through to 1680 is established conclusively. For Bengal, the occasional
and non-systematic information available also underscores the impor-
tant role of Asia, particularly Japan, in the mix of precious metals sent
to the region in the seventeenth century. Finally, as far as Gujarat is
concerned, the available information suggests a pattern where the
precious metals imported until the 1630s originated mainly in
Holland, and thereafter increasingly in Japan and the Middle East. The
domination of Japan was particularly marked between 1638-9 and
1644-5, as was that of Persia over the following fifteen years or so.*?

The table also provides strong confirmation of the dominant role of
precious metals in the total imports of the Company into India. The

32 FS. Gaastra, Bewind en Beleid bij de VOC. De Financiele and Commerciele Politiek
van de Bewindhebbers 1672-1702, Zutphen, 1989, p. 205.
» van Santen, De Verenigde Oost-Indische Compagnie in Gujarat en Hindustan, Table 2,

P- 37-

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Table 3.3 Value and the regional distribution of precious metals imported by the VOC into India, 1640-1785

Year'

1640-50
1650-60
1660-70
1670-80
1680-90
1690-
1700
17Ol—2
W7II=12
1722-3
1731-2
1741-2
I75t-2

1761-2

1770-1
1784-54

1,846,411
(8 yrs)
1,775,449
(5 yrs)

1,482,339
(4 yrs)

1,882,547
( yr)
NA

NA
995,929
1,052,326
1,180,714
$61,689
zero
1,005,067

1,370,763

1,330,185
zero

Coromandel

2 3 4

zero

NA _ zero

73:7 zero
75-4
75-4
58.8

zero

zero I
zero I
zero

zero

42.2 zero

78.1 zero 1

71.6

39.1

zero zero

36.8

24.4

36.3

24.0

84.2
00.0
00.0

77.8

73-0

00.0

39.0

17.8
zero
zero

22.23

27.0

zero

21.9

Gujarat Bengal
1 2 03 4° 5 1 2 3 4 § 1 2
700,500 87.6 NA NA NA NA NA
(6 yrs)
438,000 61.8 NA NA NA NA NA
(3yrs)
66,872, 15.2 NA NA NA _ 1,225,741 87.7 NA NA NA NA
(10 yrs) (7 yrs)
zero zero zero zero zero 1,090,386 77.8 NA NA NA NA
(10 yrs) (6 yrs)
17,935 31 NA NA NA 1,167,630 74.46 NA NA NA NA
(10 yrs) (10 yrs)
zero zero zero zero zero 2,120,169 85.1 NA NA NA NA
(10 yrs) (10 yrs)
zero zero 2,046,197 82.9 zero 62.0 38.0 81,198 50.2
zero zero 2,979,992 87.1 zero 100.0 zero 12,923 7.1
1,502,875 85.1 zero 100.0 zero 3,884,482 95.5 zero 100.0 zero zero —_ Zero
zero zero 1,781,999 84.9 zero 100.0 zero zero. zero
200,582 $3.0 zero 109.0 zero 4,735,089 90.7 zero 68.3 31.7 870,167 69.3
(Coromandel)
99,094 19.8 zero zero 100.0 4,729,994 86.6 7.6 88.4 3.9 422,362 $4.4
(Persia)
zero zero 2,634,282 86.3 11.5 88.5 zero 150,000 23.0
zero zero 397,183 55-9 83.3 16.7 zero 1795535 83.6
zero zero zero zero

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Malabar

zero

4 5

100.0 zero

71.0
(Coromandel)
5-3 94-7
(Surat)

100.0
(Surat)

100.0 zero

29.0

zero

Note:
' Until 1700, the figures are on an average annual basis.
* Explanation of column heading numbers:
1. Value of treasure imported in florins. The figures in parenthesis in this column for the period 1640-1700 refer to the number of years in a decade for which
information is available.
. Proportion of treasure to total value imported.
. Proportion of treasure directly imported from Europe.
. Proportion of treasure imported from Batavia.
5. Proportion of treasure imported from the rest of Asia.
3 This is the amount of bills of exchange (wissels) issued at Coromandel and honoured by Sri Lanka.
‘4 The funds invested in Bengal during this year were raised by issuing bills of exchange locally which were payable in Europe.
NA stands for not available.
Source: For the seventeenth century, the figures for Coromandel are based on information available in T. Raychaudhuri, Jan Company in Coromandel, 1605-1690, The
Hague, 1962; for Gujarat in V.B. Gupta, ‘The Dutch East India Company in Gujarat trade, 1660-1700: a study of selected aspects’, unpublished PhD Thesis, University of
Delhi, 1991; and for Bengal in Om Prakash, The Dutch East India Company and the Economy of Bengal, 1630-1720, Princeton, 1985. The eighteenth-century evidence is
from the ‘General Journals kept by the Bookkeeper-General at Batavia for the period 1700-1 to 1789-90’, ARA, Boekhouder-Generaal Batavia (BGB), 10751~801.

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case of Gujarat, however, provides an interesting deviation from the
norm of the ‘bullion for goods’ model for the subcontinent. While
until 1660 or so precious metals constituted the bulk of the total
imports into the region, the picture changed dramatically in the
following decades. From a net importer of precious metals, Surat now
became a net exporter of Mughal silver rupees, mainly to Bengal but
also to places such as Coromandel coast and Malabar, as well as to Sri
Lanka. The amounts involved, as we shall see later, were fairly large
and formed an important segment of the total Dutch exports from the
region. This transition from a ‘bullion for goods’ to a ‘goods for goods
and bullion’ situation was made possible because of the unusually
important role of Surat as a market for spices brought in by the Dutch.
The other major commodity that contributed to this result was
Japanese bar copper, in which again the Dutch had a monopoly. This
situation lasted until the 1720s when it was again found necessary to
bring precious metals into Surat. A small quantity of these metals was
also imported in the 1740s. In the second half of the eighteenth
century, Surat had once again turned into a net exporter of precious
metals, now mainly to Cochin on the Malabar coast.

The two key factors that enabled the Dutch to achieve an enviable
position in intra-Asian trade during the seventeenth century were the
spice monopoly and the exclusive right to trade with Japan. The spice
monopoly provided the Company with a staple item of trade in
demand all over Asia and entailing an extraordinarily high rate of
return. As was pointed out above, the special situation in Surat was the
product largely of the Company’s spice monopoly.

The Japan trade brought in large quantities of precious metals,
mainly silver until 1668 and gold thereafter. It was pointed out earlier
that in May 1641 the Dutch had been obliged to move to the islet of
Deshima off the Nagasaki harbour. At the same time, their trade had
been subjected to a variety of restrictions. For example, days were
prescribed on which alone they could offer their goods for sale, until
which time they had to be kept in sealed warehouses. Also, the
pancado system was extended to the entire lot of Chinese raw silk the
Company imported into Japan. This system required the Company to
sell the silk at a price determined by a guild monopsony consisting of
a group of merchants from the five imperial cities of Edo (Tokyo),
Osaka, Kyoto, Sakai and Nagasaki. Commercially injurious as these
restrictions were, the Dutch meekly accepted them. The Heren XVII,

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in fact, went so far as to instruct Batavia to maintain the trade, if
necessary, ‘even from the ships’. In a report submitted to the Directors
in September 1652, Pieter Sterthemius, the chief of the Nagasaki
factory during 1650-1, wrote,

But I seem to hear a whisper in my ear, that some vexations can surely be endured
for the sake of Japan’s sweet gains, since Japan is the strongest sinew of the

Company’s inland trade and of the Indies profits; and this (in so far as our self-
respect allows us to endure it) is true.>*

The ‘sweet gains’, of course, were the precious metals the trade
provided. The relative positions of Holland and Japan in the matter of
the supply of precious metals is set out in Table 3.4.

What this table suggests quite unambiguously is a clear an substan-
tial lead for Japan between the late 1630s and the end of the 1670s.
There were two further advantages associated with the procurement of
precious metals in Japan as compared to Holland. In the first place, the
Japanese supplies were obtained in exchange for commodities that
were themselves sold at a good profit. Second, the cost per unit of
silver procured seems to have been lower in Japan. If one assumes that
the value that the factors in Batavia assigned to a tael of Japanese schuit
silver in their books correctly represented its cost price, the cost of the
Japanese silver works out to be 24.75 per cent lower than in Holland
until 1636 and 35.58 per cent thereafter.*> It might also be added that,
in addition to the precious metals, Japan also provided large quantities
of bar copper which sold at a good profit in both Asia and Europe.

In the course of the last quarter of the seventeenth century,
however, things became increasingly difficult for the VOC in Japan.
As Table 3.4 shows, there was a steep decline in the Dutch import of
precious metals from Japan from about 1680. This was the cumula-
tive outcome of the ban on the export of silver in 1668, the
introduction of the appraised trade system in 1672 and of the limited
trade system in 1685, and finally the debasement of the gold koban
in 1696 with its gold content being reduced from 85.69 to 56.41 per
cent without any reduction in its silver price of 6.8 taels.°® In the
absence of a major alternative Asian source of gold, the Company
did continue to procure small quantities of gold koban occasionally

34 Om Prakash, The Dutch East India Company and the Economy of Bengal, 1630-1720,
Princeton, 1985, p. 121.

35 Prakash, The Dutch East India Company and the Economy of Bengal, p. 21.

36 Prakash, The Dutch East India Company and the Economy of Bengal, ch. 5.

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Table 3.4 The Dutch East India Company’s import of precious metals
from Holland and Japan into Batavia, 1621-99 (annual average in

florins)

Period Holland Japan
1621-4 1,215,000 157,924
1628—32 1,240,000 -
1633-6 1,075,000 921,044
1637 1,000,000 3,029,550
1640-9 940,000 1,518,871
1650-9 840,000 1,315,121
1660-9 1,200,000 1,454,913
1670-9 979,500 1,154,148
1680-9 1,972,000 298,383
1690-9 2,691,000 228,952

Source: The years included in the table are those for which information regarding
Japan is available. Until 1637, the figures for Japan are based on Oscar Nachod,
Die Beziehungen der Niederlandischen Ostindischen Kompagnie zu Japan im
Siebzehnten Jahrhundert, Leipzig, 1897, Appendix, Table E, pp. ccvii-ccviii. The
figures for 1621-4 are given in Nachod directly in florins but those after 1624 are
in taels. The rate of conversion used here is the same as that used by the
Company: 61.5 stuivers to a tael until 1636 and 57 stuivers to a tael for 1637. The
figures for 1640-99 are based on Glamann, Dutch—Asiatic Trade, Table 10, p.51,
who bases these on Nachod and other sources. Until 1662 the imports from Japan
were entirely in silver, and from 1668 entirely in gold. For the period 1660-9, the
component of gold in the average annual figure of f.1,454,913 was f.406,902 (or
28 per cent). The figures for Holland have been calculated from Bruijn, Gaastra
and Schoffer, Dutch—Asiatic Shipping, vol. 1. Appendix 4, Table 46 with a one-year

lag.

until the middle of the eighteenth century, but the critical role of
Japan in promoting the Company’s intra-Asian trade had come to an
end in 1696.

The declining volume as well as profitability of intra-Asian trade in
precious metals was perhaps an important element in the changing
fortunes of the Company in the matter of the profitability of the intra-
Asian trade in general as between the seventeenth and the eighteenth
centuries. It has been estimated that while in the seventeenth century
as much as go per cent of the total income earned by the Company in
Asia was derived from trade, the proportion came down over the
eighteenth century to around 60 per cent, the remainder of the income

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THE EUROPEAN TRADING COMPANIES

being contributed by items such as taxes and tolls.°” Of course, as the
work of de Korte on the Company’s finances shows, the eighteenth
century also was not a homogeneous unit in this respect. Indeed, in
the course of the century, the Company’s Asian income from trade
(generale winsten) fluctuated a great deal with a significant and
irreversible decline being registered only from 1768-9 onward. The
average annual income earned by the Company from Asian trade,
calculated on a decadal basis, was over f.4 million during the first four
decades of the century, over f.6 million during the 1740s and the
17508, f.4 million during the 1760s, and a little over f.2.5 million
during the 1770s and the 1780s.78

Another index that suggests a relatively declining participation by
the VOC in Asian trade is the lower absorption rate into intra-Asian
trade of shipping coming in from Holland in the eighteenth century.
The relevant information is summarized in Table 3.5. Before we draw
our conclusions from the table, however, it might be useful to note the
limitations of this data base. For one thing, the absorption rate in the
Asian trade worked out on the basis of the difference between the
number of ships (and the volume of tonnage) arriving into and leaving
Asia would overstate the real absorption rate for several reasons. In
the first place, by virtue of its age or for other reasons, a ship might
simply be pulled out of service after arrival in Asia. It would then not
be included in the shipping returning to Europe, but at the same time
would not have been available for use in intra-Asian trade. Also, of the
shipping pressed into service in Asia, a certain amount was not used
for purposes of trade but for patrolling, armed combat and so on.
Besides, in the eighteenth century, the apparently high absorption rate
of the 1780s is likely to have been related to the problems in sending

3” F.S, Gaastra, De Geschiedenis van de VOC, Zutphen, 1991, p. 133.

38 J.P. de Korte, De Jaarlykse Financiele Verantwoording in de Verenigde Oost Indische
Compagnie, Leiden, 1984, Appendix 10. The precise average annual figures on a decadal
basis were as follows:

1700/1-1709/10 f-4,192,286
1710/11-1719/20 _—f.4,487,979
1720/1~1729/30 [4,287,878
1730/1-1739/40 —f-44514,343
1740/1-1749/50 [6,081,362
1750/1-1759/60 [6,267,012
1760/1~1769/70 [4,086,227
1770/1~-1779/80 f-2,537,701
1780/1-1789/90 f.2,768,002

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Table 3.5 Dutch East India Company shipping arriving at and leaving
Asia, 1602-1794

Years No.of Tonnage No.of Tonnage Proportion Proportion
ships arriving — ships leaving — of arriving of arriving
arriving in Asia leaving Asia ships tonnage
in Asia Asia absorbed absorbed in

in Asia Asia

1602-10 69 33,370 47 20,100 31.9 39.8

1610-20 114 555410 46 26,590 5§9.6 52.0

1620-30 130 50,960 68 35,280 47.7 30.8

1630-40 154 62,640 72 38,890 = 53.2 37-9

1640-50 165 100,950 92 73:749 = 44.2 27.0

1650-60 196 118,341 102 84,200 = 48.0 28.8

1660-70 228 125,186 1g 79,313 49.6 36.6

1670-80 218 142,289 129 91,975 40.8 35-5

1680-90 196 126,619 133 98,165 32.1 22.5

1690-1700 223 138,827 145 100,697 35.0 27.5

1700-10 271 180,620 ~=—-188 1335437 30.6 26.1

1710-20 297 220,074 240 182,164 19.2 17.2

1720-30 353 272,103 308 243,314 13.7 10.6

1730-40 363 270,095 290 221,205 20.1 18.1

1740-50 307 246,565 215 170,1§§ 30.0 31.0

1750-60 287 276,295 234 227,650 18.5 17.6

1760-70 288 287,845 223 222,450 22.6 26.7

1770-80 287 287,190 =. 231 230,670 19.5 19.7

1780-90 288 233,850 197 144,093 31.6 38.4

1790-94 106 84,943 85 66,370 §=6:19.8 21.9

Source: Calculated from Bruijn, Gaastra and Schoffer, Dutch—Asiatic Shipping,
vol. 1, Tables 35 and 36, pp. 174-6.

ships back to Europe because of the Fourth Anglo-Dutch War. An
acute shortage of sailors would have produced a similar result in the
1790s. On the other hand, in so far as the Company occasionally
bought vessels in Asia which were used exclusively in intra-Asian
trade, the absorption rate suggested by the table would understate the
real absorption rate of shipping in Asian trade. In the absence of the
relevant information, the bias in neither direction can be corrected,
though perhaps it was not particularly pronounced in either and was
in part at least self-cancelling. The other problem with the data
pertains to the fact that the ships permanently absorbed in intra-Asian

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trade might very well have had very different working lifespans
depending partly upon the stage of their life at which they had been
kept back in Asia. This would necessarily leave a certain margin of
error in the conclusions drawn from the table.

Subject to these limitations, the main conclusions suggested by the
table are as follows. In terms of the absolute number of ships absorbed
in Asian trade there was a decline from 744 in the seventeenth century
(98 years) to 640 in the eighteenth (94 years). In terms of tonnage,
however, the volume had gone up over the same period from 305,642
tons to 518,072 tons. But in relative terms, the decline between the
seventeenth and the eighteenth century is unambiguous and fairly
significant in terms both of the number of ships as well as the volume
of tonnage. Thus the proportion of ships absorbed in Asian trade
came down from an average of 44 per cent in the seventeenth century
to 23.5 per cent during the eighteenth. The corresponding values for
the volume of tonnage were 32.1 per cent and 22 per cent, respectively.

THE TRADING STRATEGY OF THE ENGLISH
EAST INDIA COMPANY

The evolution of the English East India Company’s trading strategy in
Asia was along very different lines. Nevertheless, the pattern of its
exports to the East was quite similar to that of the VOC. The
commodities exported included broadcloth, draperies and lead, but the
dominant item throughout was precious metals, mainly silver. As
Table 3.6 shows, treasure accounted approximately for between 65
and go per cent of the total English exports to Asia. In the second half
of the eighteenth century, an overwhelming proportion of the total
purchasing power in the East was generated by issuing bills of
exchange on London and other places in favour not only of the
Company’s own servants, but of a large range of other private
European traders as well. The other major source used by the Dutch
to supplement the resources received from home, namely the precious
metals earned within Asia, was, however, never available to the
English.

Like other Europeans, the principal interest of the English in the
East, initially at least, was the procurement of pepper and other spices
for the European market. The first two voyages were directed at
Bantam in Java where a factory was established in 1602. From 1613,

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Table 3.6 English East India Company exports to Asia, 1601-1760
(average annual value in £sterling (£1 = f.12)

Years Total exports Treasure (%)
1601-10 17,096 69.7
1611-20 76,009 64.5
1621-30 44,152 91.3
1631-40 47,670 79-1
1661-70 133,463 67.0
1671-80 342,891 74.2
1681-90 402,566 84.0
1691-1700 299,352 71.3
17O0I-I0 407,662 87.4
1711-20 513,871 80.6
1721-30 650,008 83.5
1731-40 648,518 76.0
1741-50 819,287 73-6
1751-60 988,588 65.6

Source: The figures for the period 1601-40 have been calculated from Chaudhuri,
The English East India Company, Table tI, p. 115. It has been assumed that in the
years not listed in the table the exports were zero.

The figures for the period 1661-1760 have been calculated from Chaudhuri,
The Trading World of Asia and the English East India Company, 1660-1760,
Appendix 5, Tables Cr and C4, pp. 507, 512.

Sumatra became the chief supplier of pepper to the Company.
Factories were established at Acheh, Tiku and Priaman, but the
factory at Bantam remained the headquarters of the Company’s
trading organization in the region. The crucial importance of the
Coromandel textiles in facilitating this trade and making it more
profitable had also been brought home to the Company quite early. In
1610, therefore, it accepted the offer of two Dutchmen, Peter Floris
and Lucas Atheunis, to set up a factory on the coast of Coromandel
and supply textiles for the southeast Asian markets. Floris and
Atheunis established a factory at Masulipatnam in 1611, though the
first Company voyage to the coast was organized only in 1614. In the
meantime, given the Dutch monopolistic designs in the archipelago, a
situation of armed conflict with the VOC was becoming inevitable.
The hostilities erupted in 1618, and the English emerged distinctly the

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CAAA MMAMAM LS

|
|
}
Hy
=
4 i H
- _ ee AS a Le
1601-10 1621-30 1661-70 1681-80

amount in thousand pound sterling

1701-10 1721 -30

1611-20 1631-40 1671-80 1691-1700 1711-20 1731-40 1761 -60

Years

Fig.3.2 English East India Company exports to Asia, 1601-1760
(annual average)

worst of the two. The London agreement of 1619 provided for an
English share of one third in the trade of the Spice Islands, and of one
half in the pepper trade of Java subject to the English contributing one
third of the cost of maintaining the Dutch garrisons in the area. The
English headquarters in the area were moved to Batavia in 1620 and
the two companies shared garrisons in the Bandas, Moluccas and
Amboyna. But due both to Dutch hostility as well as to the shortage
of resources of the English, the arrangement did not quite work. The
1623 incident at Amboyna led to a recall of the English factors from
the shared centres in the archipelago to Batavia and hastened the
process of the English withdrawal from the Spice Islands. By 1624, the
factories at Patani, Ayutthaya and Japan had also been abandoned.
From this point on, pepper was procured mainly at Bantam to which
the English had moved back from Batavia, and cloves at Makassar,
where a factory had been established in 1613. As D.K. Bassett has
demonstrated, the English were among the major buyers of the cloves

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smuggled in large quantities into this port until 1643 both by the
merchants from Makassar as well as by those operating from several of
the Malayan ports. An important medium of exchange used in both
Bantam and Makassar was the textiles from the Coromandel coast. In
the mid-1620s, the English established another factory on the Cor-
omandel coast at Armagon. The Anglo-Portuguese truce made pos-
sible the establishment of an English factory in 1640 at Madras as well,
which in September 1641 was designated as the chief factory of
Coromandel. In 1682, the Dutch forced the English out of Bantam,
and from 1685 the only English establishment in the Indonesian
archipelago was at Benkulen in Sumatra.

While the English had come to Coromandel in quest of textiles for
the southeast Asian markets, their attempts to penetrate the Gujarat
trade were linked directly to their Euro-Asian trade. Because of the
possibility of a military engagement with the Portuguese and/or the
Dutch, each of the English voyages to the East consisted of a certain
minimum number of ships. But on the return voyage, a cargo
consisting of pepper and other spices alone would fill perhaps only
one of these ships. Hence the urgent need to diversify the return
cargo by including in it items such as Indian textiles and indigo.
Gujarat textiles could, of course, also be used for the southeast Asian
trade to the extent necessary. The third voyage sent out in 1608,
therefore, carried instructions to explore the commercial possibilities
of the western coast of India. William Hawkins reached Surat in 1608
and went on to Agra the following year, but was unable to obtain
trading rights. Henry Middleton, the commander of the sixth voyage,
was also refused permission to trade at Surat. It was only in
September 1612 that Thomas Best finally managed to obtain formal
trading rights. A factory was established at Surat in 1613 and regular
trade started there and at Ahmedabad, Burhanpur and Agra. A ship
was sent back home directly from Surat for the first time in 1615.
Between 1616 and 1617, while only four small ships were dispatched
directly to Bantam from London, nine ships of large tonnage were
sent to Surat. The President at Surat was also placed in charge of the
Company’s trade in Persia. The Crown leased Bombay to the
Company in 1668: in 1687 it superseded Surat as the headquarters of
the Company in western India. In the meantime, the Company’s
trade had extended into Bengal in the early 1650s with the establish-
ment of a factory at Hugli.

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Table 3.7 French East India Company’s exports to Asia, 1725-69
(figures in livres tournois (1 LT = f.0.5)

(1) (2) (3) (4) (5) (6)

Years Average Average —- Proportion Average Treasure
annual annual of treasure annual value earmarked
value value of _ to total of treasure _ for India as
of total treasure — exports earmarked _ proportion
exports exported (%) for India of total
(LT) (LT) (LT) treasure

(%)

1725/6 to 1734/5 6,976,174 6,014,325 86.2 3,891,666 74.2

1735/6 to 1744/5 11,428,789 9,419,610 82.4 7,293,689 77°

1745/6 to 1754/5 13,095,305 9,857,508 75.2 9:09§,913 92.2

1755/6 to 1764/5 4,300,516 2,971,994 69.1 NA

1765/6 to 1768/9 ~—-:10,113,855 5,596,522 $5.3 NA

Note: NA stands for not available.
Source: Calculated from Philippe Haudrére, La Compagnie frangaise des Indes au
XVIIle siecle 1719-1795, Paris 1989, vol. rv, Tables u E and F, pp. 1196-98.
Information regarding India is available over the first decade for only three
years, 1727/8 to 1729/30. The figure for this decade in column 5 is, therefore, a
three-year average. In working out the proportion in column 6 also, information
pertaining to only these three years has been taken into account for both India as
well as the total. For the decade 1735/6 to 1744/5, the only year for which
information for India is not available is 1735/6. This year has, therefore, been left
out of account in working out the figure in column 6 as well. Information for the
decade 1745/6 to 1754/5 is available for all years.

FRENCH EXPORTS TO ASIA

The last of the major European trading companies to engage in Euro-
Asian trade was the French East India Company. Quantitative in-
formation available in respect of the Compagnie Perpetuelle des Indes
suggests that the pattern of French exports to Asia in the eighteenth
century was the usual one of the domination of the export bill by
precious metals. The information is set out in Table 3.7. Over the
period 1725 to 1755, for which a destination-wise regional breakdown
of the precious metals exported is also available, the domination of
India, accounting for between 74 and 92 per cent of the total treasure
exported, is unmistakable. The involvement of the Company in the
China trade, the other major theatre of French Company activity in
Asia, was on a much smaller scale at this time.

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The French started out in India in Surat where Francois Martin
arrived in October 1668. Martin was also responsible for setting up
the Company’s establishment on the Coromandel coast at Pondi-
cherry in 1674 after the dust raised by the fiasco of the capture and
subsequent loss of Sao Tomé by Commander de la Haye had settled
down. Pondicherry, which became the headquarters of the French in
India, was seized by the Dutch in 1693 but restored to them in the
peace of 1697. The French actually reoccupied Pondicherry only in
1699. The extension of French trade into Bengal had begun in 1686
when an agent had been sent there by Martin to found a factory.
Trading posts were established at Balasore, Kasimbazar and Patna, but
the real beginning of French trade in the region should perhaps be
dated to the acquisition of Chandernagore by Martin’s son-in-law
Deslandes in 1690, the same year as Calcutta was founded by Job
Charnock.

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CHAPTER 4

THE COMPANIES IN INDIA: THE
POLITICS AND THE ECONOMICS
OF TRADE

The history of the European companies’ trading operations in India
over the seventeenth and eighteenth centuries in the context of their
overall trade in Asia can be broadly divided into three fairly distinct
phases with the cut-off points lying approximately around 1680 and
1740. In the case of the Dutch East India Company, the phase until
about 1680 was basically one where the importance of the Indian trade
was derived chiefly from its role in the Company’s intra-Asian trade.
Textiles from Coromandel and Gujarat were indispensable for the
procurement of pepper and other spices, while raw silk from Bengal
had become the mainstay of the bullion-supplying Japan trade. In the
period after about 1680, the drastically altered composition of the
imports into Europe, with a dominant role for Indian textiles and raw
silk, ensured a continuing critical role for India, though it was now
basically in the Company’s Euro-Asian trade. This phase lasted until
about 1740, when the dominant role of India was challenged to a
certain extent by Chinese tea, which now accounted for around one
third of the total imports from Asia, though later this figure came
down to about a quarter.

Basically the same time division is applicable in the case of the
English East India Company. Also, the English Company’s emergence
as a political power in the subcontinent in the latter half of the
eighteenth century puts this period into a category by itself. The
newly acquired power of the English had a variety of consequences.
For the rival European trading companies, including the Dutch, this
meant that they could no longer operate on a basis of equality, but
were essentially on sufferance and subject to all kinds of arbitrary
regulations and restrictions imposed on them by the English. The
implications of European trade for the Indian economy were also
altered significantly. In a region such as Bengal, the relationship
between the English East India Company on the one hand, and the
local producers and merchants on the other, was no longer determined

IIt

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA THE COMPANIES IN INDIA

0 1000 miles ‘
ere see

a a ee)
1500 km

Mediterranean

OS JAPAN
irado
Mashad :
Rr,
! Ss Herat
s Kabul
* ra m,
dum git
a ‘o Lahore
ee ({rorwosa
as a0 Age Patna
+a oe .
ghhmedabad Hugli A Dacca
Broach Calcutta + PHILIPPINES
eT wen cen eterna TSF Surat4- Balasore

-<e~ (\ Bomb
ue Vizagapatam “s

Goal ee $ Masulipatam
toe Madras m
27” Tellicherry }Pondichetry
Calicut Cuddalore ~\.
Cochin Porto Novo
Anjengo Negapatam
CEYLON
Colombo
w-e~ Trade routes and sea lanes
@ Indigenous port towns
AX English presidency settlements
Aa Subordinate English factories
+ = Dutch factories
% Portuguese settlements
w= French settlements
112 Map 3 The Indian Ocean in the seventeenth and eighteenth 113

centuries, showing the settlements of the English East India
Company and of other European nations

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

by the market but became one of domination by the Company over
these groups, depriving them of the full extent of their legitimate share
in the value of the output produced.

THE DUTCH COMPANY IMPORTS INTO EUROPE

The available evidence permits the construction of a fairly detailed
quantitative profile of the trading operations of both the Dutch and the
English East India companies. As far as the VOC is concerned, a broad
idea of the growing value as well as the changing composition of the
Company’s imports from Asia into Europe through the seventeenth
and the eighteenth centuries can be formed from the work of Kristof
Glamann, recently extended by Bruijn, Gaastra and Schoffer. The
information is set out in Table 4.1. As far as the value of the imports is
concerned, there was a significant upward trend all the way. Thus from
a modest figure of under f.3 million over the three-year period
1619-21, the imports had crossed the f.10 million mark by 1668-70
and stood at f.15 million during 1698-1700. Given the large base at the
beginning of the eighteenth century, the rate of growth over that
century was naturally much lower, but the absolute value of imports
was nevertheless in excess of f.19 million during 1738-40 and nearly
f.21 million during 1778-80. Equally important was the changing
composition of the imports. Pepper and spices together came down
from an imposing 74 per cent of the total imports in 1619-21 and 68
per cent during 1648-50 to 23 per cent during 1698~1700 and to a mere
12 per cent during 1778~80.' On the other hand, textiles and raw silk
went up from 16 per cent in 1619-21 to an incredible 55 per cent at the
end of the seventeenth century. There was a decline thereafter, but in
1778-80 this group again accounted for half of the total imports.
Equally important was the rise in the share of tea and coffee in the
eighteenth century. From a mere 4 per cent in 1698-1700, the figure
went up to an impressive 27 per cent in 177880, with a peak of 32 per
cent in between during 1738-40. The table also highlights the critical
value of the Company’s spice monopoly. Here was a group where the

! This, however, should not obscure the fact that, in absolute terms, the trend over the
same period had been of a very different kind. The invoice value of this group had gone up
from f.2.15 million in 1619-21 to f.4.2 million in 1648-50, down to f.3.45 million in
1698-1700 and finally to f.2.5 million in 1778-80. Note that the terminal value was actually
higher than the initial one.

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Table 4.1 Triennial totals and composition of the Dutch East India Company’s imports into Europe, 1619-1780

Goods

Pepper
Other spices

Textiles and
raw silk

Tea and
coffee

Drugs,
perfumes and
dye-stuffs

Sugar
Saltpetre
Metals
Sundries
TOTAL

1619-21

1,638,500
510,400

466,900

284,200

2,900

2,902,900

Note: ' Explanation of column headings:

1648-50

2 1 2
$6.45 3,168,900 50.43
17.§§ 1,127,700 17.85
16.06 894,600 14.16

9.84 $35,500 8.52
- 403,200 6.39
- 132,200 2.07
0.10 31,500 0.50
* 12,600 0.17

6,306,200

32.89
26.36

17-54

8.80

4.30

0.70

Column 1 = Total value of imports over the triennium (in florins)

Column 2 = Percentage of total invoice value

Column 3 = Percentage of total sales proceeds at Amsterdam.

* Only two out of nine ships from Sri Lanka included.
Source: J.R. Bruijn, F.S. Gaastra and I.Schoffer, Dutch—Asiatic Shipping in the 17th and 18th Centuries, The Hague, 1987, vol. 1, Table 41, p. 192.

1668-707"

1 2
35294,000 30.53
1,306,800 12.05
3,942,000 36.46
626,400 5.84
453600 4.24
550,800 5.08
615,600 §.74
10,800 0.06

10,800,000

28.99
28.43
23-77

5.86

2.02
7-63
2.99

0.28

1698-1700

1 2
1,680,000 11.23
1,7§§,000 11.70
8,205,000 §4.73
630,000 4.24
1,245,000 8.29
4§,000 0.24
585,000 3.92
795,000 = §.26
60,000 9.39

15,000,000

13.31
24.78
43-45

4.10

6.57

4.00

2.94
0.65

1738-40
1 3
1,561,000 8.1
1,182,600 6.1
7:918,600 41.1
6,202,100 32.2
$32,000 2.8
710,000 3.7
504,400 2.6
202,100 LI
433900 2.3
19,246,700

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11.43
23.63
28.27

24.22

2.70

3.00
3-$4
0.58
1.93

1778-80
1 2
1,868,100 9.0
642,900 3.1
10,283,200 49.5
5,652,300 27.2
380,700 =—:11.8
133,000 0.6
909,700 4.4
569,000 2.7
357-600 1.7
20,796,500

11.03

24.43
32.66

22.92

2.29

0.61

2.79
137

1.90

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Figs. 4.1.1~4.1.6 Triennial totals and composition of the Dutch East
India Company’s imports into Europe, 1619-1780

Drugs, perfumes&dye-stuffs (9.8%)

Textiles & raw silk (16.1%)

Other spices (17.8%)

Fig. 4.1.3 1668-70

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THE COMPANIES IN INDIA

Tea & coffee (4,
Satpetre (3.9%)

Textles & raw silk (54.7%):

Fig. 4.1.4 1698-1700

* Tea & coffee (32 2%) : Stctatets i Sunanes (2.3%)

Texbies & raw silk (41.1%)

Fig. 4.1.5 1738-40

Textiles & raw silk (49.5%)

Fig. 4.1.6 1778-80

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share in the sales proceeds was consistently higher than the share in the
invoice value. Over time, this differential in fact increased fairly
substantially till in 1778-80, against a share of a mere 3 per cent in the
invoice value, the share in the sales proceeds was as much as 24 per
cent. In the case of pepper, except in the years 1648-50 when the share
in the sales proceeds was considerably lower, the two values were
generally similar. Finally, in the case of both the textiles and raw silk
and the tea and coffee groups, the share in the sales proceeds was
generally lower — sometimes substantially lower — than the share in the
invoice value. This was a necessary corollary of the differential in the
case of spices being significantly in the other direction.

India figured prominently in the Company’s trade within Asia as
well as that between Asia and Europe. Items such as saltpetre and
indigo, used extensively in the Europe trade, as well as opium, which
figured prominently in the intra-Asian trade, were procured almost
exclusively in India. The principal importance of the India trade,
however, lay in the supply of textiles and raw silk for both the Asian
and the European markets.

THE ENGLISH COMPANY IMPORTS
INTO EUROPE

The available data set in respect of the English East India Company
covers the period from about 1660 to 1780. In order to facilitate a
comparison with the VOC to the extent possible, this information has
been put together in Tables 4.2 and 4.3 for the trienniums 1668-70,
1698-1700, 1738-40, 1758-60 and 1777-9. It will be noted that until
1670, the English Company was way behind the Dutch, accounting
for only f.4.32 million worth of imports during 1668-70 against the
Dutch figure of f.10.78 million. This gap had nearly been bridged by
1698-1700 when the English imports had reached f.13.79 million
against the Dutch figure of f.15 million. This process continued in the
eighteenth century, and by 1738-40 the English had actually forged
ahead of the Dutch, accounting for f.23 million against the VOC
figure of f.19.24 million. Note, however, that this comparison pertains
only to the Euro-Asian trade carried on by the two companies. For
the still substantial intra-Asian trade of the Dutch there was no
English counterpart. Thus with regard to the total value of trade
carried on in Asia, the Dutch, in all likelihood, were still considerably

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ahead of the English. But by the time the close of the 1770s is reached,
there is no room for any ambiguity whatsoever. With a figure of f.69
million against the Dutch figure of under f.21 million, the English
were so much ahead that an inclusion of the Dutch intra-Asian trade
figure in the value of their total trade in Asia would make hardly any
difference to the relative ranking of the two companies.

As far as the composition of the English imports is concerned, the
absence of spices from the list is a reflection of the Dutch monopoly of
this item. The changes over time included a decline in the share of
pepper from 25 to under 5 per cent, and in the case of saltpetre from 8
per cent to 3 per cent. A minor item, indigo, disappeared from the list
altogether in the eighteenth century. As in the case of the Dutch
Company, the share of goods such as textiles, raw silk and tea, on the
other hand, registered a major increase. Thus between 1668-70 and
1738-40 the share of textiles went up from 57 per cent to 70 per cent,
though by 1758-60 it had come down to 54 per cent. By this time, raw
silk had also become an important item of trade, accounting for 12 per
cent of the total imports. The other spectacular increase was in the case
of tea from nil in 1668-70 to Io per cent in 1738-40 and as much as 25
per cent in 1758-60.

The changing composition of the imports was also reflected in the
relative shares of India, southeast Asia and China in the total value
imported (Table 4.3). The decline in pepper accounts for the eventual
disappearance of southeast Asia from the list. The rise in the share of
China was linked almost entirely to tea. India was central to the
English Company trade throughout, accounting for 95 per cent and 84
per cent of total imports during 1698-1700 and 1738-40, respectively,
when the textile trade was at its peak. During 1758-60, India and China
accounted for two thirds and one third of the total imports, respec-
tively. By 1777-9, the share of India had once again gone up to 78 per
cent. Within India, by virtue of its status as the principal supplier of
textiles and raw silk, Bengal completely dwarfed during the eighteenth
century the other two Indian regions, namely Bombay and Madras.

THE FUNCTIONING OF THE COMPANIES IN
INDIA: THE ABSENCE OF COERCION

The Dutch East India Company was the first northern European
corporate enterprise to establish factories in India. Since the principal

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Table 4.2 Triennial totals and composition of the English East India Company’s imports into Europe, 1660-1779

Goods 1668-70
I L

Pepper 90,996
Textiles 203,976

Raw silk 2,181

Tea 120
Coffee 1,603
Indigo 15,325
Saltpetre 27,671
Miscellaneous

Total value £360,310
(=f-4,323,720)

Note: ' Explanation of column headings:
Column 1 ~ Total value of imports over the triennium (in £sterling)
Column 2 - Proportion of invoice value.

25.25
56.61
0.60
0.03
0.44
4.25
7-67
5-15

1698-1700
1

80,719
850,559
81,494
13,082
22,164
32,532
17,460

£1,149,599
(=f.13,795,188)

7-02
73-98
7-09
1.13

1.93
2.82

1.51
4.52

1738-40
I

64,701
1,333,094
208,706
195,951
50,853

35,480

£1,917,202
(=f.23,006,424)

3-37
69.58
10.89
10,22

2.65

1.85
1.44

1758-60

91,585
1,119,540
256,611
$27,901

62,287

£2,092,040
(=f.25,104,480)

4:37
53-51
12.27
25.23

2.97
1.65

1777-9

1 2

£5,778,201
(=f.69,338,412)

Source: The figures for the years until 1760 have been calculated from K.N. Chaudhuri, The Trading World of Asia and the English East India Company
1660-1760, Cambridge, 1978, Appendix 5, Tables C.2, C.8, C.9, C.10, C.14, C.15, C.19 and C.24, pp. 507-48. The rate of conversion used is £1 = f.12.
The figures for the years 1777-9 have been calculated from Appendix 22C, ‘An account of the total prime cost of all cargoes purchased in India and
China, to be shipped for Europe, for the different seasons from 1763 to 1778 inclusive, distinguishing each year’, to Report from the Select Committee
appointed to examine the Reports of the Directors of the East India Company dated 22 June 1784 (Parliamentary Board Collection 19, L/Parl/2/19,
India Office Library). The rate of conversion used is £1 = f.12. The cargoes that left Asia in 1776, 1777 and 1778 reached Europe with a time lag of a
year. The commodity composition of these cargoes is not available. But the total value figure for these years is fully corroborated by information
available for Bengal alone. We note in Table 4.3 that during these years, Bengal accounted for 54.28 per cent of the total English Company imports
from Asia. That gives a figure of £3,136,407. Based on information available in Appendix 6 to the Ninth Report of the Select Committee, Chaudhuri
puts the Bengal figure for these years at £3,136,980 (K.N. Chaudhuri, ‘Foreign Trade and Balance of Payments 1757-1947’ in Dharma Kumar (ed.),
The Cambridge Economic History of India, Vol. 11, Table 10.2C, p. 819, Cambridge, 1983).

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THE COMPANIES IN INDIA

Table 4.3 Regional distribution by origin (percentagewise) of English
Company imports into Europe, 1660-1779

Region 1668-70 1698-1700 1738-40 1758-60 1777-9

Bombay 36.07 34.40 6.06 5.89 ?
Madras 27.81 19.39 12.31 6.86 ?
Bengal 12.33 41.64 65.92 §2.85 54.28
Total for India 76.21 95.43 84.29 65.60 77.96
Southeast Asia 23.29 0.56 0.75 0.69 0.00
China 0.03 2.06 12.28 33.68 22.03

Source: The figures for the period until 1758-60 have been calculated from
Chaudhuri, The Trading World of Asia, Appendix 5, Table C.2, pp. 508-10.

The figures for 1777-9 have been calculated from Appendix 22C, ‘An account
of the total prime cost of all cargoes purchased in India and China, to be shipped
for Europe, for the different seasons from 1763 to 1778 inclusive, distinguishing
each year’; and Appendix 22B, ‘An account of the prime cost of investments
imported from China from the year 1765 to the year 1779 inclusive, with an
average for one year’, to Report from the Select Committee appointed to examine
the Reports of the Directors of the East India Company dated 22 June 1784
(Parliamentary Board collection 19, L/Parl/2/ India Office Library); and Ap-
pendix 6, ‘Invoice amount of Investments from Bengal 1766-1780’, to Ninth
Report from the Select Committee appointed to take into consideration the state
of the administration of justice in the provinces of Bengal, Bihar and Orissa dated
25 June 1783, L/Parl/2/15 India Office Library. The figures available are for total
exports from India and China, those from China and those from Bengal. The
percentage figure for India has been derived by deducting that from China from
the total for India and China. To the extent that there might have been some
imports from southeast Asia, the Indian figure would go down correspondingly.

~/— Pepper (25.3%)

Textiles (56.6%)

\-Saltpetre (7.7%)
Coffee (0.4%)

Fig. 4.2.1 1668-70

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AR site (7.1%)
7-Tea (1.1%)

Textiles (74.0%)

Fig. 4.2.3 1738-40

Fig 4.2.4 1758-60

Figs 4.2.1-4.2.4 Triennial totals and composition of the English
East India Company’s imports into Europe, 1660-1779

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100
90
80
70
60
50
40
30
20
10

Ma india
Gams South-East Asia
EZZZ3 China

percentage

1668-70 1698-1700 1738-40 1758-60 1777-79

Fig. 4.3 Regional distribution by origin of English Company
imports into Europe, 1660-1779

attraction that India held for the Company at this early stage was the
possibility of procuring textiles for the Indonesian archipelago, it is
not surprising that the first establishments were set up on the
Coromandel coast, the principal source of these textiles. The other
major coastal centres of trade in the subcontinent were reached over
the following few decades. The English East India Company also
arrived on the subcontinent almost simultaneously. As we noted
earlier, there was a long tradition of foreign merchants being allowed
to operate at Asian ports under a variety of administrative arrange-
ments. By virtue of being the leading centre of international exchange
and the meeting point of the Asian traders from the East and the West,
by far the most liberal in this regard was the port city of Malacca in
the fifteenth century. Asian merchants resident in and operating from
this port could be broadly divided into four groups: (a) the Gujaratis;
(b) other Indian merchant groups and merchants from Burma; (c) the
merchants from southeast Asia upto and including the Philippines;
and finally (d) the merchants from East Asia including the Chinese,
the Japanese and the Okinawans. Each of these four groups was
allowed to have a shahbandar of its own who managed the affairs of

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that particular merchant-group autonomously of the local authorities.
While such total autonomy was not the norm in most Asian ports and
merchants visiting from other parts of the continent were subject to
the discipline and the control of the local authorities, they were by and
large treated well and left alone to manage their affairs themselves.
This included the arrangements they might make with their local
counterparts, their business dealings in the market and so on, without
the administration making any undue interference in their decision-
making processes. This generally positive attitude towards these
merchants was in a large part conditioned by the revenue generated by
these merchants for the authorities in the form of, for example,
customs duties. On the arrival of the Europeans in Asia, a certain
amount of deviation from this tradition was occasioned in the case of
the Portuguese chiefly because of their belligerent behaviour and the
use of armed strength in the initial stages of their operations in Asia.
The troubles that the Portuguese had in 1501 with the samudri raja at
Calicut is a case in point. The centre of pepper procurement was
subsequently shifted to Cochin where the local raja was coerced into
granting the Portuguese monopoly rights in pepper. It is another
matter that, given the raja’s lack of real control over the areas where
pepper was grown or the overland routes used for its transportation
across the western ghats, the monopoly never really worked in any
effective sense. It is instructive to note that in 1663, when the raja of
Cochin, in collaboration with the Dutch East India Company, even-
tually managed to throw the Portuguese out of his kingdom, he was
obliged to grant identical monopoly privileges to the new European
collaborator. Earlier in the century, the VOC had also managed to
coerce authorities in various spice-producing islands in the Indonesian
archipelago into granting to the Company monopoly rights in spices
such as cloves, nutmeg and mace. The story was repeated later in the
century in Sri Lanka with reference to cinnamon, areca-nuts and other
goods.

From the vantage point of the Indian subcontinent, the case of the
Portuguese and of the Malabar coast in general must be looked upon
as exceptional. In the rest of the subcontinent, until at least the middle
of the eighteenth century, the relationship between the ruling
authority and the different European groups operating there was by
and large an amicable one based essentially on perceived mutual
advantage. The authorities basically looked upon the European com-

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panies’ trade in their area as a net addition with the attendant benefits
that such growth of trade entailed for the economy. More immedi-
ately, the resultant increase in the customs revenue, which in the case
of the Mughal empire accrued directly to the central treasury and
probably constituted a head of revenue in importance next only to
land revenue, was an important consideration. An equally important
consideration would seem to be the ‘bullion for goods’ character of
the Europeans’ trade. The fact that the companies paid for the goods
obtained in the subcontinent overwhelmingly in terms of precious
metals made them probably the single most important conduit for the
import of these metals into the country. In the context of the domestic
output of these metals being practically nil, their importation in
reasonably large quantities was critically important for, among other
things, the successful conduct of the subcontinent’s monetary system.
The result was that the Europeans’ requests for permission to trade
and the establishment of factories were granted almost as a matter of
course by the imperial authorities in the case of Mughal India, and by
the regional authorities in the case of the Coromandel coast. The rate
of customs duty that the company concerned was obliged to pay was
ordinarily the same as that payable by the Indian and other Asian
merchants operating from the region. Indeed, the imperial administra-
tion often went a step further and exempted the companies from the
payment of the transit (rabdari) duties, putting them in a position of
differential advantage vis-a-vis their own nationals. It is another matter
that the local and the provincial authorities, whose income streams
would have been adversely affected by such an exemption, usually
managed to ignore the imperial orders and continue charging the
rahdari duties. Under this dispensation, the companies operated in the
market basically as yet another group of merchants with no special
privileges whatever being available to them in their dealings with the
Indian merchants or artisans. By the same token, they were at liberty
to function in the system like any other merchant group, indigenous
or foreign, with no restrictions whatsoever on their using the various
infrastructural facilities that the system had to offer. Their factors and
representatives were allowed to travel anywhere in the empire, to buy
and sell where they found it most profitable to do so, and to deal with
their Indian counterparts on terms strictly determined by the market.
The critical significance for the Europeans of the market-determined
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perhaps best illustrated by a brief reference to their experience in
Japan both before and during the ‘closed-country’ era. Briefly stated,
in their business dealings in this bullion-providing country the
Europeans found themselves at the receiving end of an intensely
coercive relationship. Under an arrangement introduced in 1604 and
termed the pancado, the Portuguese were obliged to sell their principal
import into Japan, namely Chinese raw silk, at a price determined by a
guild monopsony consisting of a group of merchants from the five
imperial cities of Edo (Tokyo), Osaka, Kyoto, Sakai and Nagasaki.
This arrangement was part of a larger strategy adopted by the Japanese
authorities to give them a measure of control over the merchants
buying the imported raw silk. In 1631, when they protested against
the arrangement, the Portuguese were told that they were free to leave
the country. In 1633, they actually had to sell at prices lower than even
the pancado price.* The same year the pancado arrangement was
extended to cover a part of the Chinese raw silk brought in by the
Dutch East India Company as well. Following the promulgation in
June 1636 of the katkin edict and the expulsion of the Portuguese in
1639 consequent upon the suspected involvement of the Catholic
missionaries in the Shimabara rebellion in 1637, the Dutch became the
only European merchant-group to be allowed to operate in Japan. In
May 1641, they were ordered to move to the islet of Deshima off the
Nagasaki harbour to which they were henceforth confined, cutting
them off from the mainstream of Japanese life. The number of Japanese
allowed access to the Dutch quarters at Deshima was kept to a
minimum and the purpose of their visit limited to matters of trade.
The Japanese were prohibited from learning Dutch and the Hollanders
from learning Japanese; communication was permitted only through
interpreters in Portuguese. The commercial restrictions imposed on
the Company included a ban on the export of gold; the prescription of
days on which it could offer its goods for sale, until which time they
had to be kept in sealed warehouses; and the extension of the pancado
system to the entire lot of Chinese raw silk the Company imported
into Japan. The 1672 introduction of the system of shih shobai, which
the Dutch translated as taxatie-handel (appraised trade), effectively
extended the pancado system to all imports. On the basis of the

2 George Bryan Souza, The Survival of Empire: Portuguese Trade and Society in China
and the South China Sea, 1630-1754, Cambridge, 1986, p. 60.

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samples collected from the Dutch factors, the different commodities
imported were evaluated unilaterally by selected members of the
Nagasaki Chamber of Commerce. This arrangement had an immediate
and substantial adverse effect on the profitability of the trade, and in
1675 the Batavia Council wrote to the governor of Nagasaki that
although the Company traded with ‘all corners of the globe’, it had
‘never yet found a single other place where the purchaser fixed the
price’.> The appeal that the ‘appraised trade’ system be rescinded,
however, fell on deaf ears and the Dutch chief at Nagasaki, Martinus
Ceaser, could do little but express his frustration as follows: ‘But it
seems that the Japanese have finally laid aside all sense of honour and
decency whilst we perforce must dance to their piping in everything.’*
It is indeed true that in spite of all this, exclusive access to the Japan
trade was one of the principal differential advantages the Dutch had
over their European rivals. Nevertheless, in their commercial opera-
tions in Mughal India and the Coromandel coast, they had good
reason to be glad that if they did not have the monopoly privileges
there that they had in the Indonesian archipelago and Sri Lanka, they
were not subject there to the restrictive and coercive situation that
they had to face in Japan either.

THE ESTABLISHMENT OF FACTORIES:
PRIVILEGES, PERSONNEL AND SOCIAL LIFE

Coromandel

We noted above that the Dutch East India Company was the first
northern European corporate enterprise to establish factories in India.
The process was started on the Coromandel coast with the establish-
ment of a factory at Petapuli on the northern segment of the coast in
1606. Another factory was established the same year in the neigh-
bouring major port of Masulipatnam. The southern stretch of the
coast was reached with the establishment of a factory at Tirupapaliyur
in 1608. Finally, a factory was established in 1610 at the central
Coromandel port of Pulicat which also became the headquarters of the
Dutch directorate of Coromandel. The Fort Geldria was constructed

> Pieter van Dam, Beschrijvinge van de Oost-Indische Compagnie (ed. F.W. Stapel et al.),
Book uy, Part 1, p. 454.

4 CR. Boxer, ‘Jan Compagnie in Japan 1672-1674 or Anglo- Dutch rivalry in Japan and
Formosa’, Transactions of the Asiatic Society of Japan, second series, vol. 7, 1930, p. 170.

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at Pulicat in 1613 and the Coromandel complex of factories was
elevated in 1616 to the status of a ‘government’ with its seat at Fort
Geldria. As a countermeasure against the local havaldar’s demands,
the factory at Petapuli was closed in June 1616. Further, in view of the
uncertain conditions created by the civil war that engulfed southern
Coromandel following the death of king Venkata II of Vijayanagar,
the Tirupapaliyur factory was also abandoned in 1618. While the
overall head of the Coromandel factories was designated ‘governor’,
the chief of the factory at Masulipatnam was to be the second-in-
command and was designated ‘president’ in 1621. In 1690, the seat of
the Coromandel ‘government’ was moved from Pulicat to Nagapat-
tinam in southern Coromandel. A farman granted by the king of
Golconda in August 1606 stipulated the payment by the Dutch of a 4
per cent customs duty on their exports and imports. The Company
was exempted from the stamp duty on cloth amounting to about 12
per cent. In 1612, the 4 per cent duty at Masulipatnam was commuted
to a fixed payment of 3,000 pagodas per annum.

In the year 1680, the personnel of the Dutch establishments on the
Coromandel coast was reported to have totalled 441 of which 233
were Indians holding diverse jobs such as clerks with a knowledge of
Persian, blacksmiths, carpenters, domestic servants, palanquin-bearers,
stableboys, torch-bearers etc. Of the 208 European functionaries, as
many as 128 were soldiers including a lieutenant, 5 sergeants and 7
corporals. The bulk of these constituted the garrison at Fort Geldria.
Eleven of the European employees performed miscelleneous jobs and
included a clergyman, five medical men and two trumpeters. The
remaining sixty-nine functionaries directly looked after the Compa-
ny’s trade and included the governor, two chief factors, six factors,
thirteen under-factors, four book-keepers and forty-three assistants.>
The European employees essentially constituted self-contained com-
munities who lived under communal discipline maintaining their own
cultural traditions. The walled factory compounds served both as
living quarters and as secure storage for valuable goods. Partly in
order to impress the local inhabitants and the royal court with the
wealth and the power of the Company, the senior members of the staff
often lived in ostentatious style. For example, when Thevenot visited
Golconda in 1666, he found that the Dutch chief factor at Masuli-

3 van Dam, Beschrijvinge, Book tl, p. 234.

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patnam was escorted by standard-bearers and trumpeters whenever he
went out. Baldeus, who was the minister on the coast during the
1660s, has left a detailed account of the daily habits and manner of
living of the Dutch in Coromandel. They had adopted many of the
local habits, like washing the mouth after every meal and chewing
betel leaves. Their diet was on the whole the same as in Holland and a
large proportion of the meat and bacon required was supplied from
Holland as hopes of procuring victuals cheaply on the coast had
proved to be false. Coromandel, in the opinion of a Dutch governor,
‘was more a prey to Bacchus and Venus than any other place in India’,
and many of the coast factors believed that ‘men must follow the ways
of the land’. Their zeal in this respect often involved the Dutch in
serious difficulties with the local people and the other European
companies. It was decided, in 1633, to pay the Coromandel factors
only the amount considered necessary for keeping house, the balance
of their salary being paid when they returned to Batavia, so that they
should have no surplus money in their hands during their stay on the
coast. The measure was directed against both illegal private trade and
habitual drunkenness and debauchery.®

As far as the English East India Company was concerned, a factory
was established at Masulipatnam in 1611, though the first Company
voyage to the coast was organized only in 1614. Initially, the Dutch
factors at Pulicat had instructions to try and keep the English out of
the Pulicat trade. But the 1619 Treaty of Defence that terminated the
hostilities between the two companies in the Indonesian archipelago
contained a clause entitling the English Company to a share in the
trade at Pulicat provided they also shared half of the cost of the
maintenance of the Dutch fort and the garrison there. An agreement
signed at Batavia on 13 April 1621 provided that in the case where the
two companies wished to buy identical varieties of textiles at Pulicat,
these would be bought jointly. The Dutch also undertook to provide
accommodation to the English factors inside the fort itself against the
payment of rent at least till such time as alternative arrangements were
made for them. The Globe arrived at Pulicat on 19 June 1621 and the
cooperation between the two companies formally started.

But the accord ran into problems almost from the very beginning.
The English complained that the Dutch did not offer them half of the

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total textiles procured but insisted on dividing the lot in proportion to
the capital invested by the two companies respectively. They also
complained about the inadequacy of the accommodation provided for
them as well as about the procedure adopted to work out their share
of the cost of the maintenance of the garrison. The Dutch retorted that
the joint procurement of textiles ensured for the English the same
price and quality that the Hollanders got for themselves on the basis
of the experience acquired by them over a number of years. The
English were not convinced and the result was a growing bitterness
between the two companies. Governor-General Coen, who was in any
case strongly opposed to any kind of accommodation with the
English, wrote the following to the Directors in January 1622:

It was impossible to deal with the English. They would do as much damage to the
Dutch interests as they could, and then claim that it was they who were the
aggrieved party. The jealousy, the distrust and the envy that these people had was
unlikely to be neutralized by any regulations, agreements or orders. The more
apart the two stayed from each other, the greater were the chances of continued
friendliness between the two.’

In May of the same year, he wrote to the factors at Masulipatnam:

Regarding the costs at the Moluccas, Amboina, Banda, and Pulicat, the English
had nothing but complaints to make. Their ambition and greed could never be
appeased. In all matters, big and small, they found themselves cheated, sunk,
affronted and despised so much so that it appeared that the entire means at the
disposal of the Company would not be enough to meet their claims.®

The Dutch factors at Coromandel, however, did not take such an
extreme view of the situation at any stage and indeed consciously tried
to accommodate the English whenever possible. The latter, however,
found the burden of their share of the maintenance costs of the fort
and the garrison at Pulicat crippling. In any case, all hopes of any
continued cooperation between the two nations were dashed to the
ground following the notorious ‘massacre’ of Amboyna in February
1623. The formal termination at Pulicat came with the English with-
drawal from that place on 1 July 1623. Soon thereafter, a factory was
established at Armagon. The Anglo-Portuguese truce also made the

7 General letter from Coen at Batavia to the Directors at Amsterdam, 21 January 1622,
Algemeen Rijksarchief (henceforth ARA), Verenigde Oost-Indische Compagnie (henceforth
VOC), 1075, ff. 2-10Vv.

8 Coen at Batavia to Andries Soury and Van Uffelen at Masulipatnam, 8 May 1622, ARA,
VOC 849, ff. 82-5.

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establishment of a factory possible at Madras in 1640. The Fort
St George was constructed there and, in September 1641, Madras was
designated the chief factory of Coromandel. Factories were also
established at Cuddalore and Vizagapatnam on the coast.

Gujarat

The quest for textiles for the Indonesian archipelago next took the
VOC to Gujarat where a factory was established at Surat in 1618 on
the strength of a document granted by the subadar, Prince Khurram.
Soon thereafter subordinate factories were established at Broach,
Baroda, Cambay, Ahmedabad, Burhanpur and Agra. The establish-
ments at Cambay and Burhanpur were, however, not found particu-
larly useful and were soon withdrawn. The English East India
Company had earlier established a factory at Surat in 1613 and had
extended its trade to Ahmedabad, Burhanpur and Agra. Since it was
not feasible to have garrisons in the Mughal territories, the Gujarat
establishment of the VOC was relatively small. In 1619, a total of
eighteen Dutch employees was recorded: by 1628, this number had
gone up to thirty-five, of whom twenty-two were employed at Surat
and the remaining at Ahmedabad, Agra, Broach and Baroda. After a
decline in the famine-hit 1630s, the number in 1651 was reported to be
fifty-one. The increase in the volume of trade in the second half of the
century necessitated a further increase in the number to seventy-eight
in 1687-8. The number of Indian functionaries at work in the Gujarat-
Agra establishments at this time was reported to be 150. By the middle
of the eighteenth century, this number had gone up to 300, though
soon after a big drop was recorded.”

The VOC factors at Surat formed part of a Christian community
which included the resident Portuguese, the Armenians and the
English. Considerable differences in the domain of religion, politics
and economics across these constituent units notwithstanding, they
appeared from the outside to be a socially coherent group. Thus on
the last journey of the wife of the VOC Director Paulus Croock in
1642 to the Dutch cemetery in the city (where her tombstone still
stands), all resident Europeans were in attendance. The procession was
headed by two trumpeters — a Dutchman and an Englishman — while

° H.W. van Santen, De Verenigde Oost-Indische Compagnie in Gujarat en Hindustan,
1620-1660, Leiden, 1982, p. 9.

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the coffin was carried by four Dutch and four English Company
servants. Then followed a carriage with the female slaves of the
departed woman and two flag-carriers bearing the Dutch and the
English colours. Next, clad in black, were the Dutch director, the
English director, and, in hierarchical order, the factors and the
assistants of the two companies. The rear was made up by the other
resident Christians of the city totalling in all approximately sixty
persons. Like their counterparts in Coromandel and elsewhere, the
Dutch factors in Mughal India also liked to live in style. For example,
whenever the Director left the factory, he was preceded by trumpeters,
drummers and the Dutch flag. The Governor-General at Batavia could
do little about this except to express his strong displeasure when
rumours reached him regarding the ‘splendour ... with which the
factors lived there, going about draped in gold’.!°

Bengal

The extension of Dutch trade to Bengal in the 1630s was also in
response to the imperatives of the Company’s intra-Asian trade,
though the commodity this time was not cotton textiles for the
Indonesian archipelago, but raw silk and silk textiles for the critically
important bullion-providing Japan trade. A factory was established at
Hariharpur in Orissa in 1633, and another at Hugli in 1635. But the
Hugli factory was abandoned in 1636 in favour of another at Pipli in
Orissa. Soon after, the Hariharpur factory was also abandoned and a
new one opened at Balasore, also in Orissa. The Hugli factory was re-
established sometime between 1645 and 1647, but the chief factory of
the Bengal region continued to be at Pipli. Sometime between 1645
and 1651, the Patna factory, originally founded in 1638 but abandoned
the same year, was also re-established and a new factory opened at
Kasimbazar, the principal silk emporium of the region. The Bengal
factories came of age in 1655 when they were organized into a
directorate independent of the ‘government’ at Pulicat. The following
year, the factory at Hugli (in the village of Chinsura) was recognized
as the chief factory of the region and continued to be the seat of the
Dutch directorate of Bengal for nearly a century and a half. The
Company leased the villages of Chinsura, Baranagar and Bazar

10 van Santen, De Verenigde Oost-Indische Compagnie in Gujarat en Hindustan,

pp. 1o-1I.

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Mirzapur for an annual ground rent of Rs.1,574. In 1676, a factory
was opened at Malda in north Bengal primarily for the procurement of
textiles. But it was closed in 1687 in pursuance of Commissioner Van
Rheede’s directive to make do with as few establishments as
possible.'!

By three farmans granted between 1636 and 1638, Emperor Shah-
jahan had allowed the Company to trade freely in Bengal, though the
rate of customs duty payable by it was left vague. By virtue of various
documents granted to it, the Company was also exempted from the
payment of transit (rahdari) duties in the province. The Van Adrichem
embassy, sent to Delhi in 1662 to try and obtain from the new
emperor Aurangzeb concessions that his late father Shahjahan had
accorded the Company, did indeed manage to obtain a farman
exempting the Company from transit and similar duties in the
provinces of Bengal, Bihar and Orissa. As for the customs duties, the
farman instructed the relevant officials to go on charging the
Company at the ‘formerly established’ rate (which was 4 per cent at
Hugli and 3 per cent at Pipli and Balasore). The rate of customs duty
payable at Hugli was reduced to 3.5 per cent in 1679 or later. This
might have been done to ensure uniformity with the rate at Surat,
where it was 2.5 per cent prior to 1679, but was later increased to 3.5
per cent to include 1 per cent in lieu of the jazia. By a farman granted
by Emperor Bahadur Shah in January 1709, the rate of customs duty
payable at Surat and Hugli was reduced from 3.5 to 2.5 per cent. The
1709 rates were confirmed in August 1712 by a farman by Bahadur
Shah’s successor, Jahandar Shah. By a separate farman granted at the
same time, the new emperor also confirmed the Company’s exemption
from transit and similar duties throughout the Mughal empire.!?

The personnel of the Company’s establishments in Bengal was
reported in 1680 to be 64 European and 341 Indian employees. As in
the case of Gujarat, the European employees did not include any
soldiers. Apart from seven medical men and an equal number of those
attending to miscellaneous jobs, all the European functionaries were
basically assigned commercial duties. The main job of the law enforce-
ment officer (the fiscaal) was to prevent illicit participation in private
trade by the Company’s factors. A career survey of 115 European

'' Om Prakash, The Dutch East India Company and the Economy of Bengal, 1630-1720,
Princeton, 1985, pp. 34-41.
'2 Prakash, The Dutch East India Company and the Economy of Bengal, pp. 37-43.

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employees of the directorate of Bengal during the eighteenth century
showed that only 34 of them (30 per cent) returned to Holland after
an average Company service of 21 years. The other 81 employees died
in Asia at the age of 45 plus after an average of 223 years of Company
service.

The English East India Company reached Bengal about the same
time as the Dutch, and by 1651 had established a factory at Hugli. Soon
thereafter, factories were established at Balasore, Kasimbazar, Patna,
Dhaka and Malda. Following the outbreak of hostilities between the
English Company and the Mughal authorities in 1686, the English
moved to Sutanati which later became the nucleus of the city of
Calcutta. The English had started out in Bengal with a distinct
advantage over all their European rivals: the exemption from customs
and transit duties that they had been able to obtain from the Mughal
authorities subject to an annual tribute of a mere Rs.3,000. The
concession had initially been obtained through fraudulent means. The
1651 nishan by subadar Prince Shah Shuja conferring this concession
had been obtained by misrepresentation of facts pertaining to the
farman granted by Emperor Shahjahan in 1650. From 1656 onward,
however, the factors were obliged to pay to the port authorities at
Hugli an annual tribute of Rs.3,000 as the price for continued exemp-
tion from the customs duty. A hasb-ul-hukm issued in February 1691
under the seal of Wazir Asad Khan formalized the duty-exempt status
of the Company subject to an annual tribute of Rs.3,000. This privilege
received royal sanction in the form of Farrukhsiyar’s well-known
farman of 1717. An idea of the magnitude of the distinct differential
advantage that this concession would have conferred on the English
would probably be conveyed by reference to the fact that, in the decade
of 1711-20, the average annual liability of the Dutch East India
Company on account of the customs duties payable by it in Bengal
would have worked out at approximately Rs.120,000.!*

Malabar

The last of the major Indian regions the northern European trading
companies reached was the southwest coast of India, comprising the
Malabar and the Kanara coasts. In 1637, the VOC had established a

'3 F, Lequin, Het Personnel van de Verenigde Oost-Indische Compagnie in Azie in de
Achttiende eeuw, meer in het byzonder in de vestiging Bengalen, Leiden, 1982, pp. 206-11.
4 Prakash, The Dutch East India Company and the Economy of Bengal, pp. 75-81.

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small factory at Vengurla in the kingdom of Bijapur on the Kanara
coast under the direct jurisdiction of Batavia. In Malabar, a factory
was set up in Kayakulam in 1647. But the resumption of hostilities
with the Portuguese after the end of the Ten Years’ Truce in 1652
forced a withdrawal of the factory. It was only in 1663, when the
Dutch, collaborating with the raja of Cochin, managed to throw the
Portuguese out that the Dutch trade at Malabar began on a regular and
substantive basis. The strategic role of the Vengurla factory now came
to an end. It was placed under the charge of the chief factory at Surat
in 1673 and for all practical purposes abondoned in 1685, though
formal orders for its closure were not issued until 1692. The special
nature of the Company’s trade at Malabar, which in theory was run
on the basis of monopoly privileges granted by the raja of Cochin in
pepper — the principal item provided by the region — would be clear by
reference to the division of the personnel of the Company’s establish-
ments in the region in the year 1680. In addition to 162 Indian
employees, there were as many as 561 European employees at work in
these establishments at this time. The significant thing to note is that
of the 561 European functionaries, military officers and soldiers
accounted for no fewer than 423.!> Whatever of its theoretical mono-
poly rights the Company managed actually to enjoy in Malabar would
have owed a great deal to this impressive military presence. The
English East India Company also maintained factories at Tellicherry,
Cochin and Anjengo on the Malabar coast but, given the absence of
any special privileges, the nature of its presence was very different
from that of the Dutch East India Company.

THE ADMINISTRATIVE FUNCTIONING OF THE
FACTORIES: THE ROLE OF BATAVIA

In a given region, be it the Coromandel coast or Bengal or any other,
the chief factory together with the subordinate factories constituted an
administrative complex with clearly defined decision-making pro-
cesses and procedures. In the case of the Dutch East India Company,
the principal executive body at the chief factory level was the council
headed by the Governor or the Director as the case might be. In
Bengal, the Hugli Council consisted, besides the Director, of a senior

5 van Dam, Beschrijvinge, Book 1, pp. 240-1.

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factor in charge of the Company’s trade books, the fiscaal, the factor
in charge of the warehouses, the factor in charge of the loading and the
unloading of the ships and six junior factors, one of whom acted as
secretary to the council. Each of the subordinate factories also had a
council. The chief of the Kasimbazar factory, who held the rank of
senior factor, was treated as second-in-command in the directorate
and in the event of the death or incapacitation of the director took
over the latter’s functions pending the appointment of a regular
incumbent to the position. As pointed out earlier, in Coromandel the
position of the second-in-command was held by the President at
Masulipatnam. A centralizing factor in the administrative structure of
the Coromandel factories was the office of the hoofd-administrateur,
i.e. chief administrator, who supervised the accounts for the entire
coast before these were sent to Batavia. Besides these, there was the
Council of Justice for the coast which had powers to judge and punish
the employees in Coromandel.

The administrative structure was not very different in the case of the
English East India Company with the principal decision-making
powers lying with the chiefs of the factories at Madras, Surat (later
Bombay) and Calcutta. In 1653, Madras was made a presidency and
five years later all English settlements on the Coromandel coast and in
Bengal were subordinated to it. In 1661, the centre of the Company’s
northern trade was still firmly located in Surat. The chief of the Surat
factory carried the title of President and the area of his authority
extended well beyond the subordinate factories of Broach and Ahme-
dabad in Gujarat. He was also in charge of the factories at Tatta in
Sind, Karwal, Kayal and Rajapur further south down the coast and
even Gombroon and Isfahan in Persia, Basra in the Persian Gulf and
Mocha in the Yemen.’® Following the construction of Fort William
there in 1700, Calcutta also became an autonomous entity. Once this
was the case, the respective chiefs of the three Presidency settlements
at Madras, Bombay and Calcutta dealt directly with the Court of
Directors in London.

A feature peculiar to the Dutch East India Company with far-
reaching implications in a variety of directions, and which indeed has
already been noted earlier, must be commented upon at this stage.

'6 K.N. Chaudhuri, The Trading World of Asia and the English East India Company
1660-1760, Cambridge, 1978, p. 47.

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This was the office of the Governor-General and Council at Batavia
with a large establishment acting essentially as an intermediate agency
between the Board of Directors — the Heren XVII - and the Company
establishments all over Asia. The decision to create this office, whose
first occupant was Pieter Both, had been taken in September 1609. The
office was initially located at Bantam but was shifted to the Batavia
Castle after the founding of the town in 1619 (actually christened
Batavia only in 1621). To begin with, the members of the Council,
presided over by the Governor-General, numbered five but this was
increased to nine in 1617. From 1650 onward, the Council consisted
of six ordinary and two extraordinary members with the position of
the Governor-General further strengthened in the set-up. The Batavia
Castle functioned as the eastern headquarters of the Company and the
Governor-General and the High Council were the supreme authority
in Asia. The structure of command was for the Heren XVII to deal
almost exclusively with the Governor-General and Council who, in
turn, dealt with the chief factories in the individual Asian regions.
Thus the Directors sent the consolidated orders-list for the year,
listing the orders region by region, to Batavia, which arranged for the
transmission of the relevant part of the list to each of the regions. By
the same token, the chief factory of each individual region reported to
Batavia which, in turn, communicated from this advice whatever it
considered necessary to the Heren XVII in the form of one or more
general letters each year. Whenever necessary, of course, there could
indeed be direct communication between a chief factory and the
Heren XVII, but this was ordinarily kept to the minimum. Individual
chief factories dispatched cargoes to Batavia where they were centrally
collected and then put on the homeward-bound ships, which would
have earlier in the season travelled directly to Batavia from Holland.
Of course, there were exceptions here too and direct shipments from
Sri Lanka, Surat and Bengal, etc., to the Netherlands did indeed take
place, though never on a large scale.

The availability of an intermediate high-ranking agency in Asia
conditioned to a significant extent the functioning of the Dutch East
India Company as well as the precise trading strategy it was able to
evolve over the years. One could, for example, argue with a reasonable
amount of certainty that extensive participation in intra-Asian trade,
which in time became the single most important feature distinguishing
the Company from its fellow European corporate enterprises func-

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tioning in Asia and which indeed contributed a great deal to its
dominant position in Euro-Asian trade through at least the seven-
teenth century, would have been unthinkable without Batavia. The
whole enterprise was the brainchild of Coen and his successors at
Batavia which played the critical coordinating agency’s role
throughout the seventeenth and the eighteenth centuries. But at the
same time, it must be recognized that there were other dimensions of
Batavia’s intermediate role, all of which were not necessarily to the
Company’s advantage in the long run. Take, for example, the procure-
ment by the Company of Indian textiles for the European market
following the fashion revolution of the last quarter of the seventeenth
century when trade in these textiles became the most important single
component of the Company’s Euro-Asian trade. Bengal had emerged
as the single largest provider of these textiles accounting at the turn of
the eighteenth century for an incredible 55 per cent, by value, of the
total of Asian textiles the Company imported into Europe. The
Bengal—Europe trade in textiles was essentially a luxury trade in which
exclusiveness and novelty in designs and patterns mattered a great
deal. In 1681, for example, the English Court of Directors had written
to their factors in Bengal,

Now this for a constant and generall Rule, that in all flowered silks you change ye
fashion and flower as much as you can every yeare, for English Ladies and they
say ye French and other Europeans will give twice as much for a new thing not
seen in Europe before, though worse, than they will give for a better silk for [of]
the same fashion worn ye former yeare.

Later the same year, they had written, ‘Of all silk wares, take it for a
certain rule that whatever is new, gaudy or unusual will always find a
good price at our candle.” This exclusiveness, coupled with the
intense competition among the Europeans for limited supplies, put a
large premium on quick decisions by the local European factors. Such
a decision might pertain to the purchase of a textile with a new pattern
or a textile whose quality or size specification was substantially
different from that stated in the relevant orders list. In this kind of
situation, the English were able to score over the Dutch. Given the
distance between England and India, the English Directors really had
no option but to allow a considerable amount of discretion in such
matters to factors in Calcutta and elsewhere on the subcontinent. The

‘7 V. Slomann, Bizarre Designs in Silks, Copenhagen, 1953, p. 114.

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result was a constant flow of new varieties, colour combinations and
patterns in the textiles that Calcutta sent to London, though in the
process the prices paid for these textiles continuously went up. The
Dutch factors, on the other hand, were continuously denied such
discretionary powers. The reason was the belief that considering that
Batavia was only a few weeks away from Hugli and for that matter
any other Asian chief factory, such discretion was best left only to the
Governor-General and Council. The Directors’ general perception
that the factors in India, particularly those in Hugli, which was by far
the most important centre from which clandestine private trade was
organized, ordinarily worked to their personal advantage rather than
to that of the Company contributed to this decision. But the fact of
the matter was that Batavia was never really able to help the Bengal
factors effectively in deciding what to buy. The net result was that the
Bengal factors at no time were able to snatch the initiative from their
English counterparts, with attendant negative consequences for profit-
ability and growth.

THE SUPERIOR NAVAL POWER OF THE
EUROPEANS: CONFLICT RESOLUTION

We had noted earlier the absence of coercion in the relationship
between the Indian political authorities and the northern European
trading companies. This was by and large true for all Indian regions
other than the Malabar coast until the rise to power of the English
East India Company in Bengal in the second half of the eighteenth
century. Such absence of coercion, of course, did not by any means
preclude the occasional emergence of areas of conflict between the two
sides. But in such an event, both sides were concerned that the conflict
should not be allowed to escalate beyond a certain point. At work was
indeed a rather finely tuned balance between the Europeans’ unques-
tioned superiority on the sea as against their almost total vulnerability
on land for a long time. Scholars such as Frederic C. Lane and, more
recently, Niels Steensgaard have gone to the extent of arguing that ‘the
principal export of pre-industrial Europe to the rest of the world was
violence’. In the case of India, and more generally Asia, the capacity to
inflict violence followed essentially from the immense armed super-
iority of European ships over their indigenous counterparts. A glaring
example of this disparity was provided in April 1612 when six English

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ships congregated off the Arabian coast and hijacked, in succession,
fifteen passing Mughal ships from India, culminating in the capture of
the great 1,000-ton vessel Rahimi, which belonged to the mother of
the Mughal emperor. The prizes were taken to a nearby anchorage and
plundered at will. It is true that the Rahimi was armed with some
fifteen pieces of artillery and that the soldiers aboard her carried
muskets, but these were merely anti-personnel weapons. Indian
vessels, which often relied on rope and treenails to hold their planks in
place, lacked the strength either to suffer heavy artillery bombardment
from without, or to absorb the recoil of large ordnance firing from
within.!® The fact that the English could do this with impunity
reflected not only the vulnerability of the Indian mercantile vessels but
also the absence of a Mughal Indian navy capable of retaliating against
such high-handed action. The flotilla at Dhaka and the fleet main-
tained by the Sidis at Janjira near Bombay were clearly inadequate to
support an offensive against the European ships. It was indeed not
without reason that in 1662, on being approached on behalf of the
king of the Maldive Islands to use his good offices to persuade
Emperor Aurangzeb to impose a ban on English and Dutch shipping
to the islands, the faujdar of Balasore pointed out that even if the
emperor could be persuaded to oblige the king, he was in no position
to do so since he was ‘master only of land and not of the sea’.!

An early institutionalized consequence of the European naval
superiority was the requirement that the Portuguese, almost immedi-
ately on their arrival in the western Indian Ocean, imposed on Asian
shipping to obtain from them before each voyage a licence in the form
of a cartaz. The document obliged the Asian ship to call at a
Portuguese-controlled port and to pay customs duties before it
proceeded on its voyage to ports enumerated in the document. While
it is true that the distorting effects of this innovation in reorienting the
direction of Indian merchants’ trade were relatively limited, it was
nevertheless instrumental in bringing about a quiet revolution in the
organizational structure of Asian trade. For the first time in the
history of this trade, the unfettered and absolute freedom of navigation
on the high seas stood compromised.

In the seventeenth century, the Dutch, English and French compa-

'8 Geoffrey Parker, The Military Revolution, Military Innovation and the Rise of the
West, 1500-1800, Cambridge, 1988, pp. 107-8.
'9 Prakash, The Dutch East India Company and the Economy of Bengal, p. 48, note 84.

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nies also took over the cartaz system from the Portuguese, though in a
modified format and under the nomenclature of the ‘pass’ or the
‘passport’ system. It was, however, only the Dutch East India
Company which, given its high stakes in intra-Asian trade, took the
system with a certain amount of seriousness. Even there, whenever the
Company chose to enforce the restrictions it might prescribe for
Indian shipping rigorously, it came into conflict with both the Indian
merchants as well as the ruling authorities with consequences which
were not altogether pleasant for either side. A case in point is the
troubles the Company faced at Surat in 1648-9. Following the
conquest of Malacca in 1641 and the subsequent conclusion of
monopsony agreements with the principal tin-producing regions in
the Malay peninsula, the Company had sought to restrict direct access
for Indian vessels to the ‘tin ports’ north of Malacca, and to get them
to carry out all their trade at Malacca itself. This strategy, however,
proved largely ineffective as long as these vessels had continuing free
access to the Bay of Bengal port of Acheh on the northern tip of
Sumatra. The extensive trade carried on by the Acheh merchants with
Sumatran and Malayan ports made Acheh a large market for Indian
textiles, as well as a major procurement point for items such as pepper
and tin. Indeed, on the basis of the passes issued by the queen of
Acheh it was even possible for the Indian merchants to sail to the east
Sumatran and west Malayan ports and carry on trade there. Particu-
larly useful in this regard was the link to Perak which was then a vassal
state of Acheh and was abundantly provided with tin. The implica-
tions of this for the VOC were quite severe. In 1646, no tin could be
bought in the Malay peninsula and no pepper could be sold at
Malacca. A full-scale response was evidently called for and on 3 July
1647, Batavia resolved that ‘the Moors of Surat, Coromandel, Bengal,
Pegu etc. be prohibited from the trade both in Achin [Acheh] and in
the tin quarters [of peninsular Malaya] on pain of seizure [of their
vessels] as legitimate prize if they come there in the future’. It was
decided to intensify the cruising of the approaches to Acheh as well as
to ports such as Kedah, Perak and Johor. The factors in India were
instructed not to issue passes for Acheh or any of the other ports
declared out of bounds.?°

20'S. Arasaratnam, ‘Some notes on the Dutch in Malacca and the Indo-Malayan trade
1641-1670’, Journal of Southeast Asian History, vol. 10 (3), 1969, pp. 480-90.

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The reaction to this severely restrictionist policy was sharp at least
at Surat. When passes for Acheh were refused, the Mughal authorities
banned the loading of the Dutch ships at the port. That was not all: in
April 1648, the local Dutch factory was stormed by a force of 150
men. One Dutchman was killed, two others wounded and goods
worth f.27,000 plundered. The attackers were never identified, but it
was a clear message signalling the gross displeasure of both the Mughal
authorities as well as the local merchants. Johan Tack, the Company’s
man at Agra, made representation to the Court asking for the restitu-
tion of the plundered goods. With the help of one of the amirs at the
Court, Haqiqat Khan, who was generally favourably inclined towards
the Company, an audience with Emperor Shahjahan was obtained.
The emperor promised to grant a farman directing the mutasaddi of
Surat to compensate the Company for the plundered goods. But
before the farman could be issued, a delegation of the Surat merchants
arrived at the Court. They could not prevent the grant of the farman,
but ensured that it was a very different kind of document. All that the
farman did was to say that the local authorities at Surat would do their
best to trace the plundered goods. The factors saw no point in even
bringing the document to the attention of the mutasaddi. The
Company then decided to retaliate on the sea. A fleet sent from
Batavia for the purpose arrived too late in 1648 to attack the Indian
shipping returning from Mocha. But the following year, two Gujarati
ships on their way back from Mocha and carrying a cargo worth more
than one and a half million guilders were seized just outside Surat.
Following negotiations between the Company, the local authorities
and some of the leading merchants of the city, the Company’s twofold
demand for compensation for the plundered goods and a promise to
stop the Surat ships’ attempted voyages to Acheh, Perak, Kedah and
Phuket, etc. was accepted. In return, the Company released the seized
ships and the cargo to the lawful owners.?!

The implications of the Company’s pass policy during these years
were somewhat less severe on the Coromandel coast. The problems
there revolved mainly around the issue of the refusal of passes for the
ships of the all-powerful noble, Mir Jumla. Following the seizure in
1647 of tin worth 2,000 rials off Perak from a ship of the Mir because it

2! van Santen, De Verenigde Oost-Indische Compagnie in Gujarat en Hindustan,

pp. 21-4.

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did not carry a Dutch pass, the governor of Masulipatnam, a subordi-
nate of Mir Jumla, asked for restitution. Peace was bought temporarily
by a promise to do the needful and by agreeing to sell the entire stock
of cloves in the Company’s warehouses in Coromandel together with a
certain amount of copper to the Mir. But the tin had not been returned
by 1651 leading to obstructions being placed on the Company’s textile
trade in the region. It was only after Commissioner Dirck Steur went
to see Mir Jumla that an agreement emerged. The Company reiterated
its promise to return the tin besides undertaking to buy its require-
ments of textiles at specified places only from the representatives of the
Mir. But problems surfaced again following the seizure of one of Mir
Jumla’s ships, the Nazareth, off Malacca for flying the Portuguese flag
after the Dutch—Portuguese truce had ended. Matters came to a head in
1653 when Mir Jumla threatened to attack Fort Geldria unless the
Nazareth and its cargo were released immediately and passes granted
for the Portuguese-controlled ports in Sri Lanka. It was then decided
to meet a part of the Mir’s claims in respect of the goods carried by the
Nazareth. Besides, passes were to be issued to all subjects of Golconda
for ports under the jurisdiction of the king of Kandi and for Acheh.
The only stipulation made regarding the latter was that in the event of
the blockade of the port by the Dutch, the ships sailing for Acheh
would agree to proceed to another destination approved by the
Company. It was, however, only at the end of 1655 that the compensa-
tion in respect of the Nazareth was paid. The Company also conceded
the Mir’s right to trade with Makassar, Bantam and Kedah as well as to
send goods to Malacca aboard the Company’s ships. In return, Mir
Jumla agreed not to send ships to Jaffanapatnam in view of the ongoing
Dutch—Portuguese struggle there.”

The naval superiority of the Europeans often had other dimensions
as well. Naval assistance might be sought by the Indian provincial or
other administrations for purposes such as organizing campaigns
against neighbouring states and containing the depradations of the
European pirates against Indian shipping. The general policy the
companies followed in this regard was to avoid becoming involved as
far as possible. When there was no alternative, the obligations were
sought to be fulfilled with as little investment in men and materials as
possible.

22 Raychaudhuri, Jan Company in Coromandel, pp. 48-51.

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The first such major involvement of the Dutch East India Company
was in the Mughal campaign against Chittagong in 1665-6. The
attempt to conquer Chittagong and, if possible, Arakan was intended
to contain the Magh pirates who had rendered impossible any profit-
able trade along the river Meghna, which was one of the two estuaries
serving Bengal. These pirates had joined hands with the Portuguese
chatins and operated from Chittagong with the active connivance of
the king of Arakan, who shared in the spoils. Between 1656 and 1664,
campaigns were planned twice but not executed for various reasons.
Matters came to a head in 1664, when 60 to 70 pirate vessels were
reported to have captured as many as 160 boats of the imperial flotilla.
Later the same year, the pirates were reported to have captured in one
raid 2,700 to 2,800 Bengalis from Bhusna to be sold as slaves. The
provincial authorities were ordered to reorganize the flotilla and
execute the campaign. Subadar Shaista Khan asked the Portuguese, the
English and the Dutch for assistance in the form of armed vessels. The
Dutch were requested to provide ten to twenty vessels against the
promise of a reimbursement of the costs incurred, the grant of one
fourth of the territory that might be conquered (with the Company
having the option to demand a cash payment in lieu thereof), and an
exemption in perpetuity from the payment of customs duties
throughout the Mughal empire. Even if it is assumed that not all the
promises would have been kept, the very fact that such extravagant
terms were offered only serves to underscore the pathetic state of
naval capability in Mughal India. The Batavia Council agreed to
provide two small ships, the Landsmeer and the Purmerland, for the
campaign. But the vessels arrived at Chittagong only on 11 October
1666, long after the forts at both Chittagong and Rambu — midway
between Chittagong and Arakan — had been captured by the Mughal
forces under the command of Buzurg Ummed Khan, the son of
Subadar Shaista Khan. Due to the shortage of supplies and other
factors, the campaign had been suspended at this stage. Commander
Van Leenen, therefore, proceeded with the vessels to Dhaka, where
they were placed at the disposal of the local factors for commercial
use. The planned campaign against Arakan did not materialize, and the
Mughal forces returned to Dhaka.”

Another important area of potential conflict between the Europeans

23 Prakash, The Dutch East India Company and the Economy of Bengal, pp. 49-50.

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and the Mughal authorities was the demand made on the former to
provide protection to Indian shipping against the depradations of
European pirates operating from their bases in Madagascar. The 1692
plunder of four Surat vessels, two of which were owned by Mulla
Abdul Ghafur, brought forth a demand on the Dutch, the English and
the French companies to equip a warship each for the purpose of
apprehending the pirate ships. The failure to comply with this demand
led to a ban in February 1693 on the Europeans’ trade throughout the
Mughal empire. It was only through bribes to officials at the local and
the provincial levels that the trade could be continued on a clandestine
basis. The ban was formally withdrawn only in February 1694.

The plunder of the Ganj-i-Sawai in 1695 was instrumental in the
introduction of the system of Dutch and English convoys to the Red
Sea. A large ship of 1,000 khandies was paid a fee of Rs.20,000 for a
round trip while a smaller vessel qualified for Rs.15,000. Half the sum
was found by the mutasaddi of Surat from the customs duties, while
the rest was jointly subscribed by the merchants whose ships were to
make the trip. The Company was allowed to carry its own cargo or
freight goods on the escort vessels it made available. This arrangement
worked well until 1698, when Surat merchant Hasan Hamadani lost a
richly laden ship. The ship had not formed part of the convoy, but
each of the three companies was nevertheless obliged in February 1699
to give a bond (muchalka) accepting responsibility for any losses that
vessels from Surat might in future sustain at the hands of the pirates.
The English were made responsible for the vessels going to the
southwest coast of India, the Malay peninsula and the Indonesian
archipelago, the French for those going to the Persian Gulf, and the
Dutch for vessels going to the Red Sea. Abdul Ghafur and other
merchants interpreted the muchalkas as implying the companies’
responsibility for losses whether or not a particular ship that might be
captured formed part of the convoy, an interpretation that the
Europeans contested.

An occasion for testing the enforceability of the muchalkas arose in
September 1701, when news reached Surat that one of Abdul Ghafur’s
ships from the Red Sea, the Husaini, had been plundered. The Dutch
refused to pay compensation, claiming that this was one of the ships
that had broken convoy. Ghafur organized his fellow merchants, who
decided that until the Dutch paid the compensation, no one would fit
out a ship. They also demanded suspension of the Company’s trade

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until a settlement was reached. The imperial court decreed in favour of
the merchants, and ordered the Dutch to pay the compensation
claimed. Pending this, their trade was banned throughout the Mughal
empire. As was usual in such situations, however, the ban was only
partially enforced. The demand for compensation was met but it was
only in November 1702 that the ban on trade was withdrawn.

In August 1703, yet another of Abdul Ghafur’s ships was attacked
and captured while it was anchored at the Surat bar. The Dutch
refused to pay compensation, as the piracy had not occurred on the
high seas. A strong Dutch naval force made its appearance off Surat in
September 1703 and again a year later. At the suggestion of the new
governor of Surat, Najabat Khan, the emperor agreed to relieve the
Dutch of the 1699 muchalka, thereby restoring the status quo ante of
1696 stipulating only the provision of convoy to the Surat ships. This
was in January 1705, but the Dutch blockade of Surat was lifted only
in 1707.74

THE RISE OF COASTAL CITIES

The rise of a number of port cities on both the east and the west coasts
of India can be directly attributed to the commercial operations of the
European trading companies. The most important among these cities,
Madras, Bombay and Calcutta, eventually became the headquarters of
the three presidencies. These new port cities essentially represented a
shift away from regional political and economic systems that were
based on a link between an inland centre and a port which comple-
mented each other, to another system where the port combined the
political, administrative and overseas trading roles. Since they func-
tioned in an essentially alien and potentially hostile setting, they were
duly fortified, rendering them capable of defending themselves. It is
indeed not surprising that all three fortified port cities were founded
by the English East India Company. They did not have the equivalent
of Batavia together with the strong territorial base of the VOC in Java
and the Spice Islands and felt vulnerable without fortified settlements
in the Indian subcontinent.

We noted above that on the Coromandel coast the Dutch controlled

24 Prakash, The Dutch East India Company and the Economy of Bengal, pp. 50-2.
Further details can be followed in Ashin Das Gupta, Indian Merchants and the Decline of
Surat, c.1700-1750, Wiesbaden, 1979, ch. 1.

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the port of Pulicat and protected it with the guns of Fort Geldria.
Forty kilometres to the south, the English built a port in the 1630s on
the open roadstead at Madras protected by Fort St George. Still
further south, the French occupied Pondicherry. Finally, in 1690, the
Dutch moved their Coromandel chief factory from Pulicat to Naga-
pattinam in the far south where a considerable fortification was raised.
By the time of Francois Martin’s death in 1706, Pondicherry was no
longer a mere trading station, but a flourishing commercial city of
60,000 defended by an impressive fortress and garrison. A dependable
tax system supported a French administrative, judicial and religious
establishment which ruled the city and its environs. In 1704, the
Mughal faujdar of the Hyderabad Karnatak, Daud Khan Panni, an
amir who was a confidant of Zulfiqar Khan, objected to the erection
of fortifications in the city on the ground that Pondicherry was an
integral part of the Mughal empire. As evidence of Mughal sover-
eignty, Daud Khan demanded immediate payment of Rs.100,000 as
tribute. Early in 1706, the French governor made a personal present of
Rs.10,000 to Daud Khan when the latter marched to threaten the city.
By this juncture — just prior to Aurangzeb’s long-expected death —
Daud Khan was unable to undertake a costly and difficult assault on
Pondicherry and he let the matter rest.?°

Madras

Madras was founded on the strength of a small grant of three square
miles of beachfront land to the English Company by the Hindu nayak
of Kalahasti in 1633. By 1640, walls had been constructed to enclose
the factory and Fort St George came into existence. The meagre
British garrison was supplemented by Eurasian and Indian soldiers,
and, by the end of the year, an estimated 300 to 400 families of
weavers had migrated to the settlement. Following the Mughal
conquest of Golconda in 1687, Madras was threatened with Mughal
attack in 1689-90, but the campaign against the Marathas at Jinji
diverted the attention of the Mughal commanders. In fact, Madras
supplied munitions, foodgrains and even gunners to the Mughal army
besieging the Maratha fortress. The next threat to the city came in

25 John F. Richards, ‘European city states on the Coromandel coast’, in P.M. Joshi and
M.A. Nayeem (ed.), Studies in the Foreign Relationships of India (from the Earliest Times to
1947), Prof. H.K. Sherwani Felicitation Volume, Hyderabad, 1975.

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1702 when Daud Khan Panni, in the context of Aurangzeb’s ban on
the Europeans’ trade in connection with the piracies against the Indian
merchants, demanded payment of large arrears of presumed revenue
from the English. He also announced that his officers would survey
the Company lands in and around the city and send troops to occupy
the unfortified Indian quarter of Madras. The British resisted and a
seige ensued. Negotiations and desultory military action progressed
simultaneously for three months until the two sides eventually came
to terms. Daud Khan found it easier to compromise rather than make
a serious assault on the defences of Madras. Thereafter, the issue of
Mughal control over the city was settled by default. Saadutullah Khan,
who by 1710 had become the independent nawab of the Karnatak,
merely accepted the status quo.*©

In the meantime, during the second half of the seventeenth century,
Madras had been attracting a large number of artisans, mainly weavers,
as well as brokers and merchants. This was related mainly to the
security offered by the city in the midst of devastating warfare in the
region. Also, many traders and artisans with the stigma of low caste
attached to their ritualistic status found in English neutrality a
welcome economic and social freedom, though even within the walls
of Madras the inhabitants of the black town were not entirely free
from bloody caste conflicts.2” At the turn of the century, the popula-
tion of Madras is reported to have gone up to about 100,000. Thomas
Pitt, governor of Madras between 1698 and 1709, noted at the end of
his term that the revenues of Madras amounted each year to between
700,000 and 800,000 pagodas of which about 10,000 pagodas came
from the mint.?8

During the eighteenth century, the Company extended its territory
to include fifteen villages around Madras and their dependent hamlets,
increasing the size of the settlement to more than 40 square miles.
Around mid-century, the competition with the French at Pondicherry
and wars with Mysore over political hegemony in the south trans-
formed the character and functions of the trading outpost. The
Karnatak wars increased the European military population of the city

26 Richards, ‘European city states’; John F. Richards, The Mughal Empire, New Cam-
bridge History of India, Vol. 1.5, Cambridge, 1993, pp. 240-1.
2”? Chaudhuri, The Trading World of Asia, p. 51.

28 Richards, ‘European city states’.

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from about a dozen officers in 1750 to over 800 by the late 1780s and
from a few hundred rank-and-file soldiers to several thousands. Its
non-military European population saw a corresponding growth —
from only slightly more than a hundred Company officials, private
merchants and seamen, excluding their families, to an estimated 1,200
persons by 1800. The total population of the city at this time was
estimated at around 300,000. The last three decades of the century also
witnessed a decline in the easy symbiosis between Europeans and
Indians in the city. Increasingly an exclusively European executive
dominated both Indian and European commercial communities. The
government intervened to regulate prices charged by Indian merchants
and artisans and in 1787 a Board of Regulation was set up. Alongside
the attempts to build an untrammelled European executive went
various forms of social control initiated by European residents. In
1793, official policy barred people of mixed race from government
service and emphasized the growing racial separateness of European
residents.

Racial separateness, of course, was nothing new and had indeed
characterized the growth of the city from the very beginning. The
original settlement had been divided into Fort St George, with its
surrounding white town for the European inhabitants, and the black
town and its suburbs for the Indian residents. The white town
developed on the north side of the Fort to house the European, the
Eurasian and the Indian Christian populations of the settlement. Its
streets formed a uniform grid pattern and had both British and Indian
names. The black town was originally founded as an Indian town and
had been laid out in a neat grid pattern of streets just beyond the walls
of the Fort. It was provided with a centrally located temple and
market; and the various resident castes were allocated separate streets.
Economic and social influence and political authority in the black
town were largely held by the Company’s favoured merchants and
dubashes, who were granted substantial powers over revenue, judicial
and commercial matters. This original Indian town was demolished in
the mid-eighteenth century in order to expand the buffer zone around
the Fort. The Indian community now had to congregate within the
suburban quarters of Muthialpet and Peddanaickenpet, just north of
the old town. This new black town initially had less spatial and social
cohesion than its predecessor. Rather than possessing a central temple
and marketplace to provide a focus for its activities, the town was

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divided into several caste-defined neighbourhoods, each with its
separate temple and bazaar.??

Bombay

Throughout the seventeenth century, both the Dutch and the English
East India companies carried out their trade in northern and western
India from their respective factories in the premier Mughal port of
Surat. From early in the century, however, the English had their eye
on the natural harbour of Bombay further south on the coast which
was then under the control of the Portuguese. Indeed, as early as the
1620s, the English factors had urged the Directors to acquire the
harbour city where a secure base for their operations could be put in
place. In 1661, the island was ceded to England under the terms of the
marriage treaty between the English king Charles II and Catherine of
Braganza, sister of the king of Portugal. It was, however, not until
1664 that formal possession was taken in the name of the British
crown which soon after ceded it to the English East India Company.
The 1670s and 1680s witnessed a fairly sharp deterioration in the
relations between the Company and the Mughal authorities. Thomas
Pappillon and Josia Child, both wealthy merchants and government
contractors, headed two opposing factions in East India House.
Child’s faction strongly supported and indeed initiated the changeover
to the policy of armed trading, and he was instrumental in formulating
a commercial and political strategy which would put an end to the
English interlopers in the eastern waters. It was in this context that it
was decided to engage in a short and effective naval war against the
Mughal empire. The main aim of the war would be to make territorial
conquests in the coastal areas of India and to fortify the new
settlements. Formal permission to wage war on the Mughal empire
was obtained from James II and the conflict finally broke out in 1686,
affecting the Company’s settlements both in western India as well as
in Bengal. In an attempt to put pressure on the Mughal authorities to
stop the English interlopers’ trade at Surat, John Child, the governor
of Bombay, ordered the capture of eighty Indian vessels sailing to
Surat. In retaliation, Aurangzeb ordered the stoppage of all English
trade and directed the Abyssinian sealord, the Siddi, who was tribu-

?9 Susan M. Nield, ‘Colonial urbanism: the development of Madras City in the eighteenth
and nineteenth centuries’, Modern Asian Studies, 13 (2) 1979, pp- 217-46.

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tary to the Mughal emperor, to attack Bombay. The Siddi’s troops
succeeded in occupying most of the island, but did not capture the city
and its citadel. Frantic negotiations and offers to pay reparation by the
English ended the affair. A few years later, Bombay was again in
trouble. The European pirates’ attacks on Surat shipping, and the
unauthorized minting of rupees at Bombay which adhered to the
Mughal standards for fineness and weight but bore the insignia of the
English monarch, persuaded Aurangzeb to order Siddi Yakut Khan to
attack Bombay again. But the Bombay fortifications held and the
attack was repulsed.°°

In the course of the eighteenth century, Bombay’s defences became
more formidable and its trade grew. Gradually, Bombay began to
supplant Surat as the leading port of trade for western India, but it was
a long time before the process was completed. In the meantime,
migration into the city was growing and a population figure of 80,000
for 1780 and of as much as 200,000 for 1825 has been suggested. The
pattern of settlement in the city was caste based, though highly
influenced by Portuguese patterns of town planning and ethnic
jurisdiction.>!

Calcutta

The English East India Company’s war with the Mughal empire was
also intimately related to the rise of Calcutta. After being driven out of
Hugli at the start of the hostilities in October 1686, the English moved
down the river to a place called Sutanati. From their base there, they
tried to inflict damage on the Mughals in a variety of ways, including
an attempt to overrun Chittagong and offering their services to the
king of Arakan in his offensive against the Mughals. But nothing
helped and the English were eventually forced to sue for peace. They
returned to Sutanati in 1690 and were granted a hasb-ul-hukm in 1691
under the seal of Wazir Asad Khan. Between the middle of 1695 and
the close of 1697, the province was in a state of utter disorder because
of the revolt of Zamindar Sobha Singh of Chatwa-Barda in Midnapore

3° Richards, The Mughal Empire, pp. 239-42; Chaudhuri, The Trading World of Asia,
pp. 116-17; K.N. Chaudhuri and Jonathan I. Israel, ‘The English and Dutch East India
Companies and the Glorious Revolution of 1688-9’, in Jonathan I. Israel (ed.), The Anglo-
Dutch Moment, Essays on the Glorious Revolution and its World Impact, Cambridge, 1991,
Pp. 407~38.

3! CA, Bayly, Indian Society and the Making of the British Empire, Cambridge, 1988,
pp. 68-9.

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district. Being unable to control the situation on the basis of his own
resources, Subadar Ibrahim Khan appealed to the European compa-
nies for armed assistance in crushing the revolt. He also permitted
them to strengthen their own defences and even to fortify their
factories. In August 1696, the rebels succeeded in capturing the
Mughal fort at Hugli, exposing the local Dutch factory to grave
danger. The Dutch at this point decided to deploy a contingent of
European soldiers to surround the fort, and the Berkenstein was
stationed in the Hugli river at a point from which its guns could cover
the fort. The known superiority of European weaponry persuaded the
rebels not to put up a fight. The fort was promptly vacated and the
Dutch restored Mirza Hasan Ali’s control over it. The VOC,
however, chose not to take advantage of the subadar’s permission to
fortify their factory and, once the revolt had been crushed, even undid
the temporary measures taken to strengthen the defences of the Hugli
factory. It was only in 1743 that the factory of Hugli (Chinsura) was
fortified and given the name of Fort Gustavus.*? The English, on the
other hand, immediately had a fortification raised, which a few years
later was christened Fort William and declared the seat of the new
Presidency independent of Madras. Earlier, in November 1698, the
Company had bought the zamindari rights over the villages of
Sutanati, Govindpur and Dihi-Kalkatta against a consideration of
Rs.1,300 paid to the existing zamindars of the villages. By a muchalka,
the Company undertook to deposit the jama of Rs.1,195 annually into
the imperial treasury.°? The city of Calcutta was born.

The eighteenth century witnessed an impressive growth in the size
and population of Calcutta as well as in its role in the history of the
subcontinent. As in the case of Madras, two distinct towns — the ‘white
town’ and the ‘black town’ - which were only functionally related to
each other emerged fairly rapidly. The white town came to consist of
the East India Company’s fort, its commercial buildings and offices,
churches and private houses. Outside the white town and immediately
to the north of it was the black town with the houses of Indians,
including substantial ones for the richer members of the community,
shops and bazaars. Within the black town, the population was frag-
mented by ethnic origin, caste and occupation. Arabs, Parsis, Gujaratis,

32 Prakash, The Dutch East India Company and the Economy of Bengal, p. 50.
3 Farhat Hasan, ‘Indigenous cooperation and the birth of a colonial city: Calcutta
c. 1698-1750", Modern Asian Studies, 26 (1), 1992, pp. 65-82.

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Greeks and Armenians were the early non-Bengali groups to establish
their distinct abodes. A few khatris and Marwaris from northern India
also arrived early. Outside the defined black town, the hutments on the
fringes of the settlement seem to have preserved distinct identities as
communities of cultivators, fishermen and weavers.>**

Calcutta’s fortunes changed spectacularly in mid-century. In 1756,
the nawab’s troops captured it, sacking the white town. The following
year the British retook Calcutta and, when the nawab had been
overthrown after the battle of Plassey, its political importance changed
out of all recognition. The Company was granted diwani rights in the
province in 1765 and the administrative machinery for the government
of Bengal was moved to Calcutta in 1772. In 1773, it was recognized
by Act of Parliament as the seat of government for the supreme
authority over British India.°°

There were strong elements of continuity between the new capital
and the old trading town. Growth took place within the old frame-
work of white town, black town and outer villages. The white town
was completely rebuilt with a new Fort William costing over
£1,000,000. A new Town Hall, the famous Writers’ Building and new
churches, Anglican and ‘Mission’, followed. There was also some
ambitious new building in the old established black town. Successful
Indian families began to commission houses in a style which has been
called ‘comprador syncretism’ reflecting Hindu, Muslim and British
influences. As for the population of the city, a figure of 120,000 has
been suggested for mid-century, while the Police Census of 1837 put
it at 230,000.°°

For most of. the eighteenth century, very little was provided for
Calcutta’s inhabitants by those set over them. There was no ‘native’
hospital until 1793 and even then the funds made available were only
sufficient for fifty in-patients. The connections between the black
town and the white town were strictly functional. A few of the
ambitious Indians such as Nabakrishna appeared on the fringes of
European social life, but the majority appear to have kept themselves
entirely aloof from Europeans outside business.°”

34 PJ. Marshall, ‘Eighteenth century Calcutta’ in Robert Ross and G.J. Telkamp (ed.),
Colonial Cities, Essays on Urbanism in a Colonial Context, Leiden, 1985, pp. 87-104.

35 Marshall, ‘Eighteenth century Calcutta’.

36 Marshall, ‘Eighteenth century Calcutta’.

37 Marshall, ‘Eighteenth century Calcutta’.

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THE ECONOMIC INFRASTRUCTURE

We noted earlier the pivotal position of India in the Indian Ocean
trading network on the eve of the Europeans’ arrival. It was pointed
out that while this undoubtedly was related in part to India’s location
at midpoint geographically, it also had a good deal to do with her
capacity to put on the market large quantities of relatively inexpensive
and highly competitive manufactured goods in addition to a whole
range of other goods. This made India in some senses the ‘industrial
hub’ of the region surrounded by west Asia on one side and southeast
Asia on the other. At the root of this ‘industrial’ capability was the
availability in the subcontinent of a sophisticated infrastructure of
institutions and services which rendered the system of production and
exchange highly efficient, dynamic and fully market responsive. This
sophisticated infrastructure was available in full measure to be made
use of by the Europeans. The principal constituent elements of this
infrastructure were things such as a high degree of labour mobility and
the existence of a labour market, merchant groups capable of collective
defence and good organization, development of accountancy skills,
highly developed and price-responsive marketing systems and a
sophisticated monetary and credit structure.

A highly developed exchange and trading network — both internal
and external — served as a vital link between the agrarian and the non-
agrarian sectors of the economy. Land revenue had traditionally
accounted for an overwhelming proportion of state finance in Mughal
India and adjustments in the procedures for assessing and collecting
this revenue were a routine feature in all administrations. But under
Akbar, these adjustments were rather extensive and, among other
things, involved a continuing shift away from the collection of land
revenue in kind to that in cash. Both at a qualitative as well as at a
quantitative level, this innovation served to promote in an important
way the growth of a money economy. Quite clearly, the land revenue
assessees would have been marketing a certain proportion of their
gross Output in any case. But under the new dispensation of compul-
sorily having to generate a rather large cash flow to meet the revenue
demand which could be up to 50 per cent of gross output, the volume
of monetized transactions entered into by this group would have gone
up significantly. This would have necessitated a continuously rising
supply of money and perhaps an increase in its velocity of circulation.

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The Mughal Indian coinage consisted of the gold muhr, the silver
rupee, and the copper dam or paisa. Given the almost total absence of
domestic production of precious metals, the supply of gold and silver
available for coinage depended almost exclusively on the volume of
their import into the country. This was also true of copper, though to
a smaller extent. A continuing import of these metals, overwhelmingly
from the Middle East in the pre-European trade phase and, thereafter,
increasingly also from Europe and Japan, had thus assumed the role of
almost a precondition to the successful functioning of the monetary
system and the exchange networks. It was essentially on the basis of
the continuing inflow of the khalisa revenue — the share of the imperial
government in the total land revenue — in cash that the elite in the
heartland of the empire around Agra/Delhi could afford to constitute
an important market for the industrial and other products of the
outlying regions of the empire. By the same token, these regions, such
as Gujarat and Bengal, would have found it impossible to generate the
revenue to be sent to Agra/Delhi without the heartland providing a
substantial and continuing demand for their products enabling them
to buy back, as it were, the cash flowing to the north as ‘tribute’.

External trade by land

The maritime trading links of India which served to provide the
empire with the necessary supply of precious metals and other goods
have already been noted in Chapter 1. There were also significant,
though not quite as extensive, overland trading links with Persia and
Central Asia via the northwest. The route to Persia stretched from
Agra to Lahore to Qandahar on-to Isfahan — the central market of
Persia. The volume and value of the trade on this route seems to have
been reasonably large with 20,000~25,000 camel loads travelling each
year from Lahore to Isfahan in the early part of the seventeenth
century with all kinds of relatively high-value goods manufactured or
grown in the north Indian plains. Ordinarily, overland transportation,
particularly when it also involves a certain amount of protection cost
payable to the tribes through whose jurisdictions the caravans would
have to pass, is more expensive than transportation by sea. But in the
case of the Indo-Persian trade, the Dutch East India Company factors
at Agra maintained that the land route between Agra and Isfahan via
Lahore and Qandahar cost less per unit of goods transported than the
land-cum-sea route which would involve the transportation of the

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goods from Agra to Surat by land, on to Bandar Abbas by sea and
finally from Bandar Abbas to Isfahan by land.*8

The route connecting the Mughal heartland with central Asia also
started at Agra and continued on to Lahore and Peshawar reaching
Kabul via the Khyber Pass. It then continued on to a chain of Indian
trading settlements which stretched far up into central Asia to
Astrakhan and Lake Balkh. This was a significant trade which took
Indian spices, textiles and other goods up to Bokhara and beyond in
search of gold and silver, horses, silks and Chinese porcelain. The scale
of this traffic may be judged by the effect of a single accidental fire in
Peshawar fort in 1586. The disaster destroyed 1,000 camel-loads of
goods belonging to the merchants who had sheltered there when the
route was temporarily obstructed.2? As long as the chiefs of the
Afghan and other tribes were given their usual cut, the caravan trade
on this route ordinarily moved quite smoothly.

Internal trade

A large volume of internal trade in items such as foodgrains, other
agricultural produce such as cotton, other raw materials and finished
manufactured goods across the length and breadth of the subcontinent
contributed a good deal to the growth of productivity in both the
agrarian and the non-agrarian sectors. The achievement of an extra-
ordinarily high degree of market dependence is suggested by bits of
evidence like the poor peasants of the rice-growing riverine systems of
southeastern India consuming not the expensive paddy crops which
they produced, but millets and dry grains from the interior.*° Food-
grains, raw materials and finished products travelled long distances for
eventual consumption in production centres and markets providing
the highest return. Bengal was known to be the ‘granary’ of the
subcontinent and provided large quantities of items such as rice, sugar
and oil to many parts of the country besides neighbouring countries
such as Sri Lanka and the Maldive Islands. The cotton textile industry
of the Coromandel coast depended for a large part of its raw material
on Maharashtra and Berar. In Bengal, while the finest Dhaka muslins

38 H.W. van Santen, ‘Trade between Mughal India and the Middle East, and Mughal
Monetary Policy, c. 1600-1660’, in Karl Reinhold Haellquist (ed.), Asian Trade Routes,
Continental and Maritime, London, 1991, pp. 87-95.

3° Richards, The Mughal Empire, p. 50.

4° D.A. Washbrook, ‘Progress and problems: South Asian economic and social history c.
1720-1860’, Modern Asian Studies, 22 (1),1988, pp. 57-96.

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were woven from high-grade cotton grown in the vicinity of Dhaka
itself, the bulk of the cotton used in the extensive cotton textile
industry in the province was imported from areas such as Gujarat. The
important silk textile industry in Gujarat, in return, obtained the bulk
of its supply of high-grade raw silk from Bengal. The large volume of
trade between the east and the west coasts was done via the heartland
of the Mughal empire. Luxury silks and muslins were a staple item in
the cargo sent from Bengal to Agra for use by the Mughal aristocracy.
Some of these goods were re-exported from Delhi and Agra to the
west coast along with indigo from Bayana and clothes produced in
Hindustan. They were exchanged, among other goods, for Gujarati
silk textiles and luxury items from the Middle East. The trading
communities in north India included Punjabi Khatris and the Ra-
jasthanis, but perhaps the most dominant group was that of the
Gujarati merchants who controlled the great cross-country trade route
from Surat to Murshidabad. Indeed, on the basis of their excellent
market information and large capital resources, many of these Gujarati
merchants had settled down in various parts of the country including
Bengal, several branches of whose trade, both by land and water, they
eventually came to dominate.*!

The monetary and credit system

We noted earlier that the Mughal coinage consisted of coins of three
metals — the gold muhr, the silver rupee and the copper dam or paisa.
The basic coin constituting the principal unit of account was the silver
rupee. The gold muhr was used mainly either for ceremonial purposes
or for hoarding. The copper dam or paisa constituted a major medium
of handling small-value transactions and was used extensively. A
distinguishing feature of Mughal coinage was the extraordinarily high
content of the relevant metal of a very high degree of purity in the
coin. Thus the gold muhr, which weighed 169 grains troy, was
practically of unalloyed metal of high purity. The alloy content in the
silver rupee, which weighed 178 grains until Aurangzeb raised the
weight to 180 grains, was also never more than about 4 per cent. The

*' For example, a perusal of the Dutch shipping lists for Bengal suggests that the coastal
and overseas trade of the port of Balasore was dominated by the immigrant Gujarati Shahs.
(Om Prakash, “The Dutch East India Company and the economy of Bengal, 1650-1717’,
unpublished PhD dissertation, University of Delhi, 1967, p. 35).

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copper dam weighed 323 grains till 1663~4 when its weight was
reduced to about two thirds of this figure. The coins were manufac-
tured in imperial mints spread all over the empire. The procedure
followed was that of ‘free’ mintage under which anyone could bring
bullion, old coins or foreign coins to a mint and obtain after a lapse of
time new coins in exchange. The number of coins delivered against a
given quantity of metal depended upon the purity level of the metal
surrendered. This was determined at the mint. A charge was made at
the mint to cover the seigniorage, the loss of metal in the process of
coining, and the cost of coining, which consisted partly of the cost of
the necessary ingredients and partly that of the labour involved. As far
as the question of the relative valuation of the coin of one metal in
terms of each of the other two was concerned, this was left entirely to
the market, and depended upon the relative market supply and
demand of each of the three metals.*?

In the case of the silver rupee, the new coin delivered by the mint
was known as the sikka rupee. The value of this coin corresponded
broadly to the value of the metal contained in it, plus the minting
charges including seigniorage. The problem of wear and tear of a coin
through use was tackled ingeniously by a complex system of equiva-
lence based on a varying degree of premium being enjoyed by a new
coin over older issues. The sikka rupee, defined as a coin minted
during the current or the previous year, enjoyed such a premium over
all older issues which routinely carried the year of issue on them. The
rate of this premium was controlled for all practical purposes by a
class of highly experienced and influential money dealers known as
sarrafs. Once the premium enjoyed by a new over an earlier issue
exceeded a threshold level, the old coin would simply be brought to
the mint for recoinage. This would be encouraged by the government
in so far as its income from seigniorage would go up. Since the coins
were intrinsic and not token coins, the problem of debasement of
coins did not plague Mughal coinage. It also seems that forgery of
coins was generally not a major problem.

The Mughal coinage system involved monetary management by the
state only in a limited way. The accretions to the supply of money

42 Om Prakash, ‘On coinage in Mughal India’, The Indian Economic and Social History
Review, 25 (4), 1988, pp. 475-91.

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were determined by the public itself subject to the availability of
metals in the system and the capacity of the imperial mints. In this
regard, the government was formally no different from any other
member of the public except that its resource base was naturally larger
than that of any private individual and the minting of its bullion
would get priority. Further, the government could, and did, occasion-
ally exercise its authority in directing the use of a particular metal for
coinage. Thus in 1657 when an increase in the demand for copper
coins in Surat took the rupee:paisa ratio to 1:40, while in 1642 it had
stood at only 1:56, the mutasaddi of Surat ruled that all copper
imported into the city should be taken directly to the mint. In order to
facilitate this, he banned the movement of the metal bought by the
indigenous merchants from the Dutch East India Company (which
was by far the single largest importer of this metal into the Mughal
empire, mainly from Japan) to places outside the city. This ban
remained in force over the two succeeding years. Mughal imperial
mints were scattered all over the empire, though clearly some were
more important than others, in terms of both the number of coins
manufactured as well as the geographical area within the empire over
which the issues of a mint ordinarily circulated. It is also important to
realize that while the business of all the imperial mints was the crafting
of refined metal into coins, this could be done under different
entrepreneurial and technical arrangements. The available information
suggests the existence of at least two distinct models along which the
structure of a Mughal imperial mint was organized. The dominant
model would seem to have been the one where Mughal state officials
organized the work of production themselves. The alternative organi-
zational arrangement involved the entrepreneurial function being
delegated to the sarrafs. What was common to the two patterns was
the strict control exercised by the government on the quality of the
coins manufactured.*?

The coinage system in south India was quite different. Until the
Mughal conquest of Golconda in 1687, the monetary system of the
region remained firmly based on gold. The standard coin was the
pagoda or hun (53 grains) stamped with the image of Vishnu. The
pagoda’s subsidiary coins, the half-pagoda and the fanam (5 grains)

+3 Prakash, ‘On coinage in Mughal India’.

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were also gold. The latter, heavily alloyed, was one of the smallest
gold coins known and was extensively used for ordinary commercial
transactions. A copper coin weighing between 25 and 30 grains was
called ‘cash’. Since 1636, the Qutb Shahs had also been minting a
limited number of Mughal silver rupees to symbolize their status as
tributary chiefs. After 1687, of course, the Mughals issued gold muhrs,
silver rupees and copper coins of the usual Mughal types from the
Hyderabad mint. But the production of the older indigenous gold and
copper coins as well as their extensive use in the region continued for
quite some time. This flexibility was possible because a centrally
controlled minting structure of the north Indian variety was conspic-
uous by its absence in the south. In the latter region, including
Golconda and the Hindu territories further south, minting was
decentralized subject to licence and a fairly large number of mints
operated in the area, bringing out coins which were not always
comparable in weight and fineness across mints. This applied with
particular force to fanams, where the alloy content of the coins
brought out by different mints could be very different.

The European trading companies were among the major benefici-
aries of the decentralized system of minting on the Coromandel coast.
Since the companies were allowed to convert their bullion and foreign
coins into local coins in their own mints, they were spared the
continuous tussle on a variety of issues that went on between
themselves and the masters of the Mughal imperial mints in north
India. Following the establishment of a factory at Armagon, the
English East India Company had been granted the right to coin
pagodas and fanams by the local zayak in 1626. A similar concession
was made available in the grant under which the English transferred
their factory to Madras. After the Mughal conquest of Golconda, the
English mint at Madras coined large quantities of silver rupees which
were not only used locally but also sent in large numbers to areas such
as Bengal. The Dutch East India Company also operated a mint in
Fort Geldria at Pulicat. Of the 0.75 per cent seigniorage on minting
due to the government, the Company was allowed a concession of 50
per cent on the metal minted on its own account, and 33 per cent on
that minted on the account of the local merchants and others. In 1658,
the Company was also allowed to coin pagodas at Nagapattinam at 50
per cent of the usual duty. The Company minted both pagodas and
fanams at these mints. These coins circulated freely throughout the

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region. Indeed, the Dutch pagodas minted at Pulicat were in great
demand.**

Coined money constituted an important, perhaps an overwhelming,
segment of the total money supply in the economy, but it by no means
accounted for the whole of it. Small-value transactions were often
carried out through an extensive use of uncoined non-standardized
money. Important varieties of this kind of money were the small
seashells known as cauris, bitter almonds known as badams, pieces of
lead and tin, and so on.

Finally, there were the credit instruments constituting near-money
which were used to settle mutual claims. The sarrafs constituted the
core group around which the money and credit markets were orga-
nized. Perhaps the most highly developed of these markets in Mughal
India was the one at Surat. This was partly because this port was the
principal point of entry of foreign treasure into the Mughal empire.
This treasure was minted locally before it found its way to other parts
of the empire. Available evidence suggests that large sums of money
could be raised in this market on loan for varying periods of time with
relative ease. Thus the records of the Dutch East India Company’s
factory at Surat reveal that the Company regularly raised large sums of
money locally on interest. The average rate of interest in a money
market such as Surat was lower — at times substantially lower- than in
a somewhat less developed market such as Hugli in Bengal.

We noted earlier that the revenue in respect of the khalisa lands
belonged to the imperial exchequer and enormous sums of money
needed to be transferred regularly from the provinces to the heartland
of the empire in Delhi/Agra. The reverse flow consisted of funds
needed to run the provincial administrations, for organizing military
campaigns of various kinds, and for purposes of acquiring goods in
the provinces either for trade or for consumption in the heartland. The
large-scale business of remitting funds from one part of the empire to
the other, and indeed to areas outside the empire but within the
subcontinent, was also carried on by the sarrafs. There was an
extensive network of branches, agents and correspondents that these
sarrafs had, and the basic document used to effect the transfer of funds
was the bill of exchange or the bundi. This document, which was

“4 Om Prakash, ‘Foreign merchants and Indian mints in the seventeenth and the early
eighteenth century’, in John F. Richards (ed.), The Imperial Monetary System of Mughal
India, New Delhi, 1987, pp. 171-92.

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essentially a binding written promise to pay a named person or its
presenter a certain sum of money at some future but proximate date
usually in another town, was in extensive use to effect money transfers
on a large scale. The standing of the sarrafs engaged in the hundi
business ranged from relatively small dealers to very large houses with
agents or correspondents all over. In the seventeenth century, one
such major house was that of Virji Vohra with its headquarters in
Surat. During the first half of the eighteenth century, by far the most
important sarraf establishment in the empire was that of the Jagat Seth
family operating from its headquarters in Murshidabad in Bengal. In
addition to its other extensive activities, this house handled the
remittance of the central revenues from Bengal to Delhi amounting to
over ten million rupees per annum.**

The bundi was used both as an instrument for remitting funds from
one place to another as well as for raising short-term credit which
would be repaid on maturity at another place. In the case of the
former, the amount to be transferred was handed over to the sarraf
together with the cost of the transaction, which would depend upon
the current rate of discount on hundis between the two cities. The
sarraf would then issue the hundi to the party, who would arrange to
send it on to its representative in the city to which the funds were to
be transferred. This representative would present the document to the
local agent or correspondent of the sarraf who had issued the hundi
and collect payment at the expiry of the stipulated period. As far as the
party remitting the funds was concerned, the arrangement did indeed
involve a certain amount of risk arising from the possibility of the
sarraf going bankrupt before the bundi had been encashed. The
extensive interlinking of financial enterprises across firms of sarrafs
made even a chain of bankruptcies a distinct possibility. It is true that
such bankruptcies did not happen frequently or on any scale, but the
possibility was always there. This risk could be avoided by using the
alternative method of raising the resources locally. This was done by
the local representative going to a sarraf and ‘drawing’ a hundi on his
principal. In the case of the VOC, for example, this would mean that
the Company’s factor at Agra, rather than being provided with a
hundi bought by the Company at Surat, would instead be asked to go

*5 Om Prakash, ‘Sarrafs, financial intermediation and credit network in Mughal India’, in
E. Van Cauwenberghe (ed.), Money, Coins and Commerce: Essays in the Monetary History
of Asia and Europe (From Antiquity to Modern Times), Leuven, 1991, pp. 473-90.

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to the local agent/correspondent of the Surat sarraf and ask for
accommodation for a specified sum of money. The agent/correspon-
dent would then provide the accommodation asked for less the
commission/discount to be charged. The document exchanged
between the agent and the factor would be sent by the latter to the
chief of the Surat factory, who would arrange for the money to be
paid to the local sarraf after the lapse of the stipulated period. Under
this arrangement, the hundi really became an instrument for raising
short-term credit. In addition to obviating the risk arising out of the
bankruptcies, this method of drawing a hundi also implied that the
Company had the use of the funds for the duration of the journey
between Agra and Surat, and for the maturity period thereafter. The
discount or commission charged at the time of drawing a hundi,
therefore, was always greater than if a hundi had been bought for
remitting the same sum of money.*®

The organization of manufacturing production

The organizational structure of manufacturing production can perhaps
best be analysed with respect to the textile sector which constituted by
far the most important segment of the manufacturing industry in the
subcontinent, turning it into perhaps the world’s greatest producer of
cotton textiles. The production of textiles for export was concentrated
mainly on the Coromandel coast, in Gujarat and in Bengal, though
these were also produced in limited quantities in other areas. The
specialization of Coromandel consisted in the manufacturing of
relatively inexpensive cotton textiles which were either plain or
patterned on the loom. They were often dyed in bright colours with
plant dyes. The printing or painting was done in floral and a variety of
other motifs. While the northern Coromandel — the area between the
rivers Krishna and Godavari — specialized in the production of plain
textiles, the specialization of the south — the coastal stretch between
Pulicat and Nagapattinam — consisted in the production of the famous
painted textiles — the pintadoes. A census carried out by the Dutch
East India Company in northern Coromandel in the 1680s provides
useful details regarding the organization of textile manufacturing in
the region. The weavers were not concentrated in towns but rather
dispersed in industrial villages scattered throughout the coastal

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districts. In the weaving villages of the Krishna delta, a good part of
the production was of the finer grades of fancy cloth while weavers in
the Godavari delta concentrated on the production of plain calicoes.
The inland centres produced mainly fine calicoes. The census contains
evidence regarding eighteen producing centres in the area around the
Dutch factory at Draksharama in the east Godavari delta. These
ranged from villages with 40 weaver households to others with as
many as 900. The average number of weaver households per centre
enumerated was 331, and the number of looms 418. The production in
the area of high-quality red chay-roots used for dyeing was a great
advantage. More specifically, in the east Godavari villages of Gole-
pallem and Gondawaran, the existence of groundwater with specific
chemical properties enabled the local painters and dyers to achieve
distinctive results. The Krishna delta contained fewer weavers and
smaller centres of weaving. The inland producing region had dispersed
weaver settlements and its individual nodes were apparently less
sizeable than in the east Godavari region.*”

In western and northern India, the weavers producing for the
export markets were usually either urban based or situated close to the
main cities. Surat, for example, was the metropolitan market of three
small weaving towns within a distance radius of 20 miles — Bardoli,
Nausari and Gandevi. The other major textile centres of Gujarat, such
as Ankleshwar, Broach, Baroda, Nediad, Dholka and Ahmedabad,
were all urban and located close to the main caravan route to Delhi
and Agra. While both inferior- and superior-grade cotton textiles were
manufactured in large quantities in Gujarat, the region also provided
high-grade silk and mixed textiles using mainly Bengal raw silk as raw
material. Towns such as Ahmedabad and Sironj provided fine embroi-
dered quilts, satins, chintz and the famous transparent muslin known
as ab-i-rawan or flowing water. Tavernier ascribed the superiority of
Sironj chintz, its lively colours and their fastness, to the river that
passed through the town, the water of which ‘possesses the property
of giving the brightness to the colours’.*®
The relative decentralization of the textile industry in Bengal owed

47 Sanjay Subrahmanyam, ‘Rural industry and commercial agriculture in late seventeenth
century south eastern India’, Past and Present, Number 126, February 1990, pp. 76-114;
Joseph J. Brennig, “Textile producers and production in late seventeenth century Coro-
mandel’, The Indian Economic and Social History Review, vol. 23, 1986, pp. 333-56.

*8 Chaudhuri, The Trading World of Asia, pp. 242-9.

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a great deal to the extensive and comparatively inexpensive river
transport network in the province. The comparative advantage of
Bengal in relation to other textile-producing regions of India consisted
in the manufacture of fine cotton and silk textiles. Based on special
geographical features and the cumulative effect created by a hereditary
concentration of craft skills, a number of specialized centres of
production had emerged in the province. The best quality muslins
were produced in the district of Dhaka in eastern Bengal, where a
particularly well-known centre of production was Sonargaon, situated
at a distance of about 15 miles east of the city of Dhaka. The exquisite
quality of the Dhaka muslins owed a great deal to a particularly high-
grade cotton grown in a small and narrow belt in the district which
happened to possess the right soil. The other important manufacturing
centres were the Malda district and Santipur in Nadia district.
Comparatively less fine varieties of muslins were also produced in
Patna in Bihar and Balasore in Orissa. The staple varieties of muslins
procured by the Europeans were khasa and malmal. Usually, both
these were plain muslins but they could also be brocaded in gold,
silver or silk threads, usually in floral patterns. Less frequently, they
were instead embroidered in coloured silks in chain-stitch, in gold and
silver threads or in cotton itself, which is what probably later came to
be known as ‘chikan’ embroidery. Many of the pieces also had their
borders woven in gold threads. In the case of calicoes, the principal
centres of production of the finer varieties were the Malda district and
the area around Kasimbazar in Murshidabad district; the compara-
tively coarser varieties were manufactured in Birbhum district, in
Patna, and in Pipli and Balasore in Orissa.*?

Besides cotton textiles, the Europeans procured substantial quanti-
ties of mixed and silk piece-goods in Bengal, which was by far the
most important producer of these textiles in India. Mixed piece-goods
were woven by the simultaneous use of cotton and silk yarns, the
latter having been derived either from the usual mulberry silk worm
or from the silk worm anthereap aphia, which produced the wild
tussur silk. The silk textiles procured by the Europeans were almost
exclusively of mulberry silk. The principal areas of production were
Malda and Kasimbazar, though limited amounts of particular varieties

*° Prakash, The Dutch East India Company and the Economy of Bengal, ch. 3.

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were also produced in Radhanagar and other centres in Midnapore
district.°°

Working on the basis of the cotton yarn procured from the spinner,
the basic unit of production in the manufacturing of textiles was the
weaver operating as an independent artisan. To a certain extent, the
production of standardized varieties of textiles for traditional markets
was carried on on the basis of the weavers’ own resources and at their
own risk. There is evidence, for example, that several varieties of
comparatively coarse cloth were produced on this basis in the district
of Malda in north Bengal for eventual sale to merchants engaged in
trade with Pegu, north India (Hindustan) and Persia, which had
traditionally been important markets for these varieties. The bulk of
the marketed output, however, was produced on the basis of agreement
between merchants — many of whom were intermediary merchants
known in Bengal as paikars — and weavers specifying details such as the
quantity to be produced, the price and the date of delivery. A part —
often a substantial part — of the final value of the contract was given in
advance to enable the weaver to buy the necessary raw materials as
well as to sustain himself and his family during the period of produc-
tion. Clearly, the three key elements in this system were the weavers’
need of finance, their relatively limited access to the market, and a
desire on their part to avoid risks arising out of their inability to
forecast correctly the behaviour of the demand for a given variety of
textiles. This structure, which could be described as the contract
system, was essentially a variant of the standard European putting-out
system. Unlike in the European case, the Indian weaver bought his
own raw material and exercised formal control over his output until it
changed hands. Of course, the merchant who had given the advance
had first claim on the output, and debt obligations often rendered the
artisans subject to coercive control by the merchants.

Though grossly inadequate and perhaps not entirely representative,
the available evidence on the weavers’ costs and the merchants’ mark-
up enables us to form some idea of the magnitudes involved. A 1670
report on Malda in north Bengal suggested that standardized textiles
worth Rs.800,000 to Rs.1 million were sold in the district annually for
export to places such as Pegu, Agra, Surat and Persia. If these were
bought against cash directly from the producers who brought them

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into Malda rather than from the intermediary merchants, the saving in
cost would be between 12 and 15 per cent. The mark-up by the
merchant would, of course, be substantially greater under the contract
system to compensate him for the additional risks borne. These risks
were not inconsiderable. For example, a sudden rise in the cost of
living in the wake of a famine, or the appointment of a particularly
tyrannical official in a given area, might lead to a mass migration of the
poor weavers to a more convenient location, to the great discomfiture
and loss of the merchants who had entered into contracts with them
and given them advances. Some data relating to 1686-7 in respect of
khasas, a staple variety of muslin procured by the Dutch East India
Company in fairly large quantities in Bengal, suggests that about two
thirds of the price obtained by the weaver covered the costs of the raw
material, the remainder being the reward for his labour. The mark-up
by the intermediary merchant (calculated on the basis of the price
agreed upon at the time of the contract between the Company and the
merchant) was 35 per cent in the case of grade I, 55 per cent in that of
grade Il, and as much as 142 per cent in that of grade 11.>!

The structure of textile production in the areas catering to the
export demand was reasonably flexible in responding to changes in
demand for its output. Thus the phenomenal increase in the European
companies’ demand for Bengal textiles in the last quarter of the
seventeenth and the first half of the eighteenth centuries was accom-
panied by a substantial rise in the output of the varieties demanded,
though there were obviously frustrating time lags and shortages of
particular varieties. Also, the sizes of the textiles as well as their
texture, patterns, designs and colour combinations were constantly
adjusted to meet changes in demand. Initial resistance to the adoption
of such innovations was usually overcome by the offer of higher prices
and an assured purchase of the entire output produced according to
the new specifications. The VOC even started a unit within the
precincts of its factory at Hugli where experiments in new designs,
patterns and colour schemes were carried out.

The mode of procurement

In the case of both manufactured goods such as textiles, as well as
processed agricultural goods such as opium and indigo, the Europeans

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made use of the existing procurement organization, though in course
of time they did indeed introduce modifications and innovations with
varying degrees of success in a variety of directions aimed at solving
specific problems that they encountered. An important functionary
made use of by the Europeans was the dalal (broker), an Indian
employee with an intimate knowledge of both the local market and the
intermediary merchants. He was ordinarily a salaried employee, and
his duties included collecting information about the market price of
various goods as well as identifying merchants with a good reputation
for honouring contractual obligations. These merchants were brought
by the dalal to the relevant company and agreements concluded
between the company and each of the merchants willing to supply at
mutually agreed terms. In the case of textiles, the agreement specified
the quantity to be supplied, the period of delivery, and the price per
piece of each of the different varieties contracted for. The merchants
had the goods manufactured mainly on the basis of the contract system
which, as we have seen, obliged them to give a part of the value of the
contract to the producers in advance. The merchants, therefore, insisted
that the company similarly give them an advance, which in the case of
Bengal was ordinarily between 50 and 65 per cent. The intermediary
merchants who did business with the Europeans were an extremely
heterogenous group. In the case of the VOC in Bengal, at one end it
included merchants such as Khem Chand Shah, who engaged in large-
scale domestic and overseas trade and who owned several ships. At the
other end, there were marginal merchants who genuinely could not
have operated except on the basis of the advances received from the
Company. Once the goods were delivered into the Company’s ware-
houses, the deviation from the samples was worked out and the price
finally paid to the merchants was adjusted accordingly.

There were occasional deviations from this broad structure of
procurement. At places such as Dhaka and Pipli, for example, the
VOC is known to have used the services of commission agents (also
called dalals) to procure export goods. The agent was given a certain
amount of money, which he invested among the weavers on behalf of
the Company and at the Company’s risk. After the goods had been
delivered, the agent was entitled to a 2 per cent commission (arhat) on
the total value of the transaction. Another interesting functionary
whom we come across is the head weaver (hoofd wever). His precise
status is not clear, but he acted as an intermediary between the weavers

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and the buyers of their produce. He appears to have exercised some
authority over the members of his community, ensuring a certain
amount of regularity in the supplies. His services were often utilized
by the intermediary merchants, who would enter into a contract with
him and give him an advance. On the limited occasions on which it
was able to do so, the Company dealt directly with the head weavers
and saved on the margin of the intermediary merchants. Thus, in 1670,
a head weaver of Hugli agreed to supply fotas — an ordinary calico — at
Rs.7o per twenty pieces, whereas the merchants were asking for a
price of Rs.go. The corresponding figures in the case of sailcloth were
Rs.36 and Rs.43 respectively. Such deals, however, had to be made
very discreetly because the intermediary merchants were always on
the lookout to sabotage them.>?

The organization of procurement was broadly similar in respect of
processed agricultural goods such as opium and indigo. However, in
respect of indigo grown and traded in and around Bayana near Agra in
the 1630s and 1640s, there were enough interesting deviations from the
norm to merit a somewhat closer look. The commodity was a highly
volatile one in so far as the fluctuations in both output and price could
be fairly marked. It was perhaps because of this peculiarity that the
normal procedure of procurement adopted in relation to other com-
modities was not followed in the procurement of Bayana indigo.
Neither party wanted to commit itself to honouring a predetermined
price. As a result, the norm developed in relation to this commodity
was that contacts between the buyer and the producer were made only
after the harvest was in and deals concluded at the ruling market price.
This, however, did not prevent certain classes of buyers from never-
theless entering into prior contracts with the producers and giving
them fairly large sums of money in advance. Ordinarily, the producers
of indigo, including the fairly substantial ones, were in constant need of
finance and welcomed any advances coming their way. But the condi-
tions that accompanied such a contract were very different from those
in the case of, say, opium or textiles. In the first place, the funds
advanced to the producer of indigo were not interest free and ordinarily
carried an interest rate of 1.5 per cent per month. Secondly, no mutually
binding price was worked out at the time of the contract. Once the
harvest was in, price negotiations would be held between the producer

2 Prakash, The Dutch East India Company and the Economy of Bengal, ch. 4.

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and the person who had given the advance. If a mutually acceptable
price emerged, the deal would go through and the advance together
with the interest on it would be adjusted in the final payment. Should
the price negotiations, however, fail, the producer would be free to sell
to anyone else and his obligation to the person giving the advance
would be limited to returning the advance together with the interest on
it. The only firm right that the person giving the advance had was the
right to be offered the output first. In other words, he had the first right
of refusal, but nothing else. Note that this was a radically different
situation from that obtaining in respect of other commodities where the
contract obliged the producer to supply under all situations at the
mutually agreed predetermined price. Why did anybody then give out
advances? It would seem that different categories of persons giving out
advances had a different set of objectives. In the first place, there were
the speculative dealers in the commodity. This group emerged essen-
tially in the 1630s when the international demand for the product was
rapidly on the increase. The basic idea was that by using the right of
first purchase at the current market price soon after the processed
output was in, they would be able to cash in on the continuously rising
market price. The other important category engaged in the business of
giving advances to indigo producers was that of the employees of the
Dutch East India Company, who did it clandestinely and without the
approval of their employers. The considerations that led these em-
ployees to do this were quite different from those of the speculative
buyers. Often, the funds given out as advances belonged to the
Company but were not officially entered in the books as advances. The
implication was that whether or not the deal with the producer went
through, the proceeds of interest at 1.5 per cent per month between the
time of the giving of the advance and that of the coming of the output
onto the market would be available to the employees to be pocketed. In
situations where Company funds were not available for such advances,
the employees borrowed the money in the Agra money market in the
name of the Company at 1 per cent per month. In that case, the
difference of } per cent per month would still be available to them.
From the point of view of both the speculative buyers as well as the
VOC servants, the giving of advances to the producers of indigo
carried with it certain inherent risks. In the event of a poor crop, it
might not always be possible to recover the full extent of the money
advanced together with the interest earned on it in the form of either

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indigo or cash. This is precisely what happened in 1637 to both the
speculators as well as the Dutch Company servants. Several of the
speculators went bankrupt as a result. After 1645 or so when the
international demand for Bayana indigo registered a steep decline, the
remaining speculative buyers also had really no option but to go out
of business. The 1637 crop failure also hit the Company servants hard
and when the matter accidentally came to the attention of the higher
authorities a major scandal was created. Eventually, in 1642, the
Company was obliged to write off the bad debts still outstanding in
the names of the indigo producers.

The problem of bad debts, however, was not peculiar to the special
case of Bayana indigo but indeed plagued all commodities that the
Europeans procured in India. In the case of textiles, the intermediary
merchants almost always supplied less than they had undertaken to,
either because the producers had not fully honoured their obligations
toward them or because they themselves had chosen to divert a part of
the goods procured to a third party at better terms. Second, of the
goods received by the companies, a part was usually found unaccep-
table as being of too poor a quality. Finally, even in respect of goods
accepted, for reasons of quality deviation, the final price paid to the
merchants was ordinarily lower than that originally agreed upon. The
result was that quite often the value of the goods accepted by a
company from a particular intermediary merchant was less than the
sum of money given to him in advance. The balance constituted a bad
debt. Preventive measures taken by the VOC in Bengal included a
closer investigation into the credentials of the intermediary merchants
before contracts were given out to them, and a denial of fresh contracts
to those of them who owed money to it. But since the Company did
not want to lose the bulk of its suppliers to its rivals, the latter measure
was invoked only in the case of habitual offenders. The others were
simply required to clear at least a part of their earlier obligations
simultaneously with the new ones.

An interesting innovation the VOC tried out on the Coromandel
coast with a view to solving or at least minimizing the problem of bad
debts was the institution of the so-called ‘joint stock companies’ in the
region. The innovation in this arrangement consisted essentially in the

53 van Santen, De Verenigde Oost-Indische Compagnie in Gujarat en Hindustan,

pp. 153-8.

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fact that the funds needed for investment in textiles were raised jointly
by the intermediary merchants themselves rather than being provided
by the Company in the form of advances to the customary extent of
50 to 70 per cent of the value of the contract. Each merchant was
supposed to subscribe to the pool of funds in accordance with his
share in the total value of the contract given out by the Company.
These merchants were also encouraged to operate in different seg-
ments of the production areas so as to minimize competition amongst
themselves leading to a rise in the cost price of the textiles procured.
This was a highly welcome development from the point of view of the
Company. But over time, the distinct characteristic feature of the
institution — namely, the investment by the participating merchants of
their own funds in procuring the textiles obviating the need for the
Company to give them advances and run the risk of bad debts arising
- tended to disintegrate and the joint stock system increasingly
followed the norms of the ordinary cash-advance contracts. Thus, in
the 1760s at Jagannathpuram in northern Coromandel, the Company
dealt with two joint stock companies. One of these consisted of the
Masulipatnam merchants (or their descendants) who had moved with
the Company to Jagannathpuram in 1750, while the other was
constituted by the local merchants.** In southern Coromandel, the
arrangement was much looser. An ordinary partnership between two
merchants, or even a single merchant unit, qualified to be designated
as a joint stock company there. Thus in the 1760s, the VOC procured
textiles both at Nagapattinam and at Porto Novo through six joint
stock companies each. At each of the two places, two of the companies
consisted of two merchants each, while the remaining four contained
only one merchant each.» Each of the units received an advance from
the Company and was expected to settle its accounts at the end of the
year. Bad debts nevertheless arose on a regular basis and the best that

54 ARA, Memoir of the outgoing Governor of Coromandel, Pieter Haksteen, for his
successor, Reynier van Vlissingen, dated 20 September 1771, Hooge Regering Batavia
(HRB) 344, ff. 53-5.

°5 At Nagapattinam, one of the partnership companies consisted of Palikonda Kistna
Chettiar and Venkatasala Mudaliar, while the other had Kondapilly Venkata Kistna Rama
Chetty and Kondapilly Venkatasalam Chetty as members. The four individual merchants
constituting a company each were Tirumani Chetty, Ramalinga Pillay, Muthu Venkatalinga
Mudaliar and Godawarti Sadasiva Chetty. In Porto Novo, Tambu Naikar and Rangasay
Chetty constituted one of the two partnership companies, while the other consisted of Papa
Chetty and Ramalinga Chetty. The four single merchant companies there consisted of

Masulimani Mudaliar, Shiva Chidambaram Mudaliar, Vedenada Muthu Chetty and Rama
Sama Chetty (ARA, Haksteen memoir, HRB 344, ff. 206, 146).

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the Company could do was to oblige each unit to clear each year, in
addition to meeting its obligation for that year, a part of its out-
standing obligations from earlier years. It was again the desire to
minimize bad debts that prompted the Company to allow a deceased
merchant’s heir(s) almost automatically to succeed him. The relatively
less well-off among the merchants were also obliged to produce a
guarantor acceptable to the Company.** To counter the problem of
the poor quality of the chintz supplied, the Nagapattinam factors also
decided in 1767 to depute a ‘supervisor’ to oversee the work of the
artisans engaged by the joint stock units to produce this variety. The
innovation was reported to have produced positive results and was
extended to other varieties such as muris.>”

The emergence of bad debts was not the only problem the
companies faced. Another serious problem was the receipt of goods
from the intermediary merchants much later than the date mutually
agreed upon. Part of the explanation lay in nonadherence to the
schedule by the artisans, but in some cases at least the delay was
deliberate. The delivery of goods only a few days prior to the
scheduled departure of the ships left very little time for the factors to
examine the goods received carefully, thereby increasing the chances
not only that substandard items would be accepted but also that they
would be evaluated at the same price as the others. Also, the fact that
the quality of the goods received was usually poorer than that of the
samples given to the intermediary merchants had important ramifica-
tions other than contributing to the emergence of bad debts. Given the
structure of demand in most of the markets supplied with Indian
goods by the companies, the loss in total revenue consequent upon a
deterioration in the quality offered was usually much greater than the
saving in total cost. The commodity for which the problem of poor
quality occurred in its most intense form was raw silk. Various
qualities of unreeled silk were mixed together before they were reeled.
In addition, the reeling itself was often very defective, with threads
running into each other.

56 This requirement at times created rather peculiar situations. For example, when they
succeeded their father, the late Godawarti Sadasiva Chetty, his two sons pleaded with the
Nagapattinam factors not to enforce the requirement of a guarantor in their case, for this
would adversely affect their standing and credit in their community. The Company agreed
on the condition that they would ensure that no bad debts ever arose on their account
(Haksteen memoir, ARA, HRB 344, ff. 206-8).

57 ARA, Haksteen memoir, HRB 344. ff. 208-10.

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Various measures were taken at different points in time by the
companies to solve these problems to the extent possible. But given
that, on the whole, the rate of growth of the Europeans’ demand for
Indian goods far exceeded the rate of growth of their supply turning
the market increasingly i into a sellers’ market, the companies were not
really in a position to impose punitive measures on the suppliers with
any degree of success. An interesting innovation that had a certain
measure of success that might briefly be noted is the silk-reeling unit
that the Dutch East India Company installed within the precints of its
factory at Kasimbazar in Bengal in 1653. This was a measure designed
to solve the twin problems of the use of inferior grades of unreeled silk
and the poor quality of the reeling of raw silk supplied by the
merchants. The unit had an extraordinarily chequered life, at times
reeling nearly all of the raw silk exported by the Company, and at
others practically none. When operating at full capacity, it could reel
about 1,500 bales (227,625 ponds) of raw silk per annum, and
employed over 3,000 men. Initially, the unit was organized on the basis
of a contract with a so-called ‘master reeler’. This individual was
provided with the equipment necessary for reeling raw silk, working
space for the reelers, and the necessary raw materials. Against a certain
amount of unreeled silk supplied to him, he was supposed to provide
the Company with a specified amount of properly reeled silk by a
certain date. He was paid in advance a sum calculated at the rate of Rs.5
per maund of reeled silk he had undertaken to supply. The organiza-
tional structure of the unit was changed in 1674 with the Company
itself assuming all risks and the master reeler being demoted from the
position of contractor to that of a manager at a salary of Rs.200 per
annum. In 1715, additional working space was constructed so as to
make it possible to accommodate as many as 4,000 reelers. Production
on this scale under one roof was almost certainly unprecedented in
Mughal India. Also, the imperial and other workshops (karkhanas)
were not fully comparable to the Dutch unit for two reasons. First, the
goods manufactured in karkhanas were intended almost exclusively
for use by royalty, the nobility, rich merchants and others, and for the
army, rather than for sale in the market. Second, at least some of the
big karkhanas appear to have been operated on the basis of underpaid
drafted labour rather than with free market labour.**

58 Prakash, The Dutch East India Company and the Economy of Bengal, ch. 4.

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CHAPTER 5

EURO-ASIAN AND INTRA-ASIAN
TRADE: THE PHASE OF DUTCH
DOMINATION, 1600-1680

THE DUTCH COMPANY TRADE

The Coromandel coast
We noted earlier that the first Indian region to be reached by the
Dutch East India Company was the Coromandel coast where a
factory was established as early as 1606. While the region had the
potential of providing items such as indigo, saltpetre and diamonds for
the European market, its principal attraction consisted in the avail-
ability of large quantities of textiles initially primarily for southeast
Asia, but eventually also for the European market. The staple varieties
included the ‘long cloth’, dyed in bright colours and with stripes and
checks, and re-exported extensively by the Dutch from Europe to the
West Indies under the title of ‘Guinea linen’. A variant, bleached white
or dyed blue, was also extensively used in the southeast Asian trade
under the designation of ‘negro-cloth’. Other staple varieties exported
to Europe included bethilles, salampuris, muris and parcallas. The
range of the varieties exported to the Asian markets was much larger.
The principal consuming markets served by the Dutch were in south-
east Asia and included the Spice Islands (the Moluccas, Banda and
Celebes), Java, Sumatra, the Malay peninsula, Siam and Burma. In the
Far East, limited quantities of Coromandel textiles figured in the
exports to Taiwan and Japan. Other Asian markets supplied with
these textiles were Sri Lanka and Persia. In Indonesia, these textiles
were used primarily to procure pepper and other spices, but were
often also used as a medium of payment to the soldiers in the service
of the Company. Throughout the archipelago, these textiles were used
primarily as wearing apparel by all sections of the community. While
the bulk of the demand seems to have been for the relatively coarser
and inexpensive types, there was also a fairly large market for the
more expensive and ornamental varieties. In Java, for example, the
principal varieties sold were tapis (including tapi sarassas and tapi

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Map 4 India: main textile-weaving areas, 1600-1750

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

chindaes) and goulongs. While the coarser varieties of tapis were partly
for ‘the peasants in the hills’,’ the goulongs, which were patterned on
the loom and often incorporated gold thread, were obviously for the
better-off sections. In a letter to Masulipatnam in 1617, Coen empha-
sized that ‘it was essential that only the best quality goulongs and tapi-
sarassas were procured for Java since these people were very particular
about the quality and, given their good buying power on the basis of
the high price of pepper, would pay a very good price for the right
kind of textiles’? It would, therefore, be quite inaccurate to classify
these markets as absorbers merely of coarse cottons. Also, each of the
consuming markets, with several sub-segments, was a distinct unit
with its own specific tastes and preferences with regard to the colours
of the dyes, as well as the patterns and designs created through
printing and painting. The orders lists sent by Batavia to Coromandel,
therefore, were elaborate affairs, often running into several folios,
indicating in great detail the market-wise requirements in terms of
variables such as the size of the piece, the colours preferred, the size of
the stripe, the pattern of the border, the exact floral design that was to
be duplicated, and so on. Thus the eighty packets of tapi-sarassas
asked for in 1623 were to have ‘bright red borders and small flower
work in lively colours’.

The Company’s trade on the Coromandel coast registered a
significant increase over the seventeenth century. The growth in the
average annual value of the Company’s total exports from the region
is set out in Table 5.1. It will be seen from the table that while
between 1620 and 1640 the annual exports averaged only f.o.5
million, the subsequent period witnessed an impressive growth. The
f.2 million mark was crossed in the early 1650s with a value of f.2.67
million being reached during 1661-5. After that, there was a slight
decline, but the period 1686-90 was again marked by the highest
ever figure of f.3.78 million.* The available data do not

' Algemeen Riksarchief (ARA), Coen at Batavia to Masulipatnam, 8 May 1622, VOC
849, ff. 82v—85v.

2 ARA, Coen at Jacatra to Masulipatnam, 30 November 1617, VOC 1067, ff. 31v—-35v.

> ‘An estimate of Coromandel clothes that could be sold in a year in the Moluccas,
Amboina, Banda, Java, Jambi, Patani and other southern quarters.’ Prepared at Batavia, 27
April 1623, ARA, VOC 1080, ff. 89v—gov.

* Note, however, that in this quinquennium, as in some others, the average annual figure
is based on information available only for one year. During 1686—go, that year was 1686.

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THE PHASE OF DUTCH DOMINATION

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Map 5 South India: weaving areas, c. 1720

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Table 5.1 Dutch East India Company’s exports from Coromandel,
1608-90 (annual average value in florins)

Years’ Value (f.)
1608 110,143
1614 279,975
1621-5 567,366
1626-30 657,207
1631-5 419,839
1636-40 652,270
1641-5 1,017,559
1646-50 1,725,692
1651-5 2,011,313
1661~5 2,673,815
1666-70 2,564,026
1671-5 2,300,000
1676-80 2,008,536
1686-90 3,781,568

Source: The figures until 1645 are based on Subrahmanyam, The Political
Economy of Commerce, p. 170. The figures for the remaining period are based on
Raychaudhuri, Jan Company in Coromandel.

Note: ' Note that in most quinquennial periods, information for all five years is
not available, and the annual average is based on whatever number of years
information was available for within the quinquennium. Over the quinquennium
1686-90, for example, information was available in respect of only one year,
namely 1686.

permit a disaggregation of the value of the total annual exports
between Europe and Asia. This is mainly because the exports for
Europe and southeast Asia were sent to Batavia and were listed
together under that factory. It is only for the brief period between
1616 and 1626 when shipments were also sent directly from Coro-
mandel to Holland that the value of the exports to Europe alone can
be worked out. As a proportion of total exports, the exports to
Europe during this period usually fluctuated between 20 and 25 per
cent, though there were years such as 1624 when this proportion was
only 15.5 per cent and 1619 when it was as high as 42.3 per cent. Note,
however, that in so far as during this period the export of Coromandel
goods to Holland also took place via Batavia, the proportions above

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THE PHASE OF DUTCH DOMINATION

average annual value(in million florins)

1608 tain 1621-25 feces 1631-35 ias-a0 1641-45 seiebo 9651-55 saa’ 1666-70 sesise 1676-80 a a any
Years .
Fig. 5.1 Dutch East India Company’s exports from Coromandel,
1608—90

capture only the lower bound of the exports to Europe, not their
average value.°

The southeast Asian markets accounted for an overwhelming
proportion of the total Asian market for Coromandel textiles. This is
borne out clearly by the annual order lists sent from Batavia to
Masulipatnam which, incidentally, are our only source for a partial
reconstruction of the quantitative profile of the Dutch intra-Asian
trade in Coromandel textiles over the greater part of the seventeenth
century. Instructions from Batavia repeatedly required Coromandel to
attach priority to the textile orders from different parts of Asia over
those from Europe. The extent to which the orders were under-
fulfilled (which was mostly the case) depended mainly on the avail-
ability of capital with the factors at any given point in time. The value
of the textile orders for southeast Asia at 1640-1 prices registered a
rapid rise from around f.300,000 in 1617 to f.455,000 in 1626 and to

> Information on the value of exports by direct shipments from Coromandel is available
in J.R. Bruijn, F.S. Gaastra and I. Schoffer, Dutch-Asiatic Shipping in the 17th and 18th
Centuries, The Hague, 1987, vol. 111. The figures above are from Sanjay Subrahmanyam, The
Political Economy of Commerce, Southern India 1500-1650, Cambridge, 1990, pp. 170-3.

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{824,000 in 1640. Thereafter the rise was even more rapid, and the
value increased to f.1.3 million in 1644, and f.1.55 million in 1650.°

The Company had a nearly captive market in the Spice Islands and
exploited this advantage in full by charging prices which were
considerably higher than those that other traders used to charge
earlier. In fact, in 1618 these prices were reported to be so high as to
be almost counterproductive in so far as they adversely affected the
delivery of cloves in the Moluccas.” With a brisk procurement by the
Chinese, Malay and other traders, the sales in the Java market picked
up considerably from the 1630s. The average rate of profit around this
time was reported to be between 60 and 100 per cent.® The 1641
conquest of Malacca helped, and the subsequent decades witnessed a
considerable increase in the trade in Coromandel textiles in southeast
Asia. Indeed, until the 1680s this market continued to be supplied
overwhelmingly by Coromandel. Thus of the total of f.1.26 million-
worth of textiles the Batavia Council ordered for this market for 1696
from Coromandel, Bengal and Gujarat together, the respective share
of the three sources was 93 per cent, 4 per cent and 3 per cent.” It was
only from about this time onward that the Company was confronted
by the problem of growing competition in Java by the locally
produced cheaper supplies of painted textiles.'°

The composition of the Coromandel goods exported to Europe was
more diverse. Commodities such as indigo, cotton yarn and saltpetre
figured in the export invoices more or less regularly throughout the
first half of the seventeenth century, and in some cases until later,
though as time passed the relative importance of goods other than
textiles declined. As far as Coromandel textiles were concerned, the
domination of the group by Guinea linen was unchallenged
throughout. In 1642, the Directors’ orders for cotton textiles from
Asia amounted to f.246,250 worth constituting 7.7 per cent of the total
orders for the year. The five Coromandel varieties, namely Guinea
linen, bethilles, salampuris, muris and parcallas, accounted for

? General letter from Governor-General Laurens Reael to the Directors at Amsterdam,
20 August 1618, VOC 1068, ff. 218-29.

8 In 1633, the profit on white cloth was reported to be as much as 125 per cent
(T. Raychaudhuri, Jan Company in Coromandel, The Hague, 1962, p. 159).

> Calculated from Pieter van Dam, Beschrijvinge van de Oost-Indische Compagnie, 11.11,
pp. 79-80 and 220-1; IL.1N, pp. 104~5. This is the only comprehensive list of orders available.

'© Raychaudhuri, Jan Company in Coromandel, p. 162.

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Map 6 Gujarat: textile towns, c. 1700

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

f-157,500 which, in turn, amounted to 63.9 per cent of the total Asian
orders for cotton textiles.'! By 1652, the orders for these five varieties
had gone up to f.397,000 (an increase of more than 150 per cent) in a
total Coromandel textile order of f.500,000 for Europe. The orders for
Europe accounted for 30 per cent of the total Dutch orders from
Coromandel.!* By the mid-seventeenth century, then, Europe had
become an important trading partner of Coromandel. The 1670s
witnessed further substantial increases in the European orders for
Coromandel textiles. The gross profit fetched by these textiles around
this time was reported to be between 65 and 160 per cent.'3

Gujarat

The Company’s trade with the other major Indian region supplying
textiles to southeast Asia, namely Gujarat, was taken up in earnest
from about 1620 onward. The growth in the value of the Company’s
exports from the region is set out in Table 5.2. Until the early 1640s,
this growth was a continuous one, and the annual exports had by then
crossed the f.1 million mark. There was, however, a decline from that
point on and the f.1 million mark was not reached again until the early
1670s, around which level the exports stayed until the early 1680s. A
major development of the period was the emergence of Gujarat from
about 1660 onward as a net exporter of precious metals in the form of
Mughal silver rupees. As we noted earlier, Gujarat now conformed to
a ‘goods for goods and bullion’ pattern rather than the usual ‘bullion
for goods’ pattern. By the late 1670s, the average annual export of
silver rupees had reached an all-time peak of f.700,000 worth and
accounted for as much as two thirds of the total Dutch exports from
the region. In the following period, however, there was a steep decline
in the number of rupees sent out. Among the principal beneficiaries of
the Surat silver rupees were the Dutch establishments at Bengal, Sri
Lanka, the Malabar coast and Coromandel.

The fact that the Surat factors were able to finance the procurement
of the export cargo for Europe and Asia, meet the establishment and
other costs of the factories in the region, and still spare funds for
export in the form of rupees to Batavia or directly to another Indian/
Asian region, without receiving any monetary assistance from Batavia

'! K. Glamann, Dutch—Asiatic Trade 1620-1740, Copenhagen/The Hague, 1958, p. 136.
'2 Subrahmanyam, The Political Economy of Commerce, pp. 171-2.
'S Raychaudhuri, Jan Company in Coromandel, p. 161.

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Table 5.2 Dutch East India Company’s exports from Gujarat,
1621-1792 (annual average value in florins)

Years Goods for Goods Totalof Cashfor Grand

Europe (f.) for Asia (f.) goods (f.) Asia(f.) total (f.)
1621/2-1625/6 358,833 - 358,833
1626/7-1630/1 385,667, - 385,667
1631/2-1635/6 731,350 — 731,350
1636/7-16 40/1 997,880 — 997,880
1641/2-1645/6 1,017,200 — 1,017,200
1646/7-1650/1 731,750 - 731,750
1651/2-165 5/6 744,000 — 744,000
1656/7-1660/1 5795523 240,300 819,823
1661/2-1665/6 754,831 173,069 927,900
1666/7-1670/1 263,744 255,202 518,949 249,044 = 767,993
1671/2-1675/6 232,471 236,770 469,241 574,629 1,043,870

1676/7-1680/1 143,378 228,866 372,244 699,268 1,071,512
1681/2-1685/6 293,540 274,869 568,409 497,243 1,065,652
1686/7—-1690/1 352,281 227,593 $79,874 218,933 798,807
1691/2-1695/6 383,499 300,357 683,856 188,007 871,863
1696/7~1700/1 603,737 480,654 1,084,391 152,571 1,236,962
1701/2-1705/6 671,117 159,361 830,478 NA
1706/7-1710/1t 240,452 199,683 440,135 NA
17WI/12-1715/16 169,225 246,053 415,278 NA
1716/17-1720/1 225,571 137,526 363,097 NA
1721/2-1725/6 178,789 1775423 356,212 NA
1726/7-1730/1 130,295 209,359 339,654 NA
1731/2-1735/6 152,699 217,275 369,974 NA
1736/7-1740/1 175,103 186,937 362,040 NA
1741/2-1745/6 188,518 238,644 427,162 NA
1746/7-1750/1 268,006 695,547 963,553 300,000 1,263,553
1751/2-1755/6 265,227 657,846 923,073 354,564 1,277,637
1756/7-1760/1 169,845 602,496 7725341 $08,200 1,280, 541
1761/2-1765/6 212,548 276,657 489,205 360,000 849,205
1766/7-1770/1 353,486 222,510 $75,996 400,500 976,496
1784/5-1788/9 175,862 176,439 352,301 NA
1789/90-1791/2 251,579 158, 689 410,268 NA

Note: NA stands for not available.

Source:

1. The figures for the years 1621/2 to 1655/6 have been calculated from van
Santen, De Verenigde Oost-Indische Compagnie in Gujarat, Table 1, pp. 32-3.
The regional breakdown of the goods exported is not available for this period.

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Table 5.2 (contd)

2. The figures for the period 1656/7 to 1665/6 have been calculated from V.B.
Gupta, “The Dutch East India Company in Gujarat trade 1660-1700: a study
of selected aspects’, unpublished PhD thesis, University of Delhi, 1991.

3. The figures for the period 1666/7 to 1749/50 are from two sources. The figures
for goods exported, including the regional breakdown, have been calculated
from Appendix 1, entitled, ‘Aanwysing van het bedragen der versondene
retourneren in 80 jaren sedert anno 1665/66 tot 1749/50 inclusief als’, to
‘Memorie wegens den toestand der Souratsen Directie opgemaakt en te gelyk
met het bestier aangegeven door den ondergetekenden afgaanden directeur Jan
Schreuder aan synen vervanger den heer geeligeert directeur Johannes Pecock
in ‘t Nederlands comptoir te Souratta den 30 September anno 1750’, ARA,
Hooge Regering Batavia (HRB) 838, ff. 1-139, appendices independent
pagination 1-261. Appendix 1, ff. 249-52.

The figures for cash exported between 1666/7 to 1699/1700 have been
calculated from Gupta, ‘The Dutch East India Company in Gujarat trade’.
Information regarding cash exported between 1700/1 and 1749/50 is not
available. The figure for cash shown against the quinquennium 1746/7 to
1750/1 is based on information available only for 1750/1.

4. The figures for the period 1750-1 to 1767-8 have been calculated from
Appendix 14 to the memorandum left by the outgoing director C.L. Senff for
his successor M.J. Bosman dated 31 December 1768, ARA, HRB 848.

5. The figures for the period 1784-5 to 1791-2 have been calculated from
appendix B to the memorandum left by the outgoing director A.J. Sluisken for
his successor Pieter Sluisken dated 31 December 1792, ARA, HRB 854.
Information regarding cash exported during this period, if any, is not available.

or elsewhere, was, of course, the outcome of the factors’ ability to
generate enormous sums of money locally by the sale of Asian goods.
Because of its command over the large north Indian market as its
hinterland, Surat easily constituted by far the largest single market the
Company had anywhere in Asia. The most important of the Asian
goods sold there were Indonesian spices and Japanese bar copper, in
both of which the Company enjoyed monopoly status. In order to
tide over short-term problems of liquidity, the proceeds from the sale
of goods were often supplemented by funds borrowed in the local
money market, in which sphere again the city of Surat had attained a
level of development and maturity not found anywhere else in the
subcontinent.

As early as 1623, Pieter van den Broecke, the VOC director at
Surat, had visualized a situation where the proceeds from the sale of
spices would be adequate to finance the procurement of export cargo

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THE PHASE OF DUTCH DOMINATION

Average annual value in thousands of florins

1621 165 1641 165 1661 1671 1681 teml 170887 1721 1735 174 1761 1705 17m vst 1701
1626 1696 1848 «1656 1686) «8676 1688) 1606) 1708) 171817281738) «17481756 1786776788

Years

Fig. 5.2, Dutch East India Company’s export of goods from
Gujarat, 1621-1792

for Europe as well as the rest of Asia.'* The principal spices sold by
the Company were cloves, nutmeg and mace. The Company’s factory
at Agra, which was under the administrative control of Surat, with its
concentration of the Mughal Court and the aristocracy, was a major
outlet for the spices. Being a luxury consumption good, one would
ordinarily expect the price elasticity of demand in respect of spices to
have been reasonably high. But in fact the demand for spices in India
was inelastic over a very broad price range. The reason evidently was
that while the rich Muslim aristocracy with its fondness for spiced
food, as well as other well-off sections, were willing to pay extremely
high prices for the coveted spices, most other sections of the commu-
nity found them beyond their reach even if there was to be a sharp
decline in the price. Initially, this was something the Directors found
hard to believe. Given the extraordinarily cheap procurement price of
spices, the profit margin was very good and the Directors were not at

'* ARA, Surat to De Carpentier at Batavia, 25 December 1623, VOC 1083, ff. 138-45.

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all averse to a reduction in price in the interests of promoting sales and
generating a larger purchasing power. In course of time, however, the
Directors accepted the special nature of the demand for spices in India.
There were other complicating circumstances as well. The Company
was concerned that the Asian prices of the spices should not be
allowed to fall to a level that would make it worth their while for the
English and others to buy spices in India or elsewhere in Asia and take
them to Europe, thus compromising the crucial European monopoly
of the Company. This was by no means an imaginary fear and there
were cases of this actually happening.'> Taking all these factors into
account in conjunction with the monopoly position of the Company,
the natural thing for the Company to do would be to keep the sale
prices in India pegged at a high level and maximize the monopoly
revenue. But the identification of the optimal price for each of the
major spices was not an easy matter at all. The suspicious conduct of
the factors of the Company at the Surat factory did not help matters
either.

Since the first Indian establishments of the Company were on the
Coromandel coast, the sale of spices began there. The Surat market
was at this time supplied from Masulipatnam, but already in 1618,
even before a regular factory was established there, Coen was con-
templating concentrating the Indian spice sales at Surat.'® In 1619, the
price of cloves and nutmeg in Surat was reported to be higher even
than in Amsterdam.'!? The Company also began sending spices to
Agra around this time. The position was quite satisfactory on the
Coromandel coast as well. The lot of spices worth f.40,000 sent there
in 1622 had afforded a net profit of f.180,000.!8 This was notwith-
standing the fact that the price in Coromandel was usually substan-
tially lower than in north India. Early in 1627, Francisco Pelsaert
wrote that the Coromandel price of cloves was only f.1.80 per pond
against the price of f.3.84 at Agra. This encouraged a large-scale

's In 1680, for example, several English captains had bought spices sold by the Dutch at
Surat. They were reported to have sold them in England at a profit of more than 100 per
cent. The English Directors advised their factors at Hugli to follow a similar course of action
(India Office Library, English Court of Directors to factors in Hugli, 30.12.1681, Letter
Book 6, f. 437). Also see Glamann, Dutch—Asiatic Trade, pp. 104-8.

‘© Coen at Bantam to Masulipatnam, 19 September 1618, VOC 1068, ff. 76-82.

'7 General letter from Coen at Jacatra to the Directors at Amsterdam, 22 January 1620,
VOC 1070, ff. 162-77.

'8 Coen aboard the Mauritius at St Helena to the Directors at Amsterdam, 20 June 1623,
VOC 1077, ff. 3-40.

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overland trade between the two regions which, in turn, threatened to
spoil the Agra market. In 1628, at the suggestion of the Agra factors,
Batavia agreed to increase the share of Surat/Agra in the spice
shipments to India at the cost of that of the Coromandel coast. In view
of Shahjahan’s campaign against Ahmadnagar, the routes from the
Deccan had also become rather unsafe at this time. The result was a
spectacular rise in the Agra price of cloves from f.3.00 in 1627 to
f.6.60 per pond in 1630.1?

The 1630s witnessed a significant increase in the volume of cloves
procured at Makassar by the English and the Danes as well as by the
Asian merchants. The result was a pressure on spice prices both in
Europe as well as in Asia. The Surat price of cloves, for example, came
down from f.4.76 in 1630 to f.3.07 in 1633 and further to f.2.35 per
pond in 1635.20 The Coromandel price around this time was only
f.t.s0 per pond.”! The response of the Company was to try and
compete the rivals out of the market by a further marked reduction in
price, usually referred to as the strategy of dumping. As a result, the
Surat price was brought down in 1636 to an unprecedentedly low level
of f.1.22 per pond. The following year, of the total of 269,000 ponds
of cloves sent to the various Asian factories, Batavia sent as much as
167,000 ponds or 62 per cent to India.2* The Company’s strategy
might very well have worked but for the collusion between the
Company’s servants in Surat and a few leading merchants of the city.
Evidently in return for a consideration, the factors confined the sale of
the cheap cloves to a very small number of merchants, at whose
request the price was not publicly disclosed. In the few cases where
information regarding both the wholesale price paid by these mer-
chants as well as the price at which they retailed the cloves is available,
the margin of profit earned by them is uniformly high and probably
considerably in excess of the normal level.??

It was only in the second half of the seventeenth century, and
particularly from the 1660s onward when the Company had finally
managed to control the problem of smuggling, that the price of cloves

"9 H.W. van Santen, De Verenigde Oost-Indische Compagnie in Gujarat en Hindustan,
1620-1660, Leiden, 1982, pp. 44, 217.

20 van Santen, De Verenigde Oost-Indische Compagnie in Gujarat, p. 217.

21 Raychaudhuri, Jan Company in Coromandel, p. 194.

22, W. P. Coolhaas (ed.), Generale Missiven van Gouverneurs-Generaal en Raden aan
Heren XVII der Verenigde Oost-Indische Compagnie, The Hague, 1960, vol. 1, p. 613.

23 van Santen, De Verenigde Oost-Indische Compagnie in Gujarat, p. 45.

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recovered both at Surat and on the Coromandel coast.”* The increas-
ingly strong position of the Company in the spice market, as also the
desire to ensure that the European monopoly was not compromised
by unusually low sale prices in Asia, were both reflected in the
announcement by the Directors in 1653 of minimum sale prices for
each of the major spices for Asia. These were f.2.40 per pond for
cloves, f.1.65 for the whole kernels of nutmeg called ‘noten’ and f.1.20
for the broken variety called ‘rompen’, and f.3.50 per pond for mace.?°
The actual sale price in any given Asian factory could, of course,
exceed these figures. From 1654 on, the Surat price of cloves was only
marginally in excess of the prescribed minimum, except in particularly
good years such as 1658 when it touched f.3.65 per pond. In the early
1660s, the Amsterdam price was f.4.85 per pond and the Directors
believed that if they could fetch anywhere between f.3.50 and f.4.00
per pond in India, it would be relatively more profitable to sell in
India. The Surat market did better than that and the price was reported
to have gone up to f.4.18 per pond in 1663.7°

The sale of cloves at Surat picked up considerably in the 1670s and
the 1680s. Thus, against an annual average of 46,000 ponds during the
1660s, the figure went up to 75,000 ponds in the 1670s, and further to
85,000 ponds in the 1680s.?” The Directors believed that an increase in
the minimum Asian price would not have an adverse effect on the total
amount sold. In 1687, therefore, these prices were revised upward to
f-4.35 per pond for cloves, f.2.50 for the ‘rompen’ variety of nutmeg,
and f.4.75 per pond for mace. These prices were only marginally
lower than the prices in Europe. At Surat, things proceeded relatively
smoothly until 1692, when the average annual sale of cloves was
reported to have fallen to an unprecedentedly low level of 12,687
ponds. On enquiry, it was established that this was not because the

24 Coolhaas (ed.), Generale Missiven, vol. I, p. 459; van Santen, De Verenigde Oost-

Indische Compagnie in Gujarat, pp. 217-18; Raychaudhuri, Jan Company in Coromandel,
. 194.
i 25 van Dam, Beschrijvinge, 11.1, pp. 118-25.

26 van Santen, De Verenigde Oost-Indische Compagnie in Gujarat, pp. 217-19; van Dam,
Beschrijvinge, 11.111, p. 118; Coolhaas (ed.), Generale Misstven, vol. 1, p. 459.

27 van Dam, Beschrijvinge, wil, Appendix tic, ‘Nagelen, in 28 jaren in Suratte ter
quantiteyt en pryse als volght verkoft’ , P- 131; van Santen, De Verenigde Oost-Indische
Compagnie in Gujarat, pp. 47, 217-19. "Between 1 September 1670 and 31 August 1680, a
total of 1.67 million ponds of cloves, 2.13 million ponds of nutmeg and 0.2 million ponds of
mace was sold in Asia. The corresponding figures of export to the Netherlands over the
same period were 3.52 million ponds, 2.54 million ponds and 0.9 million ponds, respectively.
(F.S. Gaastra, Bewind en Beleid by de VOC 1672-1702, Zutphen, 1989, p. 103).

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effect of the minimum prices had now begun to be felt, but because
Pieter van Helsdingen — one of the two acting directors of the Dutch
factory at Surat — had rejected offers of prices higher than the
minimum. It was pointed out that the factory could have sold 96,500
ponds of cloves at f.4.50 per pond and madea profit of f.420,000. Van
Helsdingen was dismissed from the service of the Company, and the
Surat factors were instructed to sell at f.4.35 per pond. A new set of
minimum prices was announced by Batavia in 1696. The price of
cloves was maintained at the 1687 level, but those of the other spices
were increased. In the meantime, Van Helsdingen had succeeded in
convincing the Directors that the 1687 prices were far too low, and
that the sales would not suffer if the minimum prices for Asia were
further revised upward. Yet another set of minimum prices for Asia
was, therefore, announced by the Directors in 1697. The new price of
cloves was f.5.00 per pond, which was about 6.7 per cent higher than
the European price. It also happened to be considerably higher than
the current market price in a number of Asian factories, with the result
that the total sales dropped for a while.

By their secret letter of 12 August 1698, the Batavia Council
authorized the factors at Surat to sell cloves, if necessary, at a price
lower than the 1697 minimum but no lower than the 1687 minimum
of f.4.35 per pond. In March 1701, Director Van Zwaardecroon wrote
to Batavia that they had not been able to sell more than 40,000 ponds
at about f.4.70 per pond. Doubts were also expressed in Holland
regarding the wisdom of fixing the Asian minimum prices. A commis-
sion was, therefore, appointed late in 1702 to go into the question.
Pieter van Dam, the celebrated historian of the Company, who served
on the commission, advocated a reduction in the Asian prices.?® The
principal advocate of keeping the prices ata high level was Pieter de
Witt who justified the policy on considerations of preventing illegal
private trade in spices in Asia as well as safeguarding the Company’s
monopoly in Europe. The latter view prevailed and the commission
recommended no reduction in prices.??

A statement available in the Company’s archives pertaining to the
years 1688-9 and 1689-90 and other information enables us to
document the relative importance of Gujarat (and north India) as a

28 van Dam, Beschrijvinge, 1.11, pp. 120-5.
2? ARA, Hugli to Batavia, 19.9.1697, VOC 1596, f. 94; Glamann, Dutch—Asiatic Trade,
pp. 104-8.

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market for spices. Of the total profit of f.1.89 million made by the
Company on the sale of cloves, nutmeg and mace in Asia during
1688-9 and 1689—90 together, sales in Persia accounted for 12.83 per
cent. The remaining 87.17 per cent of the profit was made on sales in
India: Gujarat — 50.23 per cent, Coromandel — 28.06 per cent, Bengal —
7.01 per cent and Malabar —- 1.87 per cent.°

The sale of goods was, of course, only a means towards an end,
which was the procurement of textiles and other goods for the Asian
and the European markets. Information regarding the relative share of
Europe and the rest of Asia in the goods exported by the Company
from Surat is available on a systematic basis only from the mid-1660s
onward. Between that time and the mid-1680s, the value of goods
intended for Europe was broadly the same as that for the rest of Asia
(not taking into account the export of silver rupees from Surat which
were intended exclusively for other Indian/Asian factories), except
during the late 1670s when the relative share of Europe was distinctly
smaller (Table 5.2). As a proportion of the total Dutch exports to
Holland during this period, goods procured in Gujarat for Europe
usually accounted for 6 to 7 per cent, though in an unusual year such
as 1670-1 it could be as large as 14 per cent.*! For the period until the
mid-1650s, the commodity composition of the export cargo suggests
that the share of Europe would have been distinctly larger until about
1641, and somewhat lower than that of the rest of Asia thereafter. This
was the result essentially of the dramatically altered role of indigo,
destined almost exclusively for Europe, in the total exports from
Surat. While until 1641 indigo generally accounted for anywhere
between 35 and 60 per cent of the total exports, its share during the
1640s and the early 1650s was generally under a quarter.°? Indigo was
procured by the Company at both Bayana (near Agra) and Sarkhej
(near Ahmedabad).

Indigo’s domination of the export cargo during the early years of
the Company’s trading operations in Gujarat and Agra is somewhat
difficult to rationalize. In letter after letter, Batavia was asking Surat to
go slow on the procurement of indigo and to invest the bulk of the

30 This statement is available in ARA, VOC 1504, ff. 271-4.

31 Calculated from Table 5.2 in conjunction with information on total Dutch imports into
Holland available in Bruijn, Gaastra and Schoffer, Dutch—Asiatic Shipping, vol. 11.

32 van Santen, De Verenigde Oost-Indische Compagnie in Gujarat, Table 1, pp. 32-3.

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limited funds available in textiles for the southeast Asian markets,
because ‘without these textiles, it was difficult to carry on trade in the
southern quarters’.>> When, in 1622, the Weesp arrived at Batavia with
no Gujarat textiles for Indonesia, Coen wrote to Surat to register his
strong displeasure, even adding that Van den Broecke ‘dreamt of
nothing but indigo’.** But for some inexplicable reason, the emphasis
on indigo in the total procurement continued. It was only in the 1640s
when competition by the better-quality and cheaper supplies from the
West Indies brought about a slump in the market for Indian indigo in
Europe that the procurement of this item was reduced. There was a
revival in the demand for Indian indigo from the mid-1650s, but the
amount exported between 1660 and 1680 was rarely above 100,000
ponds against the figure of over half a million ponds reached between
1638 and 1641.°°

As for textiles, the varieties exported to Europe were initially
mainly finer varieties of baftas, dariabadis and cangans. No Gujarat
silk piece-goods were exported to Europe at this time, and the number
of cotton and silk mixed piece-goods exported was also quite small
and only on an occasional basis. Between 1660 and 1680, the largest
number of pieces exported was in 1671-2 when it stood at 39,220
consisting of 37,220 pieces of fine cottons and 2,000 pieces of coarse
cotton textiles.3¢

Within Asia, while small quantities of textile exports from Surat
went to the Middle East (Basra, Gombroon and Mocha), the south-
west coast of India (Vengurla and Malabar), Sri Lanka, Coromandel
and Bengal, the bulk of the exports were directed at Batavia. From
Batavia, an overwhelming proportion of these textiles was sent on to
the Spice Islands and Malaya. According to an estimate prepared in
1623, the principal varieties that had a market in this region were

33 Letter from Coen to Van den Broecke dated 6 November 1621, VOC 840, ff. 26v-27.
The letter went on to say that until further orders, no funds were to be invested in any other
commodity. Earlier, in his letter of 17 October 1621, Coen had told Van den Broecke to
invest money in indigo only after meeting the textile orders from southeast Asia in full. The
procurement of textiles for Holland was also to be postponed till such time as the availability
of funds improved (letter dated 17 October 1621, VOC 849, ff. 15-16v). Also see letters
from Coen to Surat dated 5 May 1622, VOC 849, ff. 8sv—87v and 22 July 1622, VOC 850,
ff. 1v-4.

34 Letter from Coen to Dedel at Surat dated 22 July 1622, VOC 1076, ff. 96-96v.

35 V.B. Gupta, ‘The Dutch East India Company in Gujarat trade, 1660-1700: a study of
selected aspects’, unpublished PhD Thesis, Delhi University, 1991, p. 230.

3© Gupta, ‘The Dutch East India Company in Gujarat trade’, p. 233.

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baftas, cangans, chelas, cannikens, taffechelas and negro-cloth.*’ In the
case of varieties such as baftas and taffechelas, there was a fairly large
market for the medium and fine qualities. Of the Gujarat silk textiles,
the most important variety procured for the southeast Asian markets
was patolas.>® Over the period between 1663 and 1680, for which
quantitative information is available, there was an enormous fluctua-
tion in the number of pieces exported by the Company from Surat to
Batavia each year. Thus while there was a year such as 1664-5 when
the number of pieces exported was as high as 396,570, at the other end
of the scale there were years such as those between 1669-70 and
1672~3, when this number was under 50,000. The bulk of the textiles
exported were coarse cottons, though fine cottons, silk piece-goods, as
well as piece-goods made of a mixture of silk and cotton yarn, were
also exported. The profitability in Indonesia was reasonable: in 1679,
Surat chintz were reported to have yielded a gross profit of 100-128
per cent, while the following year carricans were sold at a profit of 70
per cent.>?

The only other Asian region to which Gujarat textiles were
exported in any quantity was the Middle East - Bandar Abbas and
Basra in the Persian Gulf and Mocha in Yemen. Since the trade with
these places had been organized from Surat as the base, Gujarat textiles
had traditionally been included in the cargo sent there together with
items such as Indonesian spices. The value of the textiles exported to
Persia from the mid-1630s usually fluctuated between around f.50,000
and f.150,000 per annum. In the late 1630s, Surat cargo accounted for
nearly half of the total value sent to Persia by the Company. The gross
profit earned on the textiles was 40 per cent in 1642 but registered a
steep decline thereafter to 4 per cent in 1651 and 7 to 8 per cent in
1659.The export of the textiles, therefore, was curtailed heavily.
Between 1660 and 1700, the value of the exports from Surat to Persia
was insignificant and often accounted for less than 1 per cent of the
total Dutch exports from Gujarat. The only exceptions to this were

>? An estimate prepared at Batavia by Antonio van Diemen of the textiles procured in
Surat and the neighbouring areas that could be sold annually in the southern factories,
1 August 1623, VOC 1079, ff. 192v—193.

38 In 1621, good quality patolas with figures of elephants and humans painted on them
were reported to be selling in the Moluccas at the extremely high price of 40 to 50 rials per
piece (Coen at Batavia to Van den Broecke at Surat, 6 November 1621, VOC 849,
ff. 26v—27).

3? Gupta, ‘The Dutch East India Company in Gujarat trade’, pp. 311, 337-

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the years 1664-5, when Persia’s share was a respectable 13.9 per cent,
and 1668-9 when it was 8.56 per cent. The story was even more dismal
in the case of Mocha. The export of Gujarat textiles to this port had
begun around 1638, but was terminated in 1656 because of extremely
poor profitability. It was only around the end of the seventeenth
century that the Company’s interest in Mocha had been revived
because of coffee. The role of Gujarat textiles in the Mocha trade,
however, never assumed any importance, and it was only occasionally
that a gross profit of about 50 per cent was earned on these textiles.*°

Bengal

When the Company came to Bengal in the early 1630s after having
established itself in Coromandel and Gujarat, it was also mainly in
quest of goods for its intra-Asian trade.*! But the commodity this time
was not textiles for southeast Asia, but raw silk for Japan. Some time
later, Bihar opium also emerged as a major item of export to southeast
Asia. In the closing decades of the seventeenth century, Bengal
emerged as a major provider of textiles and raw silk for the European
market. The average annual value of the Company’s total exports from
Bengal to other parts of Asia as well as to Europe registered a rapid
rise from under f.200,000 in the late 1640s to over a million florins a
decade later (Table 5.3).

Over the following decades, the growth continued almost unin-
terrupted till the figure of nearly f.2 million was reached in the early
1680s. Information available for 1675-6 shows that raw silk accounted
for 40 per cent of the total Dutch exports from the region and textiles
for another 22 per cent. The remaining 38 per cent was divided equally
between saltpetre (12 per cent) and opium (7 per cent) on the one
hand, and miscellaneous goods (sugar, rice, wheat, clarified butter,
mustard oil, wax, borax, seashells (cauris) and gunny bags) on the
other. Over the greater part of the seventeenth century, a fairly
important segment of the textiles, the bulk of the raw silk and the
entire lot of opium procured in the region was used by the Company
for its intra~Asian trade. In the 1660s, exports to Batavia, Japan and
other parts of Asia accounted for between 55 and 70 per cent of the

‘© van Santen, De Verenigde Oost-Indische Compagnie in Gujarat, p. 57; Gupta, “The

Dutch East India Company in Gujarat trade’, pp. 263-6, 278.
‘1 This section is based on Om Prakash, The Dutch East India Company and the
Economy of Bengal, 1630-1720, Princeton, 1985, chs. 5-7.

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Table 5.3 The Dutch East India Company’s exports from Bengal,

1645~1785
(average annual value in florins)

Quinquenniums Number of yearsfor Value Years Value
which informationis _(f.) (f.)
available over the
quinquennium

1645-50 2 172,982 1720-1 4,615,986

1650-5 2 718,707 1722-3 4,221,093

1655-60 4 1,267,491 1725-6 41943337

1660-5 5 1,454,524 1731-2 2,363,138

1665-70 5 1,407,112 1735-6 4,314,042

1670-5 4 1,652,102 1741-2 3,034,504

1675-80 4 1,256,393 = 1751-2 4:995,786

1680-5 5 1,960,132 1761-2 2,301,796

1685-90 5 1,871,034 1771-2 1,965,350

1690-5 5 2,429,758 1780-1 2,476,844

1695~1700 4 2,777,103 1784~$ 1,324,523

1700—-§ 3 3,294,045

1705-10 2 3,565,194

I71O-15§ 5 3,258,434

1715-20 3 3,845,882

Source: The figures for the years 1645-50 to 1715-20, and for 1720-1, 1725—6 and
1735-6 have been calculated from the Bengal export invoices in the Overgekomen
Brieven en Papieren series in the VOC records preserved at the Algemeen
Riksarchief, The Hague. (The figures until 1720-1 are also available in my The
Dutch East India Company and the Economy of Bengal, 1630-1720, Princeton,
1985, Table 33, p. 70.) The figures for the remaining years have been calculated
from the ‘copie generale journalen gehouden door de boekhouder-generaal te
Batavia 1700/1701-1789/90” which forms part of the series “Copien van stukken
afkomstig van de boekhouding te Batavia’, available at the Algemeen Rijksarchief,
The Hague under ARA, BGB 10751 to 10801. In order to establish the compar-
ability across time of the values calculated from these two sources, the figures for
the years 1701-2 and 1711-12 were collected from both sources. It turned out that
the figures from the two sources were quite comparable, the marginal difference
arising probably from various handling and other costs associated with the export
of goods. For 1701-2, the figure from the invoices in the overgekomen brieven
series was f.3,327,845 and that from the Generale journalen series f.3,344,910. The
corresponding figures for 1711-12 were f.3,481,998 and f.3,497,270 respectively.
The possibility of the figures for the years 1722-3, 1731-2 and those between
1741~2 to 1784-5 calculated from the ‘copie generale journalen’ differing from
those that might emerge on the basis of export invoices cannot, of course, be ruled
out.

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R. Brahmaputra

Murshidabad 3
Kasimbazar

A cu ae
or

N
a“ of
frye
. Bay of Bengal

iw
4
¢

‘ki: Main areas of weaving for export
4 Area growing fine Dacca cotton

200 miles

0 300 km

Map 7 Bengal: main textile towns c. 1720

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Table 5.4 Regional distribution of the Dutch East India Company’s average annual exports from Bengal,
1660-1736 (value in florins)

Years Average Europe Batavia Japan Rest of Asia

annual exports § Am
Value (f.) % oftotal Value(f.) %oftotal Value(f.) %oftotal Value(f.) % of total

1660~I 1,325,002 NA ~ NA - $95,000 44.90 85,155 6.42
1665-6 1,229,360 $55:597 49.15 NA - $00,704 40.72 173,059 14.07
1666-7 1,100,536 324,319 29.46 NA - 611,349 55-55 164,868 14.98
1668-9 1,713,016 NA = NA - 689,369 40.25 298,190 17.40
1673-4 1,453,107 NA - NA - 796,000 $4.77 206,917 14.23
1674-5 1,313,460 255,490 19.45 165,926 12.63 603,400 45-93 288,644 21.97
1675-6 1,153,769 318,039 27.56 NA - $74,759 49.81 260,971 22.61
1681-2 1,923,665 NA - NA - 5 30,700 27.58 249,132 12.95
1693-4 2,641,071 2,041,061 77.28 325,826 12.33 167,737 6.35 106,447 4.03
1698-1703 3,261,849 2,402,694 73.66 430,265 13.19 258,345 7.92 160,063 4.90
1708-13 3,308,529 2,300,706 69.53 §26,430 15.91 348,983 10.54 131,862 3.98
1713-18 3,683,513 2,677,033 72.67 584,304 15.86 264,268 7.17 1573907 4.28
1720-1 4,615,986 3,508,911 76.01 761,890 16.50 201,756 4.37 143,429 3.10
1725-6 4,943,337 3,565,066 72.11 1,009,152 20.41 320,173 6.47 48,946 0.99
1735-6 4,314,042 3,072,662 71.22 977,§12 22.65 153,878 3.56 109,990 2.54

Note: NA stands for not available.

Source: The figures for the period 1660-1721 have been calculated from Prakash, The Dutch East India Company and the Economy
of Bengal. The figures for 1725-36 have been calculated from Bengal export invoices in the Dutch records. In the three
quinquenniums included between 1698 and 1718, the annual average is based on information available for all the five years.

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THE PHASE OF DUTCH DOMINATION

Company’s total exports from Bengal. In 1674-75, this proportion
touched an all-time peak of 80 per cent, though the following year it
had again come down to 72 per cent (Table 5.4).

In Asia, by far the most important market for Bengal goods was
Japan which took large quantities of raw silk in addition to silk and
mixed textiles. The Japan goods sent to Bengal included, in addition to
substantial quantities of silver and later gold, fairly large quantities of
bar copper. Bengal raw silk was included in the Company’s cargo for
Japan for the first time in 1640. From 1641 onward, the profitability
on the Chinese raw silk, the principal rival of the variety from Bengal,
was adversely affected by the decision of the Japanese authorities to
subject the entire lot of the Chinese raw silk brought in by the
Company to the pancado arrangement.‘ The amount of Bengal raw
silk sent to Nagasaki was, therefore, increased. In 1646, the Board of
Directors even instructed Batavia to give priority to the orders for
Bengal raw silk from Japan over those from Holland. In 1649, Bengal
silk was reported to have yielded a gross profit of 200 per cent at
Nagasaki. The following year, the entire lot of this silk received at
Batavia was sent on to Japan. In the early 1650s, the rate of profit
registered a decline, but Bengal silk still did considerably better than
its rivals from Tonkin or China. In 1657, the Board of Directors went
so far as to observe that ‘the Bengal-Japan silk trade provides us with
the largest amount of capital . . . Bengal and Japan should, therefore,
be used as our milch-cows!”

In the 1660s, goods destined for Japan accounted for as much as 40
to 55 per cent of the Company’s total exports from Bengal (Table 5.4).
Of the total cargo sent to Japan from Batavia, the share of Bengal
goods at this time was within the same range — a little under 50 per
cent. Over the period 1656-72, Bengal silk accounted, on an average,
for 80 per cent of the total amount of raw silk the Company sent to
Nagasaki. The 1672 introduction of the appraised trade system, which
effectively reintroduced the pancado system in relation to all goods
imported into Japan, inevitably brought the profit rate down consider-
ably. The volume of trade with Japan was, therefore, reduced. In 1679,
the Batavia Council instructed the Bengal factors to supply raw silk

“2 Under the pancado arrangement, the Company was obliged to sell to the Nagasaki
guild at a price unilaterally determined by the latter.

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average annual value(in million florins)

Percentage of total exports

1645-50 = 1883-00 9 1085-70 167B-BO | 168S-OO1ERS1700 «17OS1O | N70) 7P2-22| 178-82 1741-42 1781-02 780-8

Years

Fig. 5.3 The Dutch East India Company’s exports from Bengal,

1645-1785

80
70
60 —@®— Ewope

A Batavia

- Me = depan

s0 ---@-- Resto Asia
40
30
20

1660-61 1660-67 1673-74 1678-76 1693-94 1708-13 1720-23 1735-36
1665-66 1668-69 1674-75 1684-82 4698-1703 1713-18 1728-26
Years

Fig. 5.4 Regional distribution of the VOC’s average annual exports
from Bengal, 1660-1736 (in percentage terms)

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THE PHASE OF DUTCH DOMINATION

for Japan only if a minimum gross profit of 80 per cent had been
earned on it in Nagasaki the previous year.

The other major Asian region to which the Dutch Company
exported Bengal goods was the Indonesian archipelago. The principal
commodity that figured in this trade was Bihar opium, and by the
close of the 1660s the quantity exported had reached fairly important
levels. The Batavia Council sold the Bihar opium to Indonesian,
Malay, Chinese and other merchants at public auctions held in the
town. Opium was smoked practically all over the region. But if one
were to list the various consuming markets in descending order of
importance to the Company, at the top would probably be the island
of Java, then Sumatra, the Malay peninsula, the island of Borneo, and
the Moluccas, in that order. The greater part of the lot the merchants
bought from the Company was carried to the Javanese ports of Grise,
Japara and Cheribon. The other major destinations were Palembang in
Sumatra and Malacca in the Malay peninsula.

The 1670s witnessed a significant rise in the amount of Bihar opium
exported to the archipelago exceeding, for example, 32,000 ponds in
1674-5. In 1677, the Company succeeded in getting monopoly rights
in opium in Mataram in Java. A similar privilege was obtained in 1678
in Palembang in Sumatra, and in 1681 in Cheribon in Java. The greater
part of the crucial Javanese market and a considerable segment of the
Sumatran market were now available to the Company on an exclusive
basis. In 1679, the average auction price at Batavia was reported to be
300 rix-dollars per picul of 122 ponds, which meant a gross profit of
400 per cent. The importance the Batavia Council now attached to the
opium trade was reflected in the instructions sent to Hugli to give
priority to the procurement of this drug over even that of raw silk. As
a provider of purchasing power to the Company in the archipelago,
opium was now second only to Indian textiles. These textiles did
include some varieties from Bengal, but at this time their role was
quantitatively insignificant. Among the major items the Company
imported from the archipelago into Bengal were spices and non-
precious metals such as tin, spelter, lead, mercury and vermilion, in
addition to minor items such as sandalwood from Timor.

The Coromandel coast, Sri Lanka, Malabar and Persia were the
other places in Asia to which the Company sent Bengal goods. The
volume and the value of trade with each of these places was, however,
comparatively small. The exports to Coromandel and Sri Lanka

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included textiles, raw silk and provisions such as rice, sugar, long
pepper, wheat and clarified butter. The items imported from Sri Lanka
included cinnamon, areca-nuts and elephants. The main item of export
to Malabar was opium besides small quantities of raw silk and textiles,
while the principal item imported from there was pepper. Between
1663 and 1672, the Company used its newly acquired status at Cochin
to wrest from the local rulers in Malabar exclusive trading rights in
both pepper and opium. Even though these rights were qualified to a
significant extent by the large-scale smuggling carried on by Indian
merchants, the amount of opium sold in Malabar registered a sub-
stantial increase. As far as Persia was concerned, the principal exports
included sugar and textiles. The profit earned on the textiles was,
however, quite small and, occasionally, even a net loss was incurred.
Indeed, in 1665, in order to minimize the chances of net loss, the
Batavia Council ruled that a minimum of 40 per cent gross profit had
to be earned on any given variety in a particular year to qualify it for
export the following year.

As far as the exports to Europe were concerned, the role of Bengal
was rather limited mainly because raw silk and textiles, the two
principal exports from the region, had only a limited market in Europe
at this time. Indeed, but for saltpetre, of which Bengal was the
principal Asian supplier, the role of Bengal goods in the total Dutch
exports to Europe would have been negligible. In the 1660s and the
1670s, the proportion of Bengal goods in the total exports to Europe
fluctuated between 7 and 10 per cent (Table 5.5). The only exception
to this was the year 1665-6 when an unusually small value of total
exports to Europe coupled with a relatively high value of goods
originating in Bengal led to a situation where Bengal goods accounted
for as much as half of the total value sent to Holland.

As for textiles, initially it was only muslins that were ordered from
Bengal, though later other varieties of cotton, cotton and silk mixed, as
well as silk textiles, also figured in the orders. The performance in
Holland was quite satisfactory: in 1660, the average gross profit on
Bengal textiles was reported to be 200 per cent, which was consider-
ably higher than the profit earned on the textiles from Coromandel,
for example. But this happy state did not last very long with the result
that, in 1665, the orders for Bengal textiles were sharply slashed and
several varieties, particularly in the fine cotton group, were dropped
altogether. Mainly because of the stiff competition by the English East

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Table 5.5 Share of Bengal goods in total Dutch exports to Europe,

1665-1736
Year Total exports Bengal exports Share of Bengal exports
to Europe (f.) to Europe (f.) in total exports (%)
(1) (2) (3) (4)
1665-6 1,124,180 5553597 49.42
1666-7 3,119,053 324,319 10.39
1674-5 33644173 2555490 7.01
1675-6 4,131,266 318,039 7.69
1693-4 257945745 2,041,061 73-03
1698-1703 5,951,011 2,402,694 40.64
1708-13 5,464,354 2,300,706 42.10
1713-18 657355593 2,677,033 39-74
1720-21 10,235,475 3,508,911 34.28
1725-26 10,136,882 3,565,066 34.83
1735-36 6,500,672 3,072,662 47.26

Source: The figures in column 2 have been calculated from Bruijn, Gaastra and
Schoffer, Dutch—Asiatic Shipping, vol. 111. The figures in column 3 are based on Table
5-4. The figures for the years between 1698 and 1718 are average annual figures.

Percentage of total exports

1665-66 1674-78 1693-94 1708-1713 1720-1721 1735-1736
1666-67 1675-76 1698-1703 W713-17186 1725-1726
Years
Fig. 5.5 Share of Bengal goods in total Dutch exports to Europe,
1665-1736
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India Company, the cost price was almost continuously on the rise. In
a moment of exasperation, the Directors went so far as to write to
Batavia in 1676 that if the cost of the Bengal textiles could not be kept
in check, they would seriously consider stopping further imports.

The raw silk the Company imported into Holland was procured, in
addition to Bengal, in China and Persia. The principal attraction of the
Bengal variety was that, while it was substantially cheaper than both
the Chinese and the Persian varieties, it fetched a price only slightly
lower than the former and about the same as the latter. But because of
the precedence given to the orders from Japan, the quantity of Bengal
silk reaching Holland remained quite small in the early years and the
profit earned quite satisfactory. From the early 1660s on, however, as
in the case of textiles, the competition by the English led to the twin
problems of rising cost and deteriorating quality. Until the close of the
1670s, the Asian raw silk that dominated the Dutch market was still
that from Persia.

The Malabar coast

As far as the Kanara and the Malabar coasts were concerned, the
principal commodity the Company procured there was pepper in
exchange mainly for opium. The pepper was intended primarily for
the Persian market, though it was also sent elsewhere. Competition by
Indian merchants was severe and, in 1639, the factors at Vengurla were
obliged to pay 20 to 30 per cent more than what the Indian merchants
had paid. This, Batavia pointed out, was enough to wipe the profit out
or even to involve a net loss.4* The amount of Malabar pepper
imported into Batavia reached the respectable figure of around one
million ponds at mid-century. But as pointed out earlier, the resump-
tion of hostilities with the Portuguese after the end of the Ten Years’
Truce in 1652 necessitated the closure of the Kayakulam factory, and
it was not until 1663 that the Company resumed trade at Malabar.
When that happened, however, it was on the basis of the availability to
the Company of privileges that it had not been able to obtain any-
where else in the subcontinent. In return for the assistance to the raja
of Cochin in throwing the Portuguese out of his territories, the Dutch
were granted, among other privileges, monopsony rights in pepper in
the territory between Purakkad and Cranganur, and monopoly rights

*3 Coolhaas (ed.), Generale Missiven, vol. 11, pp. 33, 111.

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in opium in several parts of the region. The Company estimated that it
would be able to procure as much as 4 million ponds of pepper per
annum at the low price of 13 stivers per pond.

It was, however, soon realized that getting a monopoly privilege on
paper was very different from getting it in effect. Given the topo-
graphy of the region, it was nearly impossible to prevent large-scale
smuggling in both pepper and opium. Any attempt to police the
numerous tracks used for the purpose would have involved a dispro-
portionately high cost for the Company. The next best solution was to
try and control the finances of the raja of Cochin to ensure that
adequate funds were allocated for payment to guards employed by the
government to check smuggling. But because of the Company’s
inability to penetrate the complicated structure of power at the Cochin
court, this was never found feasible and smuggling continued. The
result was that the pepper received by the Company was seldom
delivered on time or in the promised quantity.**

THE ENGLISH COMPANY TRADE

We noted earlier that the English Company had already established
factories in both Gujarat and Coromandel in the second decade of the
seventeenth century, though it did not reach Bengal until the 1650s.
Initially, the principal commodity the Company exported from
Gujarat was Sarkhej and Bayana indigo for the European market. But
the size of the market turned out to be relatively small and already by
the 1620s the point of saturation would seem to have been reached. In
the 1630s, the rise in the price of the Sarkhej variety as a result of the
great Gujarat famine led to a relatively greater part of the lot being
supplied in Bayana indigo. As of the late 1630s, the European demand
for indigo began to shrink in view of the growing competition by the
better quality lots imported from the West Indies. This trend became
marked in the 1640s following which instructions were sent to Gujarat
to curtail investment in this item. In 1670, the Surat factors were told
by the Directors that buyers in London were complaining about the
quality of the Indian indigo. The 1670s nevertheless were marked by a
rapid increase in the import of Indian indigo, leading to pressure on

44 HLK. s’Jacob, ‘De VOC en de Malabarkust in de 17de eeuw’, in M.A.P. Meilink-
Roelofsz. (ed.), De VOC in Azie, Bussum, 1976, pp. 85-99.

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the sale price in London. The other important bulk good the
Company imported from India (mainly Bengal) was saltpetre, which
came in handy for ballasting the return ships. It was often sold in large
lots to the government and the mark-up, which was almost always in
excess of 1:4, was clearly the highest amongst all East India goods.

By far the most important commodity the Company procured in
India was, of course, textiles for both its intra-Asian as well as its
Euro-Asian trade. Initially, as in the case of the VOC, the Company
bought Indian calicoes needed for the procurement of Indonesian
pepper and spices at places such as Bantam and Acheh. This was no
longer the case following the establishment of the Masulipatnam
factory, but given the continued uncertain position of the Company in
the Indonesian archipelago, the quantity of Coromandel textiles
imported into the region continued to be small. It was only after 1624
when the procurement of cloves smuggled into Makassar became
important that growing quantities of Coromandel textiles were carried
there via Batavia and later Bantam. But this trade declined rather
sharply as of 1643 as Dutch efforts to plug the smuggling into
Makassar became increasingly successful. The only other Asian
market to which the Company carried Coromandel textiles was
Persia, but the quantities involved were never large.

As far as the European market was concerned, the bulk of the
textiles supplied over the first half of the seventeenth century origi-
nated in Gujarat. Calicoes imported from Surat appeared as a regular
item in the Company’s sales from 1613 onward, and the 1620s
witnessed a fairly rapid increase in the quantity imported. Thus the
number of pieces brought in went up from 100,000 in 1620 to 221,500
five years later. But this expansion was interrupted rudely by the
famine and even in 1639 the number of pieces imported was no higher
than 66,000.*°

It was during the Gujarat famine that the Company explored the
possibility of importing Coromandel textiles into Europe. But success
was strictly limited, and it was only after 1646 that the quantity of
Coromandel textiles the Company carried to Europe became at all
significant. The number of pieces ordered from Coromandel for 1658
amounted to 54,000 as against 63,500 from Surat. The 54,000 pieces

*® K.N. Chaudhuri, The English East India Company: The Study of an Early Joint Stock
Company, London, 1965.

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included 20,000 pieces each of Guinea cloth and salampuris, and
14,000 pieces of other varieties. Moreland has argued that, because of
their size, 20,000 pieces of Guinea cloth were in fact equivalent of
50,000 pieces of normal-sized textiles. On this basis, the orders from
Coromandel would amount to 84,000 pieces and would exceed those
from Surat. But in so far as the Dutch Company was still distinctly
ahead (the Dutch orders were for 106,500 pieces for 1652 and possibly
a larger amount for 1658) of the English in the trade in Coromandel
textiles, Moreland’s assertion that ‘it was the English Company which
opened the West European market in cotton fabrics’ needs revision at
least in respect of the textiles from Coromandel.*®

The first year for which detailed quantitative information in respect
of the English East India Company’s imports into England is available
is 1664. During that year, more than a quarter of a million pieces of
textiles worth a little over £100,000, and accounting for 73 per cent of
total value, were imported from India. Of these, valuewise, Coro-
mandel textiles accounted for 48 per cent, those from Gujarat for 35
per cent, while the remaining 17 per cent worth were from Bengal.
The share of the varieties from the three regions in the total sales
proceeds of textiles was 58.7 per cent, 31.1 per cent and 10.2 per cent
respectively. The remainder of the 1660s, the 1670s and the early
1680s were a period of considerable growth in the English Company’s
textile trade with the imports in 1684 standing at an all-time record of
1.76 million pieces costing nearly £670,000 and accounting for an
unprecedented 83 per cent of the total value imported.*” The period
after 1670 also witnessed a sustained expansion in the Company’s
import of Bengal raw silk into Europe, though in absolute terms the
quantities involved were still quite small.

THE DANISH COMPANY TRADE

Besides the Portuguese, the Dutch and the English, the only other
European enterprise active in Asia over the first three quarters of the
seventeenth century was the Danish East India Company. The first
fleet on the account of this Company consisting of two men-of-war
and three merchantmen had left Copenhagen in August 1618 to

‘6 For Moreland’s assertion, see Glamann, Dutch—Asiatic Trade, p. 138.
47 K.N. Chaudhuri, The Trading World of Asia and the English East India Company,
1660-1760, Cambridge, 1978, Appendix 5.

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explore the possibilities of trade in Sri Lanka, the Coromandel coast
and the Indonesian archipelago. In November 1620, Roland Crappé
obtained from the Nayak of Tanjavur the town of Tranquebar (where
Fort Dansborg was built the following year) in addition to revenue-
farming rights in respect of a neighbouring village. In October 1625, a
factory was established at Masulipatnam as well.

The shortage of resources proved a limiting factor from the very
beginning. It is remarkable that between 1623 and 1639 no more than
a total of thirteen vessels left Denmark for Asia with long periods such
as 1624-30 in between when not a single ship arrived in Asia. Again,
between the dispatch from Copenhagen of the Christianshavn in
November 1639 and a royal frigate, the Faro, in October 1668, there
was a complete blank. It is not surprising, therefore, that the import of
Asian goods into Denmark through this period was only occasional
and extremely limited in value. Between 1622 and 1637, no more than
seven ships returned to Denmark. In 1632, the Christianshavn was
sent from Tranquebar to Denmark with a cargo worth f.90,000
consisting of 57,600 ponds of pepper, 48,000 ponds of cloves, 100
packs of cotton yarn and 36 bahars of saltpetre. Crappé himself
travelled on the next shipment which left Tranquebar towards the end
of 1636 and arrived in Copenhagen in January, 1638. The cargo
carried aboard was 145,000 ponds of cloves and 20,000 ponds of
sappanwood, besides some saltpetre and a few packs of Guinea cloth
from Coromandel.*®

By the 1640s, it had become quite clear that the East India
Company venture had not been a particular success. King Frederick
III, therefore, formally declared the Company liquidated in 1650.
Since Tranquebar was a royal colony, Danish presence continued
there and in 1668 the royal frigate Faro was sent there with supplies
and money. The commercial side of the expedition was looked after
by a group of private investors who had hired cargo space on the
frigate. The factors at Tranquebar were relieved in 1669, and in
September 1670 the Fero returned to Copenhagen with a cargo of
pepper and fine spices from Bantam. This served to raise expectations
about the East Indies trade once again, and on 28 November 1670 a
second East India Company was chartered.

Given the grossly inadequate support in ships and capital from

*8 Subrahmanyam, The Political Economy of Commerce, pp. 185-7.

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home, the first Danish venture derived its real sustenance from
participation in a limited range of coastal as well as high-seas trade
within Asia. The coastal trade from Tranquebar southwards extended
as far as Sri Lanka. The first high-seas connection developed was that
with Tenasserim, where the principal competition was provided by the
Portuguese operating from Nagapattinam. The shortage of capital
soon forced the conversion of this particular activity into essentially
one of a freight service which too was terminated in the early 1630s.
The arrival of capital and ships from Copenhagen in April 1624 had in
the meantime facilitated the establishment of a more substantive link
between Tranquebar and Makassar. The role of Makassar as the
principal outlet for cloves smuggled out of the Moluccas has already
been noted. By the late 1620s, the Danes were sending on a regular
basis two ships per annum from Tranquebar to Makassar. They had
emerged as reasonably important buyers of cloves in exchange mainly
of coarse cotton Coromandel textiles causing a good deal of embar-
rassment and concern to the VOC. In 1632, the Danes were reported
to have brought into Tranquebar as much as 150,000 ponds of cloves,
a part of which, as already noted, was sent on to Copenhagen aboard
the Christianshavn. In addition to Makassar, the Danish vessels also
called at several other Indonesian ports open to non-VOC trade such
as Acheh, Bantam and Japara. In 1638, for example, two Danish ships
were reported to have brought into Bantam 39,700 rials worth of
goods from Coromandel in addition to carrying textiles worth 22,000
rials for Makassar. On their return to Bantam from Makassar in June
1639, the vessels carried a cargo worth 29,709 rials including 58 bahars
of cloves and 1,319 piculs of sugar (probably of Philippines origin) for
Coromandel. At Bantam, they picked up cargo worth another 38,464
rials.*? From about this time on, however, the scale of their trade with
Makassar and other southeast Asian ports would seem to have
registered a sharp decline. In 1653, for example, writing about the
Danish resident at Makassar, the Dutch factors noted that ‘he had
received no funds whatever over the last two years and has no option
but to live from hand to mouth’.>°

To sum up the position around 1680 which marked the end of the
first phase of the European companies’ trading activities in Asia, the

49 Subrahmanyam, The Political Economy of Commerce, p. 187.
5° J.E. Heeres et al. (ed.), Dagh-Register gebouden in ‘t Casteel Batavia, Batavia/The
Hague, 1888, 22 July 1653, p. 103.

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two giants — the Dutch and the English — between themselves
accounted for practically the entire Company trade. The Danish
Company operations were insignificant, and the French had still to
make a beginning. Between the Dutch and the English, the former
were still distinctly ahead. We noted earlier that, during the triennium
1668-70, the value of Dutch imports into Europe was as much as
f.10.78 million against the English figure of f.4.32 million. The 1670s,
however, witnessed a remarkable growth in the English Company
imports, which stood in 1680 at f.4.27 million against the Dutch figure
of f.3.38 million that year.>! But in so far as the Dutch, in addition,
carried on an extensive intra-Asian trade, there can be very little doubt
that in terms of the total value of trade, the Dutch were still very much
ahead. In the English imports of 1680, India accounted for as much as
86 per cent of the total value, with the share of Coromandel, Gujarat
and Bengal being 36.9, 27.3 and 21.9 per cent, respectively.>* For the
VOC also, the Coromandel trade was still the most important,
accounting for an annual average of f.2 million worth of exports from
the region during 1676-80 followed by Bengal (f.1.25 million during
1675-80) and Gujarat (f.1.07 million during 1676-81). Note that in the
case of each of the three regions, a larger proportion of the total cargo
was directed at destinations within Asia, as compared to that for
Europe.

°' The English Company figure is based on Chaudhuri, The Trading World of Asia,
Appendix 5, with the rate of conversion between the £sterling and the florin being assumed
to be £1 = f.12. The Dutch Company figure has been calculated from Bruijn, Gaastra and
Schoffer, Dutch-Asiatic Shipping, vol. 111.

°? Calculated from Chaudhuri, The Trading World of Asia, Appendix 5.

>? In the late 1670s, the share of Asia in the total exports from Bengal ranged between 70
and 80 per cent. For Gujarat, this figure was 62 per cent in respect of the goods exported. In
addition, the entire supply of silver rupees from the region was meant for other Asian
factories.

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CHAPTER 6

THE VOC AND THE GROWING
COMPETITION BY THE ENGLISH
AND THE FRENCH, 1680-1740

The last two decades of the seventeenth and the early part of the
eighteenth century marked a major qualitative change in the Dutch
East India Company’s trade between Asia and Europe. The value of
this trade continued to grow at a fairly impressive rate. Thus the
triennium total of the Company’s imports into Europe went up from
f.10.79 million during 1668-70 to f.15 million during 1698-1700, and
further to f.19.25 million during 1738-40. But more importantly, over
the same period, the composition of the imports altered dramatically.
Thus between 1668-70 and 1698-1700, the share of pepper and other
spices in the total imports came down from 43 per cent to 23 per cent.
By 1738-40, this figure had further come down to a mere 14 per cent
(Table 4.1). Because of an almost revolutionary change in European
fashions, the share of textiles and raw silk, on the other hand,
increased significantly. While during 1668-70 these two items to-
gether had accounted for 36 per cent of the total imports from Asia,
by 1698-1700 the figure had gone up to an impressive 55 per cent.
During 1738-40, it stood at 41 per cent. An overwhelming proportion
of the Asian textiles and raw silk was procured in India. Thus out of
textiles worth f.2.35 million that reached Holland in 1697, for
example, those originating in India accounted for as much as 88 per
cent.’ Again, of the Asian raw silk sold in Amsterdam between 1693
and 1720, Indian raw silk accounted, valuewise, for as much as 90 per
cent. The subcontinent’s share in the total Dutch imports into
Europe, therefore, registered an important increase, though with the
rise of tea in the 1730s, China also became an important supplier for
Europe.

' Calculated from Kristof Glamann, Dutch-Asiatic Trade, 1620-1740, Copenhagen/The
Hague, 1958, p. 144.

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THE DUTCH COMPANY, CLANDESTINE PRIVATE
TRADE AND THE INDIAN MARITIME MERCHANT

The Dutch Company trade

Bengal

Within the subcontinent, the most important region for the Com-
pany’s trade now was Bengal. The entire lot of raw silk imported from
India was procured in this region. In the case of textiles, Bengal
accounted in 1697 for 63 per cent of the total of Indian textiles, and 55
per cent of the total of Asian textiles imported into Holland. It is no
wonder, therefore, that at the turn of the century Bengal accounted for
as much as 40 per cent of the total value of Dutch imports from Asia
into Europe. In the process, the loss of the pre-eminence of Bengal in
the Company’s intra-Asian trade, largely because of the declining
position of the Japan trade in the network, was fully compensated. Of
the total Dutch exports from Bengal, the ratio of the cargo destined
for other parts of Asia to that for Europe, which had stood in 1674-5
at 80:20, had altered dramatically by 1693-4 to 23:77.

Over the period 1680 to 1740, the average annual value of the total
Dutch exports from Bengal increased significantly (Table 5.3). From
f.1.26 million in 1675-80, this figure had gone up to f.3.56 million
over 1705-10 and to f.4.94 million during 1725-6. Thereafter, there
was a rather sharp decline to f.2.36 million during 1731-2, but by
1735-6 the figure had recovered to f.4.31 million. The period also
witnessed a major alteration in the composition of the exports from
the region (Table 6.1). Thus the share of textiles, which had stood at
22 per cent in 1675-6, had gone up to as much as 54 per cent in
1701-3, though by 1722-3 it had come down marginally to 49 per
cent. The share of raw silk, on the other hand, had come down over
the same period from 40 per cent to 29 per cent and further to 25 per
cent. Among the less important goods, while opium had gone up from
7 to 10 per cent, saltpetre came down from 12 to 5 per cent. The
decline in the share of raw silk and the phenomenal rise in that of
textiles was directly related to something we have already noted,
namely the region’s substantially reduced role in the Company’s intra-
Asian trade and its new role as the principal supplier of goods for
Europe.

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Table 6.1 Composition of Dutch exports from Bengal (percent),

1675-1785
Commodity 1675-6 170I-3 1722-3 1751-2 1784-5
Textiles 21.93 §4.19 49.03 $8.93 53-93
Raw silk 39-57 29.44 25.46 10.11 7.84
Saltpetre 12.11 5-79 §.42 6.56 6.96
Opium 6.64 7.08 10.21 14.47 21.27
Miscellaneous 19.75 3.50 9.88 9-93 10.00
Total 100.00 100.00 100.00 100.00 100.00

Source: The figures for 1675-6 and 1701-3 are based on the Bengal export invoices
in the Overgekomen Brieven en Papieren. The figures for 1722-3, 1751-2 and
1784-5 are based on ‘Copie generale journalen, gehouden door de boekhouder-
generaal te Batavia. 1700/1701-1789-90’, ARA, BGB, 10751-801.

Percentage of total exports

(LLLhhh hi

S ; NN
Textiles Raw Sik Sattpetre Opium Miscellaneous

SNNY 1675-76 BB 1701-03 KY 1722-23
FEE 1751-52 [777] 1784-85

Fig. 6.1 Composition of Dutch exports from Bengal, 1675-1785

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Intra-Asian trade

We noted earlier that, in the framework of the Company’s intra-Asian
trade, by far the most important role played by the goods produced in
Bengal was in the Company’s trade with Japan. Until the 1670s, the
share of goods for Japan in the total cargo procured in Bengal as well
as the share of Bengal goods in the total cargo sent to Japan was in
both cases around 50 per cent. But this changed dramatically over the
period 1680 to 1740. The share of goods for Japan in the total cargo
procured in Bengal was not much more than a quarter in 1681-2, and
it came down to under 10 per cent in the 1690s. In the 1720s and the
17308, it fluctuated between 4 and 6 per cent (Table 5.4). As for the
share of Bengal goods in the total exports to Japan, the figure had
dipped to around a third in the 1690s, with the figure in 1699-1700,
the last year for which information is available, being no more than 18
per cent.

The radically altered situation of Bengal goods in regard to the
Japan trade was in a good measure the outcome of certain policies
adopted by the Japanese authorities in the 1680s and 1690s. We have
already noted the introduction in 1672 of the system of ‘appraised
trade’. But it was soon discovered that even this forced deterioration
in the foreigners’ terms of trade was not adequate to ensure that the
annual specie loss did not assume disturbing proportions. In 1685,
therefore, the system of what might be called ‘limited trade’ was
introduced. Under the new arrangement, the Company was permitted
to import annually goods whose total sales proceeds were not to
exceed f.1.05 million. Further, the amount of raw silk the Company
could sell during the course of a year was henceforth to be limited to
{350,000 sale value. The resultant erosion in the role of Japan in the
overall trading strategy of the Company was further reinforced in
1696, when the gold content of the koban was reduced from 85.69 per
cent to 56.41 per cent without a reduction in its silver price, making it
a much less attractive coin to procure.

The decline of the Japan trade is apparent in the fact that the average
annual value of the total Dutch exports to Nagasaki between 1686 and
1700 was reduced to f.630,000. Since the Company could not be
certain of the precise quantity of raw silk that would fetch the ceiling
amount of f.350,000 in Japan, and because the amount of raw silk
exported to Europe was growing at a rapid rate around this time, what
often happened was that the amount of raw silk sent to Japan was

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worth less than the maximum allowed. Throughout this period, Bengal
continued to be the principal supplier of raw silk for Japan, but the
absolute quantity involved had been reduced considerably.” The gross
profit on Bengal raw silk was reported to be 63 per cent, 74 per cent, 85
per cent and 68 per cent in 1702, 1704, 1715 and 1717, respectively.

By forcing a rapid decline in the Dutch silk trade and at the same
time withdrawing the appraised trade system from goods other than
raw silk, the 1685 regulations actually promoted the trade in textiles.
The first manifestation of this was an increase by 50 per cent in the
1686 Nagasaki orders for most varieties of Bengal textiles. Bengal
armosins fetched a good profit of 137 per cent in 1702, and of 92 per
cent two years later. In the early part of the eighteenth century, Bengal
cotton textiles became a regular item of import into Japan. In 1715,
whereas Bengal textiles afforded in Nagasaki an average gross profit of
151 per cent, those from the Coromandel coast fetched only 116 per
cent, while the few pieces imported from Gujarat had, in fact, to be
sold at a loss of 67 per cent.? In the 1720s and the 1730s, the quality of
the Bengal textiles sent to Japan probably varied considerably from
year to year. Thus while in 1728 and 1729 the quality of the taffechelas
gingams and the tassar alachas was reported to be so poor as to have
involved a net loss,* a 1731 Batavia evaluation of the lot of Bengal silk
textiles received for Japan pointed out that not only had the samples
on the basis of which the contracts had been put out been generally
reproduced competently, but in many cases they had actually been
improved upon in terms of quality.?

In contrast to Japan, the share of the goods destined for the Malay
archipelago in the total exports from Bengal registered an important
increase in the period under reference. From 12.63 per cent in 1674-5,
this share had gone up to 17.81 per cent in 1698-9. The following few
years were marked by sharp fluctuations, but by 1709-10 the figure of
19 per cent had been reached. In 1725-6, this figure stood at 20.4 per

? Thus the amount of Bengal raw silk exported to Japan had come down from 180,000
ponds in 167$ to 124,000 ponds in 1682, and to 44,000 ponds in 1693-4. The figure in
1700-1 was 60,700 ponds, in 1710-11, 42,845 ponds and in 1717-18, 33,806 ponds (Om
Prakash, The Dutch East India Company and the Economy of Bengal, 1630-1720, Princeton,
1985, p. 126).

> Prakash, The Dutch East India Company and the Economy of Bengal, p. 137-

* Algemeen Rijksarchief (ARA), Hugl: to Batavia, 30.11.1730, VOC 2165, ff. 20-1.

> Evaluation done by Hendrik Haak and Anthony Jubbels at Batavia dated 20.4.1731,
ARA, VOC 2174, ff. 2427-8.

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cent and in 1735-6 at 22.6 per cent. A part of this increase had been
achieved by a fairly substantial expansion in the export of textiles from
Bengal from about 1690 on.® This was related mainly to the deteriora-
tion in the situation on the Coromandel coast with regard to the
availability and the price as well as the quality of the coarse cotton
textiles obtained there. But the increased procurement in Bengal also
involved problems of rising cost price and deteriorating quality, so
much so that in 1715 Batavia reported that the quality of the garras —
an ordinary calico — received was ‘so poor that we do not recall an
occasion in the past when such bad quality textiles were received from
Bengal’.”? The position did not register any particular improvement
over the 1720s and the 1730s. A statement prepared at Batavia relating
to the period 1 September 1728 to 30 October 1734 noted that on
Indian textiles costing f.656,279 and sold at the Batavia Castle over the
period, a profit of only f.194,497 amounting to 29.75 per cent had
been earned. The sales at Bantam were much smaller: over the same
period, a profit of only f.17,198 representing approximately a profit
rate of 50 per cent was earned there.®

The principal Indian commodity sold in the region was now
perhaps the opium from Bengal. It has been estimated that the amount
annually consumed in Java and Madura, which had been around 4,000
ponds at the beginning of the seventeenth century, had gone up by
1678 to 70,000 ponds. By 1707, this figure had reportedly further gone
up to 108,000 ponds.? Earlier in 1683, the Company had estimated the
annual demand in the entire archipelago to be around 116,000
ponds.’° It was a classic case of increased availability leading to
increased consumption. To its mounting dismay, however, the
Company discovered that its efforts at monopolizing this highly
profitable and growing market were being severely undermined by
both Asian and rival European traders engaged in the opium trade.

© Thus the number of pieces exported went up from around 7,000 in the mid-1670s to an
average of 26,531 during the 1690s. There was further expansion from about 1706 on. After
reaching levels such as 81,090 pieces in 1709-10 and 74,425 pieces in 1710-11, the figure
stood at 46,510 pieces in 1717-18 (Prakash, The Dutch East India Company and the
Economy of Bengal, Table 6.1, pp. 146-7).

”? Prakash, The Dutch East India Company and the Economy of Bengal, p. 144.

8 Statement signed at Batavia, VOC 2301, ff. 3416-3416v.

9 J.C. Baud, ‘Proeve van eene geschiedenis van den handel en het verbruik van opium in
Nederlandsch-Indie’, Bijdragen tot de Taal-, Land-, en Volkenkunde van Nederlandsch
Indie, vol. 1, 1853, p. 115.

10 ARA, Batavia to Hugli, 26.8.1683, VOC gog, f. 1378.

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The competitors’ trade not only cut deeply into the Company’s
potential market but, being characterized by enormous fluctuations in
its total volume from year to year, had a destabilizing influence on the
average auction prices at Batavia. Among the Asian traders partici-
pating in this trade were Indians, Armenians, Indonesians, Malays and
Chinese, while the Europeans included the Danes, the Portuguese and,
most important of all, the English, both private traders and the East
India Company. Until 1682, these traders operated mainly from
Bantam. But with the fall of the city to the Dutch in that year, the
English East India Company moved to Benkulen in southwest
Sumatra. The others moved mainly to Acheh in northern Sumatra.
Besides carrying on a large amount of trade in areas where the Dutch
had no special privileges, these traders appear to have succeeded in
bringing limited quantities of opium into Mataram, Cheribon and
Palembang as well, which were officially the exclusive ‘preserves’ of
the Dutch. By far the most annoying of the competing groups was
that of the Company’s own servants engaged in a clandestine trade in
the drug. Being a high-value, low bulk item, opium was ideally suited
for this trade.

With a view to facing the challenge posed by the competitors
(including their own servants), the Governor-General and Council at
Batavia took a number of steps that included instructions to the
Bengal factors to keep the cost of the drug as low as possible by
confining their procurement to Patna, and to be extremely particular
about the quality of the opium they sent to Batavia. In 1695, the
Batavia Council decided that the only effective way to squeeze the
competitors out of business was to undersell them for as long as
necessary. In 1698, the Council observed that it had succeeded in
bringing down the price of opium throughout Java. But the hopes of
squeezing the rivals out were belied when it was discovered in 1700
that their volume of trade at both Acheh and Malacca had in fact been
growing. What the Batavia Council had apparently not taken into
account was the fact that its competitors usually succeeded in
procuring opium at Patna at a lower price than its own factors did, and
that in view of their considerably lower overhead costs (except, of
course, in the case of the English East India Company) they could
afford to operate at rather low rates of profit per unit of investment. In
view of the intense competition, the rate of profit earned on opium by
the Company continued to be relatively poor. In 1712, it was reported

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to be only 46 per cent, though in 1735-6, it had gone up to between 77
and 86 per cent.!!

Euro-Asian trade

As we noted earlier, it was in the Company’s imports into Europe that
Bengal played a critically important role during the period 1680-1740.
The region was now by far the largest Asian supplier of goods for
Holland, accounting for around 4o per cent of the total imports
during the 1690s (in 1693-4, this figure was as high as 73 per cent, but
that probably ought to be treated as exceptional), the 1700s and the
1710s. In the 1720s, this figure was around 35 per cent, but in 1735-6
it stood at an unusually high level of 47 per cent (Table 5.5). A
corollary of this was the emergence of Europe as the dominant trading
partner of Bengal. While in 1675-6 Europe accounted for no more
than 28 per cent of the total Dutch exports from Bengal, this figure
over the last decade of the seventeenth and the first four decades of
the eighteenth century was as high as between 70 and 77 per cent
(Table 5.4).

The orders list sent by the Heren XVII in 1677 reflected the first
major manifestation of the new pattern of demand for textiles in
Europe. The orders for fine calicoes as well as those for silk and mixed
piece-goods — the most important source of which was Bengal — were
substantially increased whereas those for ordinary calicoes — procured
mainly in Coromandel - were reduced. Initially, the greater part of the
increased demand for muslins and fine calicoes for use as wearing
apparel came from the well-to-do sections of the community, so that
the Directors asked almost exclusively for the more expensive varieties
of these textiles. With the spread of the fashion among consumers who
were not so well off, however, it became profitable from the early
1690s On to import comparatively less fine qualities of these textiles as
well, which in fact often afforded a higher profit. In view of the
increasing shortages and rising costs of these textiles on the Coro-
mandel coast in the 1690s, Bengal emerged as a major supplier of
ordinary calicoes to Europe also.

The enormous increase in the procurement of textiles in Bengal,
however, involved problems of rising cost price as well as deteriorating

'! Prakash, The Dutch East India Company and the Economy of Bengal, p. 156; ARA,
Statement in VOC 2361, f. 1140.

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quality, particularly in the context of the growing trade carried on in
the region by the English and the French East India companies. The
response of the Dutch Company was limited to taking such steps as
minimizing the rejection rate among the textiles received from the
suppliers, and ensuring that the factors did not have to forgo supplies
because of the shortage of liquid funds. In 1720, for example, the
Hugli factors reported that, because of the availability of ample liquid
funds, they had been able to dominate the production centres
(aurungs). Both the English and the French, whose ships had arrived
late, on the other hand, had not been able to procure more than ro per
cent of their requirements.!* The situation could get particularly
difficult in years characterized by one kind of abnormality or another.
In 1730, for example, heavy floods, coupled with the loss at sea of
several indigenous vessels while on their way from Surat to Hugli
carrying mainly cotton, resulted in a sharp rise in the price of cotton in
Bengal. Contrary to the norm whereby the merchants were obliged to
supply at the price mutually agreed upon at the time of the contract
irrespective of what happened in the meantime to the price of the
inputs, the merchants expressed their inability to supply coarse cotton
textiles at the stipulated price. Protracted negotiations obliged the
Company to agree to a last-minute price rise ranging between 10 and
125 per cent.'3 The following year, continued uncertainty regarding
the trend in the price of cotton made the merchants initially refuse to
accept any textile contracts whatsoever. Eventually, as far as fine
cotton textiles were concerned, the merchants were persuaded to
accept contracts at the previous year’s prices with the proviso that if
-the price of cotton continued to be high, they would be duly
compensated at the time of delivery. In the case of coarse cotton
textiles, however, all that the Company’s broker, Hari Kishan,
succeeded in doing was to persuade the merchants supplying fine
cotton textiles to supply simultaneously some coarse cotton pieces.
There was no formal agreement regarding the quantity or the price of
these textiles. All that was agreed to was that the merchants would
supply whatever number of pieces they could and would be paid a

12 ARA, Hugli to Batavia, 31.10.1720, VOC 1938, ff. 86-7.

'3 ARA, Minutes of the Hugli Council meeting of 24.8.1730, enclosure to the letter from
Hugli to Batavia, 30.11.1730, VOC 2165, ff. 265-74; Minutes of the Hugli Council meeting
of 25.9.1730, VOC 2165, ff. 375-80; Hugli to Batavia, 30.11.1730, VOC 2165, ff. 121-6.

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‘fair’ price at the time of delivery.'* The average profit earned on
Bengal textiles in Holland in 1735 was reported to be only 19 per cent:
on Bengal and Coromandel textiles together, it was 32 per cent. This
was because the intense competition by the English and the French
had made the suppliers increasingly indifferent to quality, so much so
that in 1735, of a particular lot of 19,390 pieces supplied to the
Company, as many as 4,119 pieces had to be rejected outright. The
rivals, particularly the French, were reported to have accepted such
lots quite happily.'> Later in the year, the Hugli factors reported that
they had been unable to procure any jamawars or armosins whatso-
ever at the prices prescribed for them.!®

The other Bengal commodity exported in large amounts to Europe
was raw silk. Between 1693 and 1720, Bengal raw silk accounted, on
average, for as much as 88 per cent of the total Asian raw silk sold in
the Amsterdam market. In terms of value, this figure was 90 per cent.
The share of Persian raw silk was 6 per cent in physical and 4 per cent
in value terms, whereas Chinese raw silk accounted for 6 per cent of
the total lot sold in terms of both quantity and value. Indeed, the
Dutch silk textile industry had come to depend a great deal on Bengal
for the supply of the necessary raw material. In July 1698, for
example, the Directors wrote: “The extremely limited amount of
[Bengal raw] silk we received this year has caused very great incon-
venience to the manufacturers here. Due to the shortage of raw silk,
hundreds of looms are unemployed and the workmen are loitering
about idle.’ A similar statement was made in 1701 about the Bengal
mochta (florette yarn) silk: “The small amount received has inconve-
nienced the producers so much that-a number of manufacturing units
had to stop production.”!”

The increase in the price of raw silk supplied by the merchants
prompted the Hugli factors in 1714 to have as much as possible of the
raw silk they exported reeled in the Company’s own silk-reeling unit
in the Kasimbazar factory. We have information regarding the place of
reeling for 86 per cent of the total raw silk exported by the Company
from Bengal to all regions between 1714 and 1718. Of this, as much as

'4 ARA, Minutes of the Hugli Council, 15.1.1731, VOC 2195, ff. 137-42; Minutes of the
Hugli Council, 29.1.1731, WOC 2195, ff. 157-61; Hugli to Batavia, 10.3.1731, VOC 2195,
ff. 66-70; Memorandum by Sadelyn to Berenaart dated 15.1.1732, VOC 2196, ff. 420-5.

'S ARA, Hugli to Batavia, 18.11.1735, VOC 2348, f. 70.

'© ARA, Hugli to Batavia, 17.1.1736, VOC 2348, ff. 560-1.

'7 Prakash, The Dutch East India Company and the Economy of Bengal, p. 217.

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83.25 per cent was reeled in the Company’s own reelery.'® Through
the 1720s and the 1730s, the growing English and French competition
created problems for the Company as much in the case of raw silk as it
did in that of textiles. Added to this was the growing trade in raw silk
carried on by the Indian merchants between Bengal on the one hand
and Gujarat and northern India on the other. In 1730-1, these
merchants were reported to have made on this item a profit of 50 to
100 per cent more than they usually made.!?

The Coromandel coast

The other principal area of the Company’s trading operations in the
subcontinent during 1680-1740 was the Coromandel coast, which
continued to be a major supplier of textiles for both the European and
the Asian markets. But the relative share of the two markets tended to
change over time. While until the 1660s the value of the textiles
procured in Coromandel for the rest of Asia had exceeded that of
those for Europe, by the end of the century Asia accounted for only
about a third of the total value of the textiles procured, the remainder
being sent on to Holland. Of the total Asian textiles arriving in
Holland in 1697, those procured in Coromandel accounted for 27 per
cent by value. If one took into account only the textiles procured in
India, this figure would go up to 30 per cent.

An analysis of the Company’s textile exports from Coromandel
from 1691 onwards produces interesting results (Table 6.2). With the
exception of 1691 and 1697, the value of textiles exported during the
1690s and the early years of the eighteenth century generally approxi-
mated or exceeded a million florins, reaching a figure of as much as
f.1.7 million in 1701. An important development characterizing this
period was the growing shift in the area of procurement for both
Europe and Asia from northern to southern Coromandel, where
textiles were available both more cheaply and in distinctly greater
abundance. Districts such as Cuddalore, Salem and Tanjavur now
provided a large proportion of the total amount procured. Districts
such as Madura and Tinnevelli, which lay south of Point Calimere and
were under the jurisdiction not of the Dutch ‘government’ of Cor-

'§ Prakash, The Dutch East India Company and the Economy of Bengal, p. 219.

'9 ARA, Hugli to Batavia, 15.12.1720, VOC 1962, ff. 61-2; Hugli to Batavia, 30.11.1730,
VOC 2165, ff. 58-62; Hugli to Batavia 10.3.1731, VOC 2195, ff. 33-5; Hugli to Batavia,
16.3.1736, VOC 2385, ff. 16-17.

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Table 6.2 Value of the Dutch textile exports from Coromandel,
1691-1770 (in Dutch florins)

Year Value Year Value
1691 373,762 1728 2,318,719
1692 1,296,196 1729 1,382,337
1693 1,449,993 1730 1,996,727
1694 1,080,189 1731 1,136,308
1695 1,270,911 1732 I,I§ 3,000
1696 974,164 1733-4 1,0§ 3,929
1697 691,965 1734-5 1,164,791
1698 1,050,456 1735-6 1,278,269
1699 1,171,546 1736-7 1,901,424
1700 1,395,980 1737-8 255745903
1701 1,699,772 1738-9 1,459,665
1702 1,647,238 1739-40 1,423,050
1703 1,560,720 1740-1 1,030,249
1704 837,780 1741-2 348,614
1705 7595321 1742-3 666,088
1706 1,073,943 1743-4 458,442
1707 1,635,813 1744-5 480,563
1708 1,991,110 1745-6 1,004,663
1709 2,138,199 1746-7 2,269,188
1710 1,905,173 1747-8 1,381,907
I7it 1,760,407 1748-9 1,981,114
1712 2,037,520 1749-50 1,492,920
1713 1,834,596 17§O-1 1,641,267
1714 2,215,877 I7§1-2 1,752,826
171§ 1,840,969 17§2-3 1,324,825
1716 1,175,061 1753-4 943;077
1717 723,608 1754-5 1,483,688
1718 1,038,929

i719 1,077,475 1764-5 788,007
1720 1,433,283 1765-6 1,635,216
1721 2,134,336 1766-7 1,906,522
1722 2,133,228 1767-8 2,641,890
1723 1,865,479 1768-9 25$90,166
1724 1,852,324 1769-70 2,162,322
1725 1,977;979

1726 1,839,472

1727 1,654,036

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Note: The figures have been rounded to the nearest florin. From 1743-4 onward,
the figures in the original document were expressed in ‘heavy money’ (swaargeld).
In order to make these comparable to the preceding figures, the ‘heavy money’
figures have been inflated by 19.55 per cent (I am grateful to Els Jacobs and
Femme S. Gaastra for providing me with this figure).

Source: The information for the period 1691-1755 is from a report on the
Company’s Coromandel trade prepared in November 1757 by Jacob van der
Waeyen, a member of the Batavia Council, in pursuance of a secret resolution of
the Council dated 11 October 1755 (ARA, HRB 341). The information for the
period 1764-70 is from a memorandum prepared by Governor Pieter Haksteen of

Coromandel for his successor Reijnier van Vlissingen dated 20 September 1771
(ARA, HRB 344, ff. 1-232).

Value (in million florins)

1691 1697 1703 1709 1716 1721 1727 1733-34 1739-40 1746-46 1751-62 1765-67
1694 4700 1706 1712 1738 1724 1730 1736-37 1742-43 1748-49 1754-65 1769-70

Years

Fig 6.2 Dutch exports of textiles from Coromandel, 1691-1770

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omandel but of that of Sri Lanka, were also found increasingly more
attractive. Indeed, in the year 1701, the textile investment in these two
districts alone was reported to have been of tee order of f.1.4 million
against f.1.7 million in the areas under the jurisdiction of the Cor-
omandel government.”° But the total supplies that the Company was
able to get hold of were still considerably short of the orders. In the
case of orders from Europe, this shortfall at times amounted to as
much as 4o per cent. This evidently reflected the growing competition
by the rival traders for supplies which were not rising at a fast enough
rate.

Between 1708 and 1715, the average value of the textile exports
from Coromandel per annum approximated two million florins. If one
included the value of the textiles procured in the Tinnevelli district
where the competition by fellow European traders was less severe, this
figure would go up to more than f.2.5 million. In southeast Asia, the
Company was now concentrating more and more on the relatively
captive markets of Java, southern Celebes and the Moluccas, and
increasingly opting out of places such as Acheh, Johor, Kedah,
Tenasserim and Pegu where the competition by Asian merchants was
turning out to be crippling. These years also witnessed the revival of
the export of Coromandel textiles to Persia and Mocha, which had
been discontinued during the last quarter of the seventeenth century.

After a brief setback during 1716 to 1720 when the average annual
exports were in the range of only a million florins because of
conditions of famine in the areas of procurement, the average figure of
approximately two million florins per annum was maintained again
through the decade of the 1720s. While the factories in northern
Coromandel did continue to supply some textiles during this period,
an overwhelming bulk of the procurement was now concentrated in
southern Coromandel at places such as Nagapattinam, Sadraspatnam
and Porto Novo. The suppliers at these places were organized more
and more into the so-called joint stock companies. As we saw earlier,
the innovation in this arrangement consisted essentially in the fact that
the funds needed for investment in the textiles were raised jointly by
the suppliers themselves rather than being provided by the Company
in the form of advances to the customary extent of 50 to 70 per cent of

20 §. Arasaratnam, Merchants, Companies and Commerce on the Coromandel Coast,
1650-1740, Delhi, 1986, p. 177.

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the value of the contract. The growing competition amongst a multi-
plicity of buyers, however, was leading to both a decline in quality and
a continuous rise in the cost price. The latter was also related to a rise
in the price of the inputs. Evidence in respect of Sadraspatnam and
Porto Novo for the years 1726 to 1731 suggests a rise in the prices of
cotton and yarn of the order of between 50 and 100 per cent.”!

The years between 1731 and 1735 witnessed successive harvest
failures and near famine conditions in southern Coromandel. Indeed,
in the year 1732-3, there was a major famine which affected even the
kingdom of Tanjavur, which traditionally was a granary of the south.
The resultant rise in the price of rice and cloth was large enough to
force a number of merchants out of business. The disruption in supply
is reflected in the value of textile exports during this period averaging
just over a million florins per annum. When the famine conditions
ended, the tide was turned once again and in 1736-7 the value of the
textiles exported approached f.2 million. The following year, the
exports exceeded f.2.5 million, almost the highest ever figure reached
over the period between 1691 and 1770. In 1738-9 and 1739-40,
however, the exports were under f.1.5 million. Overall, the evidence
on the Dutch textile exports from Coromandel over the period 1690
to 1740 would seem not to support the hypothesis put forward by
scholars such as Raychaudhuri and Glamann of a substantive decline
in the Dutch Company trade from the region over the first half of the
eighteenth century. A decade such as that of the 1720s was evidently
as vigorous as any between 1650 and 1680. The first four decades of
the eighteenth century were indeed characterized more by overall
stagnation in the value of Dutch trade from the region rather than by
perceptible decline.

Gujarat

The hypothesis of a distinct decline in the value of the Company’s
trade over the period 1680-1740 would, however, go through fully in
the case of Gujarat (Table 5.2). During the last two decades of the
seventeenth century, the average annual value of the exports from the
region went down to well under a million florins, though in the late
1690s it stood at a respectable f.1.23 million. The division of the

7! §. Arasaratnam, “The Dutch East India Company and its Coromandel trade,
1700-1740", Bijdragen tot de Taal-, Land-, en Volkenkunde, vol. 123 (3), 1967, pp- 325-46.

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exports between silver rupees and goods had also altered dramatically
over these two decades. From a peak of f.700,000 worth during the
late 1670s, the average annual export of silver rupees had come down
in the late 1680s and the early 1690s to around f.200,000, and in the
late 1690s to a mere f.150,000 worth. The share of goods had
correspondingly increased with an all-time peak of f.1.08 million
worth being reached in the late 1690s. As far as the first four decades
of the eighteenth century are concerned, information regarding silver
rupees, if any, exported from Surat is not available and we have to rely
solely on the value of goods exported to work out the trends in the
exports. After a reasonably high annual average of f.830,000 during
1701~5, the value of goods exported plummeted to half that level over
the following decade, and to under f.400,000 during 1716-40. Both
Europe and Asia shared in this decline. Except for 1701-5 when the
goods exported to Europe amounted to as much as f.671,000 against a
mere f.159,000 for Asia, there was no particular pattern in the division
of the goods between Europe and Asia. Sometimes more goods went
to Europe: in other years more were directed at the rest of Asia (Table
5.2). Gujarat goods now constituted, on an average, no more than 4 to
5 per cent of the total Dutch imports into Holland.” The crisis that
was engulfing the Mughal empire during this period was partly to
blame for this situation. The transportation of goods from Agra to
Surat, for example, was increasingly becoming more hazardous, so
much so that in 1716 the Company was obliged to close its factory at
Agra.

Commodity-wise, the last two decades of the seventeenth century
in fact witnessed an increase in the export of both indigo and textiles
from Gujarat. The export of indigo began to pick up from about
1685-6 in response to a good profit earned in Amsterdam the previous
year. Between 1685 and 1700, the amount of indigo exported to
Holland in a year was never under 100,000 ponds, and often was

22 This proportion was 5.19 in 1699-1700, 3.83 in 1702~3, 3.96 in I711—12, 3.30 in
1720-1 and 4.02 in 1735-6. Note, however, that there were some years wildly outside this
range because of special circumstances. In 1693-4, for example, when the total exports to
Europe were unusually low, the exports from Surat designated for Holland happened to be
unusually high. This led to the highly unusual result of Gujarat goods accounting for as
much as 31.05 per cent of the total Dutch Company cargo to Holland. At the other end of
the spectrum was a year such as 1725-6, when this proportion was no more than 0.96 per
cent. (Calculated from the Jan Schreuder memoir, ARA, HRB 838, and J.R. Bruijn, F.S.
Gaastra and I. Schoffer, Dutch—Asiatic Shipping in the 17th and 18th Centuries, The Hague,
1987, vol. 111).

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considerably more. Thus the figure of 250,000 ponds was reached in
1693-4, and of 317,000 ponds three years later.”? The principal factor
behind the revival in the demand for Indian indigo was the substantive
decline in the imports from the West Indies due to an unprecedented
rise in the freight rates between the Caribbean and Europe.

As far as textiles were concerned, Gujarat had its share in the fast-
growing European market for Indian textiles. While cotton textiles
continued to dominate the textile exports from Gujarat, silk piece-
goods, as well as those made from a mixture of silk and cotton yarn,
also began to figure in the exports from this point on. Within cotton
textiles, the role of ordinary cottons registered an important increase
representing in part the growing re-export trade from Europe to the
West Indies. Induced by the example set by the English and French
companies, the Surat factors also increasingly introduced new varieties
such as patkas, berzampauts and savagazees in the exports to Europe.
Also, some of the traditional Coromandel varieties such as salampuris
and parcals were now manufactured in Gujarat and formed part of the
textile cargo from Surat. The profit earned in Holland varied consider-
ably across different varieties, but, on the whole, the situation was
quite satisfactory. In 1694-5, for example, the profit earned on most of
the varieties ranged between 50 and 100 per cent. The number of
pieces exported in any given year continued to fluctuate quite sharply.
Glamann has shown that of the total Asian textile cargo worth f.2.35
million reaching Holland in 1697, that originating in Gujarat ac-
counted for only f.44,078 (or 1.87 per cent). But this is not really a
representative figure for the period. If we look at the average annual
value of the textile exports from Surat for Holland over the three year
period between 1698 and 1700, the figure turns out to be f.247,289, or
over 10 per cent of the total textiles imports into Holland in 1697. The
1680s and the 1690s also witnessed an expansion in the export of
Gujarat textiles to the Malay archipelago. The exports in 1680-1
amounted to 145,000 pieces costing f.250,000. The number of pieces
exported was 222,000 in 1692-3 and a record 323,000 pieces in
1696-7.74

Unfortunately, detailed commodity-wise information is not avail-
able for the period after 1700. But the marked decline in the value of

23 V.B. Gupta, ‘The Dutch East India Company in Gujarat trade 1660-1700: a study of
selected aspects’, unpublished PhD thesis, Delhi University, 1991, p. 230.
24 Gupta, ‘The Dutch East India Company in Gujarat trade’, pp. 233, 337.

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total exports from Gujarat noted above strongly suggests that the
decline would in all probability have affected all commodities.

The Malabar coast

The Malabar trade of the Company continued to be rather small in
value throughout the period under discussion. For a few years in the
1690s, the Company actually stopped the procurement of pepper in
the region. Pepper was then flowing into the Dutch warehouses at
Palembang and Bantam in large quantities and it was decided to do
without the Malabar variety. Indeed, with a view to partially disposing
of the accumulated stocks, limited amounts of pepper were actually
sold at Cochin. Passes were also issued to Malabar merchants for
carrying their pepper to the coast of Coromandel by sea. This,
however, was a very short-lived phase and things soon returned to
‘normal’ where the Company was trying to invoke its monopsonistic
privileges and obtain a good quantity of pepper at a below-market
price, but usually without much success. Irrespective of what their
princes had agreed to, the suppliers did their best to escape having to
supply pepper at a price below market. This was particularly so in a
situation where the demand was rising and the Indian as well as the
European buyers such as the English (who had established a factory at
Tellicherry in northern Malabar in 1682, and at Anjengo in southern
Malabar in 1688, and had gone on to be favoured with a pepper
monopoly by the queen of Atingal in 1694), the French and the Danes
were all perfectly happy to follow the market. Indeed, in an agreement
with the king of Tekkenkur in June 1694, the VOC was obliged to
agree to pay the market price in respect of the supplies delivered. Also,
given the growing diversion of the supplies of Bihar opium to the
more lucrative Java market, the Company was increasingly obliged to
pay for the pepper in terms of precious metals.

As a part of the Directors’ plans to build up large stocks of pepper
in Holland, Batavia instructed Malabar in 1698 to supply as much
pepper as it could. But the exports from Malabar continued to be
modest. As Table 6.3 shows, the exports were no more than f.216,000
worth in 1701-2 and f.190,000 worth in 1711-12. By 1722-3, the
figure had gone up to f.424,000, but it was again down to f.341,850 in
1731-2. In the meantime, the price of pepper had gone up from
Rs.60-62 per kandi of 560 ponds during 1722-30 to Rs.70-78 during
1731-4 and further to Rs.88—-90 per kandi during 1735-9. This

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Table 6.3 Value of the Dutch exports from Malabar, 1701-85

Year Exports (f.)
1701-2 215,638
I71I—12 190,431
1722-3 423,717
1731-2 341,418
1741-2 231,519
17§1-2 382,322
1761-2 699,760
1771-2 271,133
1784-5 593,040

Source: ‘Copie generale journalen, gehouden door de boekhouder-generaal te
Batavia, 1700/1701-1789/90’, ARA, BGB, 10751-801.

Annual value(in thousands of florins)

1701-02 1711-12 1722-23 4731-32 1741-42 1751-52 176-62 1771-72 9784-85

Years

Fig. 6.3 Dutch exports from Malabar, 1701-85

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remarkable phenomenon of a 50 per cent rise in the price within the
space of a decade owed its origin essentially to a major shift in the
pepper procurement towards Malabar. The fall of the Safavids in 1722,
followed by considerable political uncertainty in Gujarat in the 1730s,
had forced groups of Indian and other merchants who until then had
been procuring their pepper supplies in Surat and the Persian Gulf
ports to turn to Malabar. This had further intensified the problem of
smuggling. To add to the Company’s woes, Martanda Varma who had
ascended the throne of Travancore (Venad) in 1729 annexed in 1734
two small neighbouring kingdoms whose entire pepper crop had been
pledged to the Company. The Malabar Council also learnt that, with
the establishment of Travancore hegemony in the region, large quan-
tities of pepper were being diverted to the Coromandel coast. The
Company sought a military solution to the problem, but in the battle
between the forces of the Company and those of Martanda Varma,
fought near the roadstead of Colachel in southern Malabar on 10
August 1741, the Company’s forces were defeated.2> The Dutch
dream of a revived monopoly of the pepper trade had to be given up
once and for all.

Clandestine private trade

In view of its own substantial stakes in intra-Asian trade, the VOC
followed the policy of imposing a strict ban on its employees
participating in port-to-port trade within Asia on their private
account. That, however, did not prevent the latter from doing so on a
fairly important scale on a clandestine basis. They used the Company’s
ships and often its capital resources quite blatantly. One of the most -
lucrative branches of trade in their network was that between Bengal
and Batavia. The main item carried to Batavia was opium, a high-value
low-bulk and, therefore, ideal item for contraband trade, though other
Bengal goods such as raw silk and silk textiles also figured in this
trade. Pieter van Dam has suggested that, at one stage, the volume of
the clandestine private trade from Bengal was nearly as large as that on
the Company’s own account. As far as opium alone was concerned, in
an unusually bountiful year such as 1676 the volume of opium
smuggled into Batavia could be several times the amount imported on
the account of the Company. An anonymous report submitted to the

25 Ashin Das Gupta, Malabar in Asian Trade 1740-1800, Cambridge, 1967, pp. 25, 31-2.

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Heren XVII in 1684 contained a detailed description of the organiza-
tional structure of this trade at the Bengal end. In the year 1679,
Director Jacob Verburg founded in the name of his wife a ‘small
company’ with the specific purpose of carrying on private trade. To
facilitate its operations, two of the shareholders in the ‘company’ —
both nephews of Verburg’s wife — were appointed to the key posts of
the directorate’s fiscaal (the law-enforcement officer) and the Hugli
factory’s warehouse officer, respectively. In order to enable him to
discharge his ‘duties’ properly, the fiscaal was provided with a staff
large enough to keep an eye on all Dutch company ships entering or
leaving the port of Hugli. As soon as a ship approached the port, the
warehouse officer went aboard and offered to buy whatever private
cargo might be on board. The prices offered were obviously consider-
ably below the market, but usually the deals went through because
everyone knew that in the event of an unsuccessful negotiation, the
fiscaal would be promptly informed and the goods confiscated on
behalf of the Company. The goods obtained by the warehouse officer
in this manner were then sold on the open market at substantially
higher prices on the account of the ‘small company’. As far as goods
procured in Bengal were concerned, the procedure was to buy them in
the name of a nonexistent Bengali merchant. This was done before
procurement was begun on the account of the Company, so that the
‘small company’ was ensured of getting the best quality goods at the
lowest possible prices. These goods were then loaded aboard the
Company’s ships along with the regular cargo. Sometime before the
ships were due into the harbour at Batavia, the contraband goods were
taken out in small boats. The watch-and-ward staff at Batavia at times
managed to seize part of the smuggled goods, but that made only a
very minor dent in the total profit from the operation. A rough idea of
the magnitude of the profit earned could probably be formed by the
fact that at Verburg’s death in 1681, his wife carried with her to
Holland a fortune running to f.600,000. Even the warehouse officer
had managed to save a sum of f.150,000 over a period of three and a
half to four years.76 In so far as the clandestine nature of this trade
often obliged the servants to pay a price above the market in respect of
goods procured and accept one below it for goods sold, the servants’
private trade tended to spoil both the buying and the selling markets

26 Anonymous report entitled ‘t Oostindische Sacspiegeltje’, ARA, VOC 4704.

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for the Company. There was, however, very little the Company could
do about this problem. One measure taken was to strengthen the
cruising watch-and-ward staff deployed to detect clandestine goods
carried aboard Company ships coming into Batavia. The other was
periodically to issue proclamations reiterating the deterrent penalties,
including dismissal from service and deportation to Holland, pre-
scribed for those found engaging in private trade. This was done in
1677, 1678, 1680 and 1683. The last of these decrees went so far as to
prescribe punishment by death. But the vested interests were far too
entrenched to be dislodged easily and nothing changed.?”

A major landmark in the Dutch Company policy towards private
Dutch participation in intra-Asian trade was the partial opening up of
this trade in the early 1740s. The initiative in this regard had been
taken by Gustaf Willem Baron van Imhoff, the Governor-General-
designate of the Dutch East Indies. In a memorandum submitted in
1741, Van Imhoff had argued that the Company’s trade in the factories
west of Malacca had been on the decline for some time and now
compared very unfavourably with that carried on by its competitors
such as the English and the French. He, therefore, suggested that it
would be in the best interests of the Company to declare trade with
that region, except in strategic commodities such as spices and
Japanese copper, open to all. Extra customs duties charged from the
private traders who, Van Imhoff believed, would mainly be the
burghers from Batavia, would compensate in part for the loss of profit
that the partial abandonment of its own trade in the region would
entail. As for trade within the archipelago, Van Imhoff pleaded for a
greater freedom of trade between Batavia and the eastern provinces of
Amboyna and Celebes. Finally, in relation to Euro-Asian trade, Van
Imhoff recommended that the private traders be allowed to export tea
to Holland in the Company’s ships. The burghers could buy the tea
from the Chinese junks calling at Batavia, and the Company could
charge as freight 4o per cent of the proceeds from the sale of the tea in
Holland.?8

Van Imhoff’s recommendations were accepted by the Heren XVII

27 Prakash, The Dutch East India Company and the Economy of Bengal, pp. 86-9, 154-6.

28 J.E. Heeres, ‘De consideratien van Van Imhoff’, Bijdragen tot de Taal-, Land-, en
Volkenkunde van Nederlandsch Indie, vol. 66; S. Arasaratnam, ‘Monopoly and free trade in
Dutch-Asian commercial policy: debate and controversy within the VOC’, Journal of
Southeast Asian Studies, vol. 4 (1), March 1973, pp. 1-15.

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in 1742. The communication received by the Indian factories from
Batavia in 1743 stipulated that ‘the navigation and trade from and to
Batavia both to the east as well as to the west of India has been
declared open for everyone with the provision that the trade in spices,
copper, tin, pepper as well as the import of opium will be reserved for
the Company’.”? In September 1745, Van Imhoff further outlined the
geographical extent of his free-trade area. It comprised China, Batavia,
Malacca, all harbours from Acheh to Bengal, and Bengal to Nagapat-
tinam, Sri Lanka, and from Cape Comorin to Persia, then along the
African coast to Madagascar and Mozambique.*°

The private trade under the new dispensation was to be carried on
under the flag and the protection of the Company. At Surat, the list of
goods in which trading was to be reserved for the Company included,
in addition to spices and tin, copper and opium, items such as coral,
ivory and several varieties of textiles including blue baftas, blue
cangans, kannekins, silk patolas, niquanias and so on. Not only would
such goods found aboard private traders’ ships be confiscated, but the
owner would be subjected to further punishment. In the case of spices
and opium, the punishment prescribed was death: in the case of other
goods, it was left to the discretion of the judge.?! The private traders
were supposed to pay customs duty to the Company at the rate of 4
per cent at Hugli and 5 per cent at Surat. The Company would, in its
turn, settle the accounts with the authorities at the locally established
rates for its own goods. At Hugli, this would leave a surplus of 13 per
cent for the Company, of which 5 per cent would be given to the
fiscaal. At Surat of the 23 per cent surplus, } per cent would go to the
fiscaal, 1 per cent to the director, and the remaining 1 per cent to the
Company accounts. The additional surplus of 25 per cent in respect of
provisions and drinks, which were exempt from government customs
duties, would all accrue to the Company.*? While it is quite clear that
the 1743 provisions did indeed lead to a certain amount of additional
participation in intra-~Asian trade by the Dutch free burghers, the scale
of this participation remains unclear. Some of the concessions granted
by Van Imhoff were withdrawn by his successor, Jacob Mossel

29 ARA, ‘Consideratien over de opengestelde vrije Vaart en Handel-hoedanig die in
Souratta sal kunnen gereguleert werden’, by Director Jan Schreuder at Surat, 2 March 1746,
HRB 837, para. 340.

3° Das Gupta, Malabar in Asian Trade, 1740-1800, p. 86.

31 ARA, ‘Consideratien’ by Jan Schreuder, HRB 837, para. 411.

32 ARA, ‘Consideratien’ by Jan Schreuder, HRB 837, paras. 400, 411.

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(1750-61). Later in the century, the burghers were again allowed more
freedom of trade. But the overall volume of this trade does not seem to
have become particularly significant at any point.>*?

The Dutch and the Indian maritime merchant

In addition to its employees, the other principal group of merchants
competing with the Company in its intra~Asian trade was that of the
Indian and other Asian maritime merchants. By using the device of the
pass (cartaz) the Company tried to hinder, or at least to regulate, these
merchants’ trade with areas where it enjoyed monopoly privileges. We
had noted earlier that by the early 1620s the VOC had acquired
monopoly rights in the Moluccas where the major spices were
procured. Indian and other Asian merchants were successfully ex-
cluded from the area. It was only at the port of Makassar in Celebes
that trade was still possible, and this link was used by Indian
merchants, particularly those from Coromandel, to break the Dutch
control of the eastern archipelago. But this particular opening also
came to an end in 1669 with the Dutch conquest of the port city. In
the meantime, the capture of Malacca in 1641 by the VOC had
occasioned a major dislocation in the Indian merchants’ trade with the
Malay penninsula. From the very beginning, the Company tried to
divert as much of the Asian merchants’ trade with the region as
possible to Malacca. This would bring in a certain amount of revenue
(a 10 per cent duty on imports and a § per cent duty on exports was to
be levied at Malacca) but, more importantly, would enable the
Company to control and direct the Asian merchants’ trade with the
region to its advantage. But already in November of 1641 the Dutch
governor of Malacca pointed to the glut of Indian cloth in the area as a
result of which the Company’s own sales had suffered. The following
year, the factors in Ayutthaya ascribed the poor sale of Indian textiles
to the large imports by the merchants from Bengal and Coromandel.
The situation was even worse at Perak where the Company’s sale of
textiles had practically been brought to a halt. Batavia’s response to
this situation was a twofold one. On the one hand, instructions were
issued to the factors in India to require all merchants granted passes
for the Malayan ports to call first at Malacca and pay the duties there.
For one whole year, the Surat factors even managed to oblige the Surat

33 Femme S. Gaastra, De Geschiedenis van de VOC, Zutphen, 1991, p. 124.

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shipping granted passes for the region to pay the Malacca duties at
Surat itself before sailing out. The factors at Malacca were to offer to
buy the textiles brought in by the Indian ships at the market price.
Sufficient stocks of goods that these merchants might want to buy at
Malacca were also to be maintained in the Company’s warehouses. At
the same time, these merchants were to be prevented from operating in
some of the more important markets in the region. This was sought to
be achieved by the Company entering into exclusive contracts with
the local rulers. Such contracts were made with Kedah (June 1642),
Phuket (March 1643) and Bangeri (January 1645). The Kedah contract
stipulated that half of the total supply of tin would be made available
to the VOC at a fixed price against cash or cotton textiles. Indian
merchants’ ships would be allowed in only if they carried Dutch
passes and produced evidence that they had first called at Malacca and
paid duties there. A similar stipulation was made in the Phuket
contract. The Bangeri contract was even more wide-ranging. The
entire supply of tin was to be sold to the VOC and no textiles were to
be bought from any foreign vessel.

The Indian merchants from Gujarat, Coromandel, Bengal and other
places sought to counter this by shifting their operations to Acheh.
The extensive trade carried on by the Acheh merchants with Sumatran
and Malayan ports made Acheh a large market for Indian textiles, as
well as a major procurement point for items such as pepper and tin. It
was in this context that the Company imposed a blanket ban on the
Indian merchants’ trade with Acheh as well as the Malay peninsular
ports. The failure of the retaliatory action taken at Surat designed to
prevent the Company from implementing the decision has already
been noted in Chapter 4.

Since Perak had refused to enter into an exclusive contract with the
Company along the lines of its northern neighbours, the Perak river
was blockaded. The immediate sufferers were the Acheh merchants
whose tin trade with Perak was brought to an end. Perak was,
therefore, ordered by the queen of Acheh to enter into an agreement
with the VOC, which was done in August 1650. The tin trade of
Perak was henceforth to be shared between the VOC and the
merchants of Acheh to the exclusion of everyone else. The VOC
factory at the mouth of the Perak river was attacked in 1651, but in
December 1655 the 1650 treaty was reconfirmed. Soon thereafter,
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Perak and Acheh. It was only in June 1659 that a comprehensive
treaty was finally concluded with the queen of Acheh. The Indian
merchants were again to be granted passes for Acheh, though the
Malay peninsular ports were to remain out of bounds for them. The
tin trade of Perak was to be divided equally between the VOC and the
merchants of Acheh.

From about 1660 or so, Dutch passes were issued liberally for both
Acheh and Malacca. The Indian merchants made the most of the
trading opportunities at Acheh, but by no means gave in to the Dutch
demand of staying away from the Malay peninsular ports. Kedah,
which was just outside the Dutch blockade system and, though not a
producer of tin, was a major provider of it because of the existence of
an efficient network of coastal trade with the neighbouring producing
region, became an important port of call for shipping from Coro-
mandel. Further north, a considerable amount of shipping went to
Bangeri and Phuket in addition to the Thai port of Tenasserim and the
Burmese port of Pegu. After the conclusion of the second Anglo-
Dutch war in 1667, obtaining an English Company pass became yet
another device to evade the Dutch control. Goods were also freighted
on English ships going to the Malayan ports. At times, English
Company ships flying the English flag were also hired to transport the
Indian merchants’ goods to the region.

The Dutch conquest of Bantam in 1682 followed by the exclusion
of Indian shipping from the port did indeed involve the loss of the
important Java market for Indian, particularly Coromandel, textiles.
The procurement of Chinese and Japanese goods, particularly copper,
which used to be obtained mainly at Bantam, also suffered in the
process. But a part of this loss was made up by increased sailings to
ports such as Johor, Lama and Pankor. The Dutch Company’s
attempts to make the sultan of Johor restrict Indian shipping to his
ports were not particularly successful.**

The available evidence would seem to suggest that from the closing
years of the seventeenth century onward, there was a distinct decline
in the Indian merchants’ trade with the Malay archipelago. But this
decline would seem to be related in the main to political and economic

34S. Arasaratnam, ‘Some notes on the Dutch in Malacca and the Indo-Malayan trade
1641-1670’, Journal of Southeast Asian History, vol. 10 (3), 1969, pp. 480-90; S. Arasar-
atnam, ‘The Coromandel-Southeast Asia trade 1650-1740’, Journal of Asian History, vol. 18,
1984, pp. 113-35.

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developments in the relevant Indian region and/or in the partner
ports. The role of the VOC policies or trade in this regard would seem
to be of no particular consequence. A case in point is the eastward
trade from the Bengal ports of Hugli and Balasore. This trade
consisted essentially of four sub-branches: the trade with Arakan and
Pegu; the trade with Siam with Tenasserim as the principal port; the
trade with the Malay peninsula and Sumatra, the principal ports of call
in the area being Phuket (Ujang Salang), Kedah, Perak, Malacca and
Acheh; and the trade with Manila in the Philippines. Evidence
available in the Dutch shipping lists for the ports of Hugli and
Balasore relating to departures for and arrivals from the eastward
ports on the account of Indian and other Asian merchants suggests a
pattern of marked decline in this trade between the last years of the
seventeenth century and about 1720. There would seem, however, to
have been no connection between this development and the policies of
the VOC. If one disaggregated the nature of the decline of the Bengal-
eastward trade, it turns out that it was ascribable entirely to the
withdrawal from high-seas trade by Mughal state officials engaged in
trade in addition to their other activities. The volume of eastward
trade carried on by the ordinary merchants registered no particular
decline. It would be highly unlikely that in a situation where ordinary
merchants could survive the Company’s trade and pass policies, state
officials with a substantial resource and power base would have been
obliged to withdraw from trade by the Company policies. This
conclusion finds strong support in the history of the trade between
Bengal and the Maldive Islands. During the closing years of the
seventeenth and the early years of the eighteenth century, while this
branch of trade registered an increase, the participation of state
officials in it declined markedly. If these officials practically withdrew
from a growing trade which, in addition, was characterized by the lack
of Company competition and the absence of a restrictive pass policy,
their withdrawal from the eastward trade must also be viewed as
having had nothing to do with the policies of the VOC.*°

If the VOC was by and large unable to disrupt the Indian
merchants’ eastward trade on any long-term basis, what about their
trade with Sri Lanka, the other major Asian region where the Dutch

35 This argument can be followed in greater detail, together with the necessary evidence,
in Prakash, The Dutch East India Company and the Economy of Bengal, ch. 8.

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enjoyed exclusive rights? Traditionally, a considerable amount of
trade was carried on between the ports in Bengal, the Coromandel
coast, Malabar and the Kanara coast on the one hand, and those in Sri
Lanka on the other. In 1670, the VOC monopolized the Sri Lanka
trade in all major commodities, the only exception being rice. Among
the export goods, the commodities monopolized were cinnamon,
elephants, ivory, areca-nuts and chanks. The major import goods
declared monopoly items were cotton textiles, pepper, tin and zinc.
The import of rice was not monopolized because the island depended
heavily on the import of this provision from India on a continuing
basis, and the shipping capacity available to the Company could
simply not take care of the island’s requirements. The trade restrictions
inevitably led to some decline in the Indian merchants’ trade with the
island, but given the vast coastline which it was impossible to police
effectively, a great deal of trade in the prohibited items continued ona
clandestine basis.

As far as trade carried on legally was concerned, given the important
role of Bengal as a supplier of provisions such as rice, sugar, clarified
butter and oil, the restrictive provisions were enforced in her case only
from about 1684 onward when it was considered necessary to contain
the competition in the sale of cotton textiles. These textiles were
consequently excluded from the list of ‘permitted’ goods specified in
the passes issued. A similar step was taken in respect of cinnamon in
1696. That these restrictive measures turned out to be a great damper
on the volume of the legally conducted Bengal-Sri Lanka trade is
suggested quite unambiguously by the information available in the
Dutch shipping lists for the period between the late 1690s and about
1720.°°

The trade between south India and Sri Lanka was carried on from a
number of ports stretching from Kanara round the Cape Comorin to
north Coromandel. The restrictive measures of 1670 affected this trade
quite adversely, but by the 1690s recovery would seem to have taken
place. This process was further helped by the 1697 removal of
restrictions on the trade in textiles and areca-nuts. But increased
competition in the sale of cotton textiles again obliged the Company
to prohibit their import. The Indian ships were henceforth also

36 Om Prakash, ‘The European trading companies and the merchants of Bengal,
1650-1725’, The Indian Economie and Social History Review, vol. 1 (3), 1964, pp. 37-63-

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required to confine their trade to the Dutch-controlled ports of
Colombo, Galle and Jaffna where areca-nuts would be sold to them
directly by the Company. These measures again tended to depress the
trade without, of course, affecting in any way the volume of the
substantial clandestine trade on this sector.>”

To sum up, the Dutch East India Company’s attempts at controlling
and redirecting the Indian merchants’ trade with the Malay archipe-
lago and Sri Lanka were by and large quite ineffective. In the case of
Sri Lanka, the Company was never really able to make up its mind
regarding what precise course of action to follow. The policy of
indecision significantly limited whatever adverse effect the restrictions
imposed on the Indian merchants’ trade with the island had on their
trade. It was also found impossible to control the large-scale smug-
gling trade with the island. As for the Malay peninsula, it was only
during the late 1640s and the 1650s, when the Company was willing to
resort to violence, if necessary, to prevent what it perceived to be a
grave threat to its long-term commercial interests in the region, that it
succeeded in keeping the Indian merchants out of a number of Malay
ports. For the rest, it was indeed a question of these merchants
adjusting to the pressures generated by the Company by shifting their
trade to another port in the area rather than by reducing the scale of
their operations.

THE ENGLISH COMPANY AND THE PRIVATE
TRADERS

The English Company trade

The period 1680-1740 also witnessed a tremendous expansion in the
value of the Indo-European trade carried on by the English East India
Company. We noted earlier that the value of the total English imports
from Asia had gone up from the equivalent of a mere f.4.32 million
during the triennium 1668-70 to f.13.79 million during 1698-1700,
and further to f.23 million during 1738-40. The dominant items of
import during the period were textiles and raw silk which together
accounted for over 80 per cent of the total imports during both

37 §. Arasaratnam, ‘Dutch commercial policy in Ceylon and its effects on the Indo-
Ceylon trade (1690-1750)’, The Indian Economic and Social History Review, vol. 4 (2),
1967, PP. 109-30.

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1698-1700 and 1738-40. Since both these items, together with some of
the minor ones, were procured almost entirely in India, the sub-
continent accounted for 95 per cent of the total English imports
during 1698-1700 and 84 per cent during 1738-40. As in the case of
the Dutch, within the subcontinent Bengal, which was the sole
supplier of raw silk and by far the most important supplier of textiles,
was now the most important region for the Company’s trade. Its share
in the total Asian imports of the Company, which stood at 42 per cent
in 1698-1700, had further gone up to 66 per cent by 1738-40. In the
latter triennium, Bengal accounted for as much as 78 per cent of the
total Indian procurement, the remainder being divided between
Madras and Bombay ina ratio of 2:1.78

The enormous increase in the Indo-European trade in textiles over
the last quarter of the seventeenth century caused a commotion among
the indigenous producers of linen, silk and woollen textiles. In
England, the manufacturers’ opposition to the import of these textiles
was sufficiently vocal to lead to the passage of a Parliamentary Act in
1700 prohibiting the import of ‘all wrought silks, Bengals and stuffs
mixed with silk or herba, of the manufacture of Persia, China or the
East Indies and all calicoes painted, dyed or printed or stained there’.
But since this might simply have involved an increase in the import of
white calicoes and muslins from India which were then printed in
England, another Act was passed twenty years later altogether prohi-
biting the use or wear of printed calicoes in England. Of course,
neither of the two Acts affected in any way the re-export trade in
Eastern textiles, and, on the whole, their effect on the growth of the
trade in textiles was not particularly marked. While the all-time 1684
peak level of textile imports into England could not be sustained in the
following period, the position continued to be reasonably satisfactory.
The 1690s witnessed a rise in the average sale price of these textiles.
Between 1695 and 1704, the average mark-up on the English textile
imports was reported to be as high as 1:3.85. The number of pieces
imported in 1700 was 868,095 costing a total of £374,608 and
accounting for 74.7 per cent of the total imports. All of the textiles had
originated in India, with Bengal accounting for 48.5 per cent of the
total value of the textiles imported. The share of Madras and Bombay

38 Calculated from K.N. Chaudhuri, The Trading World of Asia and the English East
India Company, 1660-1760, Cambridge, 1978, Appendix 5.

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was 14.3 per cent and 37.3 per cent respectively. Forty years later,
while the total number of pieces imported had come down to 648,060,
the invoice value had gone up slightly to £395,570 accounting for 68.3
per cent of the total imports. Bengal now accounted for a staggering
83.4 per cent of the total value of textiles imported. The share of
Madras was 13.7 per cent, while Bombay with 0.9 per cent had
practically been dropped. The share of Chinese silk piece-goods in the
total textile value imported was also no more than 2 per cent.°?

The Company’s procurement of raw silk in Bengal (which ac-
counted for practically the entire amount procured in Asia) had begun
to pick up from about 1680, but the conflict with the Mughals later in
the decade had interrupted the process. The amount imported in 1700
stood at 96,340 lbs with an invoice value of £44,071 accounting for 8.8
per cent of the total imports. All these magnitudes had registered an
increase by 1740, when the quantity imported was 129,619 lbs. costing
£59,157 and accounting for 10.2 per cent of the total imports.*°

Finally, among the bulk goods, the demand for Indian indigo had
continued to be good in the 1680s, and the orders from Surat had in
fact been doubled. But the supplies in the 1690s had been erratic. In
the early years of the eighteenth century, there had been a significant
rise in the cost price, and after 1712 it was only occasionally that the
Company traded in indigo. The other bulk good, saltpetre, also
remained at the margin accounting in 1720 and 1740 for no more than
1.05 and 1.7 per cent respectively of the total value imported.*!

The English private traders

Unlike the VOC, the English East India Company usually did not
own the ships it used but hired them from private parties. The
‘charterparty’ agreements often obliged the Company to make avail-
able to the owners a minor proportion of the shipping space, creating
yet another category of private traders engaged in Euro-Asian trade. It
was also customary for the Company to allow a small amount of
shipping space to the ship’s personnel. These groups were obliged to
operate under certain rules and regulations with regard to the goods
they could trade in and so on. From 1667 onward, the range of goods

3? Calculated from Chaudhuri, The Trading World of Asia, Appendix 5.
*° Calculated from Chaudhuri, The Trading World of Asia, Appendix 5.
4" Calculated from Chaudhuri, The Trading World of Asia, Appendix 5.

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in which trade was allowed was broadened, but it was still obligatory
to operate by registration and consignment through the Company’s
warehouse in London.*? Valuewise, an important item of trade
figuring in the English Euro-Asian trade on private account was
diamonds, which were not covered by the Company’s monopoly and
could be freely imported against a 4 per cent fee. The diamond trade
was controlled basically by Jewish merchants, many of whom had
migrated from Portugal to England around the middle of the seven-
teenth century. This had led to a shift in the axis of the diamond trade
from Goa-Lisbon to Madras-London. The diamond merchants oper-
ated mainly by appointing ‘commissioners’ in India to whom funds
were dispatched regularly and who looked after the procurement and
the shipment of the rough stones. By and large, these commissioners
were chosen from amongst the senior officials of the Company based
in Madras who were simultaneously engaged in intra-Asian trade in a
substantial manner on their private account. In recompense of their
labours, the commissioners were entitled to a 7 per cent commission
on the value of the investment.

Euro-Asian trade, however, was only on the fringes of the total
English private trading activity from India. The real field of activity
was the trade within Asia. The two groups of private traders engaged
in this trade were the Company servants (until about the 1760s) and
the so-called free merchants settled in India. In the initial stages, the
Company itself was engaged in a certain amount of intra-Asian trade,
and like the Dutch Company had sought to prevent its servants from
participation in it. That, however, had not quite worked because the
servants are known to have engaged in a fair amount of intra-Asian
trade from the very beginning. As early as 1613, for example, when
the James arrived at Bantam from Surat, it was found to be so heavily
laden with 300 bales of privately owned goods that it was described as
rather a ‘sty for swine than a ship for men’. In 1630, the private trade
to Persia was said to be worth £30,000, equivalent to nearly one third
of the stock of the Company’s own Persian voyage that year. Cases of
Englishmen returning home with fortunes of between £30,000 and
£40,000 each were recorded around this time. By the 1650s, some of

#2 Tan Bruce Watson, Foundation for Empire, English Private Trade in India 1659-1760,
New Delhi, 1980, pp. 68-75.

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the private traders operating from Madras were believed to have made
fortunes of up to £50,000.*?

The Company’s own limited participation in intra-Asian trade,
however, had in the meantime turned out to be rather disappointing,
and in 1661 a decision was taken to withdraw from it. But in order to
ensure that the English presence in various parts of Asia did not cease
altogether, it was decided at the same time to legalize the trade carried
on by the Company servants and the free merchants. By a series of
‘indulgences’ issued in the late 1660s and the 1670s, these two groups
were formally allowed to engage in trade with all parts of Asia, the
only places excluded being Tonkin and Taiwan.

The private merchants’ trade embraced both the westward as well as
the eastward sectors of the maritime trade from India. In addition to
the ports on the west coast of India itself, the westward sector included
the ports in the Red Sea and the Persian Gulf. The eastward trade
embraced, in addition to the two littorals of the Bay of Bengal, the
Malacca Straits, ports in the Indonesian archipelago, the Philippines
and the south China coast. It was common for these traders to carry,
in addition to their own goods, Indian merchants’ goods on freight.
There was demand for this service notwithstanding the fact that the
rates charged by the English were distinctly higher than those offered
by the rival Indian and other Asian shipowners. Thus in 1699 while an
Asian vessel was asking for Rs.5 per maund of freight between Bengal
and Persia, the rate quoted by the English was Rs.8. The corre-
sponding figures for 1718 were Rs.6 to Rs.7 and Rs.g per maund. The
explanation was only in part in terms of the generally more efficient
sailing and the greater immunity the English ships offered against
piracy. Often the English shipowners were willing to assume the
ownership of the freight cargo making available to the freighter the
fairly substantial customs privileges enjoyed by the English in many
parts of Asia.**

The English private traders operated from ports on both the east
and the west coasts of India. Over the seventeenth and the early years
of the eighteenth century, the Coromandel ports witnessed English

43 PJ. Marshall, ‘Private British trade in the Indian Ocean before 1800’, in Ashin Das
Gupta and M.N. Pearson (ed.), India and the Indian Ocean 1500-1800, Calcutta, 1987,
pp. 278-9.

44 Marshall, ‘Private British trade’, p. 283; P.J. Marshall, East Indian Fortunes, The British
in Bengal in the Eighteenth Century, Oxford, 1976, pp. 58-6o.

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trading activity on a much larger scale than did ports in Bengal.
Masulipatnam was the principal port used on the Coromandel coast,
but around the turn of the century more and more private English
shipping moved on to Madras. In Bengal, the principal port used was
Hugli until it was replaced by Calcutta in the early years of the
eighteenth century. In course of time, Calcutta emerged as the most
important port of English private trade from India. On the west coast,
English private trade began at Surat in the early years of the seven-
teenth century, but moved on to Bombay in the eighteenth.

Among the important private English traders operating from Cor-
omandel during the second half of the seventeenth century were the
governors of Madras. Two of these, Elihu Yale and Thomas Pitt, were
particularly active and are known to have amassed huge fortunes,
estimated in the case of Yale at a massive £200,000. Other governors
with significant private trading interests included Edward Winter,
William Langhorn, Streynsham Master, Gulston Addison, Edward
Harrison and Joseph Collet. Among the chiefs of the English factory
at Masulipatnam, major private traders included William Jearsey,
Richard Mohun and Robert Freeman. Most, if not all, of these
individuals were also diamond commissioners, an activity that con-
tributed handsomely towards their prosperity. The accounts of a
leading diamond merchant in London, John Chomley, provide for
some years information on the total amount of funds remitted each
year from London to Madras for investment in diamonds. While this
amount fluctuated a great deal between one year and another, an
exceptionally good year such as 1676 witnessed the remittance of as
much as £100,000 on this account.*° There ordinarily was a gap,
sometimes as long as six months, between the receipt of the funds by
the commissioner in Madras and their actual investment in the
purchase of the diamonds. The resultant additional liquidity available
at no extra cost often constituted a major contributory element to the
commissioner’s success in the country trading ventures he carried on
on his private account.

William Jearsey was initially the chief of the English factory at
Syriam in Burma. In 1655, when it was decided to close that factory
down, Jearsey was ordered to return to Madras. An alleged delay in

45 Soren Mentz, ‘English private trade on the Coromandel coast, 1660-1690: diamonds
and country trade’, The Indian Economic and Social History Review, vol. 33 (2), April-June
1996, PP. 155-74.

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his departure from Syriam led to a severing of Jearsey’s connection
with the Company, but he remained in Madras as a freeman. Later, he
was reinstated in the Company’s service, and in August 1662 suc-
ceeded Johnson as the chief of Masulipatnam. But jealousies and
conflicts arising out of Jearsey’s substantial private trading ventures
led to a constant friction between him and the governor, Edward
Winter. Between 1663 and 1669, Jearsey was also an important,
probably the most important, diamond commissioner in the region
operating in partnership with Nathaniel Chomley, the brother and the
local commissioner of John Chomley. In 1669, Jearsey was discharged
from his chiefship but was permitted to remain in India for a year or
two if he gave the Company ‘satisfaction’. Strenuous efforts in this
behalf by the Company’s factors notwithstanding, Jearsey managed to
evade producing his accounts until, in 1686, the Company withdrew
all claims of money due from him. During the forty years that Jearsey
was engaged in private trade from Coromandel until his death in 1690,
his trading fortunes ebbed and flowed quite considerably. In the
1660s, he is believed to have owned at least nine vessels. These ships
operated between Coromandel and ports in Pegu, Phuket, Acheh,
Kedah and Persia. He was evidently making a great deal of money
around this time both from his diamond commissionership as well as
from his private trading ventures, but also had his share of misfor-
tunes. Around 1669, two of his ships, the Nonsuck and the Adventure,
both richly laden, were taken by the Dutch. In 1672, the Ruby was
seized by the French at Sao Tomé. About this time, Jearsey also lost
the York Ormuze, which ran ashore at Balasore.*®

Richard Mohun, also a diamond commissioner and partner of
Nathaniel Chomley, had succeeded William Jearsey as the chief of
Masulipatnam but was himself suspended in 1675 for misusing the
Company’s funds for private trade, taking commission on goods
bought on the account of the Company and other such misdemea-
nours. But curiously enough, he was reinstated in the service of the
Company in 1679 as the head of the mint. This was done without the
approval of the Directors in London who ordered his dismissal when
the matter came to their attention. In 1683, Mohun left Coromandel
for Acheh where he died three years later. Robert Freeman was

‘6 L.M. Anstey, ‘Some Anglo-Indian worthies of the seventeenth century: William
Jearsey’, The Indian Antiquary, vol. 34, 1905, pp. 164-76.

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employed at Masulipatnam in 1668, but left the service of the
Company in 1675. In 1682, he reappears as the chief at Masulipatnam,
joins the Council at Fort St George in 1687 and dies two years later.
During his chiefship at Masulipatnam, he was probably the most
substantial shipowner of all and, in addition to conducting trade on his
own account, carried a large amount of freight cargo between Masuli-
patnam and Persia on the account of Indian merchants. He was also an
important trader between Masulipatnam on the one hand and Pegu
and Acheh on the other, besides carrying on a certain amount of
coastal trade in rice.*” Freeman succeeded Nathaniel Chomley in 1682
as a diamond commissioner when the former finally left for England.
Chomley took the bulk of his fortune amounting to £54,000 with him,
but left a small amount of £7,300 at Freeman’s disposal for investment
on his behalf. Streynsham Master, who left at about the same time, did
the same, but eventually had reason to regret the decision. In 1703,
Thomas Pitt, the governor of Madras, reported that of the 15,700
pagodas collected by Freeman from Indian merchants owing money
to Master, the latter received nothing.*®

While the bulk of the English private trade from Coromandel
would seem to have been carried on on the account of individual
merchants, there were several alternative patterns in use as well. Some
of the governors of Madras organized ‘joint stocks’, that is, large
syndicates of investors who would buy shares in one or more ships
under the governor’s management. A large segment of the English
community had a stake in Madras’s shipping, either as part owners or
as lenders of respondentia loans. Such loans were secured on the cargo
of a ship at a rate adjusted to the risk and the length of the voyage, the
risk being on the lender.*? Partnership ventures among two or more
individual merchants were also quite common. Thus Richard Mohun,
Matthew Mainwaring and George Chamberlain are known to have
been partners in trading ventures based on a 4/9, 3/9 and 2/9 share
respectively. Another noteworthy partnership was that between
William Monson and Nicholas Morse, who traded on equal shares
from Madras. On occasions, a vessel was owned jointly by several

47 Sanjay Subrahmanyam, ‘Persians, pilgrims and Portuguese: the travails of Masuli-
patnam shipping in the western Indian Ocean, 1590-1665’, Modern Asian Studies, vol. 22
(3), 1988, pp. 503~30; Sanjay Subrahmanyam, ‘Asian trade and European affluence?
Coromandel, 1650-1740’, Modern Asian Studies, vol. 22 (1), 1988, pp. 179-88.

48 Soren Mentz, ‘English private trade on the Coromandel coast’.

4? Marshall, ‘Private British trade’, p. 287.

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persons, the profit earned from its trips being shared proportionately.
Thus in 1675 the Indulgence was reported to have been owned to the
extent of one third by Richard Mohun, and the remaining two thirds
jointly by William Langhorn, Harris, Matthew Mainwaring and
Robert Fleetwood.°° In the case of voyages to China, large partner-
ships are known to have been formed to invest in the ships, including
not only Englishmen at Madras, but also those in Surat, Bombay and
the Malabar ports. Many of these voyages seem to have started and
finished at Surat.>!

Joint ownership, financing and management of ships occasionally
also included Indian merchants. For example, in the trade between
Madras and southeast Asia, there was collaboration between Governor
Harrison of Madras, Governor Joseph Collet of Benkulen (who had
earlier been in Madras and after a few years returned there as governor)
and Sunku Rama, the chief merchant of the English Company at
Madras. In May 1713, Collet advised Sunku Rama as follows:

In such an adventure as I propose I shall constantly continue to be concern’d with
you One half, not doubting but that Governour Harrison will at your request,
supply my Proportion in Respondentia.>?

The private English trade with Manila and Macao often involved
Armenian, Spanish and Portuguese intermediaries. The Madras mer-
chant, John Scattergood, had as his business partners at Malacca the
Captain China Chan Yungqua and the Portuguese Joao de Matta.
Through these two persons, Scattergood arranged second-stage invest-
ments in voyages to Trengganu, Siam, Acheh, Banjarmasin and Java.
In 1720, de Matta was entrusted with the goods shipped on the Bonita
to sell as he thought fit in the straits of Malacca and adjacent ports in
return for a 5 per cent commission.

The private English traders began operating from the port of
Masulipatnam in the 1650s, and within two decades or so came to
dominate the trade from it. Such domination during the first half of
the 1680s is confirmed by the shipping lists available in the VOC
records. Asian shipping based at the port appears to have declined
substantially in respect of voyages to the Red Sea and the Persian

°° Watson, Foundation for Empire, pp. 122-3, 330-1.

5! Marshall, ‘Private British trade’, p. 285.

>? D.K. Basset, ‘British “country” trade and local trade networks in the Thai and Malay
states, c. 1680-1770’, Modern Asian Studies, vol. 23 (4), 1989, p- 635.

53 Basset, ‘British “country” trade’, p. 635.

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Gulf. The Asian merchants’ cargoes to these destinations were now
carried mainly as freight on English and other European shipping.>*
The English private traders also collected a good deal of freight cargo
for Surat and the Persian Gulf in Bengal. Around the turn of the
century when more and more of the English private shipping was
moving on to Madras as its base, five or six ships were sent each year
to Bengal to collect the freight cargo for Surat and Persia. But as
private English trade and shipping at Calcutta came of age, the heavy
dependence of the Madras shipping on freight cargo from Bengal
proved to be disastrous. The political turmoil in Persia in the 1720s
further cut into the profitability of the westward trade from Madras.
The Coromandel famine in the early 1730s made an already difficult
situation even more precarious, and the Madras merchants were
reported to have made ‘losses upon losses’.>°

The decline of the Madras shipping was in part a direct consequence
of the rise of the English shipping at Calcutta. The private English
trade in Bengal had started out late in the seventeenth century at the
Hugli and Balasore ports. Following the founding of Calcutta in 1690,
the bulk of the English trade had begun shifting to that port. The
principal trading links of the Calcutta shipping at this time were
westward — with Surat, the Persian Gulf and the Red Sea ~ with the
principal export goods being textiles and sugar. Carrying Indian
merchants’ freight cargo was an important component of the
enterprise. Ships were operated on individual account as well as on
partnership basis. In the eighteenth century, the Governor and the
Council had also managed to set up a large joint stock enterprise
involving several ‘freight’ ships. There is also evidence of Indians
lending money to the English merchants on respondentia, and some
instances of their having shares in English owned ships. We noted
earlier that in its heyday the Madras shipping collected a good deal of
freight cargo in Bengal for the westward sector. That business was
now taken over by the Calcutta shipping and the Madras merchants
repeatedly complained about the lack of access either to the freight
cargo or to Bengal goods at a competitive price.

The early years of the eighteenth century witnessed a remarkable
growth in the volume of English private shipping at Calcutta. The fleet

54 Subrahmanyam, ‘Persians, pilgrims and Portuguese’, p. 525.
55 Marshall, ‘Private British trade’, p. 288.

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THE VOC, AND ENGLISH AND FRENCH COMPETITION

consisted of about twenty ships in 1715: by 1730 the number had
doubled. A buoyant westward trade was largely responsible for the
growing prosperity of the private English shipowning merchants of
Calcutta. A Dutch shipping list pertaining to Calcutta in 1734 listed
the departure of sixteen private English ships westward — nine for
Surat, two for Gombroon and Basra, one for Basra alone, two for
Mocha, and one each for Jeddah and Sind. A ship to Surat reportedly
carried an average of Rs.70,000 worth of goods in addition to the
freight cargo, a ship to the Persian Gulf Rs.150,000 to Rs.200,000
worth of goods plus freight cargo, while a ship to the Red Sea carried,
in addition to the freight cargo, goods worth as much as Rs.300,000.°°
The differential advantage enjoyed by the English in the form of an
exemption from transit and customs duties in Bengal subject only to
the payment of a token annual sum of Rs.3,000 was evidently a factor
enabling them to draw more and more trade to themselves.>”

The short-haul trade from Calcutta in the westward direction
included that with the Coromandel ports, Sri Lanka and the Maldive
Islands. There was a fair amount of trade with Masulipatnam and
Madras, mainly in stores and provisions such as rice. As many as 3,500
tons of rice were reported to have been shipped from Calcutta to
Madras in 1737. The trade with Sri Lanka was only occasional but that
with the Maldive Islands — the great provider of cauris and chank
shells — was both regular and substantial.

West of Cape Comorin, the Malabar ports of call of the Calcutta
shipping included Anjengo, Cochin, Calicut and Tellicherry where
pepper was procured for the Red Sea and the Persian Gulf markets.
While some of the ships proceeded from Malabar directly to the Red
Sea or the Persian Gulf, others stayed on the coastal circuit and went
on to Goa, Bombay and Surat. The last mentioned was by far the most
important westward port of call for the Calcutta shipping. The goods
exported there included, in addition to textiles and sugar, a large
volume of raw silk, while the principal item imported was raw cotton.

56 Marshall, East Indian Fortunes, pp. 85-6.

5? This privilege had been secured first in 1651 by misrepresentation of facts pertaining to
the farman granted by Emperor Shahjahan in 1650. It had been formalized in February 1691
vide a hasb-ul-hukm issued under the seal of wazir Asad Khan. The royal sanction was
received in 1717 vide the well-known farman granted by Emperor Farrukhsiyar. The
privilege was meant for the English Company goods alone, but was widely abused to include
the private English traders’ goods. The latter often abused it further by assuming, against a
consideration, the ownership of the Indian merchants’ goods.

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That the rise in the English trade was most probably at the expense of
that of the Surat merchants is strongly suggested by the Dutch
shipping lists. In the early eighteenth century, these lists recorded a
total of about fifty Surat ships being put to sea each year with Bengal
as an important destination. By the 1730s, the number of Asian ships
trading between Surat and Bengal had been reduced to a trickle. By
the 1760s, a stage had been reached where the Calcutta ‘freight ships’
(the joint stock run by the Governor and Council) had so complete a
monopoly over the main return cargo from Surat, namely Gujarat
cotton, that their owners could fix its selling price in Bengal.°8

The two principal ports in the Persian Gulf frequented by the
Calcutta shipping were Gombroon in Persia and Basra in Iraq.
Against the usual exports of textiles, raw silk and sugar, the principal
import from the region consisted of precious metals. Commodity
imports included copper, rosewater, Shiraz wine, dates and horses. As
in the case of the trade with Surat, this was a major route for the Asian
merchants as well and the competition the private English merchants
operating on the route had to face was stiff. Many of the Asian
merchants, however, used the English ships to freight their goods. By
about 1710, the practice of sending to the Persian Gulf at least one
Calcutta ship each year and sometimes two or more had become fairly
established. In 1717, it was estimated that two ships a year carried
about soo tons of Bengal goods to Persia. Following the Afghan
invasion of Persia in 1722, the focus shifted from Gombroon to Basra.
In the 1720s and the 1730s, the number of ships sent to Basra normally
fluctuated between two and four, though in an unusually good year
such as 1738-9, it could even be five. As for the Red Sea, the principal
ports of call were Mocha and Jeddah and the principal item imported
again precious metals. By about 1720, the bulk of Bengal’s exports to
the Red Sea would seem to have been carried in private English
shipping. At Mocha, English merchants’ goods paid only a 3 per cent
customs duty as against 9 per cent paid by the Asian merchants. At
Jeddah, the corresponding rates were 8 and 10 per cent except that the
Asian merchants’ goods were over-valued in such a way that the real
burden of the customs duties on these merchants amounted to as
much as 12 to 17 per cent.

Adverse political conditions in the western Indian Ocean, combined

58 Marshall, East Indian Fortunes, pp. 78-9, 86.

250

THE VOC, AND ENGLISH AND FRENCH COMPETITION

with the instability in Bengal in the 1740s following the Maratha
incursions into the province, provided a damper on the trade between
the two regions. A rise in the prices of the Bengal goods made them
increasingly less competitive. Thus sugar from Java and China under-
sold Bengal sugar. Bengal raw silk, the price of which was said to have
risen by 40 per cent between 1765 and 1780, similarly suffered from
the competition by Chinese silk in the western Indian market. Even
the Bengal textiles were said to be losing out in western India and the
Persian Gulf. The shipping to Surat continued to maintain a good level
in the 1740s (thirteen and ten ships returned from Surat in 1745 and
1746 respectively). But there was a sharp decline in the 1750s when the
value of the English-owned silk and textiles was reported to be only
10 per cent of what it had been in the peak years of the 1730s. As for
the Persian Gulf, the outlook was so poor in 1747 that the Bengal
Council decided not to send a freight ship at all to Basra. Gombroon
was captured by the French in 1759, and formally abandoned by the
Company in 1763. The Red Sea proved by far the most stable of the
western Indian Ocean destinations. One ship per annum continued to
ply between Calcutta and Mocha, as well as between Calcutta and
Jeddah right through the 1760s. It was only in the 1770s that the
English trade between Calcutta and the Red Sea was finally
abandoned.°?

The private English merchants’ trade from the west coast of India
was carried on mainly from the port of Surat in the seventeenth
century, and increasingly from that of Bombay in the eighteenth. In
addition, a certain amount of trade was carried on from the Malabar
ports of Anjengo and Tellicherry. As on the rest of the Indian
seaboard, persons holding senior positions in the Company hierarchy
dominated the trade. This group included George Oxenden, Gerald
Aungier and John Child, each President at Surat between the 1660s
and the 1680s. With the two ships that he owned, Oxenden carried on
a vigorous freight trade to Persia. He reportedly turned a debt of
Rs.50,000 into an estate worth Rs.300,000 at his death. Oxenden’s
ships were purchased by Aungier in association with a number of
Surat merchants who included Mohammed Chellaby, belonging to a
distinguished merchant family of the city. Eventually, Aungier and
associates owned as many as five vessels. John Child reportedly left his

59 Marshall, East Indian Fortunes, pp. 80-4, 92-5.

251

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

wife £100,000. Charles Boone, governor of Bombay in the second half
of the 1710s, and Robert Cowan, governor during 1728-34, together
with his associate Henry Lowther, chief at Surat, were other important
members of this select group. Boone organized joint stocks for two
China ships in 1716. Cowan was busy trying to remit £28,000 to
England to increase his estate when he died at Bombay in the last
months of 1737. Lowther was less fortunate materially, but he lived to
return to England.©° The trade at Anjengo and Tellicherry, consisting
mainly of freight business provided by the Indian merchants, was also
carried on mainly by the chiefs of the two factories: indeed, as Holden
Furber notes, ‘the posts were unquestionably run at a loss for the
private benefit of their chiefs and factors as country traders’.®!

The growth of the private English shipping based at the ports of
western India was much more slow than it was either on the
Coromandel coast or in Bengal. Until the 1770s or so, the orientation
of the private English trade from the western Indian ports was almost
entirely westward — ports on the Red Sea and in the Persian Gulf. But
the kind of mastery and control that the Calcutta shipping was able to
establish over the westward trade from the region in the early part of
the eighteenth century always eluded the Surat/Bombay shipping. The
westward trade from western India remained firmly in Asian hands
with the share of the English shipping remaining limited. Thus in the
season of 1731-2, of the twenty-four country ships that called at
Mocha, the thirteen primarily Indian-financed ships totalled 4,390
tons, the remaining European-controlled ones only 2,440 tons. In the
case of the Persian Gulf also, Indian shipping from the west coast
around this time had about twice as much carrying capacity as the
English shipping.

THE FRENCH COMPANY AND
THE PRIVATE TRADERS
The French Company trade

As for the French East India Company, we have noted earlier that the
enterprise founded by Colbert in 1664 had been succeeded by a new

6° Watson, Foundation for Empire, pp. 82-106.

61 Holden Furber, Bombay Presidency in the Mid-Eighteenth Century, London, 1965,
p. 18.

62 Furber, Bombay Presidency in the Mid-Eighteenth Century, pp. 32, 40.

252

THE VOC, AND ENGLISH AND FRENCH COMPETITION

company in 1685. This company began by procuring textiles in Surat
and Pondicherry, but almost immediately was faced with protective
legislation at home — the first of its kind in Europe — directed against
these textiles. In January 1687, the Directors did manage to persuade
the authorities to relax the new restrictions somewhat. Painted calicoes
and clothes suitable for painting remained banned, but the Company
was allowed to dye its stock of white clothes until the end of 1688, and
sell its stock of painted calicoes until the end of 1687 to merchants
who, in turn, might retail them for another year. After that, the
Company would have to repossess the remainder for export abroad.
A large profit was made at the sales at Rouen in 1687, and at Nantes in
1689.°* Around this time, on average, one ship was being sent to Surat
each year and another to Pondicherry.

At the turn of the century, prospects for French Company trade in
India appeared reasonably bright. In September 1699, on a sale of
Surat and Bengal goods worth 3.5 million livres (1 livre = f.0.5), a
profit of 750,000 livres had been made. After the reoccupation of
Pondicherry in 1699, the procurement of Coromandel textiles had also
been organized on a proper basis. A sum of 100,000 pagodas was
reportedly invested at Pondicherry in 1710: three years later, this
figure had gone up to 180,000 pagodas.® But from about this time on,
the financial situation of the Company became increasingly precarious.
In 1716, the Company was reported to be under debt at Surat to the
tune of Rs.3 million. In 1719, Pondicherry was said to be in desperate
straits financially. Its governor could only carry on with the aid of
loans from the leading local merchants. It was against this background
that, in May 1719, the Edict of Reunion merged the Compagnie des
Indes Orientales with Law’s expanding enterprise. The edict attributed
the Company’s failure to bad administration, insufficient capitaliza-
tion, premature payment of dividends and a ruinous borrowing
policy. But Law’s grandiose schemes for the East had hardly begun
when the collapse of his ‘system’ forced the liquidation of the
Compagnie des Indes and its restructuring in 1723 as the Compagnie
Perpetuelle des Indes.

It was only after the founding of the Compagnie Perpetuelle des

63 Holden Furber, Rival Empires of Trade in the Orient, 1600-1800, Minneapolis and
Oxford, 1976, p. 113.

64 Furber, Rival Empires of Trade, p. 204.

6 Arasaratnam, Merchants, Companies and Commerce, p. 203.

253

Years

1725/6 to
1734/5
1735/6 to
1744/5
1745/6 to
1754/5
1755/6 to
1764/5
1765/6 to
1770/1

Table 6.4 The French East India Company’s imports from Asia and India, 1725-71
(figures in livres tournois (1LT = f.0.5))

Average
annual value
of total
imports
from Asia

(LT)

55224,506
8,873,867
6,365,383
3,940,648

8,742,583

Invoice value

Average
annual value
of imports
from India

(LT)

4,348,212
6,647,642
45354272
2,650,288

591975747

Proportion
of imports
from India to
total imports
(%)

83.22
74-93
68.40
67.25

59-45

Average
annual value
of total

sales

(LT)

10,635,214
16,560,826
12,782,027

6,540,701

15,466,131

Sales value

Average
annual value
of sale of
goods from
India

(LT)

8,800,702
12,397,759
8,518,574

33969,780

8,839,065

Proportion
of total sales
accounted
for by goods
from India

(%)

82.75
74-31
66.64

60.69

57-15

Profit (%)
Profit on Profit on
all goods goods from
from India
Asia (%)
(%)
103.56 102.39
86.62 85.14
100.80 95-63
65.98 49.78
76.90 70.05

Source: Calculated from Philippe Haudréré, La Compagnie francaise des Indes au XVIIle siecle 1719-1795, Paris, 1989, vol. 1v,
Tables 2G and H, pp. 1199-201.

THE VOC, AND ENGLISH AND FRENCH COMPETITION

eo |- ~ —- — - Proportion of imports trom india(vatuewite) to total Asian imports
x —@-— Proportion of total sales(vakewise) accounted for by goods trom india
a

Percentage

1725/26-1734/35 1735/38-1744/45 1745/46-1754/55 1758/56-1 764/65 1765/66-1770/71
Years

Fig. 6.4 The French East India Company’s imports from Asia and
India, 1725-71

Indes that the French trade in India really picked up. In 1719, the
Compagnie des Indes had also decided to participate in intra~Asian
trade in collaboration with both its own employees as well as other
traders — both Indian and European. This trade continued on a limited
basis until 1741. But the principal business of the Company was the
trade between Asia and Europe. Quantitative information on this
trade is available on a systematic basis for the period between 1725 and
1771, and is set out in Table 6.4. Over the decade 1725/6 to 1734/5,
the average annual value of the French Company imports from Asia
into Europe was 5.22 million livres. By the following decade, this
figure had gone up to as much as 8.87 million livres. Goods procured
in India accounted for 83 and 75 per cent of the total cargo,
respectively, in the two decades, the other principal source of goods
being China. The average rate of profit on the sales in Europe during
the two decades was 104 and 87 per cent, respectively. How do these
magnitudes compare with their English and Dutch counterparts of the
time? In the triennium of 1738-40, the invoice value of the total
English imports from Asia into Europe was f.23 million, and of the

255

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Dutch f.19.24 million. In terms of Dutch florins, this figure in the case
of the French East India Company was f.13.84 million.°® While the
French were still distinctly behind both the English and the Dutch, the
gap was closing rather rapidly, particularly when one takes into
account the fact that the catching up process had begun only some
little time earlier. The French procurement had now begun to cause a
fair degree of concern to the rival European companies. In November
1725, for example, the Dutch chief factor at Hugli had reported to
Batavia that in view of the considerably increased competition by their
European rivals, including the French, who had received a larger
number of ships from home that year, it was becoming impossible to
procure an adequate quantity of textiles. The new situation had made
the weavers ‘raise their horns not a little bit’ and stop bothering about
maintaining the quality, because these other Europeans ‘accepted
anything greedily’.®’ In 1731, four of the principal textile suppliers of
the Dutch Company, Jiwan Chaudhuri, Gokul Mukund, Jagannath,
and Radha Kishan Chaudhuri, after entering into contracts with the
Company, chose to go over to the French at Chandernagore. The
VOC could do little about it except to resolve that in the event of
these suppliers offering to come back to the Company, they would
not be accepted.®* Pieces of garras and yarn rumals rejected by the
Dutch in 1735 were reportedly grabbed anxiously by the French at an
excessively high price.®? When the French began procuring saltpetre at
Patna in 1735, both the English and the Dutch made an application to
the nawab to restrict the amount of saltpetre to be supplied to the
French.”°

The French private traders

Though a few Frenchmen, living mainly in Chandernagore, are
known to have occasionally engaged in a certain amount of trade in
the period prior to 1719, the real beginnings of French participation in
intra-Asian trade ought to be traced to that year when the newly
organized Compagnie des Indes decided to enter the field. It was,
however, immediately obvious to the factors at Pondicherry that the

66 Calculated from Philippe Haudrere, La Compagnie francaise des Indes au XVIIIe
siecle 1719-1795, Paris, 1989, vol. 1v, Tables 2G and H, pp. 1199-201.

67 ARA, Hugli to Batavia, 7.11.1725, VOC 2024, ff. 91-2.

68 ARA, Memorandum by Sadelyn for Berenaart dated 15.1.1732, VOC 2196, ff. 420-5.

6° ARA, Hugli to Batavia, 17.1.1736, VOC 2348, ff. 559-60.

7° Chaudhuri, The Trading World of Asia, p. 340.

256

THE VOC, AND ENGLISH AND FRENCH COMPETITION

Company’s financial and other resources were simply not adequate to
allow a meaningful participation in intra-Asian trade entirely on its
own. A decision was, therefore, taken to invite the Company’s
employees as well as other traders, both Indian and European, to
collaborate with the Company in the venture. The life span of this
unique venture lasted for about twenty years between 1722 and 1741.
During the 1720s, the Company took the lead in organizing voyages
out of Pondicherry, but the sums invested on the account of the
Company were strictly limited. By the end of the decade, French
Company employees operating in their private capacity would seem
to have become the dominant element in the enterprise. Thus while in
the Soucarama, sent from Pondicherry to Manila in 1724, the con-
tribution by the Company and by the employees was 51.7 per cent
and 18.6 per cent, respectively (the remainder being put up by Indian
and other European traders), the respective share of the two groups
had altered to 9.4 per cent and 65.6 per cent in the Pondicherry sent to
Mocha in 1729. The total capital invested in the Soucarama was 24,690
pagodas and in the Pondicherry 26,500 pagodas.?! The Company
employees and other French traders also operated independently of
the Company.

It was usual for the French to form ‘societies’ or ‘associations’
which undertook one or more voyages. Each participant in the
venture, which could be an independent merchant or an organization,
put up a certain amount of money. The voyage of the Pondicherry
mentioned above had been initiated in Pondicherry, but the shortage
of capital there had persuaded the organizers to invite the employees
and other traders at Chandernagore to participate. A sum of Rs.4,000
had also been subscribed on behalf of the Ostend Company on which
a profit of 50 per cent was reported to have been made.”?

There was a great deal of cooperation between French shipping
based at Chandernagore and that based at Pondicherry in organizing
voyages both westward and eastward. The bulk of the cargo as well as
the freight for the westward destinations such as Basra generally
originated in Bengal, and the cargo originating in Pondicherry was
picked up on the way by the ship that had started out in Chanderna-

7" Catherine Manning, ‘French country trade on Coromandel (1720-50)’, Revista de
Cultura, Macao, nos. 13/14, January-June 1991, Table on page 168.

72 Jan Parmentier, De Holle Compagnie, Smokkel en Legale Handel onder Zuiderneder-
landse Vlag in Bengalen, ca. 1720-1744, Hilversum, 1992, pp. 53-4.

257

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

gore. The trip to Mocha was based mainly on the Company’s demand
for coffee for Europe which was paid for in Pondicherry in silver. A
ship usually sailed from Coromandel each year with freight and a
cargo of textiles, pepper and Chinese porcelain to be sold against
coffee. Another important branch of trade involving a relatively low
investment and the possibility of making several trips a year was that
to the Maldives.

The eastward destinations covered southeast Asia, Manila and, to a
limited extent, China. In southeast Asia, the principal ports of call
were Acheh, Mergui and Pegu. The principal goods carried there
included Coromandel textiles, Bengal opium, saltpetre and firearms,
which were exchanged against goods such as pepper, teak, eaglewood,
rubies and rice. Further east, Manila was probably the most important
eastward port of call for the French shipping. Between 1720 and 17350,
a ship from Pondicherry is known to have called at this port each year
but four. Probably because of the larger capital investment required,
the trips to China were much less frequent. Thus over the same period
of thirty years, no more than seven voyages were made between
Pondicherry and Canton and the profit made was not particularly
high.”

At least some of the French private traders are known to have done
very well for themselves. Mahe de la Bourdonnais is believed to have
left Asia with more than three million livre tournois (approximately
f.1.5 million) and Duvelaer with more than five million.”* The most
well known of them, though perhaps not the one to have made most
money, however, was Joseph Francois Dupleix, the head of the
Chandernagore factory between 1731 and 1741. Immediately on
arrival in Chandernagore, Dupleix had established a ‘society’ for trade.
His associates ranged from direct participants in his ventures to
providers of loans on an ordinary or respondentia basis. His French
associates included Costanier, one of the directors of the French
Company and two successive governors of Pondicherry, Lenoir and
Dumas. English merchants of Calcutta and Madras such as Eliot,
W. Price, Benet, Court and Wycht also carried on trade in association
with Dupleix. His principal Dutch associate was the chief of the
Dutch factory in Hugli, Jan Albert Sichterman, who is reported to

73 Manning, ‘French country trade’, pp. 165-6.
74 Philippe Haudrere, ‘The French Company of the Indies in the 17th and 18th centuries:
success or failure?’, The Indian Ocean Review, vol. 1 (2), June 1988, p. 11.

258

THE VOC, AND ENGLISH AND FRENCH COMPETITION

have invested no less than Rs.87,000 in the Francois sent by Dupleix to
Basra in 1736. In 1739, he was under debt of Rs.42,000 to Dupleix. Yet
another group of European merchants deeply involved in Dupleix’s
ventures was that of the employees of the dissolved Ostend Company.
These included Pierre Strebel, John Ray, Leendeert Meynders and,
above all, Francois de Schonamille. Schonamille had been a free trader
on the Coromandel coast between 1719 and 1723 and had associated
with the French at Pondicherry. Just before the dissolution of the
Ostend Company in 1731, Schonamille had been appointed the chief
of the factory at Bankibazar. It was on the basis of his private trading
ventures, mainly in association with Dupleix, that Schonamille for-
mally kept the Ostend factory going until 1744. Of the four voyages
organized by Dupleix in 1731, Schonamille invested Rs.7,000 in the
trip to Acheh, Rs.3,000 in that to Mahe and Rs.2,000 in the trip to
Surat.”> In a subsequent venture to Manila, Schonamille put up
Rs.4,000 on respondentia at 30 per cent interest. That Dupleix’s own
share in the capital investment in a particular voyage might not be very
high is suggested by the breakdown of the total investment made in
the voyage by the Balocopal to Manila in 1738. Of the total sum of
Rs.243,000 invested, Dupleix’s own share was only Rs.30,000. Of the
remainder, Rs.105,000 was put up by Eliot, Rs.40,000 by one of the
Carvalho brothers, Rs.30,000 by Dumas and Rs.23,500 by Costanier,
the balance being subscribed probably by smaller associates. The list
of persons providing loans for Dupleix’s ventures was a long one and
included persons such as the Jagat Seth. The respondentia loans
carried a minimum of 18 per cent interest, though, as we saw above, it
could be much higher. A major component of Dupleix’s business was
the carrying of freight cargo belonging mainly to the Armenian and
Muslim merchants. The rate charged normally varied between 7 and
10 per cent of the value of the cargo carried.”¢

Between 1731 and 1741, Dupleix organized or participated in about
ninety-one voyages. An overwhelming bulk of these — as many as
seventy-nine — went westward, including sixteen to Surat and fourteen
to Basra. The other westward destinations (apart from Pondicherry)
included the Maldives and Mozambique, Malabar, Mocha and Jeddah,
and Bandar Abbas. The eastward destinations included Acheh (two),

75 Parmentier, De Holle Compagnie, p. 55.
76 Indrani Ray, ‘Dupleix’s private trade in Chandernagore’, The Indian Historical
Review, vol. 1 (2), 1974, pp. 279-94-

259

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Pegu and Malacca (one each), Manila (six) and Canton (two). Steady
profits were made on most of these trips. But Dupleix would seem to
have had more than his share of misfortune in the form of shipwrecks.
The loss of the Amiable in 1735 while returning from Jeddah with
Rs.500,000 worth of gold was a crippling blow. But fortunately for
him, the loss he suffered in the disappearance of the Balocopal in the
Bay of Bengal on its way back from Manila in 1739 amounted to no
more than Rs.40,000. Dupleix kept on transferring his savings to
France through both legitimate and unauthorized channels. In 1741,
his capital in Pondicherry and Chandernagore was reported to have
amounted to about Rs.5 50,000.77

The withdrawal of the French East India Company from intra-Asian
trade in 1741, followed by the outbreak of hostilities between the
English and the French in 1744, practically put an end to the French
participation in intra-Asian trade. There was, however, a remarkable
revival in the French private trade from Bengal in the 1750s. In the
1780s and the 1790s, French participation in Asian trade was based
chiefly on Mauritius. While only six French vessels were recorded as
having called at Cochin in 1785-6, the number had gone up to seventeen
in 1791-2. Nearly all of these ships were trading between Mauritius and
Mahe, Pondicherry, the Maldives and Colombo. Only one of these
ships had made a China voyage and only two had gone to Bengal.”8

THE DANISH COMPANY TRADE

The establishment of the second Danish East India Company in 1670
was noted earlier. It turned out to be a somewhat more successful
venture than its predecessor. Danish neutrality in the late seventeenth-
century wars among the great maritime powers helped, and consider-
able cargoes of pepper, saltpetre, sugar and Indian textiles were
imported into Copenhagen. In addition to Tranquebar, the Company
carried on trade in Bengal. A factory was maintained at Hugli until
1714. In 1717, a number of influential merchants of Hugli sent word
to the Company at Tranquebar suggesting that it come back to Hugli.
The message was accompanied by a parwana from Subadar Murshid
Quli Khan. The Danes did in fact send some men to Hugli in 1724 to

77 Ray, ‘Dupleix’s private trade’, pp. 279-94.
78 Holden Furber, John Company at Work, A Study of European Expansion in India in
the late Eighteenth Century, Cambridge, Mass., 1948, p. 186.

260

THE VOC, AND ENGLISH AND FRENCH COMPETITION

whom was duly handed over possession of the erstwhile factory of the
Company. But no trade was carried on and in October 1736, the
Danes were still reported to be planning to resume the Bengal trade.”?

Between 1671 and 1727, treasure and goods worth a total of 2.92
million Danish ryx-dollars (1 Danish ryx-dollar = approximately f.2)
were dispatched to Tranquebar on the account of the Company. The
return cargoes over the same period fetched a total auction value of
5.70 million Danish ryx-dollars. Goods worth 7.8 per cent of this
amount were re-exported from Denmark. But ever since 1709, the
Company had been facing rather severe financial problems. The
outbreak of the great northern war that year had led to the State
raising a forced loan from the Company. Besides, the fear of capture
of its ships by Swedish privateers in the North Sea had necessitated
extremely expensive stopovers in English ports. By the time peace was
concluded in 1720, the Company’s finances and international competi-
tiveness had been undermined. Frederik IV refused to help out with a
loan, and in 1729 the Company went into liquidation.®° The East
India trade, however, continued under the auspices of interim compa-
nies and on 12 April 1732 a new Danish Asiatic Company was
chartered by King Christian VI with a forty-year monopoly of the
Asia trade. The Company in fact stayed in business until 1807 — a total
of seventy-five years.

THE OSTEND COMPANY TRADE

Finally, there was the Ostend Company chartered by the Habsburg
Emperor Charles VI in 1722. We noted earlier that the group of
merchants responsible for floating the Company had in fact been
sending ships to Asia ever since the establishment of the Austrian
administration in the former Spanish Netherlands in 1713. The group
had established a factory at Kovilam, a few miles south of Madras, in
1719. But most of its activities were concentrated in Bengal, where in
pursuance of the favourable reports received from the Scotsman
Alexander Hume, the Carolus Sextus was sent in 1722. Pending the
receipt of a formal permission to trade for which a sum of Rs.70,000
was deposited for ‘expenses’ with an Armenian banker in

79 ARA, Hugli Resolution dated 19 October 1736, VOC 2385, ff. 550-4.
80 Ole Feldbzk, ‘The Danish Asia trade, 1620-1807, value and volume’, The Scandina-
vian Economic History Review, vol. 39 (1), 1991, pp. 3-27-

261

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Murshidabad, the Carolus Sextus sailed back in February 1724 for
Ostend with a full cargo and with Hume aboard. Andreas Cobbé,
who had stayed behind as the factor in charge and had found lodgings
in the factory which the Danes had abandoned in 1714 after an armed
conflict with the local authorities, continued with the efforts to obtain
permission to trade. But he was more of a soldier than a merchant
diplomat, and when permission was not forthcoming by April 1724,
Cobbé had a few indigenous vessels seized. But he suffered a fatal
wound in an engagement with the nawab’s troops and died in June
1724. His colleagues were obliged to take refuge in the French factory
at Chandernagore.*!

When the news of the death of Cobbé reached Antwerp, Alexander
Hume was named governor of the Ostend factories in India. He was
offered an unusually high salary of Rs.6,000 per annum (the salary of
the Dutch director of the Bengal factories at this time was Rs.2,160 per
annum) besides a 6 per cent commission on all Bengal goods sold in
Ostend. Soon after his arrival in Bengal in 1726, Hume reopened
negotiations for a formal permission to trade and deposited another
Rs.45,000 towards ‘expenses’. But when nothing had happened by
April 1727, Hume went on the offensive. He had a rumour spread that
he and his colleagues were planning to return to Ostend with the next
ship. He also ordered the seizure of indigenous shipping at Balasore.
This was sufficient to alarm the local authorities who arranged a
meeting with the nawab at Murshidabad, but nothing came of the
meeting. In June 1727, Hume ordered the two newly arrived frigates
from Ostend to seize Indian vessels in the River Hugli. On 2 July, one
of the frigates, the Aertshertoginne, made contact with a vessel
returning from the Maldives with a cargo of cauris worth Rs.30,000.
The strategy worked and a parwana containing permission to set up a
factory at Bankibazar was received on 5 July 1727. As in the case of
the VOC, the rate of customs duty payable was fixed at 2} per cent.
The Company was also granted the right to have its silver minted into
rupees at the Murshidabad mint.®?

The reluctance of the authorities to grant permission to trade, which
ordinarily would have been done as a matter of routine, was the
outcome basically of the behind-the-scenes efforts of the English and

8! Parmentier, De Holle Compagnie, p. 21.
82 Parmentier, De Holle Compagnie, pp. 27-8.

262

THE VOC, AND ENGLISH AND FRENCH COMPETITION

the Dutch companies to prevent the entry of the Ostenders in the
lucrative Bengal trade. The English-Dutch coalition was at work both
in Europe as well as in Bengal. Even before the Company had been
chartered in 1722, the employees as well as the brokers and other
residents of the English and the Dutch villages had been directed to
have nothing whatever to do with the Ostenders.® The faujdar of
Hugli, with whom Hume was in touch in connection with his efforts
to obtain a parwana, played one party against the other. While he was
assuring Hume that he would plead on the Ostenders’ behalf with the
nawab, he was at the same time actively considering an English-Dutch
offer of Rs.200,000 to keep the Ostenders out of Bengal. In 1727, just
before the Ostenders eventually received the parwana, the English
even sought to bring them into disrepute by having a Bengali village
set on fire by a party of their own soldiers carrying the Habsburg
emperor’s flag and shouting, ‘Long live the Emperor, we are
Germans.’**

In the meantime, the Ostend factors had been busy carrying on a
limited amount of trade. In 1725-6, they were reported to have sent
out 24,600 pieces of malmals, 13,812 pieces of khasas and 17,994
pieces of garras besides 1,600 maunds of low-grade raw silk.8° The
factors’ relative lack of experience was taken full advantage of by the
suppliers and brokers. It was reported by the Dutch factors at Hugli
in 1726, for example, that dungarees, normally used as packing
material, had been passed on to the Ostenders as garras.*©

In the spring of 1728, news was received in Calcutta that in
exchange for the English-Dutch support to his daughter Maria
Theresia’s succession to all his dominions, the Emperor had agreed the
previous year to suspend the Ostend Company for a period of seven
years. The Directors in Antwerp, however, decided to continue in
business by operating under foreign flags. Two ships were dispatched
to Bengal in the spring of 1729 with Polish passports and an interna-
tional crew. The subterfuge, however, did not quite work because in
Bengal the Ostenders claimed customs duties privileges for the two
ships. In the meantime, the English and the Dutch factors in Bengal

83} ARA, Hugli to Batavia, 15.12.1720, VOC 1962, ff. 80-2.

84 Parmentier, De Holle Compagnie, pp. 25-7.

85 ARA, Memorandum of goods sent by the Ostenders to Europe in February 1726
(VOC 2052, ff. 125-6).

86 ARA, Hugli to Batavia, 21.3.1726, VOC 20352, ff. 13-18.

263

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

had equipped two armed vessels, the Fordwich and the Duke of York,
to seize any Ostend vessel that might try to come in. At the request of
the Ostenders, the nawab directed the English and the Dutch not to
engage in enemy action. But the Fordwich nevertheless seized a sloop,
the /’Enfant, on its way back from the Coromandel coast near Fulta. It
was detained for a day but then released under pressure from the
nawab. The English—Dutch coalition then sought to buy the nawab’s
support by a gift of Rs.124,000 besides 122 gold muhrs for the Mughal
emperor. But the nawab asked for Rs.600,000, which sum was
eventually reduced to Rs.325,000. In return, the nawab agreed to force
the Ostenders to leave Bengal and allow the coalition to seize their
vessels at the mouth of the river. When the Phoenix equipped at Cadiz
and flying the Prussian flag arrived in Balasore in September 1730, the
threat of capture obliged it to flee to Mergui. After a while, it returned
to Balasore and then went on to Pondicherry and Tranquebar, but
only to return to Mergui. It was only in December 1731 that the
Phoenix returned to Goa and picked up a textile cargo put together for
Europe under a secret arrangement with the French.®”

Between 1726 and 1730, the Ostenders also engaged in a certain
amount of intra-Asian trade. In 1726, the brigantine Goed Success was
sent to the Coromandel coast with cotton textiles, saltpetre and rice.
While the latter two commodities were sold to the Danes at Tran-
quebar, the cotton textiles were sold to a broker at Masulipatnam
against chintz for Ostend. A sloop was similarly sent to Kovilam each
year between 1727 and 1730 (from 1729 under a foreign flag), but the
profit earned in the process was quite insignificant.8® In 1729, Alex-
ander Hume invested on the account of the Company a sum of
Rs.8,000 in a voyage from Calcutta to Bombay, Mocha and Jeddah.
The cargo in the vessel was owned in the ratio of 3:1 by Samuel
Greenhill, a senior employee of the English Company, and Edward
Coward, a private English merchant. The Ostend Company invest-
ment consisting of cotton and silk textiles was in the cargo ostensibly
owned by Coward. A part of the cargo remained unsold at Jeddah,
but a profit was nevertheless made. This profit was invested in yet
another vessel operated by Coward between Calcutta and Surat. It
was agreed that the Ostend Company would receive a 10 per cent

87 Parmentier, De Holle Compagnie, pp. 29-35.
88 Parmentier, De Holle Compagnie, pp. 23-4, 44.

264

THE VOC, AND ENGLISH AND FRENCH COMPETITION

interest on its investment. But it was with great difficulty that the
investment was eventually recovered from Coward and then with a
loss of about Rs.800.? Ever since 1729, the English and the Dutch had
blockaded the River Hugli. They succeeded in capturing four vessels
operating under cover of the Ostenders. The blockade was lifted later,
but the question of the return of the four vessels was still pending in
1735.

The Ostend Company was eventually dissolved in 1731 with one
final voyage being authorized as part of the agreement of dissolution.
The Bankibazar and the other Indian factories were formally taken
over by the Emperor. Many of the merchants associated with the
Ostend venture helped float the Swedish East India Company estab-
lished in 1731, while others went over to the Danish Asiatic Company
founded the following year. Still others continued to trade under the
‘flag of convenience’ of the king of Poland. Frangois de Schonamille,
an Antwerp merchant who had served the Ostend Company for many
years and had been appointed governor after Hume had deserted to
the English in December 1730, stayed on at Bankibazar and kept the
factory going until 1744. This he was able to do by engaging in a
certain amount of trade on his own account often in collaboration
with other important private European traders operating in Bengal at
the time. These included the chiefs of the French and the Dutch East
India companies ia Bengal, Joseph Frangois Dupleix and Jan Albert
Sichterman respectively. -

The trade carried on by the Ostend Company during its brief
existence never really amounted to anything. But in the history of the
European companies’ trade in India, the Ostend Company is never-
theless of interest for two reasons. In the first place, it demonstrates
how deep seated the concern of the two giants — the English and the
Dutch East India companies — really was when it came to keeping a
potential rival out and the lengths to which they could go to prevent
such a thing happening. The Ostend Company case also illustrates
how the monopoly of the great chartered East India companies could
be skirted, and the East India trade increasingly ‘internationalized’.

If we look at the period 1680-1740 as a whole, certain important
developments stand out. Probably by far the most important of these

89 Parmentier, De Holle Compagnie, p. 45.
°° ARA, Statement dated 28 February 1735, VOC 2327, f. 1141; Hugli to Batavia
18.11.1735, VOC 2348, ff. 68-9.

265

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

was the successful challenge by the French East India Company of the
hitherto unqualified domination of the Euro-Asian trade by the two
giants — the Dutch and the English East India companies. The growth
in French trade was particularly marked after the reorganization of the
French enterprise in 1723 into the Compagnie Perpetuelle des Indes.
We noted above that over the three-year period 1738-40, the invoice
value of the French exports from Asia to Europe stood at f.13.84
million as against f.19.24 million in the case of the Dutch, and f.23
million in that of the English East India Company. The French
admittedly were still distinctly behind both the English and the Dutch,
but they were a close third and could no longer be dismissed as
inconsequential. That characterization, however, continued to be fully
applicable to the Danes, the Ostenders and the Swedish East India
Company.

Between the Dutch and the English East India companies, the
English with an average annual import figure of f.7.66 million as
against the Dutch figure of f.6.41 million were now distinctly ahead as
far as the value of Euro-Asian trade was concerned. But if we add to
the Dutch figure the value of the still substantial intra-Asian trade
carried on by the VOC, to which there was no English counterpart,
continued Dutch superiority in terms of the total value of trade carried
on in Asia is unmistakable. Over the years 1738-40, India accounted
for less than 50 per cent of the total Dutch imports into the Nether-
lands. But the average annual value of the total VOC imports from
India alone — into Europe as well as to the rest of Asia - amounted
around this time to f.6.43 million as against f.6.41 million which was
the value of the total Dutch import of Asian goods into Europe at this
time.”! It is useful to remember that, in 1735-6, as much as 29 per cent
of the Dutch imports from Bengal was still directed at the rest of Asia.
In the case of Gujarat, this figure was 52 per cent during 1736-7 to
1740-1."

9° The figure of f.6.43 million includes the imports from

Bengal (1735-6) f-4.31 million
Coromandel (1739-40 textiles alone) —f.1.42 million
Gujarat (1736-7 to 1740-41) f.0.36 million
Malabar (1731-2) f0.34 million
Total f-6.43 million

These figures have been taken from Tables 5.2, 5.3, 6.2 and 6.3.
°2 The Bengal figure has been taken from Table 5.4. The Gujarat figure has been
calculated from Table 5.2.

266

THE VOC, AND ENGLISH AND FRENCH COMPETITION

During 1738-40, pepper and other spices accounted for no more
than 14 per cent of the total invoice value of the Dutch imports into
Europe. Textiles and raw silk accounted for another 40 per cent or so,
while tea and coffee added up to nearly a third of the total imports.
Since textiles and raw silk were procured overwhelmingly in India, the
share of the subcontinent in the imports into Europe continued to be
important. Within the subcontinent, Bengal continued to be the most
important area of the Company’s operations accounting in 1735-6 for
total imports worth f.4.3 million. Of these, the imports into Europe
were worth f.3.07 million, accounting for as much as 47 per cent of the
total Dutch imports into Holland. Next in order of importance was
the Coromandel coast accounting in 1739-40 for f.1.42 million worth
of textiles alone. Both Gujarat and Malabar played only a limited role,
the average annual value of the imports from each being only slightly
more than f.300,000. In the case of the English East India Company,
over the three-year period 1738-40, textiles and raw silk accounted for
as much as 80 per cent of the total imports into England. The only
other item of importance in the English import bill at this time was
Chinese tea accounting for ro per cent of the total value. The share of
Indian goods in the total imports amounted to 84 per cent, of which
Bengal alone accounted for as much as 66 per cent.

The period 1680-1740 also witnessed a fairly substantial participa-
tion in intra-Asian trade by European Company servants on their
private account. In the case of the Dutch Company servants, this was
done on a strictly clandestine basis until the partial opening up of the
trade from the 1740s onward. The participation by the English
Company servants, on the other hand, was legal and grew fairly
rapidly during the period. The French tried the unique experiment of
collaboration between the Company and its servants and others in
engaging in a certain amount of intra-Asian trade. The scale and the
duration of the experiment, however, was strictly limited.

267

CHAPTER 7

THE SUPREMACY OF THE
ENGLISH EAST INDIA COMPANY,
1740-1800

From the standpoint of the European companies’ trade in India, the
second half of the eighteenth century constituted a distinct category
characterized by developments of far-reaching import. We noted
earlier that around 1740, in terms of its overall trading operations in
Asia, the Dutch East India company was still distinctly ahead of its
English rival, though in terms of Euro-Asian trade alone, the latter
had already taken a lead. This situation had been altered radically by
the time we reach 1780 or so. The greater part of the change took
place in the years after 1760. Thus the value of the total English
imports from Asia into Europe, which had stood at the equivalent of
f.23 million over the triennium 1738-40 and had gone up marginally
to f.25 million during 1758-60, reached the incredible figure of f.69
million over the triennium 1777-9 (Table 4.2). Bengal continued to
account for over half the total imports, while the share of China came
down from a third during 1758-60 to under a quarter during 1777-9
(Table 4.3). As against this, the value of the total Dutch imports into
Europe had gone up only marginally from f.19 million during
1738-40 to f.21 million during 1778-80. The only major change in
the composition of the Dutch imports had been a decline in the share
of tea from 32 to 27 per cent, and a rise in that of textiles and raw silk
from 41 to 49 per cent (Table 4.1). In absolute terms, the value of
textiles and raw silk in the total imports had gone up from f.7.91
million during 1738-40 to f.10.28 million during 1778-80. The share
of Indian goods in the total imports was now higher, perhaps around
§§ per cent against a probable 45 per cent during 1738-40. While this
would put at rest all speculation regarding the perceived decline (or
even decimation) in the post-1750 period of the Dutch East India
Company’s Indo-European trade, there is no question that around
1780 the scale of the Dutch Company’s trade was nowhere near that
attained by the English Company. Whatever amount of trade the
Dutch would still have been carrying on within Asia at this time (to

268

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

which there was no English Company counterpart) would probably
not have affected this relative ranking in any significant manner. As
far as the French East India Company was concerned, the average
annual value of the imports from Asia during 1765/6 to 1770/1 was
no higher than it had been during 1735/6 to 1744/5 — roughly around
f-4.4 million (giving a figure of f.13.2 million for a triennium). The
share of India in the total French imports had in fact come down over
the same period from around 75 per cent to around 60 per cent

(Table 6.4).

THE POLITICAL AUTHORITY OF THE ENGLISH
COMPANY IN BENGAL

A major circumstance contributing to the unprecedented growth in
the English trade was the wresting of political authority by the
Company in Bengal, the most important region of its trade, between
1757 and 1765. The chain of events culminating in the Company
being appointed the diwan of the province in 1765 had started in
April 1756 when, on the death of Nawab Alivardi Khan, his
grandson, Siraj-ud-Daula, had taken over as the subadar of Bengal.
For a variety of reasons, including the abuse of the transit and the
customs duties exempt status of the Company goods by the
Company servants for their private trade and even extending this
privilege to Indian merchants for a consideration by assuming owner-
ship of their goods, the relations between the new nawab and the
English Company rapidly became strained to the point where the
nawab’s armies stormed Calcutta on 20 June 1756 and forced the
English out of Fort William. Prior to the storming, both the English
Company as well as the nawab had written to Adriaen Bisdom, the
Dutch director, for assistance. The nawab had also written similar
letters to the French, the Danes, the Portuguese and the Prussians.
The Dutch, however, had chosen to maintain strict neutrality and had
politely refused to provide assistance to either party. The other
Europeans had also refused to get involved. On 23 June, the Dutch
received word that a penalty of Rs.2 million had been imposed upon
them for disregarding the request of the nawab. A similar penalty had
reportedly been imposed on the French. After negotiations, however,
the amount was reduced to Rs.400,000 for the Dutch, Rs.350,000 for
the French, Rs.25,000 for the Danes, and Rs.5,000 each for the

269

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Portuguese and the Prussians. Troops were deployed to attack Fort
Gustavus in case the Dutch refused to comply with the demand.
Bisdom did not have much of a choice, and the demand was met
before he went to greet the nawab on 28 June 1756.!

The English, however, were not down for very long. The Compa-
ny’s army, which had been engaged in south India in a battle with the
French for many years, was recalled to Calcutta in December 1756 and
the town recaptured in January 1757. In February, the nawab agreed
to the restoration of the English privileges. In June came the famous
battle of Plassey which marked the inauguration of British political
lien in the province. Mir Jafar, the new nawab, made available to the
Company a body of commercial and other privileges. The revenues of
24 parganas were also allocated to the English to defray their military
costs. In 1758, in part payment of debts, the revenues of three large
districts were also allocated to the Company. In October 1760, the
Company forced Mir Jafar to abdicate in favour of his son-in-law, Mir
Kasim. The new nawab gave three new districts to the Company. But
in 1763, trouble erupted with the new nawab as well. Following the
battle of Buxar in October 1764, Mir Jafar was reinstated as the
nawab. When Robert Clive arrived in 1765, he decided to introduce a
new arrangement whereby the Company allocated a certain amount to
the nawab and kept the rest of the provincial revenue to itself. The
formal transfer of power took place on 12 August 1765 when the
Mughal emperor appointed the Company the diwan of the province.
The emperor was sanctioned an annual tribute of Rs.2.6 million. The
nawabs of Bengal retained the office of nazim with formal responsi-
bility for defence, law and order, and the administration of justice
according to Islamic law. As a military power, however, the nawabs
had already been reduced to insignificance. They were granted a fixed
allowance for their court expenses and such activities as the nazim
tried to undertake. The rest of the revenues of Bengal were at the
disposal of the East India Company.

Quite apart from its long-term political implications, the English
takeover of Bengal had major economic ramifications. The newly
acquired political power was subject to gross misuse by the employees

' A.K.A. Gijsberti Hodenpijl, ‘De handhavig der neutraliteyt van de Nederlandsche loge
te Houghly by de overrompeling van de Engelse kolonie Calcutta, in Juni 1756’, Bydragen
tot de Taal-, Land-, en Volkenkunde van Nederlandsch Indie, vol. 76 (11 and 1v), 1920,
pp. 258-83.

270

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

of the English Company with a view to promoting both the Compa-
ny’s trade and even more their own private trade. The rival European
trading companies were now reduced essentially to a position of being
on sufferance and were subject to all kinds of harassment by the
English. Then there were the indigenous merchant and artisan groups
who were now subject to the coercive authority of the Company
creating a situation where the terms on which they dealt with the
Company were no longer governed by the market. At a macro-
economic level, the implications of the European companies’ trade for
the economy of the region were altered beyond recognition.

The wresting of monopsony rights in saltpetre by the English from
Nawab Mir Jafar in 1758 was the first step in the emergence of the
Company as a commercial body enjoying privileges not available to its
rivals.? When, soon after, the English also began interfering in their
procurement of opium, the Dutch became convinced that their future
in the region was in jeopardy. They, therefore, began looking for ways
to strengthen their military presence in the subcontinent and to try
and subvert the growing strength of the English Company. In the
process, they embarked upon a bizarre adventure, ill-conceived and
disastrously executed, which one might take note of if for no other
reason than because, other than in Malabar in the 1660s, it constituted
the only organized attempt by the VOC to employ naval-cum-land
forces in the Indian subcontinent.

In June 1759, the Batavia Council dispatched a fleet of seven ships
with 1,000 European and 1,000 Indonesian soldiers to the Coro-
mandel coast with instructions to the chiefs of the Dutch factories in
Coromandel, the Madura coast which was under the jurisdiction of
the Sri Lanka government, Malabar, Gujarat and Bengal to keep in
touch with each other and use the force, which was to be augmented
by another 1,000 soldiers to be recruited in India, wherever necessary
in the subcontinent, to the Company’s best advantage. In the mean-
time, plans had been afoot to construct a new Dutch fort at Bank-
ibazar to take the place of Fort Gustavus at Chinsura, which was not
deemed to be strong enough. The Hugli factors were, however,
worried that the English would not let the plans go through. It was at
this point that they told Batavia that if they were allowed to help

2 G.C. Klerk de Reus. ‘De expeditie naar Bengale in 1759’, De Indische Gids, vol. 11,
1889, pp. 2093-128, vol. 12, 1890, pp. 27-90 and 247-78.

271

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Nawab Mir Jafar’s son, Miran, against his father in the power struggle
likely to erupt between the two, the growing English influence in the
province could be neutralized. This was a tailor-made opportunity to
use the projected force and, in February 1759, detailed instructions
approving the project were communicated secretly to Adriaen
Bisdom. At the right moment, the nawab’s son was to be helped with
men, ammunition and gunpowder against a promise of restitution of
costs and restoration to the Company of its former privileges and
prerogatives in matters of trade. If the conflict between the father and
the son failed to erupt openly, the force was to be used simply to
facilitate the construction of a fort at Bankibazar or another suitable
site. In the meantime, G. Vernet, the Dutch second-in-command and
the chief of the factory at Kasimbazar, had sought an audience with
Nawab Mir Jafar in January 1759. In the audience, the nawab
allegedly invited the Dutch to bring a force over to help him get rid of
the English yoke.

It was against this confused background regarding its aims and
objectives that the Dutch expedition reached India. The English had
earlier come to know of the project from John Herbert, their spy at
Batavia. Clive took immediate steps and, invoking a clause in the 1757
agreement with the nawab obliging the English to help him against a
hostile third party, persuaded Mir Jafar to impose a ban on the entry
of Dutch troops into the province in the interests of maintaining peace
and order.

Of the seven ships constituting the Dutch fleet, two stayed on in
Coromandel, but the remaining five had been supplemented there by
another four. The first of these ships, the Visviiet, arrived at the mouth
of the River Hugli on 21 August 1759. The Dutch claimed that the
ship had been destined to go to Nagapattinam, but the winds had
forced it to come to Bengal. Vernet had a secret meeting with Mir Jafar
who, however, said that in view of the English position, he was unable
to withdraw the ban on the entry of Dutch ships carrying troops. The
remaining vessels of the Dutch fleet arrived on 1 October. For several
weeks, there was complete stalemate with the English ships positioned
to prevent the entry of the Dutch vessels into the river. The actual
hostilities were started by the Dutch on 10 November when they
captured seven English ships. Following their refusal to return the
ships, the English launched an attack both on water and on land. The
naval engagement, lasting no more than two and a half hours and

272

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

going decisively in favour of the English, took place on 24 November
between three English ships carrying 540 soldiers and four Dutch
ships with 200 men aboard. Earlier, the English had taken Baranagar
on 19 November and the land engagement took place on 25
November at Bedara near Chandernagore. Of a total Dutch force of
400 men consisting of 113 European soldiers, 21 artillerymen, 91
topases and 175 sipahis, against an English force of 100 Europeans and
400 sipahis, no more than 60 men reached Fort Gustavus alive. Thus
ended the ill-fated adventure, and the Dutch were forced to sue for
peace. The peace treaty obliging the Dutch to repatriate all European
soldiers in excess of 125, and never to bring troops to Bengal again,
was signed between the Dutch and Mir Jafar’s son, Miran, at Murshi-
dabad on 5 December 1759. It was ratified by the English on
8 December when the captured Dutch ships were returned.?

With the English Company (and its employees acting as merchants
in their private capacity) creating all kinds of hindrance in the way of
its trade, the position of the VOC continued to be rather precarious
through the remaining part of the eighteenth century. In the wake of
the Fourth Anglo-Dutch War, the Company’s establishments were
annexed by the English in 1781 and not restituted until 1784. During
the Napoleonic wars, when the Company had ceased to exist, the
Dutch possessions in the subcontinent were placed under British
protection. Following the London Treaty of 1814, they were restored
to the government of the Netherlands between 1816 and 1818. They
were finally exchanged against English possessions in Sumatra in 1825
bringing the Dutch connection with the Indian subcontinent formally
to a close.

DECLINING IMPORT OF BULLION INTO BENGAL

A part of the Bengal revenue resources available to the English East
India Company from 1757 onward was diverted to finance the
procurement of return cargoes for England not only in Bengal, but
also in the presidencies of Madras and Bombay and even in China.
This practice led to the beginning of the phenomenon of ‘unrequited’
exports and explains in part the growing divergence between the value
of the total exports by the Company to India and that of its total

> Klerk de Reus ‘De expeditie naar Bengale in 1759’.

273

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

imports from the subcontinent. The export of treasure to India, which
traditionally had constituted by far the most important distinguishing
feature of Euro-Indian trade, declined sharply and fast approached the
figure of zero. In the decade of 1751-60, for example, against the
average annual value of English exports to Asia amounting to nearly
£1 million over the entire decade, the average for the last two years,
1759 and 1760, was only about half that figure. The contrast was even
more sharp in respect of the export of treasure alone: against the
annual average of £650,000 for the decade as a whole, the annual
average for the last two years was under £160,000, accounting for no
more than 30 per cent of the total value exported over the two years.*
Such detailed information is not available for the post-1760 period,
but an appendix to the Ninth Report from the Select Committee of
the East India Company entitled ‘An account of the quantity of silver
exported by the East India Company to Saint Helena, India and to
China’ from 1758 to 1771 lists only Mocha and Benkulen under
‘India’. A similar statement for the period 1771 to 1783 likewise lists
only Benkulen and Balambangan under ‘India’.® There is some
evidence, however, which suggests that the import of treasure into
India was resumed after 1784. The total value of treasure exported to
China and India together was reported to be £369,033 in 1792-3,
though during the following year this figure came down to a mere
£10,290. There was a substantial rise in this figure in the opening
years of the nineteenth century. In the case of Bengal alone, the figure
suggested for the five years between 1800-1 and 1804-5 is £3,399,093
giving us an annual average of £678,818.”

The other important local source used by the Company for the
procurement of the return cargo was the money borrowed from
private European merchants, including its own servants, against bills

+ K.N. Chaudhuri, The Trading World of Asia and the English East India Company,
1660-1760, Cambridge, 1978, Table C.1, p. 507, Table C.4, p. 512.

5 For a brief period, the Company had a settlement at Balambangan island north of
Borneo. Both these statements are available in Appendix 5 to ‘Ninth Report from Select
Committee appointed to take into consideration the state of the administration of justice in
the provinces of Bengal, Bihar and Orissa’, 25 June 1783, India Office Library, L/Parl/2/15.

© India Office Records, L/AG/10/2/2, p. 236. Cited in Rajat Datta, ‘Markets, bullion and
Bengal’s commercial economy: the eighteenth century perspective’, in Om Prakash and
D. Lombard (ed.), Trade and Culture in the Bay of Bengal, 1500-1800 (forthcoming).

7 India Office Records L/AG/10/2/4, p. 148; L/AG/10/2/5, pp. 92-3. Cited in Datta,
‘Markets, bullion and Bengal’s commercial economy’.

274

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

of exchange payable in London. In so far as it provided a safe channel
to a whole host of European individuals to remit home savings made
in India, the amounts available under this arrangement were usually
quite large. Even the procurement of tea at Canton was organized
partly on the basis of the funds made available at Calcutta by
Englishmen in exchange for bills to be issued at Canton on London.®
The availability of rupee funds in India against bills of exchange
payable in European capitals was also instrumental in significantly
reducing the export of silver to the subcontinent by the other
European companies as well.? If we look at the case of the Dutch East
India Company, we find that while, at the level of Asia as a whole, the
second half of the eighteenth century was indeed marked by the
continued export of significant and, at times, rising quantities of
precious metals from home (Table 3.1), the story was very different in
the case of the most important of the Indian trading regions, namely
Bengal. It will be seen from Table 3.3 that the value of precious metals
the Company imported into this region came down from f.4.72
million in 1751-2 to f.2.63 million in 1761-2 and to a mere f.390,000
in 1770-1. No import of silver whatever was recorded in 1784-5.
Admittedly, the value of the Dutch exports from Bengal had also
declined over the same period, but by nothing like these values (Table

5-3).

THE DUTCH AND THE ENGLISH
PROCUREMENT OF THE RETURN CARGO
IN BENGAL

As far as the procurement of return cargo was concerned, Bengal
continued to be by far the most important area of operation for both
the Dutch and the English East India companies. The value of the

8 For an example of this kind of a transaction, see a Company advertisement from Fort
William dated 30 July 1781, Appendix 12 to Ninth Committee Report, India Office Library,
L/Parl/2/15.

° The French, the Dutch and the Danish companies ‘will be found to add their full
Proportion to the Calamity brought upon Bengal by the destructive System of the ruling
Power; because the greater part of the Capital of all these Companies, and perhaps the whole
Capital of some of them, is furnished exactly as the British is, out of the Revenues of the
Country. The Civil and Military servants of the English East India Company being restricted
in drawing Bills upon Europe, and none of them ever making or proposing an Establishment
in India, a very great Part of their Fortunes, well or ill-gotten, is in all Probability thrown, as
fast as required, into the Cash of these Companies’ (Ninth Committee Report, p. 16).

275

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Dutch exports from the region did indeed register a decline from
f-4.31 million in 1735-6 to f.3.03 million in 1741-2, but the lost
ground had been more than made up by 1751-2 when an all-time peak
of f.4.99 million was achieved (Table 5.3). Textiles and raw silk
between them accounted for as much as 69 per cent of the total
exports that year, with the share of saltpetre and opium being 7 and 14
per cent respectively (Table 6.1). The second half of the century was
again marked by a downward trend with the value of exports standing
at f.2.3 million in 1761-2 and dropping further to as low as f.1.96
million in 1771-2. In 1780-1, this figure had recovered to f.2.47
million. In view of the dislocation caused by the Fourth Anglo-Dutch
War, the 1784-5 figure of f.1.32 million should perhaps not be treated
as a representative one for the 1780s (Table 5.3). The share of textiles
and raw silk together that year stood at 62 per cent while that of
opium went up to 21 per cent (Table 6.1).

As for the English Company, we noted above that an incredible
increase in the value of total English imports from Asia from the
equivalent of f.23 million during 1738-40 to f.69 million during
1777-9 notwithstanding, Bengal accounted for over half the total
imports during the latter triennium (Tables 4.2, 4.3). Textiles and raw
silk would have accounted for an important part of the increase in the
value of the total imports from Bengal, but in the absence of detailed
information of the kind available until 1760, the precise share of these
items in the total imports, or the precise share of Bengal in the total
import of these items, cannot be indicated. In 1759, the last year for
which detailed information is available, textiles accounted for 58.8 per
cent of the total value imported from Asia. The value of the textiles
imported from Bengal that year was over £380,000 as against under
£40,000 for those from Madras and a little over £8,000 for those from
Bombay.!°

Textiles

Even as Bengal continued to occupy a position of key importance in
the trading network of both the Dutch and the English East India
companies, the conditions under which the two companies traded
there underwent a sea change from the late 1750s onward when the
English assumed political authority in the region. The Dutch found

'0 Chaudhuri, The Trading World of Asia, Tables C.20-22, C.24, pp. 540-5, 547-8.

276

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

themselves reduced to a position of being essentially on sufferance and
subject to all kinds of hindrance being placed in their way by the
English, who grossly misused their newly acquired power. Before this,
the 1740s had been marked by a crisis of a different kind — the
Maratha incursions into the province which interfered seriously with
the work of the procurement of return cargo. The depredations of the
Marathas led to widespread scarcity of grain, shortage of labour and
generally rising cost levels. Both the production and the procurement
of textiles suffered severely, and the VOC was obliged to improvise.
In January 1747, for example, when the suppliers failed to provide
even the modest quantity of 40,000 pieces contracted for, the factors
found it necessary to buy whatever was available in the market against
cash. The situation was equally grim from the point of view of the
merchants supplying to the Company. As early as 1744, the Company
had suspected that the fortunes of several of the merchants doing
business with it were under severe strain. These suspicions were
confirmed in 1746 when it was learnt that four important merchants
operating in the major textile centre of Santipur - Hinkar Chaudhuri,
Jag Bhushan, Gokul Chand and Bhagwan Gopi Chand - together
with their associates, Radhamohan Chaudhuri and Radhakant Chand,
had been financially ruined. The Company suffered considerable
losses in the form of debts owed by these merchants. The principal
corrective step the factors sought to take was to require the merchants
to provide sureties. But the local sarrafs and bankers, who would have
been acceptable to the Company as guarantors, flatly refused, saying it
was too risky a proposition.!! The Company then tried the device of
using the services of the gumashtas or individuals who bought for the
Company in the aurungs against cash provided to them. But it was
found difficult to get hold of an adequate number of reliable
gumashtas and after being tried for three years in succession, the
system was given up. At the same time that the Company was trying
out the gumashta experiment, the dadni system was not abandoned.
Since it was not possible to obtain sureties, what the factors did was to
persuade the suppliers to form themselves into small groups (ploegen)
and to be jointly and severally responsible for the funds advanced to
each one of them. This in a way was the introduction in Bengal of the

"' Algemeen Ryksarchief (ARA), Memorandum by Jan Kersseboom, the outgoing
Director of the Bengal factories, addressed to his successor, Louis Taillefert, dated 16
February 1755, VOC 2862 (the volume is not foliated).

277

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

joint stock company experiment the Company had carried out in the
seventeenth century on the Coromandel coast. As an additional
precaution, broker Hari Krishan Ray was made a guarantor for the
merchants and allowed a 3 per cent commission as compensation. |?

The response of the English Company to this situation was some-
what different. In 1746, the Court of Directors instructed the Calcutta
Council to try and persuade the merchants to accept the contracts
without insisting on the usual advances being made available. The
merchants, however, refused to oblige and the Company decided in
1753 to shift over to the gumashta system of procurement.!? After the
Company had wrested political power in the region later in the
decade, the gumashta system became the principal vehicle through
which the Dutch and the French East India companies were margin-
alized as rivals, and the merchants and the weavers doing business
with the Company subjected to intense coercion.

For purposes of procurement, the English Company divided the
province into segments each of which consisted of a group of aurungs.
Each group contained a string of procurement stations, one of which
was designated as the principal station where the chief gumashta of the
group, responsible to the Commercial Resident, was based. The chief
gumashta received from the Company both a salary (a modest sum of
around Rs.50 per month) as well as a commission. He operated with
the Company’s funds and was, in principle, responsible for any bad
debts that might arise from the sums advanced to him. He was
provided with a staff of a muqim (supervisor of looms, yarn, etc.), a
mubharir (clerk), a tagadgir, a dihidar (village supervisors), cash-
keepers and peons.'* Each of the subordinate procurement stations
was manned by a gumashta and a dalal who dealt with the weavers.
Thus the aurungs of Haripal and Duniakhali had a total of eleven
procurement stations with the principal station located at Duarhatta.
Alternatively, the chief gumashta might operate directly through
patkars, a group that would be a counterpart of the dalals. Thus the
chief gumashta based at Khirpai and having under his jurisdiction the
aurangs of Chandrakona and Hariasjoul dealt with a total of forty-one

'2 ARA, Memorandum by Kersseboom; Memorandum by Louis Taillefert for his
successor, George Louis Vernet, dated 7 November 1763, Hooge Regering Batavia (HRB)
246, f. 104.

'3 Chaudhuri, The Trading World of Asia, pp. 310-12.

14 Hameeda Hossain, The Company Weavers of Bengal, The East India Company and
the Organization of Textile Production in Bengal 1750-1813, Delhi, 1988, p. 88.

278

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

paikars.'> The intense coercion of the merchants and artisans that this
system involved will be discussed later.

In order to counter the problem of grossly inadequate availability
and the emergence of bad debts as a result of the English Company
policies, the VOC adopted a series of essentially ad hoc measures. The
gumashta system was revived in 1758 but soon given up as unwork-
able. New dadni merchants such as Murli, Birju Basu and Parbati
Charan were then taken in and assigned to different groups, members
of each of which undertook to be jointly and severally responsible for
the funds advanced to them. But the principle of joint responsibility
never really worked either and in 1761/2 bad debts to the tune of
f.267,265 were reported to have arisen. The Company then tried to
find merchants who would be willing to supply without being
provided with an advance, but with an additional payment of 7 to 9
per cent in lieu thereof. This arrangement was reported to have had a
fair degree of success for a few years but did not last, leaving the
Company no option but to revert to the dadni system.'¢

Raw silk

The problems created by the English political power for the merchants
and the artisans the Company dealt with, as well as for the rival
European companies, were by no means confined to textiles but
indeed extended to all other goods procured in the region — raw silk,
saltpetre and opium. Raw silk had always been an important item of
trade for the English, but its importance increased still further in the
post-Plassey period. In the 1740s and the 1750s, the average annual
value of the Bengal raw silk imported by the Company into England
had been Rs.400,000 and Rs.300,000 respectively.!” In 1766, however,
the Company was reported to have contracted for raw silk worth as
much as Rs.1.8 million to Rs.2 million. The following year, a figure of
Rs.1.6 million was mentioned.'® By 1769, the procurement of raw silk
had become ‘a great national object’ and in 1793 the raw silk

'S ARA, J.M. Ross to Director at Hugli, Appendix A, HRB 247 (the volume is not
foliated).

'6 ARA, Memoir by Taillefert for his successor, George Vernet, 7 November 1763, HRB
246.

'? Calculated from Chaudhuri, The Trading World of Asia, p. 534. The precise figures are
Rs.416,344 and Rs.296,976 respectively.

'8 ARA, Memoir of outgoing Director Johannes Bacheracht for his successor, J.M. Ross,
dated 31 July 1776, HRB 252, f. 112.

279

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

investment amounted to an unprecedented Rs.2.5 million.!? This
increase in procurement was achieved mainly by coercing the produ-
cers into supplying exclusively to the Company. In 1767, for example,
a public announcement at Kasimbazar, accompanied by the beating of
drums, ordered all silk reelers working for the Company not to accept
work from anyone else. The wry comment made by the Dutch was ‘if
this is not a display of power, we do not know what is’.2° The Dutch
had good reason to be upset because although at a formal level the
English took care to explain to them that such a ban did not apply to
their procurement, the amount that the VOC was able to buy suffered
considerably nevertheless. Hindrances were also placed regularly by
the English gumashtas in the transportation to Hugli of whatever
amounts the Dutch were able to buy.”!

Saltpetre

Saltpetre, by virtue of being about the most profitable trading good
doubling as ballast, had traditionally been an item of great interest to
all the European companies. In 1728, the suppliers of saltpetre had
been organized into a ‘company’ serving both the Dutch and the
English. Eight years later, an agreement was concluded between the
English, the Dutch and the French, stipulating that no Indian mer-
chants living within their jurisdiction were to be allowed to buy
saltpetre in Chapra, Purnea or any other aurung as far as Malda.?? In
1745, the three companies agreed that they would share the jointly
purchased lots in the ratio of 42.5:42.5:15.7° But this arrangement was
effectively sabotaged by the new faujdar of Chapra, Dip Chand
(brother of the notorious Omi Chand) who took on farm the major
saltpetre-producing areas in the district and practically monopolized
the item. The VOC had no option but to buy 21,000 sacks of saltpetre
from this man in 1747 at Rs.6 per maund.** Following the battle of

'9 N.K. Sinha, The Economic History of Bengal from Plassey to the Permanent Settlement,
vol. 1, Calcutta, 1956, pp. 17-19.

20 ARA, Letter from Johannes Bacheracht at Kasimbazar to Director George Vernet at
Hugli dated 13 March 1767, HRB 247.

2! ARA, Letter from Johannes Bacheracht at Kasimbazar to Director George Vernet at
Hugli dated 12 March 1766, HRB 247; letter from the same to same dated 14 July 1766,
HRB 247. :

22 Chaudhuri, The Trading World of Asia, p. 340.

23 ARA, Memoir prepared by Dutch director, George Louis Vernet, and submitted to the
English on 10 May 1768, HRB 247.

24 ARA, Memoir by Jan Kersseboom for his successor, Louis Taillefert, dated 16.2.1755,
VOC 2862 (the volume is not foliated).

280

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

Plassey, however, the scenario again changed and the English obtained
from Nawab Mir Jafar in 1758 exclusive rights in the commodity.”°
They offered to provide to the Dutch at cost price one third of the
amount procured by them.” From 1763, the annual quota of the
Dutch was fixed at 23,000 maunds, and that of the French at 20,000
maunds.?” In years of shortage, the quota could be reduced as
happened, for example, in 1776 when the Dutch were allotted only
18,000 maunds.”® From the point of view of the VOC, however, the
situation was not altogether too bad. On the lot supplied to them by
the English, the problem of bad debts arising had been solved
automatically and the additional quantity needed could always be
bought in the market on the side. Also, from 1776 onward, the
English began accepting payment for the saltpetre at Calcutta through
bills, obviating the necessity of sending large sums of money to
Patna.??

The Board of Trade promulgated new regulations regarding salt-
petre in May 1787. Article 5 of these regulations stipulated that the
rival companies ‘be not permitted to work any manufactories of their
own, as some of them are said to have done’.2° The Dutch chief at
Patna, Isaac Titsingh, made representation to Cornwallis to allow the
inhabitants of the Dutch village of Daulatganj in Bihar to continue
producing saltpetre ‘which they had been doing for ages and deriving
their livelihood from’.*! The request was turned down and Titsingh
was asked to ‘instruct your commercial agents at Patna not to interfere
in future in the manufacture of saltpetre’.*? In 1794, the English

25 ARA, Letter from Cornwallis at Calcutta to Isaac Titsingh at Hugli dated 20 July 1787,
HRB 212 (the volume is not foliated); Memoir by outgoing director Bisdom for his
successor, Louis Taillefert, dated 18 October 1760, HRB 245, ff. 35-6

26 ARA, Second memoir by outgoing director Louis Taillefert for his successor, George
Louis Vernet, dated 17 November 1763, HRB 246, f. 181.

27 ARA, Memoir by outgoing director Johannes Bacheracht for his successor, J.M. Ross,
dated 31 July 1776, HRB 252, ff. 9-10, 124; Memoir by outgoing director George Louis
Vernet for his successor, Boudewyn Faure, dated 8 March 1770, HRB 249, f. 86.

28 ARA, Letter from Calcutta to Hugli dated 21 September 1775, HRB 253 (the volume
is not foliated).

29 ARA, Memoir by outgoing director Johannes Bacheracht for his successor, J.M. Ross,
dated 31 July 1776, HRB 252, ff. 124, 127.

3° ARA, Letter from the English factors at Patna to the Dutch factors at Patna dated
11 June 1787, HRB 212 (the volume is not foliated).

31 ARA, Isaac Titsingh at Hugli to Cornwallis at Calcutta dated 16 July 1787, HRB 212.

32 ARA, letter from the English at Calcutta to the Dutch at Hugli, 20 July 1787, HRB

212.

281

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

decided to terminate the arrangement of supplying saltpetre to the
rival companies altogether.*?

Opium

The last major item procured by the VOC in Bengal was opium for
the Indonesian market. The profit earned by the Company from the
sale of this commodity had been growing over the years. Thus from
f.108,214 during 1678-87, the average annual profit made had gone up
to f.414,196 during 1688-97 and to f.844,390 during 1738—47.°* But
the problem of the intense competition provided by its own servants
engaged in a clandestine trade in the commodity had continued to
defy solution. In his famous minute of 1741, ‘Considerations over the
Present State of the Dutch East India Company’, Gustaaf Willem van
Imhoff went to the extent of suggesting the withdrawal of all restric-
tions on private trade as the only way to get out of the rut of
corruption the Company had managed to get into.*> The Directors
accepted the suggestion with the proviso that all opium handled would
be subject to an export duty of Rs.s0 per chest in Bengal and an
import duty of 50 ryx-dollars at Batavia.** They evidently seem to
have planned on the Company withdrawing from the opium trade
altogether and leaving it completely to the private traders. But for
some inexplicable reason, on becoming Governor-General in May
1743, van Imhoff himself turned against the idea. In their letter to the
Directors dated 21 December 1743, the Governor-General and the
Council at Batavia strongly opposed the introduction of the new
arrangement and the plan seems to have been shelved.”

The following year, van Imhoff came up with a major alternative
proposal. He recommended the setting up of an Opium Society
constituted by private shareholders, who would be provided with a
specified quantity of opium each year by the Company at a fixed price
and who would be responsible for its sale in Indonesia. It was hoped

33-ARA, John Shore at Calcutta to van Citters at Hugli dated 15 September 1794 and
17 October 1794, HRB 212.

34 Calculated from J.C. Baud, ‘Proeve van eene geschiedenis van den handel en het
verbruik van opium in Nederlandsch Indie’ (hereafter ‘Opium’), Bijdragen tot de Taal.-,
Land-, en Volkenkunde van Nederlandsch Indie, vol. 1, 1853, Appendix 6.

>> Baud, ‘Opium’, p. 120.

36 The rate of exchange was approximately 1 ryx-dollar = 2 rupees.

37 L.C.D. van Dijk, “Byvoegsels tot de Proeve eener geschiedenis van den handel en het
verbruik van opium in Nederlandsch Indie door den Heer J.C. Baud’, Bijdragen tot de Taal-,
Land-, en Volkenkunde van Nederlandsch Indie, vol. 2, 1854, p. 200.

282

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

that the problem of clandestine trade in the drug would be taken care
of in so far as the unauthorized private traders would now have the
option to become shareholders in the venture and to participate
legitimately in the profit from the trade.>® The Society came into being
on 30 September 1745 on the basis of an exclusive charter granted for
an initial term of ten years. The Company was henceforth obliged to
offer its entire imports of opium to the Society who, on its part, would
be obliged to accept each year a minimum of 1,200 chests at a fixed
price of 450 ryx-dollars per chest. Supplies in excess of 1,200 chests
and up to 1,500 chests, if accepted, would qualify for payment of 400
ryx-dollars and those in excess of 1,500 chests, of 350 ryx-dollars per
chest.°? The Society had a total share capital of 600,000 ryx-dollars
divided into 300 shares of 2,000 ryx-dollars each.

Within a few years of the establishment of the Society, however, it
was quite clear that the experiment had had only a limited amount of
success. The plan to check contraband trade in the drug by associating
private merchants engaged in it with the Society, for example, worked
only up to a point. A large number of these traders never got into the
orbit of the Society. Indeed, within a few years of the establishment of
the Society, it was discovered that the bulk of the shares in it were held
by persons who had since returned to Holland, or by their heirs. At
one point, no more than 67 of the total of 300 shares were held by
persons domiciled in Java.*° Also, at times, the Company was obliged
to accept payment from the Society at a rate lower than that stipulated
in the charter.*!

The big jolt both for the Company and for the Opium Society came
in 1757 with the English takeover of Bengal. Private English mer-
chants now engaged in an increasing amount of trade in opium and
openly challenged the Dutch monopoly in the archipelago. Even more
damaging was the fact that the unofficial English opium monopolies of
the 1760s as well as the official Company monopoly established in
1773 put serious constraints on the Dutch opium procurement in
Bihar. Over the nine years between 1746-7 and 1754-5, the Company

38 Baud, ‘Opium’, pp. 122-3.

3° The details of the charter are available in document No. 3 entitled ‘Project associatie
van geprivilegeerde kooplieden tot den amphioen geconsenteert in rade van Indie op den 24
September 1745’, ARA, VOC 4832 (unfoliated).

4° Baud, ‘Opium’, p. 24.

*! Document 4 entitled ‘Notitie van behaalde winsten op amphioen Bengaals in swaar
geld gerekend’, ARA, VOC 4832 (unfoliated).

283

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

had, on average, supplied 1,241 chests of opium per annum to the
Opium Society.** Between 1756 and 1761, this figure averaged 1,200
chests. Over the four years, 1762 to 1765, however, when the impact
of the unofficial monopolies began to be felt, the figure came down to
as little as 432 chests.*? On the other hand, between 1760 and 1764,
the price the Company had to pay for the Bihar opium went up from
f.222 to as much as f.402 per maund. The price charged by the
Company from the Opium Society was, therefore, revised upward
from 450 ryx-dollars to 550 ryx-dollars per chest. In 1776, on top of
the increased price payable to the Company, the Society was obliged
henceforth to give half of its net profits to the Company.“

Since this kind of pressure on the Company was directly related to
the English monopoly, detailed negotiations followed in which the
respective positions of the two companies were clearly spelt out. To
begin with, the English offered to the Dutch an amount of 450 chests
of opium per annum on the basis that this was the amount the latter
had reportedly procured in the year preceding the one in which the
English Company monopoly had been introduced. The price payable
was to be the same as that paid by the English Company to its
contractor. This was on the assumption that the Dutch would be
willing to accept whatever quality lots the contractor chose to supply.
If, on the other hand, they insisted on the right to reject poor-quality
lots, they would be obliged to pay the price that they had actually paid
in the last year of the pre-monopoly period.** The Dutch opted for
the latter arrangement. The procedure was for the Dutch to apply to
the contractor and make payment for the deliveries made by him to
the chief of the English factory at Patna.*®

While the Dutch really had no option but to agree to whatever an
English dictated, they nevertheless kept up a steady correspondence
on the issue with them. In the first place, they questioned the right of
the English, who were merely the diwan of the sovereign, to negate
the Dutch Company’s privilege of a free trade in opium which had

‘Notitie van behaalde winsten op amphioen Bengaals in swaar geld gerekend’.
Calculated from table in Baud, ‘Opium’, p. 41.
Baud, ‘Opium’, pp. 41, 142.
ARA, Memoir by outgoing Dutch Director Bacheracht for his successor, J.M. Ross,
31 July 1776, HRB 252, ff. 121-2.

46 ARA, Letter from Governor-General Warren Hastings and Council at Calcutta to the
Dutch Council at Hugli, 29 January 1776, enclosures to the memoir of Bacheracht, HRB 253
(unfoliated).

284

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

been given to them by the sovereign.47 In 1775, when a general
proclamation by Calcutta allowing unhindered trade to the Dutch did
not include opium in the list of items mentioned and was not
publicised in the opium districts, the Dutch registered a strong protest
with the chief factor of the English at Patna. The chief factor, Isaac
Sage, wrote back saying that the omission was intentional since
‘opium forms a considerable branch of the Company’s revenue, and is
by no means an esteemed article of public commerce’.*® In a con-
fidential letter dated 25 January 1776 to Gregorius Herklots, the chief
of the Dutch factory at Patna, Sage referred to an unfortunate incident
involving the ouster of the Dutch paikar from the district of Phulwari
in 1775, and said that this had to be done because ‘we cannot under
the present restrictions suffer any person to interfere with the con-
tractor on any account whatsoever’.*? Later in the year, the two
parties agreed to refer the matter to their respective superiors in
Europe for a mutually acceptable solution.°° In the meantime, the
Dutch had been asking for an increase in their allotment to between
goo and 1,000 chests while the English steadfastly stuck to the figure
of 450.7! It is very likely that the Dutch managed to get some more on
a clandestine basis, but the amount is unlikely to have been large.

The Dutch procurement of opium was also sought to be linked by
the English in a rather curious manner to the China trade and the
remittance question. In May 1785, Governor-General John Mac-
pherson wrote to Gregorius Herklots, the Dutch second-in-
command, making what he called a personal suggestion. He began by
saying that as against the usual 400-450 chests in the 1770s, the
Company had now agreed to provide 800 chests of opium to the
Dutch. Since the English badly needed to finance their supra-cargo at
Canton without having to send specie from Calcutta, they would
appreciate it if Batavia could arrange for the payment of the opium

*” ARA, Letter from the Dutch Director and Council at Hugli to the English Governor-
General and Council at Calcutta, 2 February 1776, enclosures to the memoir of Bacheracht,
HRB 253 (unfoliated).

48 ARA, Letter from Gregorius Herklots to Isaac Sage, 30 August 1775 and Sage’s reply,
31 August 1775, in enclosures to memoir of Bacheracht, HRB 253 (unfoliated).

4° ARA, Extract from a secret resolution adopted by the Dutch Council at Hugli,
25 January 1776, enclosures to memoir of Bacheracht, HRB 253 (unfoliated)

°° ARA, Second memorandum by the Dutch Director and Council to the English
Governor-General and Council, 15 August 1785, HRB 211 (unfoliated).

51 ARA, Minutes of the Dutch Council at Hugli, 2 February 1776, HRB 253 (unfoliated);
Letter from Governor-General and Council at Calcutta to the Hugli Council, 7 February
1776, in the Minutes of the Hugli Council, 12 February 1776, HRB 253 (unfoliated).

285

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

supplied to them in Bengal at Canton. The amount of opium
mentioned was between 800 and 1,000 chests on a recurring annual
basis. As a further incentive, the Governor-General added that he was
willing to give a guarantee that “even in case of war, we should send
the opium to Batavia under a flag of peace and leave you the full and
secure preparation of it... It is immaterial to the English Company
whether this trade is carried on by a foreign Company or by people
living at Calcutta.”>? Herklots sent a vague reply saying that he would
get in touch with Batavia, but the arrangement did not appeal to the
Dutch and was never put into practice.°> From about this time, the
Dutch quota was again successively reduced first to 700 and from
1787 on to 500 chests per annum.” Since this opium was delivered at
Calcutta, the Dutch offered to sell their factories in Bihar to the
English.°> The offer was not taken up and, in July 1791, the factories
were sold to a private party.°° On 15 March 1794, the Opium Society
was dissolved and the Company again took the opium trade directly
into its own hands.°” But this was a very short-lived affair in so far as
the Company itself went into liquidation the following year.

THE ENGLISH PRIVATE TRADE AND THE
“COMMERCIAL REVOLUTION’ IN THE INDIAN
OCEAN

We have already analysed the English Company servants’ private
trade in the westward direction in the preceding chapter. As far as the
eastward trade was concerned, it consisted essentially of three seg-
ments — southeast Asia, the Philippines and China. The first of these
stretched from ports such as Pegu, Tenasserim/Mergui, Phuket,
Kedah and Acheh — all on the eastern littoral of the Bay of Bengal — to
Ayutthaya in the Gulf of Siam. The port frequented in the Philippines

52 ARA, Letter from Governor-General John Macpherson to Gregorius Herklots,
19 May 1785, HRB 212 (unfoliated).

53 ARA, Herklots and Council at Hugli to John Macpherson and Council at Calcutta,
26 May 1785, HRB 212 (unfoliated).

54 ARA, Letter from Calcutta to Hugli, 15 April 1786; Hugli to Calcutta, 31 January
1787; Calcutta to Hugli, 7 February 1787; Hugli to Calcutta, 7 February 1787; Calcutta to
Hugli, 7 January 1788; Hugli to Calcutta, 23 February 1788; Calcutta to Hugli, 25 February,
1788, HRB 212 (unfoliated).

55 ARA, Letter from Hugli to Calcutta, 12 April 1791, HRB 212 (unfoliated).

56 ARA, Letter from Calcutta to Hugli, 4 May 1791, HRB 212 (unfoliated); Hugli to
Calcutta, 9 August 1792, HRB 212 (unfoliated).

57 Baud, ‘Opium’, pp. 142-3.

286

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

was Manila and that in China Canton. In an analysis of the English
private trade with the region, it is useful to distinguish between the
period before about 1760 and that after. This is because the second
half of the eighteenth century witnessed a substantive growth in the
relative weight of the eastward trade in the overall trading operations
of the private English merchants from India. Holden Furber has
described this turning from the west to the east as an important
element in the ‘commercial revolution’ in the Indian Ocean. The great
expansion in the eastward trade in the post-1760 period, carried on by
the private English merchants, was the outcome basically of a sub-
stantial growth in the trade with Canton which, in turn, was related in
a large measure to the growth of English power in the Indian
subcontinent. The English had become the actual rulers of Bengal,
they were the dominant power on most of the Coromandel coast, and
they had strengthened their position in western India. The special
position of the English Company, and by association of that of the
private English merchants, vis-a-vis the suppliers and producers of
goods in regions such as Bengal, significantly increased the margin of
profit from private trade. This was reflected in a sharp increase in the
volume of trade in high-value commodities such as Bengal opium
which together with Bombay cotton provided the basis of the
enormous increase in the trade with China. This trade, incidentally,
also served as an important vehicle for the transmission home of the
large private English fortunes made in India. The newly found power
and the expanded resource base had now enabled private English
shipping to go beyond the Asian networks within which it had until
then operated, and create new ones of its own.

The changing destination pattern of the eastward trade had its
counterpart in the changing relative weight of the various Indian ports
where English shipping directed at the region originated. Over the
seventeenth and the first half of the eighteenth century, the bulk of the
English trade with southeast Asia, which accounted for an over-
whelming proportion of the total trade with the eastward region, was
carried on from the Coromandel coast. This picture underwent a
complete overhaul in the second half of the eighteenth century when
the Madras shipping essentially took a back seat and the bulk of the
eastward trade was carried on by the English shipping based at
Calcutta and Bombay.

A rough idea of the growth as well as the changing destination

287

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

pattern of the private English merchants’ eastward trade from India
can be formed by reference to the fact that while in the first half of the
eighteenth century the Dutch at Malacca recorded a maximum of ten
English private ships heading east through the straits in any one year,
the number had gone up to twenty-four in 1764, and to as many as
fifty in 1774. Simultaneously, more ships were going through the
Sunda straits.°? While a large part of this would be ascribable to the
growth of the China trade, it also reflects a more thorough penetration
of the southeast Asian markets by the English private traders. The
Dutch control of Malacca as of 1641 and their special position in the
archipelago notwithstanding, it had always been possible to do a
certain amount of trading in the region in items such as opium, tin and
pepper which the Dutch by and large had sought to reserve for
themselves. The Dutch control over the Malay sultans’ trade had
always been tenuous and English country captains, by paying higher
prices and with the aid of some discreet bribery, had found it possible
to trade even at Malacca itself. But in the post-1760 period, it was no
longer necessary to be discreet and the Dutch claims of monopoly
could be countered quite openly.

Until the middle of the eighteenth century, by far the most
important destination for private English shipping from India was
southeast Asia, and the principal Indian port from which shipping was
directed at the region was Madras. The principal ports called at were
Pegu, Tenasserim/Mergui and Ayutthaya, Kedah, Acheh and Malacca
besides Bantam and Batavia. At Batavia, the English ships were
obliged to operate under stringent restrictions as to the commodities
in which they traded, while the trade to Bantam-was lost as of 1682
when the port was taken over by the Dutch and declared closed to
others. Pegu remained an important destination, but trade with the
port was subject to vigorous competition by the Indian merchants.
During the 1720s and the 1730s, between six and twelve ships left
Madras for Pegu each year. In 1720, 1722 and 1737, the number of
incoming ships from Pegu rose to thirteen or fourteen, and in 1739, as
many as twenty-one arrivals were recorded. The number of Indian
ships in these lists often exceeded that of the private English

58 PJ. Marshall, ‘Private British trade in the Indian Ocean before 1800’, in Ashin Das
Gupta and MLN. Pearson (ed.), India and the Indian Ocean 1500-1800, Calcutta, 1987,

p. 297.

288

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

merchants.>? The principal items procured in Pegu were gold, timber
and rice.

At the Siamese ports of Mergui and Tenasserim in the Bay of
Bengal, and of Ayutthaya in the Gulf of Siam, the private English
traders encountered the dynamic trading organization of the king of
Siam. The trade between Madras and Mergui/Tenasserim was domi-
nated throughout by the Asian merchants. A large number of Chinese
junks regularly called at Ayutthaya making it an important meeting
point between the east and the west. Between October 1683 and
November 1684, as many as forty-two ships including eleven be-
longing to the English are recorded as having called at the port. At the
beginning of 1685, more than a dozen English, French and Portuguese
ships are recorded as having left Ayutthaya westward with Japanese
bar copper bought from the foreign trade minister of Siam, the Greek
Constantine Phaulkon.©° But the Mergui massacre of July 1687
followed by the Anglo-Thai War of 1687-8 put a temporary stop to
the English trade at the Siamese ports, and it was not until 1705-6 that
Governor Thomas Pitt and associates resumed this trade. Initially,
they used ships with Asian or Portuguese title or captaincy, but by
1708-9 English ships were being used again. In 1718, a private
agreement was signed at Ayutthaya promising favourable treatment
for Madras ships. The English Madras—Ayutthaya connection would
seem to have continued on a regular basis in the 1720s and on a less
regular basis in the 1730s. Occasionally, a Madras ship also called at
Tonkin.®!

Other important southeast Asian ports frequented by English
shipping included Kedah and, above all, Acheh. Chinese junks reg-
ularly called at Acheh, making it an important source for Far Eastern
goods. The exports to Acheh included Coromandel textiles, rice and
slaves besides fair quantities of Bengal opium. The imports into
Madras included camphor, benzoin, wax and pepper besides goods of
Far Eastern origin. A 1660 agreement between Acheh and the English
Company had exempted ships flying English colours from the
payment of customs duties at the port subject to the requirement that
the English shippers would trade exclusively through the shahbandar

5? D.K. Bassett, ‘British “country” trade and local trade networks in the Thai and Malay
states, c. 1680-1770’, Modern Asian Studies, vol. 23 (4), 1989, p. 636.

6° Bassett, ‘British “country” trade’, pp. 628-9.

61 Marshall, ‘Private British trade’, p. 286.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

and other royal officials. While that would almost certainly have cut
into the profit margin, the turnover would have been rendered
quicker. Indian ships visiting Acheh were not bound by this require-
ment, but paid a 12 per cent import duty. The attraction of Acheh for
the English traders increased further in 1687 following their temporary
exclusion from Siam. The years around the turn of the century
witnessed a certain amount of dislocation in this trade even involving a
private British naval blockade of the port organized by Alexander
Hamilton in 1702 to enforce English exemption from customs duties.
There was another blockade for a few weeks in 1706 organized this
time by Delton and Griffith. Repeated invitations from the sultan to
resume trade with the port did lead to a resumption of voyages to
Acheh from both Madras and Bengal around 1715. But soon there-
after, some gold was seized from the Madras ship Messiah by the
Acheh government. In retaliation, the sultan’s ship was seized at
Madras by Governor Joseph Collet in October 1717. Trade to Acheh
under British colours did not resume apparently until the 1730s.

From the 1760s onward, the British country traders operating from
Madras began to organize themselves into powerful syndicates. This,
combined with the greater political and economic leverage available to
the British all over India from about this time onward, generally
increased their competitive strength in Acheh and the southeast Asian
markets. The Gowan-Harrop syndicate significantly expanded its
operations in Acheh from about 1766. The syndicate, taken over by
Jourdan, Sulivan and De Souza in 1770, included several members of
the Fort St George Council. It loaned mercenaries to the sultan and
-eventually dominated the port of Acheh. Kedah was also emerging as a
major trading port for the English around this time. Indeed, in 1772,
the Madras Presidency ranked Kedah above Acheh as an outlet for
opium and piece-goods. Acheh was assumed to have a market for 150
chests of opium as against 250 chests in Kedah. The anticipated profit
on the Acheh investment was 30,000 pagodas compared to 45,000
pagodas in Kedah.°?

In addition to southeast Asia, private English shipping from Madras
also went to Manila and China, the former from about the 1670s and
the latter from about the 1690s onward. Trade with both these

6 Bassett, ‘British “country” trade’, pp. 629-32.
6 Bassett, ‘British “country” trade’, pp. 639-40.

290

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

destinations seems to have been carried on on a fairly regular, but
relatively small, scale. Until 1789, the only European ships permitted
into Manila were Portuguese ones. From 1674, English-owned ships
based at Madras began making regular trips to Manila under Portu-
guese colours. For most of the eighteenth century, an average of three
ships a year went from Madras to Manila. The 1789 repeal of the
restrictive Spaniard regulations enabled the private English vessels to
go to Manila under their own colours. As far as the Madras—Canton
trade was concerned, it was based on the export of silver to Canton to
be exchanged against gold and commodities such as tutenag, quick-
silver, alum and sugar. The bulk of these goods was re-exported from
Madras to western India. From about 1760 onward, the India—China
trade assumed important proportions. But the share of Madras
shipping in the revitalized China trade was negligible: that was a trade
carried on mainly by the private English shipping based at Bombay
and Calcutta.

Until the 1760s, the private English merchants’ eastward trade was
practically nonexistent from Bombay and relatively quite small from
Calcutta. We noted earlier that Governor Charles Boone of Bombay
had organized joint stocks for two China ships in 1716. But that kind
of venture would seem to have been a relatively isolated one. The
trade from Calcutta was on a more regular, but relatively small, scale.
The relative smallness of this trade is highlighted when it is compared
to Calcutta’s trade westward. Thus in 1734 against sixteen departures
from Calcutta westward, only four were recorded to the ports east-
ward. The situation had not been very different in the early years of
the century. Thus the number of vessels going eastward was reported
to be four each in 1704-5 and 1705-6 and three in 1706-7. A large
proportion of these vessels, if not all of them, were directed at
southeast Asia, mainly ports in Malaya and Sumatra. The principal
ports the ships called at in the region were Kedah and Acheh, though
other ports such as Pegu and Tenasserim were also visited. The
principal exports to the region were textiles and opium and the
principal imports sandalwood, sappanwood, tin and pepper.®°

Over the first half of the eighteenth century, Bengal shipping also
went further east to Manila and Canton. Between these two destina-

6+ Marshall, ‘Private British trade’, pp. 285, 299.
65 PJ. Marshall, East Indian Fortunes, The British in Bengal in the Eighteenth Century,
Oxford, 1976, pp. 85-8.

291

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

tions, the Manila connection was more regular. Bengal textiles were
sold there mainly against Mexican silver. In the early part of the
century, there was also a certain amount of cooperation with the
Madras shipping in the trips to Manila, though by 1727 Madras was
beginning to complain of Bengal’s competition at the port. In the
17208, a total of ten Calcutta ships are believed to have gone to Manila:
in the 1730s, this number had come down to six or seven. Between
1740 and 1748, another seven Bengal ships are reported to have called
at Manila. After a gap until 1759, the arrival of Bengal ships was again
recorded at Manila in 1760, 1764 and 1767. Thereafter, there is no
evidence of shipping on this route until the late 1780s, when it was no
longer necessary to operate under Portuguese or Asian colours.
Contacts were now officially made between Calcutta merchants and
the new Spanish Royal Philippine Company for Bengal goods to be
delivered openly at Manila in English ships. The Canton connection
was much more irregular until about 1760. Bengal ships are known to
have called at Canton only in 1725 and 1736, though another ship, the
Shah Alam, the largest of the Calcutta fleet, was also reportedly being
fitted for a voyage to Canton in 1730.

The situation had, however, changed completely by the 1760s when
what Furber has termed the ‘commercial revolution’ in the Indian
Ocean was well under way. This revolution, completed by the 1780s,
consisted in the first place of a clear domination of trade in the Indian
Ocean and the South China Sea by private English shipping based at
Calcutta and Bombay, and in the second, of an increasingly central
and indeed dominant position of the trade with China and Malaya in
the private English merchants’ trade from India. This was the con-:
sequence of a variety of factors at work, both economic and political.
These ranged from the growing popularity of Chinese tea in the
European market and the growing prosperity of the private English
traders engaged in country trade, to the wresting of formal political
control by the English East India Company in Bengal and of consider-
-able political leverage in western India.

An approximate idea of the orders of magnitude involved in the
growth of the China trade could perhaps be formed by reference to
the fact that, between 1774-82 and 1785-6, the imports by the English
country ships at Canton had doubled. By 1797-8, these had nearly

66 Marshall, East Indian Fortunes, pp. 89, 104.

292

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

trebled again.” The two principal items carried to Canton were
Gujarat cotton and Bengal opium. In 1760, David Cuming had
remarked that the only big Bombay ships he had noted at Canton
were those belonging to the English East India Company. But in 1787,
Cuming counted forty sails of large, privately owned ships from
Bombay which had imported 60,000 bales of cotton. On average, over
the last quarter of the eighteenth century, cotton accounted for
approximately half of the total English exports to China. In the early
years of the nineteenth century, the cotton exports were marked by
large annual fluctuations. Against the peak of Rs.g million worth in
1807-8, for example, the exports in 1812-13 were worth only Rs.2.3
million. The bulk of the cotton exports from Bombay were on the
account of the private traders. Thus in 1810-11, these merchants
accounted for as much as 91.4 per cent of the total cotton exports from
Bombay, the remainder being on the account of the English East India
Company. A certain amount of Bengal cotton was also carried to
China by the Calcutta shipping. Thus in 1810-11, the private Calcutta
shipping carried nearly one third (31.3 per cent) of the amount of
cotton carried by the Bombay shipping on the account of both the
Company as well as the private traders.°* The principal Bengal
commodity carried to China was, of course, opium. As opposed to an
average of one per season in the 1760s, the number of Bengal-based
ships going to Canton had gone up by 1778 to as many as ten.
Valuewise, Bengal opium did not overtake Indian cotton until 1823,°
but from the perspective of the private traders, opium had already
superseded cotton as the most lucrative item by the early years of the
nineteenth century.”°

The starting point of the China trade was the growing involvement
of the English East India Company in the import of Chinese tea into
England. By 1758-60, tea was already accounting for a quarter of the
total English Company imports from Asia into Europe. Since the
British government levied duties of as much as 115 per cent on all
imports of tea, smuggling by rival bodies operating from the European
continent was a highly profitable enterprise. This, however, ceased to

67 Marshall, ‘Private British trade’, p. 297.

68 Pamela Nightingale, Trade and Empire in Western India 1784-1806, Cambridge, 1970,
PP. 23; 233-

70 Nightingale, Trade and Empire, p. 233.

293

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

be the case following the Commutation Bill of 1784 which reduced the
duties to a mere 12 per cent. The result was that the English Company
was able to price the competitors out of the market and further
increase its imports from China. As with most Asian commodities,
however, Chinese tea had to be paid for mainly in specie. Once Bengal
revenues became available to the Company following the acquisition
of diwani rights in 1765, the Directors asked the Bengal Council to
ship Rs.4 million annually to Canton. But this was not found feasible,
and indeed after 1768 no specie could be spared from Bengal. As far as
Indian goods were concerned, Gujarat cotton and Bengal opium were
the only items with a large market in China. Opium was a contraband
item and the Company obviously could not handle it on its own, but a
certain amount of cotton was indeed carried by the Company ships to
Canton on a regular basis. The close collaboration between the
Company servants and the private traders, however, ensured that the
bulk of the cotton trade was left to the latter. This, together with a
large and growing clandestine trade in opium, made the China trade
by far the most lucrative branch of trade for the private English
merchants operating from India.

By a curious intermingling of the private traders’ interests with
those of the Company, the China trade became not only an important
vehicle for the generation of private European fortunes in India, but
also the leading medium of the remittance home of these fortunes. The
proceeds from the goods the private merchants sold in China invari-
ably exceeded the value of the goods such as silk, sugar-candy, tea,
mercury and camphor that they procured there by a considerable
margin. It was in the mutual interest of these merchants as well as the
Company for this surplus purchasing power to be put at the disposal
of the supercargoes at Canton for investment in tea on the account of
the Company. The Company would then be spared the necessity of
carrying specie to China, or at least could reduce the amount, and the
bills of exchange issued at Canton on the directors in London for the
money received would ensure for the merchants a safe avenue for the
transfer home of their fortunes on a regular basis. In the event that
they needed the money in India, the bills of exchange were made
payable in Calcutta. The private traders were often able to expand the
size of their outward cargoes by raising fairly large sums of money in
respondentia from individuals who were looking for avenues to
transmit their savings home. Between 1770 and 1783, approximately

294

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

£3 million worth of bills of exchange were issued at Canton: this
figure would have gone up substantially with the striking growth of
the China trade after 1784.

The fact that there was a great degree of collaboration between the
private English traders and the governments of Bombay and Bengal is
fully borne out in the case of both the cotton and the opium exports to
China. In the case of cotton, this collaboration was at times even at the
expense of the Company itself. Following the Commutation Act of
1784, the average annual sales of cotton in Canton had leaped from
around 300,000 taels worth to as much as 2.16 million taels worth
within a period of three years. The private trading interests in
collaboration with the Company officials, however, ensured that the
Company itself was allowed to partake of this bounty only up to a
point. In April 1789, for example, the Directors deplored the fact that
against a capacity of 1,500 to 2,000 bales, the Company ships carried at
the most 800 bales for the Company and made the remaining space
available to the private traders. The factors were, therefore, instructed
to send as much cotton as possible to Canton on the Company’s own
account. In April 1790, the Directors even sent 600 chests of dollars to
Bombay specifically for the purchase of cotton. Six years later,
Bombay was ordered to send as many as 15,000 bales of cotton to
China to repair the finances of the Company at Canton. But the
factors by and large managed to disregard these instructions, and the
Company’s share in the total cotton exports to China never reached
important proportions. Instead, the Company’s power and authority
at Surat and elsewhere was made available in ample measure to the
private traders in their efforts to control the cotton dealers. Such
control was deemed necessary to check the rise in price as well as the
problem of adulteration of the cotton supplied. In December 1801, an
agreement was concluded between the government on the one hand,
and three agency houses of Bombay trading in cotton together with
three Parsi merchants, on the other. The private traders and the
government agreed to buy the cotton jointly, and to divide it between
them. The Company’s share was no larger than that assigned to each
firm. It was also realized that the problem of adulteration could be
tackled effectively and on a long-term basis only if the Company
extended its power in Gujarat. As Pamela Nightingale has emphasized,
it was this consideration rather than the menace of French imperialism
that determined the British policy of territorial expansion in the region

295

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

around this time. But from about 1805 onward, the Directors
succeeded in obliging the Bombay government to increase the Compa-
ny’s share in the cotton trade substantially. The domination of the
government by the private traders evidently was over, though they
continued to be important participants in the cotton trade with
Canton.”!

The principal item carried to China by the private English shipping
based at Calcutta was, of course, opium. Being contraband, it was
completely outside the Canton commercial system. It was not chan-
nelled through the Hong merchants but was smuggled to outside
brokers against cash payment. In addition to opium, the Calcutta ships
also carried to Canton commodities such as Malayan tin and Sumatran
pepper purchased en route in Batavia and other Malay ports against
items such as Bengal opium and textiles. On the return trip, some of
the China goods were sold in southeast Asia. The trade from Calcutta
to Canton and southeast Asia thus became part of an integrated
mechanism in which the export of opium played the central role. Ever
since the middle of the seventeenth century, the opium trade between
Bengal and southeast Asia had been handled predominantly by the
Dutch East India Company. But the British conquest of Bengal had
changed all that and the private English trader had emerged as the
principal dealer in Bengal opium. In the 1760s, the procurement of
opium in Bihar had been monopolized by a succession of English
Company servants operating in their private capacity. In 1773, the
Company itself had taken over the opium monopoly and made the
drug available to the private traders through public auctions held at
Calcutta. To the great advantage of these traders, the amount made
available to the Dutch Company under a newly introduced quota
system was kept at the relatively low level of 450 chests per annum.”2
The English private traders operated with impunity in the former
Dutch preserves in the archipelago and sold large quantities of Bengal
opium in the region. The shipping records at Batavia showed that
British private tonnage calling at that port increased from 3,000 to
5,000 tons between 1784 and 1786.

Already in 1764 private British traders were believed to have

71 Nightingale, Trade and Empire, chs. 5-7.
72 Om Prakash, ‘Opium monopoly in India and Indonesia in the eighteenth century’, The
Indian Economic and Social History Review, vol. 24 (1), 1987, pp. 63-80.

296

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

brought 500 chests of opium into the straits of Malacca. In 1777, the
value of Calcutta’s trade with Malaya and Indonesia was estimated as
being equal to the value of its trade with China. Up to between 1,500
and 2,000 chests of opium could be sold in the port of Riau alone,
which the sultan of Johor had opened to the English around 1768,
and a considerable amount of pepper and tin obtained there. The
American War and a Dutch counter-offensive in the Malacca straits,
which closed Riau in 1784, temporarily checked the Calcutta ship-
ping’s commercial expansion into Malaya, but in 1786 it took a more
concrete form with the annexation of Penang, the first British
settlement in Malaya. This was the culmination of the British private
traders’ attempt at finding a foothold in southeast Asia which could
serve as a base for their shipping and trade. Several places such as
Acheh, Balambangan and Phuket had earlier been explored for the
purpose but without success. In March 1789, the English traders
were reported to be smuggling at least 2,000 chests of opium annually
into China. Calcutta’s eastward trade as a whole was estimated in
1793 at around Rs.s million of which about Rs.3 million worth
consisted of opium. This sum would have bought about 4,500 chests
of which around 2,000-2,500 seem to have reached China and a
roughly similar amount to have been sold on the way in the Malay
archipelago.”

THE COROMANDEL COAST

Next to Bengal, the Coromandel coast continued to be the principal
theatre of the VOC’s trading operations in India over the period
1740-1800. The value of the textiles exported by the Company from
the region, after slumping to f.1 million during 1740-1 and to only
around half that figure during 1741-5, recovered remarkably from the
mid-1740s onward. In 1746-7, the figure stood at as much as f.2.26
million. Between 1747 and 1755, this value was generally around f.1.5
million. Over the last block of years for which information is available,
namely 1764-70, the value of the textiles exported again fluctuated
considerably with a trough of f.780,000 being recorded in 1764~5 and

73 Holden Furber, John Company at Work, A Study of European Expansion in India in
the Late Eighteenth Century, Cambridge, Mass., 1948, pp. 174-5, 183.

297

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

a peak of f.2.64 million in 1767-8 (Table 6.2). Overall, the wide annual
fluctuations make it impossible not only to identify any particular
trend in the value of the Company’s textile exports from the region
over the three decades between 1740 and 1770, but also to distinguish
this phase from the preceding one in any meaningful way. There is, for
example, very little to distinguish the decade of the 1760s from that of
the 1730s. The kind of upheaval in its trading position that the
Company witnessed in Bengal in the 1760s clearly did not have a
counterpart on the Coromandel coast. The English Company no
doubt had acquired a special position in the region, but on nowhere
near the scale it had been able to do in Bengal. The French presence on
the coast had at best a nuisance value.

The available data do not permit a precise division of the value of
the textiles exported by the Company from Coromandel between the
European and the Asian markets. There is, however, evidence which
suggests that around the middle of the eighteenth century, the share of
the two markets was broadly the same with Europe having a slight
edge over the East Indies. Thus of the total of f.13.87 million worth of
textiles exported between 1744-5 and 1753-4, f.6.79 million worth (or
49 per cent) was destined for the East Indies, the share for Holland
being f.7.08 million. The rate of profit earned on these textiles in the
East Indies was reported to be around 35 per cent.”* The fact that the
Indian merchants operating from Coromandel were still a major force
is also suggested by the same report. It is pointed out that from Porto
Novo alone, the textiles exported by these merchants to ports such as
Manila, Malacca, Acheh, Arakan, Pegu, Mocha and those in Persia and
other places amounted each year to 200,000 pagodas (or approximately
f.1 million).”°

The southern part of the Coromandel coast continued to be the
principal supplier of textiles to the Company. The factory at Pulicat in
central Coromandel provided expensive varieties such as extra fine

74 These calculations are based on the report by Jacob van der Waeyen dated 25
November 1757, ARA, HRB 341 (unfoliated). According to van der Waeyen, a total profit
of f.2,126,041 was earned on Coromandel textiles in Holland over the ten-year period,
assuming a rate of profit of 30 per cent. On this basis, the value of the textiles sold in
Holland works out at f.7.08 million. That leaves f.6.79 million worth for the East Indies, on
which a profit of f.2,367,212 (actual and not assumed) was reported to have been earned,
suggesting a figure of 34.8 per cent.

7> ARA, Report by Jacob van der Waeyen, HRB 341 (unfoliated).

298

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

rumals, bethilles, gingams, taftas, chelas and fine muris etc. The chintz
procured at Sadraspatnam were said to be the best available anywhere
on the coast in terms both of the quality of the material as well as of
the workmanship in the ‘painting’ on it. The most important centre of
procurement in southern Coromandel continued to be Nagapattinam
where Guinea-cloth and muris were woven in the Company’s own
villages.”° But as everywhere else, the problem of rising cost and
deteriorating quality was getting increasingly more acute at Nagapat-
tinam also. In 1754-5, for example, it was noted that a piece of an
ordinary guinea, a salampuri and a parcal, which cost f.5.90, f.2.60 and
f.1.40, respectively, in 1690-1, now cost respectively as much as f.9.15,
f.4.00 and f.2.10 (both reckoned in heavy money) representing an
increase of between 50 and 55 per cent. But the fact that the profit on
these and other varieties both in Holland as well as in the East Indies
continued to be satisfactory is borne out by Batavia’s exhortations to
the factors in 1756 to ensure that the orders for varieties such as fine
bleached guineas were met in full even if the price paid had to be
pushed up somewhat. Half of these guineas had to be sent on to
Holland while the other half was intended for the markets of the East
Indies. The other item for the East Indies to whose procurement
priority was to be attached was salampuris. The blue textiles for
Malacca were to be procured at Porto Novo.’”

As for northern Coromandel, the procurement at Masulipatnam
had to be suspended as of 1750 following the town’s takeover by the
French. It is not clear whether an attempt to bribe the French
governor, De Morain (who had been born in The Hague) with the
offer of a 3 per cent commission on all textiles bought in the town
clandestinely on behalf of the Company was successful.’ The varieties
hitherto procured at Masulipatnam were now bought at Narsapur,
Bimilipatnam, Palakollu and, above all, Jagannathpuram. The last-
mentioned town had been taken in farm from the Mughal governor
Rustam Khan Bahadur in 1734. In the second half of the eighteenth
century, it became an important centre of procurement. The washing,
bleaching and starching of the Company’s textiles procured in the
region had been organized for over a century at its own village of

76 ARA, Memoir of the outgoing Governor of Coromandel, Pieter Haksteen, for his
successor, Reynier van Vlissingen, dated 20 September 1771, HRB 344, ff. 119, 207.

77 ARA, Report by Jacob van der Waeyen, HRB 341 (unfoliated).

78 ARA, Report by Jacob van der Waeyen, HRB 341 (unfoliated.).

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Gondawaran located at the edge of a large tank noted for its alkaline
water. Another of the Company’s villages, Golepallem, also in the
Eastern Godavari delta, similarly specialized in painting and dyeing.
These processes were helped by the existence in the village of ground
water with specific chemical properties.”?

We noted earlier that, in the wake of the Fourth Anglo-Dutch
War, the Indian factories of the VOC were annexed by the English in
1781. When the factories on the Coromandel coast were restored to
the Dutch in 1784 along with those elsewhere on the subcontinent,
the one at Nagapattinam was kept back by the British. This forced
the VOC to move its Coromandel headquarters back to Pulicat. In
1791-2, the value of the Company’s exports from the region, the bulk
of which would have been in the form of textiles, was put by the
Coromandel factors at f.600,000. It was believed that a profit of
approximately 75 per cent would be made on the lot sent to Holland.
But given the establishment and other costs, this was not considered
attractive enough. In a secret communication to Batavia in 1791, the
Heren XVII had already suggested the folding up of the Coromandel
factories. This decision was formally incorporated in a resolution of
the Batavia Council dated 19 June 1792, and communicated to Pulicat
with instructions to move the Company’s effects at the six factories at
Pulicat, Sadraspatnam, Porto Novo, Jagannathpuram, Palakollu and
Bimilipatnam to the Dutch establishment in Sri Lanka.8° The Compa-
ny’s interpreter at Pulicat, Mandalam Venkatasalam Naikar, whose
family had served the Company for over a century and who himself
had been an employee since 1777, offered to keep all the factories
going at his own expense provided he was allowed to keep the
income from the Company’s villages. The profits on the sale of the
Company’s spices and other goods, which he would continue to
organize on the Company’s behalf, would be remitted by him in cash
or in the form of textiles.2! No serious attention was, however, paid
to this offer and it was decided to go ahead with the closure of the
factories.

79 ARA, Haksteen memoir, HRB 344, ff. 53-4; Sanjay Subrahmanyam, ‘Rural industry
and commercial agriculture in late seventeenth century south eastern India’, Past and
Present, Number 126, 1990, p. 92.

80 ARA, Secret letter from Jacob Eilbracht at Pulicat to Batavia dated 28 December 1792,
HRB 362, ff. 5, 13-14.

81 ARA, Letter from Mandalam Venkatasalam Naikar at Pulicat to Jacob Eilbracht dated
19 December 1792 (Telegu original available), HRB 362, ff. 113-20.

300

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

GUJARAT

On the west coast, when Jan Schreuder took up in October 1740 his
new responsibilities as the Director of the Company’s factories in
Gujarat, he found things ‘in a very poor shape’. Over the first half of
the 1740s, the average annual exports to both Europe and the rest of
Asia continued to be low, and were only marginally higher than over
the preceding several quinquenniums (Table 5.2). In a review exercise
carried out by him in March 1746, Schreuder put the Company’s
performance in a comparative perspective. He pointed out that while,
during 1694/5 to 1698/9, the average annual value of the Company’s
exports from Surat, and of the goods sold by it in the region, had
been Rs.601,373 and Rs.823,618 respectively, making a total of
Rs.1,424,991, the corresponding figures during 1740/1 to 1744/5 were
no higher than Rs.283,467, Rs.257,928 and Rs.541,395 respectively.®?
A comparison with the trade carried on by its rivals further high-
lighted the relative smallness of the Company’s trade in the early
1740s. The Asian merchants’ trade from Surat at this time was
estimated at Rs.2 million, that of the Portuguese at Rs.500,000, of the
French at Rs.160,000, and of the English at as much as Rs.2.43
million.®? Considering that the English Company trade at Surat at this
time was quite small (between 1741 and 1745, the average annual value
of the Gujarat textiles the Company imported into England was no
more than Rs.322,280),°4 an overwhelming proportion of the English
figure was evidently accounted for by the private traders. If these
figures are at all reliable, the share of the VOC in the total trade at
Surat would work out at under 10 per cent.®

An important factor held responsible for the poor performance by
the Company was the situation arising out of the Maratha incursions
into the province. The additional heavy tolls charged by them were
reported to be cutting deeply into the sale of goods.® It was also
largely because of the Maratha menace that the Company was forced

82 ARA, ‘Considerations over the opening up of free navigation and trade — how this
could be guaranteed at Surat’, by Jan Schreuder, 2 March 1746, HRB 837 (unfoliated), paras.
260-3. The slight difference between these figures when converted into florins at the usual
rate of f.1.5 to a rupee, and those in Table 4.5 arises because of the different years covered by
the quinquenniums in the Table.

83 ARA, ‘Considerations’, HRB 837, para. 262.

8* Calculated from Chaudhuni, The Trading World of Asia, p. 541.

85 The exact share works out at 9.61 per cent.

86 ARA, ‘Considerations’, HRB 837, para. 116.

301

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

in 1744 to abandon its factory at Ahmedabad, the principal procure-
ment centre for silk textiles, as also for some varieties of cotton
textiles.8” Silk textiles procured at places such as Surat were not of the
same quality as those earlier procured at Ahmedabad. This was
notwithstanding the fact that the raw materials used were the same,
and in many cases even the weavers were the ones who had moved out
of Ahmedabad in the wake of the Maratha troubles. The explanation
given was in terms of the specific chemical properties of the water in a
particular pond in Ahmedabad used for washing the silk textiles,
which gave them that specific brightness and lustre.*®

With a view to improving this state of affairs, Schreuder suggested a
more vigorous and better-coordinated participation by the Company
in Surat’s trade. As against the average of one or two ships over the
preceding several years, he made out a case for the employment of five
ships each year in the trade to and from Surat. Two of these ships
could come from Batavia with European and Asian goods. On their
return voyage, they could carry cargo not only for Batavia and
Europe, but also for Malabar and Sri Lanka to be offloaded on the
way. Another two ships could come from Bengal with raw silk, sugar,
textiles and freight goods. They could make stopovers on the way in
Sri Lanka and Malabar and pick up goods such as sandalwood, coir
and areca-nuts. On the return voyage, these ships could carry cotton
to Bengal. If, however, it was felt that Bengal, Sri Lanka and Malabar
together could not send two shiploads each year, then all four ships
could originate at Batavia. On their return voyage, two of these ships
could travel via Bengal. Finally, the fifth ship could come from China
with sugar, spelter, quicksilver and alum and carry back items such as
cotton. On its way back, it could also pick up goods such as pepper
and sandalwood at Malabar.8?

The plan was duly implemented for a while but then modified. The
Bengal shipments stopped after two years as did the one from China
soon after. In the memoir that Schreuder prepared in September 1750
for his successor, Johannes Pecock, he endorsed the discontinuation of

87 ARA, ‘Considerations’, HRB 837, para. 136; Memoir by outgoing Director Jan
Schreuder for his successor, Johannes Pecock, dated 30 September 1750, HRB 838, f. 17.

88 ARA, ‘Considerations’, HRB 837, para. 137; Report to Governor-General Mossel and
Council at Batavia on the state of affairs at Surat by D. van Rheede, extraordinary member
of the Council, dated 15 May 1758, HRB 843, f. 90.

89 ARA, ‘Considerations’, HRB 837, paras. 322-5.

302

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

the China voyage. It would be more profitable, he now felt, to invest
funds in China in goods for Holland rather than for Gujarat. Also, the
principal item imported from China, namely sugar, could more profit-
ably be imported from Batavia. In any case, a profit of just 50 to 60
per cent earned on the China goods was not good enough. He
therefore proposed that all the five ships originate at Batavia and carry
goods such as sugar, Japanese bar copper, spices, tin, lead, iron,
spelter, ivory and Siamese sappanwood to Surat. For the return
voyage, while two of the ships could return to Batavia, another two
could be sent to Bengal, while the fifth could go on to China.
Alternatively, one ship could travel back to Batavia, another to China,
and a third to Sri Lanka via Malabar. From Sri Lanka, it could go on
either to Batavia or to Holland. The fourth and the fifth ships could
carry freight cargo to Basra and Mocha respectively and then return to
Bengal via Surat where they could pick up cotton.”

Whether it was the efficacy of the Schreuder plan or the result of
other factors at work, the fact remains that the position of the
Company’s trade at Surat improved remarkably from the mid-1740s
on. The value of the exports to Europe increased considerably, but the
increase in the value of the goods destined for the rest of Asia to an
average annual level of between f.600,000 and f.700,000 was little
short of spectacular. The total value of the goods exported now
approached a million florins. In addition, there was the cash sent to
the various Asian factories taking the figure up to f.1.25 million (Table
5.2). At the same time, the profit earned on goods sold in Surat
jumped from an average annual level of f.200,000 in the 1740s to a
remarkable f.670,000 in the 1750s, and further to f.720,000 in the
1760s. While spices continued to be the single largest profit earner, the
share of other goods such as Japanese bar copper consistently went up.
In the eighteenth century, the period between 1745 and 1760 clearly
constituted the high point of the Dutch Company’s trade in Gujarat.

The 1760s, however, again witnessed a downturn in the value of the
Company’s trade from Gujarat. The increase in the average annual
value of the exports for Holland was more than neutralized by the
steep decline in the value of the goods for the rest of Asia, which now
averaged only f.250,000 per annum against more than f.600,000
during the 1750s. The total value of the goods exported came down on

9° ARA, Memoir of Jan Schreuder, HRB 838, ff. 204-17.

303

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

average to half a million florins, and that of total exports, including
cash, to under a million florins (Table 5.2). Details available for the
year 1764~5 show that of the total of f.743,000 worth of goods
exported, 37 per cent by value, consisting entirely of textiles, were
destined for Holland, and the remainder for the East Indies. The cash
exports of f.450,000 were destined for the East Indies and Sri Lanka in
the ratio of 1:2.71

A part of the Company’s problems at this time emanated from the
growing influence of the English East India Company at Surat. An
important landmark in that development was the English takeover of
the Surat castle in 1759. Meah Achan was allowed to continue as the
nawab but was made subordinate to the authority of the new English
qiladar. The English also appropriated for themselves the right to
mediate in all disputes between the local merchants and the rival
European companies. While the Dutch Company was formally
assured both before and after the takeover that its right to trade in the
province unhindered would in no way stand compromised, the facts
were slightly different. The English took full advantage of their
special authority and created all kinds of irritants for the Dutch. In
May 1765, for example, the English chief, Hodges, issued orders that
in view of the possibility of fraud being perpetrated in the matter of
the payment of customs duties, the Dutch would henceforth be
obliged to pay these duties on the imported spices in the city rather
than at the harbour. Senff, the Dutch director, while publicly threa-
tening in protest to send the ships back without having them
unloaded, privately asked the brokers to approach Hodges with the
offer of a bribe if he would withdraw the order. The strategy worked
and the Dutch were allowed to pay duties on all goods imported at the
harbour itself. The following year, the English decided that as proof of
having paid the duties, the Dutch Company goods must carry the
stamp of the English in addition to that of the governor. Initially, they
took the position that the measure was designed simply to prevent
fraud being perpetrated by the officials of the governor. When the
Dutch insisted that this violated their rights, they were simply

%) ARA, ‘Reflections of Director C.L. Senff on the Surat sugar trade’, dated 1 March
1766, HRB 846, Appendix A, unfoliated.

92 ARA, Memoir by outgoing director C.L. Senff for his successor, M.J. Bosman, dated
31 December 1768, HRB 848, para. 37.

304

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

informed that ‘our superiors at Bombay have issued orders that the
goods of the Dutch should carry our stamp’.

The only other factory the Dutch had in Gujarat at this time, in
addition to that at Surat, was the one at Broach. In 1772, the English
asked that this factory be closed down. It was only after a deputation
was sent to Bombay that the order was withdrawn. But after the peace
treaty of 1783 ending the Fourth Anglo-Dutch War, the Broach
factory was not returned to the Dutch, but was instead handed over to
Madhav Rao Scindia. A protest to the English and a plea to Scindia
went unheeded. The Dutch factors, however, noted that since they in
any case carried on only a very small amount of trade at Broach, this
would be no great hardship.7* What did matter more was the use by
the English of their authority to do at Surat, though on a much smaller
scale, what they had been doing in Bengal, namely to insist that the
weavers work for no one else till such time as they had completed
their engagement with the English Company.” This would obviously
have hurt the VOC’s textile procurement at Surat, though going by
the value of the Company’s average annual exports in the 1780s, the
adverse effect was probably only of a limited order (Table 5.2).

THE MALABAR COAST

The years between 1740 and 1800 also witnessed fluctuations in the
VOC’s fortunes on the Malabar coast. By far the most important
development of the period was the establishment of a pepper mono-
poly by Martanda Varma of Travancore, whose territorial jurisdiction
now stretched as far up the coast as Cranganur. It was in 1743-4 that
Martanda Varma first declared his intention ‘to take upon himself the
Direction of the pepper trade’. Initially the English Company was
allowed a certain measure of relaxation from the new arrangement.
The merchants it chose to deal with were allowed to buy pepper freely
in a specified area within the kingdom of Travancore. But in
November 1746, the Anjengo factors were directed to enter into
contracts only with designated merchants at predetermined prices. The

°° ARA, Memoir of Senff, HRB 848, paras. 46-9, 56.

%* ARA, Memorandum on Surat submitted to the Governor-General and Council at
Batavia by Surat director, A.J. Sluisken dated 1 October 1786, HRB 851, paras. 149-52.

°° ARA, Memoir of outgoing Director A.J. Sluisken for his successor, Pieter Sluisken,
dated 31 December 1792, HRB 854, paras. 60-1.

325

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

result was that the English were unable to obtain any pepper during
1747-8 and 1748-9. In 1750, it was the government’s contract that
supplied pepper to the English at Anjengo.”© The average annual value
of the Malabar pepper the Company imported into England was
£33,306 (f.399,672) in the 1740s, and £29,971 (f.359,652) in the
17508.”

The position of the Dutch Company was equally precarious. In
1741-2, the value of its exports from Malabar was no more than
f.232,000 (Table 6.3). The pepper it procured at this time was supplied
principally by merchants engaged in business in south Malabar. The
procurement in the north was negligible because of the pull of Calicut.
In May 1743, the Company entered into an agreement with Martanda
Varma under which the raja agreed to supply 1,200 kandis of pepper
per annum at Rs.54 per kandi. This amount was often not supplied in
full, but it was now the mainstay of the Company’s total procurement
in Malabar. At the close of 1751, the price was increased to Rs.75 per
kandi. The necessity of enhancing the supply obliged the Company to
enter into yet another treaty with Martanda Varma in 1753. Under the
treaty of Mavalikara, the Dutch agreed to supply the raja with
Rs.12,000 worth of military supplies annually, to aid him against
external attack, and to denounce their treaties with all other Malabar
princes, most of whom had long since come under the raja’s control.
In return, Martanda Varma undertook to enhance the amount of
pepper supplied to the Company each year to 3,000 kandis at Rs.65
per kandi. He also undertook to supply another 2,000 kandis at Rs.5 5
per kandi from principalities he might later conquer. One might note
that this price was no more than about half the market price and the
raja was able to offer it only because of his complete control over both
the production and the trade in pepper.”® The target of 3,000 kandis
per annum was not always met, but there is no question that the
export capability of the Company now improved enormously. This is
reflected in the rise in the value of the annual exports to as much as
{700,000 in 1761-2, and nearly f.600,000 in 1784-5, though the figure
was much smaller during 1771-2 (Table 6.3).

Partly because of the expenses the maintenance of fortresses and
garrisons involved, the annual expenditure of the Company incurred

%6 A. Das Gupta, Malabar in Asian Trade, 1740-1800, Cambridge, 1967, pp. 34-9-
%” Calculated from Chaudhuri, Trading World of Asia, p. 525.
°8 Das Gupta, Malabar in Asian Trade, pp. 42-4.

306

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

in Malabar was always considerably in excess of the income earned
locally through profit on the sale of goods and so on. Thus over the
forty-year period ending in 1754-5, it was estimated that against the
total income of f.8.56 million, the total expenditure had been as much
as f.18.93 million, producing a staggering deficit of f.10.37 million.*? It
was with a view to cutting into this deficit to the extent possible that
the Cochin factors decided in the 1740s to participate in the textile
trade of Malabar. The plan was to buy textiles in Tengapatnam in the
south and sell them at Cochin. The beginning was quite good and, in
1752, the factors managed to sell as many as 14,000 pieces. But this
phase did not last very long. In October 1758, the factors complained
of a significant rise in the cost price and found that they could not
quite compete with the merchants from the north. In February 1759,
therefore, it was decided to get out of this trade.'©°

The Dutch connection with Malabar came to an end in the 1790s.
From 1792, the factors at Cochin were trying to sell the Company’s
establishments to the raja of Travancore. But since it was generally
believed that the English wanted the Cochin factory for themselves,
the raja refrained from finalizing the deal. Trading operations were
terminated in November 1793, and Dutch rule finally ended in Cochin
in October 1795.}%

THE FRENCH COMPANY TRADE

Apart from the English and the Dutch East India companies, the only
European company of any consequence operating in India in the mid-
eighteenth century was the French Compagnie Perpetuelle des Indes.
We noted earlier that ever since its establishment in 1723, this
Company had done quite well and that by the mid-1730s it had
become a major competitor of the English and the Dutch. The
subsequent history of the Company until its liquidation in 1769 was
characterized by marked fluctuations in the value of the trade it
carried on between Asia and Europe. From a peak of LT 8.87 million

°° ARA, A short account, dated 31 December 1756, prepared by van Hooreman,
ordinary member of the Batavia Council, for Governor-General Mossel, about Malabar in
pursuance of the XVII’s directive dated March 1754, and Batavia’s secret decision dated 4
October 1755, VOC 4903 (unfoliated).

100 Das Gupta, Malabar in Asian Trade, pp. 79-82.

'01 Das Gupta, Malabar in Asian Trade, pp. 124-5.

307

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

during 1735-6 to 1744-5, the average annual value of the Company’s
total imports from Asia came down to LT 6.36 million during 1745-6
to 1754-5, and further to a trough of LT 3.94 million during 1755-6 to
1764-5. But the last few years of the Company’s existence (the last
sales on the account of the Company took place in 1770-1) witnessed
a remarkable revival in its fortunes. Thus, between 1765-6 and 1770-1,
the average annual value of its imports into Europe was as much as LT
8.74 million, being nearly the same as during the peak years of 1735~6
to 1744-5. How did this performance compare with that of the Dutch
and the English around this time? The average annual value of the
Dutch imports from Asia during 1778-80 was f.6.93 million (Table
4.1). In the case of the English, this figure was f.8.36 million during
1758—60 and as much as f.23.11 million during 1777-9 (Table 4.2). The
French figure of f.4.37 million (LT 8.74 million) during 1765-6 to
1770-1 was still the lowest of the three, but nevertheless one not to be
dismissed lightly. The share of the India goods in the total Asian
cargoes was around 75 per cent during 1735-6 to 1744-5, but came
down steadily over the following decades till it reached 60 per cent
during 1765-6 to 1770-1 (Table 6.4). The average mark-up on the
Asia goods fluctuated between around 65 and 100 per cent. The mark-
up on India goods alone was somewhat lower — roughly between 50
and 95 per cent (Table 6.4). At the time of the liquidation of the
Company in 1769, the government paid the shareholders a sum of 30
million livres and threw the trade open to private merchants.
Following the peace treaties of 1783, a number of private French
merchants engaged in the India trade formed in 1785 the so-called new
French East India Company of Calonne. During its brief five-year
existence, the Company sent out to India a total cargo worth 36.17
million livres consisting mainly of silver. A certain amount of pur-
chasing power was also generated in India by issuing bills of exchange
on Paris against rupees received. Such transactions were carried on
both with individual European merchants looking for a safe avenue to
transmit their savings home, as well as with agency houses at Calcutta
and Madras. The total value of the return cargo received was 34.98
million livres working out to an average annual figure of approxi-
mately 7 million livres.'* The return cargo consisted overwhelmingly
of textiles procured at Chandernagore in Bengal, and Pondicherry,

102 Furber, John Company at Work, p. 57, note 62.

308

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

Yanaon and Karikal on the Coromandel coast. At Mahe on the
Malabar coast, where the Company sought to buy pepper, an embargo
imposed by Tipu Sultan effectively blocked all progress. Little pro-
gress was similarly made at Surat, though in a move clearly ahead of its
time, the Company had planned to import Surat cotton into Europe
for manufacture by the new machines in the English cotton mills.

A treaty concluded in 1787 recognized the right of the French to
sell to the English factors each year 200,000 maunds of salt and to buy
from them 18,000 maunds of saltpetre and 300 chests of opium. As far
as textiles were concerned, the procurement in Bengal was subject to
the usual hindrances that the Dutch also had to face at the hands of the
English Company gumashtas. The situation on the Coromandel coast,
on the other hand, was reasonably satisfactory. At Pondicherry, for
example, the long-established links with the weaving communities
ensured regular supplies.

In April 1790, the French National Assembly issued a decree
declaring the trade with India again open to all Frenchmen. Since an
immediate liquidation of the Calonne Company would have left it in
the red, it was allowed to reorganize itself with a new board of
directors and to continue in business on a small scale for some time
more. The last deliberations of its agents in Bengal are recorded as
having taken place in September 1795.1

THE DANISH COMPANY TRADE

As for the Danes, we had noted earlier that King Christian VI had
chartered the Danish Asiatic Company in April 1732 with a forty-year
monopoly of the trade with Asia. Table 7.1 sets out the value of the
trade carried on by this Company with India. Until 1772, when its
first charter expired, the India trade of the Company was both
irregular and limited in value. The cargo from India consisted mainly
of cotton textiles procured at Tranquebar and in Serampore in Bengal,
where a factory was re-established in 1755 after a gap of over forty
years. Over the period 1734-71, the auction value of the total cargo
imported from Asia was 41.69 million Danish ryx-dollars. At 10.46
million ryx-dollars, the value of the goods imported from India
accounted for only a quarter of the total, the remaining three quarters

'03 Furber, John Company at Work, pp. 53, 65.

399

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Table 7.1 Average annual value of the Danish Asiatic Company’s
imports from India, 1734-1807

Years Invoice value of the Sales proceeds of Gross profit
cargo (in Danish ryx- the cargo (in (percentage)
dollars; 1 Danish ryx- Danish ryx-dollars)
dollar = approx. f.2)

1734-43 NA 2575035

1744-§3 NA 256,953

1754-63 NA 335,826

1764-71 NA 171,189

1772-9 290,941 363,130 24.81

1780-9 746,766 951,831 27.46

1790-9 982,784 1,361,162 38.50

1800-7 941,739 1,154,656 22.60

Note: NA stands for not available.

Source: Calculated from:

Rows 1-4 Ole Feldbzk, ‘The Danish Asia trade 1620-1807, value and volume’,
The Scandinavian Economic History Review, vol. 39 (1), 1991, Table 1, p. 6.

Rows 5-8 Ole Feldbek, India Trade Under the Danish Flag, 1772-1808,
Copenhagen, 1969, Appendix III, pp. 246-7.

being accounted for by the goods from China.'% The average annual
value of the goods imported from India was also marked by
considerable fluctuations. From an average of 250,000 ryx-dollars
between 1734 and 1753, the figure went up to 335,000 ryx-dollars
during 1754-63, but came down sharply to a mere 171,000 ryx-
dollars during 1764-71.

The cargo exported by the Company to India during this period
consisted mainly of silver, though a certain amount of value was also
carried in the form of ballast goods such as lead, copper and iron. This
silver constituted the principal component of the purchasing power at
the disposal of the factors in India. A smaller component was the
resources generated locally by issuing bills of exchange to English and
other European private traders on London and Amsterdam etc. The
relative smallness of this source is borne out by the fact that over the
period 1732 to 1758, the bills issued amounted to no more than

104 Ole Feldbzk, ‘The Danish Asia trade 1620-1807, value and volume’, Scandinavian
Economic History Review, vol. 39 (1), 1991, p. 6.

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THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

When the date for the expiry of the charter of 1732 approached, the
Company applied in 1769 for a fresh forty-year charter. The new
charter was granted in July 1772 but for a period of only twenty years.
Also, while the Company was allowed to retain its monopoly of the
China trade, the India trade was thrown open to all Danish subjects.
The Company was allowed to continue to administer the Indian
establishments, but in 1777 this function was taken over by the
Crown. In 1792, the charter was renewed for yet another period of
twenty years.1°%

For the period 1772-1807, both invoice and auction values of the
cargoes received from India are available. An examination of these
values shows that it is not without reason that this phase has been called
the ‘golden age’ of the Danish Asiatic trade. The total auction value of
the Asian cargo imported during this period both on the account of the
Company as well as on that of the private traders was 132 million
Danish ryx-dollars. The share of India goods in this total was as much
as 75 million ryx-dollars (57 per cent), that of China goods 40 million
ryx-dollars (30 per cent), and of the goods procured in the rest of Asia
at places such as Java and Mauritius, the remaining 17 million ryx-
dollars (13 per cent). The share of the Danish Asiatic Company in the
total auction value of the imports from India and China worth 115
million ryx-dollars was 75 million ryx-dollars (65 per cent), the
remaining 40 million ryx-dollars worth (35 per cent) having been
imported on private account, all from India. Of the cargo imported on
the account of the Company, 40 million ryx-dollars worth (53 per
cent) consisted of China goods and the remaining 35 million ryx-
dollars worth (47 per cent) of goods from India representing a distinct
improvement in the share of the India goods compared to the
preceding period.'” The substantive increase in the cargoes from
India started in the 1780s (Table 7.1). In the closing decade of the
eighteenth and the early years of the nineteenth century, the average
annual invoice value of this cargo approached a million Danish ryx-
dollars (equivalent to approximately two million Dutch florins). The

'05 Holden Furber, The Rival Empires of Trade in the Orient 1600-1800, Minneapolis
and Oxford, 1976, p. 215.

'06 Feldbzk, ‘The Danish Asia trade’, pp. 7-8.

'07 Calculated from Feldbzk, “The Danish Asia trade’, Table 3 (p. 14) and Table 6 (p. 24).

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

value imported on the account of the private traders was in addition to
this. While in relation to the English Company trade from India at this
time this figure does not sound particularly impressive, it nevertheless
represented a great advance over whatever the Danish Company had
been able to achieve earlier. The gross profit on the India goods
reportedly fluctuated between about 22 and 38 per cent (Table 7.1).

Another significant feature that distinguishes the post-1772 period
from the one preceding it is the considerably enhanced use now made
by the Company of bills of exchange to finance its procurement of the
return cargo. Between 1772 and 1775, silver formed on average no
more than 32.3 per cent of the outward cargo. And for a whole decade
between 1775 and 1785, no silver whatsoever was sent to India. This
clearly was the highpoint of the business in bills of exchange as far as
the Danish Company was concerned. But as the bill market in India
became tighter and the rate of interest increased, the Company
reverted to silver. Silver exports were resumed in 1786 and between
1788 and 1807 silver, on average, accounted for 75.6 per cent of the
outward cargoes to India.

Between 1778 and 1808, textiles accounted for over 80 per cent of
the return cargo imported on the account of the Company. The
remainder consisted of ballast goods such as saltpetre and pepper.
More and more of the textiles were now being procured in Bengal.
While during 1772~5 the share of Bengal goods in the Indian cargo
was between 18 and 30 per cent, the proportion went up to 48 per cent
in 1777, and was 43 per cent in 1778. The wars in southern India in the
1780s leading to the closure of the factory at Tranquebar in 1796
further strengthened this trend.1°8 As Feldbzk has shown, there was
an interesting pattern of complementarity between the India trade of
the Company and that of the private Danish merchants engaged in this
trade. When the latter had a downward trend, the former boomed, and
vice versa. In a general situation of faltering demand, the Company
did not want to glut the market, though it did not always succeed. In
the early years of the nineteenth century, stocks of Indian textiles
piled up in the Company’s warehouses and instructions were sent in
1807 to Serampore to reduce drastically the textile component in the
return cargo.!°? But the war with England intervened and the Danish

108 Ole Feldbxk, India Trade Under the Danish Flag 1772-1808, Copenhagen, 1969, pp.
1§—22.
109 Feldbzk, ‘The Danish Asia trade’, pp. 16-17.

312

THE SUPREMACY OF THE ENGLISH EAST INDIA COMPANY

trade with India came to an end. Tranquebar and the other Indian
establishments were under the occupation of the British between 1808
and 1815, and were eventually sold to them in 1845.!!°

To summarize, the second half of the eighteenth century, and
particularly the period from about 1760 onward, was characterized by
an unquestioned domination of Euro-Asian trade by the English East
India Company and of trade in the Indian Ocean-South China Sea
complex by private English traders. Even during its ‘golden age’ over
the last decade of the eighteenth and the early years of the nineteenth
century, the average annual value of the Danish Company imports
from Asia was under f.2 million. The French Company imports over
the period had been marked by violent fluctuations as well as interrup-
tion, and the highest average annual value achieved was f.4.37 million
during 1765/6 to 1770/1. In the case of the VOC, the average annual
value figure had gone up only slightly from f.6.4 million during
1738-40 to f.6.93 million during 1778-80. In comparison, the growth
in the average annual value of the English Company imports from
f.7.66 million during 1738-40 to f.8.36 million during 1758-60, and to
as much as f.23.11 million during 1777-9, was nothing short of
spectacular. At the latter date, India accounted for 78 per cent of the
total imports. This figure was 60 per cent in the case of the French and
47 per cent in that of the Danish Company. In the case of the VOC,
this figure was around 50 per cent.

Within India, the Dutch trade at Coromandel was characterized by
large annual fluctuations with the peak years registering fairly impor-
tant levels of trade. Gujarat contributed only marginally to the
Company’s Euro-Asian trade, though it continued to be of signifi-
cance in its intra-Asian trade. The trade at Malabar, however, was
quite small throughout the period. That left Bengal, which was by far
the most important region of trade for all the European companies. In
the case of the English Company, Bengal accounted for as much as 59
per cent of the total Asian imports in 1759, and 54 per cent of a very
much higher figure during 1777-9. The Bengal trade was clearly the
key to the English domination of the Euro-Asian trade.

The unprecedented success of the English in Bengal owed a great
deal to the gross misuse of the political authority wielded by the
Company in the province since about 1760. The rival European

"0 Feldbzk, India Trade Under the Danish Flag, p. 9.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

companies were now essentially on sufference and subject to all kinds
of hindrances put in their way. The political leverage of the Company
also had significant implications for the economy of the region. For
one thing, the Company diverted a part of the revenue income from
the province to investment in the purchase of the return cargo for
England. Another major source used to augment the rupee funds
available to the Company was the sums borrowed from private
European merchants, including its own servants, against bills of
exchange payable in London and other European capitals. Indeed, this
particular source was used extensively by the rival European compa-
nies as well. The result was that the companies no longer found it
necessary to import significant amounts of silver from home or from
elsewhere in Asia, leading to a fundamental alteration in the structure
of Euro-Asian trade. Perhaps even more important was a basic
alteration in the nature of the relationship the English Company had
with merchants and artisans with whom it did business in the region.
This relationship was no longer governed by the forces of demand and
supply in the market, but had degenerated into one of intense coercion
by the Company of the trading and the artisanal groups.

314

CHAPTER 8

EUROPEAN TRADE AND THE
INDIAN ECONOMY

TRADE AS AN INSTRUMENT OF GROWTH

The principal distinguishing feature of Euro-Asian trade in the early
modern period was its bullion-based character. In view of the inability
of Europe to supply western products with a potential market in Asia
at prices that would generate a large enough demand for them to
provide the necessary revenue for the purchase of the Asian goods, the
Europeans were obliged to import the bulk of the purchasing power
they brought to India (and other parts of Asia) in precious metals,
mainly silver. It is indeed quite immaterial whether the imported
precious metals are treated as a traded commodity or as a balancing
item settling trade surpluses. Traditionally, trade between the Indian
subcontinent and neighbouring regions such as southeast Asia had
essentially been one involving the exchange of commodities such as
Indian textiles against items such as Indonesian spices and Malayan
tin. But at the same time, trade with other regions such as west Asia
had involved the exchange of Indian textiles overwhelmingly against
precious metals. It is not without reason that the port of Mocha in the
Red Sea was described as the treasure chest of the Mughal empire. The
Euro-Asian trade was thus essentially a continuation of the earlier
pattern of trade with regions such as west Asia.

In so far as a country is relatively more efficient in the production
of export goods than in that of import goods, an increase in trade
between nations is ordinarily to the advantage of both the trading
partners, involving an increase in the value of the total output in each
of the two economies. The ‘gains from trade’ tend to become much
more substantial in special situations such as in the case of the Euro-
Asian trade in the early modern period. This is because the decline in
the domestic production of import-competing goods, which would
usually accompany an increase in the output of export goods in an
ordinary trade situation involving the exchange of goods against
goods, would be avoided when the imports consisted not of goods but
of precious metals (which in any case were not produced domestically

315

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

in countries such as India). An increase in the output of export goods
attendant upon an increase in trade would then involve a net increase
in total output and income in the economy. This would be so
irrespective of whether the imported precious metals are treated as a
commodity import or asa mechanism for settling trade balances.

The increase in the output of export goods in the subcontinent in
response to the secularly rising demand for these goods by the
Europeans would seem to have been achieved through a reallocation
of resources, a fuller utilization of existing productive capacity and an
increase over time in the capacity itself. A reallocation of resources in
favour of the production of export goods such as raw silk and
particular varieties of textiles would have been signalled, among other
things, by a continuous rise in the prices of these goods in the markets
where they were procured. Evidence regarding such a rise is available
in plenty in the European company documentation. The available
evidence also suggests both a fuller utilization of existing capacity as
well as expansion thereof over time. In the case of textile manufac-
turing, for example, artisans engaged in the activity on a part-time
basis seem to have increasingly found it worth their while to become
full-time producers and to relocate themselves in the so-called aurungs
— localized centres of manufacturing production, where the Europeans
were increasingly concentrating their procurement through the inter-
mediary merchants. Among the other factors of production required,
land was clearly in abundant supply practically all over the subconti-
nent at this time. As far as the necessary capital resources needed for
the production of new spindles, wheels and looms etc. was concerned,
given the extremely small amounts involved, and the fact that the
European companies were ever willing to advance the necessary sums,
the availability of funds also is highly unlikely to have been a
constraining factor. It need hardly be stressed that across a country of
the size of the Indian subcontinent, there are likely to have been
regional variations with regard to the degree of dynamism, flexibility
and potential for continuing expansion in the scale of production that
this scenario envisages. However, evidence available at least in respect
of regions such as Bengal, which was by far the most important
theatre of company activity on the subcontinent, would generally
seem to confirm the presence of such attributes in ample measure.

In this scenario, the Europeans’ trade would have become a vehicle
for an expansion in income, output and employment in the subconti-

316

EUROPEAN TRADE AND THE INDIAN ECONOMY

nent. As far as additional employment generated in the textile manu-
facturing sector as a result of European procurement is concerned, an
exercise carried out in respect of the average annual procurement of
textiles and raw silk in Bengal by the Dutch East India Company over
the period 1678-1718 suggested that a total of 33,770 to 44,364
additional full-time jobs would have been created by the Company’s
procurement of these two items. If one extended the exercise to cover
the English East India Company, but considered only the early years
of the eighteenth century between 1709 and 1718, the number of
additional full-time jobs created was estimated at 86,967 to 111,151.
The probable total size of the workforce in the textile manufacturing
sector in the province of Bengal was estimated at one million. The full-
time jobs associated with the Dutch Company’s trade thus accounted
for between 3.37 per cent and 4.43 per cent of the total workforce in
the sector: the proportion went up to between 8.69 and 11.11 per cent
when the trade of the Dutch and the English East India Companies
was considered together.!

The fact that the rate of growth of the Europeans’ demand for
goods such as textiles and raw silk was almost always greater than the
rate at which their output increased turned the market increasingly
into a sellers’ market. This was reflected in the growing bargaining
strength of the merchants vis-a-vis the companies. For example, in
1709 a number of textile suppliers dealing with the Dutch Company in
Bengal refused to accept fresh contracts unless the Company gave
them an assurance that henceforth in the event of only a limited
variation between the quality of the sample given out and that of the
pieces actually supplied by them, there would: be no deduction made
from the price mutually agreed upon at the time of the contract. The
suppliers even insisted upon a refund of the price deductions made on
this count on textiles supplied during the preceding season. A similar

' This is based on a more detailed analysis carried out in Om Prakash, The Dutch East
India Company and the Economy of Bengal, 1630-1720, Princeton, 1985, ch. 8. The
subsequent detection by Sushil Chaudhury of an error in the rate of conversion between the
covid and the yard suggested that the figure of 33,770 jobs ought to be revised to 38,195, and
that of 86,967 to 94,517. In that case, the proportion that these additional full-time jobs
would have formed of the probable total size of the workforce in the sector would go up
from between 3.37 and 4.43 to between 3.81 and 4.43 per cent, and from between 8.69 and
11.11 to between 9.45 and 11.11 per cent, respectively. (See Sushil Chaudhury, ‘European
companies and the Bengal textile industry in the eighteenth century: the pitfalls of applying
quantitative techniques’, Modern Asian Studies, vol. 27 (2), 1993, pp- 321-49. My response,
‘On estimating the employment implications of European trade for the eighteenth century
Bengal textile industry — A reply’, appeared in the same number of the journal, pp. 341-56.)

347

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

distinct improvement would also seem to have taken place in the
bargaining strength of the weavers vis-a-vis the textile suppliers
ensuring that the ‘gains from trade’ indeed percolated all the way
down. Writing in 1700, for example, the Dutch factors at Hugli made
the following observation:

The merchants inform us (and on investigation we find that they are speaking the
truth) that because of the large number of buyers in the weaving centres and the
large sale of textiles, the weavers can no longer be coerced. They weave what is
most profitable for them. If one does not accommodate oneself to this situation,
then one is not able to procure very much and the supplies go to one’s
competitors.”

THE MONETARY ASPECTS OF
THE EUROPEAN TRADE

Quite apart from the implications of European trade for real variables
such as income, output and employment, there was an important
range of issues in the monetary domain which were affected by this
trade. The import of large quantities of precious metals by the
European companies into India on a continuing basis would have had
certain consequences for the economy of the subcontinent. There is a
considerable body of literature that assigns an important role to the
imported American silver in shaping the growth of a number of
European economies in the early modern period. According to
Immanuel Wallerstein, for example, without the American silver

Europe would have lacked the collective confidence to develop a capitalist system,
wherein profit is based on various deferrals of realized value. This is a fortiori true
given the system of a nonimperial world-economy which, for other reasons, was
essential. Given this phenomenon of collective psychology, an integral element of
the social structure of the time, bullion must be seen as an essential crop for a
prospering world-economy.*

This is what made South America so valuable. In Wallerstein’s words,

the production of gold and silver as a commodity made the Americas a peripheral
area of the European world-economy in so far as this commodity was essential to
the operation of this world-economy, and it was essential to the extent that it was
used as money . . . In short, they [the Europeans] incorporated the Americas into

2 Algemeen Rijksarchief (ARA), Explanation by the Dutch factors of why the orders
were not supplied in full, 1700, VOC 1638, ff. 17-19, 1 Section.

3 Immanuel Wallerstein, The Modern World-System, Capitalist Agriculture and the
Origins of the European World-Economy in the Sixteenth Century, New York, 1974, p. 46.

318

EUROPEAN TRADE AND THE INDIAN ECONOMY

their world-economy, primarily because they needed a solid currency base for an
expanding capitalist system and secondarily to use the surplus in trade with Asia.‘

But according to the proponents of this position, Asia was different.
To quote Wallerstein once again,

At this epoch, the relationship of Europe and Asia might be summed up as the
exchange of preciosities. The bullion flowed east to decorate the temples, palaces,
and clothing of Asian aristocratic classes and the jewels and spices flowed west.
The accidents of cultural history (perhaps nothing more than physical scarcity)
determined these complementary preferences.

Another western scholar, Rudolph Blitz, makes essentially a similar
point, ‘In the Orient, much of the specie went promptly into hoards
or was demonetized and became a commodity satisfying the oriental
penchant for ornaments.”© The otherness of Asia in this view thus
derives essentially from the fact that while, in the case of Europe, the
imported silver involved an accretion to the supply of money in the
system, in Asia this valuable asset was frittered away by being used
‘for hoarding or jewelry’.”

There is reason to believe that such a clear-cut dichotomy between
Europe and Asia is indeed quite untenable and does not conform to a
wide body of evidence available to us. By far the most concrete of the
effects associated with the import of American silver into Europe was
the so-called ‘price revolution’ of the sixteenth century. A similar
response is ruled out in the case of Asia for the simple reason that the
first link in the chain, namely an increase in the supply of money,
would not have come about in the Asian economies. But such a
position is demonstrably false. In the case of Mughal India, for
example, the treasure brought in by the European companies was
intended for investment in Indian silk, textiles and other goods. In so
far as foreign coins were not allowed to circulate locally, the very first
step that would need to be taken by these companies in the matter of
raising the necessary purchasing power would be the conversion of
imported bullion and coins into Mughal Indian rupees. This could be

4+ Immanuel Wallerstein, The Modern World-System II, Mercantilism and the Consolida-
tion of the European World-Economy, 1600-1750, New York, 1980, p. 109.

5 Wallerstein, The Modern World-System, Capitalist Agriculture, p. 41.

© Rudolph C. Blitz, ‘Mercantilist policies and the pattern of world trade, 1500-1750,
Journal of Economic History, vol. 27 (1), March 1967, p. 40.

7 J. Sperling, “The international payments mechanisms in the seventeenth and eighteenth
centuries’, Economic History Review, 2nd series, vol. 14 (3), 1962, p. 450. Quoted in
Wallerstein, The Modern World System II, p. 109.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

done either through professional dealers in money known as sarrafs or
by recourse to one of the imperial mints in the empire. In either event,
there would be an automatic and corresponding increase in the supply
of money in the economy. It is, of course, perfectly possible that a part
of the increased money supply might eventually have been hoarded or
withdrawn from active circulation. But in the present state of our
knowledge, it would probably be futile to surmise how significant or
marginal this phenomenon might have been. Some observations could
nevertheless be made on this behalf. In any society, hoarding of
precious metals in the form of bullion or coins would be a function of
the structure of asset preferences. Given the virtual absence of deposit
banking facilities in India, hoarding on a reasonable scale can very well
be interpreted as a perfectly legitimate and rational form of holding
liquidity. The point is that the implied irrationality in the ‘Oriental
penchant for hoarding’ kind of story might in fact never have been
there except perhaps at the margin.

A growing supply of money in response to a continuing import of
precious metals would presumably have had implications for the
functioning of an Asian economy along lines not necessarily very
different from those in Europe. In relation to late Ming China, this is
what William Atwell has to say,

Japanese and Spanish-American silver may well have been the most significant
factor in the vigorous economic expansion which occurred in China during the
period in question. This is true not only because of its direct impact on the silk
and porcelain industries, although this clearly was of great importance; but also
because an increase in the country’s stock of precious metals upon which
economic growth and business confidence seem to have depended would have
been determined almost entirely by how much silver entered the country through
foreign trade.®

The situation is unlikely to have been different in Mughal India, where
it would seem that the rising supply of money was leading to a
significant acceleration in the process of monetization in the economy.
The well-known growing monetization of the land-revenue demand
during the period was clearly a part of this larger process. Another
significant feature of the Mughal Indian economy was the rise of
banking firms all over the empire dealing in extremely sophisticated
instruments of credit. Many of these firms had enormous resources at

8 William S. Atwell, ‘Notes on silver, foreign trade, and the late Ming economy’, Ching-
Shih Wen-t’t, vol. 3 (8), 1977, P- 5.

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EUROPEAN TRADE AND THE INDIAN ECONOMY

their command. Probably the best known of these was the house of
the Jagat Seths operating from its headquarters at Murshidabad in
Bengal. Along with its other activities, the firm organized the transfer
of Delhi’s share in the land revenues collected in the province. It need
hardly be stressed that there was an important organic link between
the rise in the money supply and the growth of the banking firms in
the Mughal Indian economy.

What about the relationship between a rise in the money supply and
the notional general price level in the economy? In other words, was
there a counterpart in India to the European price revolution of the
sixteenth century? A considerable body of work done over the past
quarter of a century or so on the history of prices in different regions
of India during the seventeenth and the first half of the eighteenth
century has consistently negated the possibility of a general price rise
(as opposed to a rise in the prices of goods procured by the
Europeans). This includes my own earlier work on the price history of
Bengal based mainly on the evidence available in the records of the
Dutch East India Company. The evidence regarding movements in
the prices of wage-goods such as rice, wheat, sugar and clarified
butter, which I had argued could indeed be treated as proxies for
movements in the notional general price level in the economy,
suggested considerable fluctuations in the prices of these goods but no
statistically significant upward or downward trend.?

How does one reconcile the phenomenon of a rise in the supply of
money with the absence of a rise in the notional general price level?
While no definitive answer is possible, we might consider the following.
Together with looking at the supply of money, we ought also to look at
the demand for it. We have already noted that the ‘bullion for goods’
character of the Euro-Asian trade in the early modern period turned the
foreign trade sector into an instrument of growth with the savings,
investment and production in the economy registering an increase. The
rising supply of money in the system would then have been absorbed
by rising output, essentially obviating the need for the general price
level necessarily to go up. This process would be further reinforced by

9 Om Prakash, ‘Precious metal flows, coinage and prices in India in the 17th and the early
18th century’, in Eddy H.G. van Cauwenberghe (ed.), Money, Coins, and Commerce: Essays
in the Monetary History of Asia and Europe (from Antiquity to Modern Times), Leuven
University Press, 1991, pp. 55-74. Reprinted in Om Prakash, Precious Metals and
Commerce, The Dutch East India Company in the Indian Ocean Trade, Variorum, 1994.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

the increasing monetization in the economy whereby monetized
transactions as a proportion of total transactions in the economy would
have gone up. Finally, over the fairly long period with which we are
concerned, natural increases in population would also have necessitated
a secular rise in output and transactions if the per-capita output and
availability were not to go down. All these factors would tend to check
a general rise in prices consequent upon an increase in the supply of
money caused by an increased inflow of precious metals.

Certain deviations from the above scenario across both space and
time must be noted. Across space, the above analysis will not be fully
applicable to the Malabar coast, for example. The Portuguese had
enjoyed special rights in pepper procurement in parts of the region
until 1663 when they were thrown out of Cochin by the raja with the
active assistance of the VOC. But then the VOC got its pound of flesh
consisting, among other privileges, in a monopsony in the procure-
ment of pepper in the area between Purakkad and Cranganur, and a
monopoly in the sale of opium. Given the terrain, it was impossible to
prevent large-scale smuggling by Indian merchants, which substan-
tially limited the scope of the Dutch monopoly privileges. But even so,
in respect of that part of the total marketed output of pepper that the
Dutch East India Company procured, the price paid to the inter-
mediary merchants, which eventually also determined the return
reaching the producer, was lower, possibly substantially lower, than
what the free market forces of demand and supply would have
dictated. The macro-economic implications of the European procure-
ment would thus have been grossly vitiated.

THE EARLY COLONIAL PERIOD

Across time, the situation during the second half of the eighteenth
century was very different from that in the preceding period. The
political control now exercised by the English East India Company in
several major areas of the subcontinent placed it in a position of
substantial differential advantage vis-a-vis both the rival European
companies as well as the intermediary merchants and artisans. The
terms and conditions the Company imposed on those doing business
with it were no longer determined by the market: indeed, these people
were no longer always free even to determine whether to do business
with the Company at all. In Gujarat, this situation developed after the

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EUROPEAN TRADE AND THE INDIAN ECONOMY

English takeover of the Surat castle in 1759. On the Coromandel
coast, the 1750s and the 1760s witnessed the acquisition by the
Company of extensive land revenue collection rights in key textile-
producing districts in the northern Circars and central Coromandel,
giving it an unprecedented degree of control over the textile merchants
and weavers in the area. S. Arasaratnam has described in some detail
the coercive measures adopted by the Company in its textile procure-
ment in the region, including the demarcation of looms on which
textiles would henceforth be produced exclusively for the Company.'°

It was, however, in Bengal where the Company first obtained
formal diwani rights in 1765 that the full impact of the new status of
the Company was in evidence. The availability against bills of
exchange of large amounts of rupee funds that individual European
merchants of different nationalities were interested in remitting home
enabled the English and other companies operating in Bengal to cut
down substantially on the import of silver from Europe. Indeed, in the
case of the English Company, this source, combined with the funds
raised by the diversion of a part of the Bengal revenues to the
procurement of goods for Europe, led to a total suspension of the
import of precious metals from home. It was only in 1784 that the
import of these metals was resumed.

Textiles

This phase also witnessed a fundamental alteration for the worse in the
nature of the relationship between the English Company on the one
hand and the intermediary merchant and artisanal groups on the other.
-A gross abuse of the newly found political power available to the
English factors turned this relationship into one of widespread
coercion and oppression. In the matter of the procurement of textiles
in Bengal, the Company’s operations at Khirpai provide a good
example of the manner in which the system was run. Soon after the
assumption of diwani rights in 1765, the Commercial Resident of the
area arranged for information to be collected regarding the number of
weavers, looms, pieces of textiles of different kinds manufactured in
each aurung in his area in a year, the number ordinarily procured by
rival European trading companies as well as private merchants each

10 §, Arasaratnam, ‘Weavers, merchants and Company: the handloom industry in south-
eastern India 1750-1790’, The Indian Economic and Social History Review, vol. 17 (3), 1980,
pp- 257-81.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

year, and so on.'! Since the Company’s textile requirements took
precedence over everyone else’s, individual patkars of the Company
were allotted weavers who were banned from working for anyone else
till such time as they had met their contractual obligations towards the
Company. The terms offered by the Company to the paikars, and, in
turn, by the latter to the weavers, were extraordinarily poor. The
perennial complaint of the weavers was that the price allowed them by
the Company hardly enabled them to cover the cost of the raw
materials. In 1767, the weavers went so far as to send a delegation to
Calcutta with a petition (arzi) requesting that the prices offered to
them be increased by at least so much as to afford them a subsistence
wage. They did manage to obtain an order directing the Commercial
Resident, identified in a Dutch report as one Bathoe, to do the
needful. But this evidently was no more than eyewash because Bathoe
not only openly disregarded the order but indeed threatened to have
the weavers arrested in the event that they continued with their
efforts. !?

The pieces of textile received from the paikars were classified by the
Company’s evaluators from quality one to five. Pieces not found good
enough to make even quality five were rejected as ‘firty’ (ferreted). A
rough idea of what the Company subjected the weavers to can be
formed by the fact that pieces classified as third quality would gladly
have been accepted by the Dutch Company as first quality at a
considerably higher price.!> It is remarkable that even the pieces
rejected by the Company as ‘firty’ had a profitable market. The
margin between the price that these pieces fetched in the open market,
and the rate at which they had been evaluated by the Company before
being rejected, would convey some idea of the extent of the exploita-
tion of the weavers. This margin was shared clandestinely between the
Commercial Resident, the chief gumashta and the paikars. To take an
example from 1767, Resident Bathoe rejected 896 pieces of textiles as
‘firty’ that year. Many of these pieces were eventually sold by the
paikars in the open market at between Rs.63 and Rs.7 per piece higher
than the price at which they had been evaluated by the Company’s

"1 ARA, J.M. Ross at Khirpai to Director at Hugli, 18 July 1767, Appendix D, Hooge
Regering Batavia (hereafter HRB), 247.

12 ARA, J.M. Ross at Khirpai to Director at Hugli, 16 May 1767, Appendix C2, HRB
247.
"3 ARA, J.M. Ross at Khirpai to Director of Hugli, Appendix A, HRB 247.

324

EUROPEAN TRADE AND THE INDIAN ECONOMY

factors before being rejected. Bathoe had returned the pieces to the
paikars after keeping a margin of Rs.3 per piece for himself and Rs.} per
piece for the chief gumashta Radhamohan Basak. But even after paying
Rs. 34 extra, the paikars managed to earn a net profit of Rs.3 to Rs.34
per piece in the market for themselves.'* Besides, the Company also
exploited the weaver by manipulating the raw material market to its
advantage. It was reported in 1767, for example, that Resident Bathoe
had bought silk yarn from the producers at 16 tolas to a rupee and had
supplied it to the weavers of silk textiles at 7 to 9 tolas per rupee. The
profits were shown in the Bardwan accounts of the Company.!°

In 1771, the Board of Trade reverted to the contract system and
formally invited local merchants to undertake to supply to the
Company. But in its actual working, the new arrangement represented
no more than a change in form and left the content by and large
unchanged. Often, the Commercial Residents themselves undertook
the responsibility of supplying to the Company on a contractual basis.
After 1774, their names were listed as direct suppliers to the Company
and an official agency commission payable to them was agreed
upon.!¢

A by-product of the political ascendancy of the English Company
in Bengal was the growing range of problems created for its European
rivals, the Dutch and the French East India companies. The growing
English stranglehold on the weavers, obliging an increasing number of
them to work exclusively for the English Company, made it difficult
for the Dutch and the French to procure an adequate quantity of
textiles. Within a few months of Plassey, the English factors were
reported to be forcibly taking away pieces woven for the Dutch.!” In
October 1758, when the Dutch protested against the English high-
handedness in having pieces under production for their Company torn
away from the looms, the English officials promised redress but
nothing was actually done.'® In the early 1760s, the Commercial

'4 ARA,J.M. Ross at Khirpai to Director at Hugli, 18 July 1767, Appendix D, HRB 247.

's ARA, J.M. Ross to Director at Hugli, Appendix A, HRB 247; also Appendix D, HRB
247.
‘6 Hameeda Hossain, The Company Weavers of Bengal, the East India Company and the
Organization of Textile Production in Bengal, 1750-1813, Delhi, 1988, pp. 90-1.

'7 GC. Klerk de Reus, ‘De expeditie naar Bengale in 1759’, De Indische Gids, vol. 11,
1889, p. 2099.

*8 ARA, Memoir prepared by Dutch director, George Louis Vernet, and submitted to the
English on 10 May 1768, HRB 247.

325

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Residents at Malda and Midnapur were instructed to ensure that the
best weavers of Jagannathpur, Olmara and the neighbouring aurungs
worked exclusively for the English.!?

With a view to finding a more lasting solution to the problem, the
Dutch proposed to the English in 1767 that they should be assigned
weavers in the various aurungs who would then be allowed to work
for them without hindrance. Since formally the English took the
position that the Dutch, as indeed all other Europeans, were perfectly
free to carry on their trade in the region, this was agreed to in
principle, but eventually nothing came of the proposal.2° A Fort
William public notification dated 28 April 1775 even asserted

that the weavers of the province of Bengal and Bihar should enjoy a perfect and
entire liberty to deal with any persons whom they pleased and that no person
should use force of any kind to oblige the weavers or other manufacturers to
receive advances of money or to engage in contracts for the provision of clothes
against their will, and that all persons offending against this order should suffer
severe punishment.”!

The charade was continued in the English response dated 8 September
1785 to a Dutch memorandum:

Under your agents, they [the weavers] may work more freely perhaps than under
our own, and you may rest assured that we shall not countenance the servants or
gomastahs of our own Board of Trade in any attempts that they may make to
oppress the natives who work for you and not us, or prevent your employment of
their industry. The weaver who works for your Company contributes equally to
pay the revenue, with the weaver who works for our own Board of Trade, and
perhaps more so. And an extension to the sale of Bengal manufacture is more
profitable to Great Britain than a monopoly in the purchase of such goods as
would restrain the manufacture.”

The truth, however, was otherwise and the Dutch procurement
continued to suffer heavily. The situation was exploited fully by the
merchants. On average, the Dutch factors were obliged to pay a price
about 25 per cent higher than the price the English company paid for

"9 ARA, Memoir by Taillefert for his successor, George Vernet, 7 November 1763, HRB
246 (the volume is not foliated).

2° ARA, Memoir prepared by Dutch director, George Louis Vernet, and submitted to the
English on 10 May 1768, HRB 247; J.M. Ross at Khirpai to Director at Hugli, 8 July 1767,
Appendix D, HRB 247.

21 ARA, The notification was signed by J.P. Auriol, Assistant Secretary, HRB 253.

22 ARA, The English Company reply dated 8 September 1785 to the second Dutch
memorandum, Macpherson and Council to Eilbracht and van Citters, HRB 211.

326

EUROPEAN TRADE AND THE INDIAN ECONOMY

comparable varieties.2> Also, the VOC often found it difficult to get
an adequate number of merchants unless a continuous increase in the
price was agreed to.”*

Opium
The agrarian sector counterpart of the aggrieved Bengal textile weaver
was the opium peasant who was similarly subjected to significant non-
market pressures by the English East India Company as well as by its
employees operating in their private capacity. Soon after the takeover
of the province, Company servants tried to establish private mono-
polies in the drug. The first such case available to use is that of William
McGwire, the chief of the English factory at Patna. In 1761, he
‘persuaded’ Naib-Subadar Ram Narain to issue a parwana stipulating
that McGwire would have the exclusive right to engage with the
suppliers of opium for the procurement of the drug. McGwire tried to
have this arrangement legitimized by Calcutta and in the process even
offered a share in the profit from the venture to Governor Vansittart.
But the latter refused to succumb to the temptation and ordered the
withdrawal of the parwana.”° That, however, did not deter McGwire’s
successor, William Ellis, from grossly misusing his official position to
coerce the suppliers into providing him with the drug at prices
considerably below the market.2 From 1765 on, the English
Company factors at Patna agreed to carry on this business on a
somewhat more organized basis. They decided to act jointly and
divide the profits from the venture on the basis of each person’s status

23 To take a specific example, in 1767, against Rs.10 per piece paid by the English for a
particular variety, the Dutch had to pay Rs.12.44, ARA, J.M. Ross to Director at Hugli,
Appendix A, HRB 247; J.M. Ross to Director at Hugli dated 12 May 1767, Appendix C,
HRB 247.

24 ARA, Memoir by George Vernet for his successor, Faure, 8 March 1770, HRB 249;
Memoir by outgoing Director Johannes Bacheracht for his successor, J.M. Ross, dated 31
July 1776, HRB 252.

25 ‘Secret memoir concerning the Directorate of Bengal left by outgoing Dutch Director
Louis Taillefert for his successor, George Louis Vernet’, dated 17 November 1763, ARA,
HRB 246, f. 205; Memoir of Dutch Director in Bengal at Hugli, Johannes Bacheracht, for his
successor, J.M. Ross, dated 31 July 1776, ARA, HRB 252, ff. 114-15; ‘Extract of the
Proceedings of the President and Council at Fort William in Bengal in their Revenue
Department, the 15th October, 1773’, ‘Appendix 57 to the Ninth Report from the Select
Committee appointed to take into consideration the State of the administration of justice in
the provinces of Bengal, Bihar and Orissa’, 25 June 1783, India Office Library (hereafter
IOL), L/Parl/2/15; PJ. Marshall, East Indian Fortunes, The British in Bengal in the
Eighteenth Century, Oxford, 1976, pp. 118-19.

26 Memoir of Bacheracht for Ross dated 31 July 1776, ARA, HRB 252, ff. 115-16;
Enclosures to the memoir of Bacheracht for Ross dated 31 July 1776, ARA, HRB 253, f. 6.

327

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

in the hierarchy. These individuals generally did not engage in internal
or international trade in the item on their own and sold it on a
monopoly basis to the prospective traders in the drug who would
include Indian merchants, other private English traders, the Dutch
Company, etc. The gross profit earned by the Patna factors has been
estimated to have ranged between 175 per cent and as much as 300 per
cent.’” But considering that the arrangement did not have Calcutta’s
approval and the machinery of enforcement available to the Patna
factors was of necessity limited, it would seem that the proportion of
total marketed output that passed through the hands of these factors
was perhaps not very large.

This situation was altered radically in 1773 when the English
Company decided to assume monopoly rights in the drug for itself.
The arrangement was for the Company to organize the procurement
of the drug on an exclusive basis and then arrange for its sale to
prospective traders through public auctions held at Calcutta. It was
maintained that given the ‘dispositions and the habits of the natives’, a
monopoly was essential.?® Earlier, Vansittart’s minute which had
formed the basis of the 1773 decision had elaborated on these
‘dispositions and habits’ by noting that ‘had every merchant free
liberty to make them [the suppliers and the producers] Advances, they
would receive Money in Abundance, they would dissipate a part of it,
they would be unable to manufacture opium sufficient to complete
their Engagements’.?? In order to justify the measure further, the
Company even helped create a myth that a state monopoly of opium
had always been the norm for India. In a memorandum sent to the
Dutch factors at Hugli, Governor-General John Macpherson and the
Calcutta Council observed:

The opium of this country was always managed by the native government as a
monopoly and we have the evidence before us of a person who held a considerable
office at the Buxbandar for above sixty years, and who is now alive that opium
and saltpetre were purchased by the foreign companies as they could from the

27 Memoir of outgoing Dutch Director of Bengal, George Louis Vernet for his successor
Boudewyn Verselewel Faure, dated 8 March 1770, ARA, HRB 249, ff. 85-6; Extract, Bengal
Revenue Consultations, 23 November 1773, Appendix 57, Ninth Report, IOL, L/Parl/2/15;
Marshall, East Indian Fortunes, p. 146.

28 Governor-General John Macpherson and Council at Calcutta to Eilbracht and van
Citters, members of the Dutch Council at Hugli, 8 September 1785, ARA, HRB 211
(unfoliated).

29 Extract, Bengal Revenue Consultations, 23 November 1773, Appendix 57, Ninth
Report, IOL, L/Parl/2/15.

328

EUROPEAN TRADE AND THE INDIAN ECONOMY

persons enjoying the exclusive privilege of this monopoly in like manner as by
private merchants.°°

An examination of the extensive reports filed by the factors of the
Dutch Company, the single largest buyer of opium in the market on
the eve of the British takeover, however, does not point towards any
such arrangement.*! The 1773 English Company monopoly, there-
fore, must be viewed as an ‘innovation’ with rather important
consequences.

Initially, the monopoly pertained to the Bihar opium and excluded
the marginal amount produced in the province of Bengal. In principle,
the monopoly implied that the entire output of the drug in Bihar
would have to be handed over to the Company at a price determined
unilaterally for the year. The amount so collected was then sold off to
traders in the drug at public auctions held in Calcutta. The mechanics
of the system of collection was as follows. Initially, this was done
through a contractor awarded the contract for a year at a time.
Although applications were invited from interested persons through
public notices in English, Persian and Bengali,>? the selection was
made by the Governor-General-in-Council essentially on a patronage
basis rather than on the basis of any objective criteria prescribed for
the purpose. From 1781, the contract was given for a period of four
years at a time. When the first four-year contract expired in 1785, the
patronage system of awarding it was replaced by one where it was
given to the highest bidder at a public auction organized for the
purpose.

The Company paid the contractor at a specific price communicated
to him in advance for each chest of opium delivered.*> Half the value

3° Governor-General John Macpherson and Council at Calcutta to Eilbracht and van
Citters, members of the Dutch Council at Hugli, 8 September 1785, in ‘Correspondence
exchanged between the English authorities in Bengal and the servants of the Dutch
Company there, 1785’, ARA, HRB, 211 (unfoliated).

3" Indeed, a Dutch memoir from 1776 explicitly says that while some attempts had been
made during the pre-1757 period to monopsonize opium, these had never been successful
(Memoir of Director Bacheracht for his successor, Ross, dated 31 July 1776, ARA, HRB
252, f. 117).

3? For a sample of the public notice, see Extract, Bengal Revenue Consultations, 23 May
1775, Appendix 62, Ninth Report, IOL, L/Parl/2/15.

33 The price paid to the first opium contractor, Mir Manir, was Sicca Rs.320 per chest. In
respect of the lots procured in Ghazipur and some other districts outside Bihar and held in
jagir by Nawab Shuja-ud-Daula, a price of Sicca Rs.350 per chest was stipulated (Extract,
Bengal Revenue Consultations, 23 May 1775, Appendix 62, Ninth Report, IOL, L/Parl/2/
15).

329

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

of the entire lot was given to him in advance out of which he was
expected to give cash advances to the peasants producing opium. The
contractor was subject to a penalty of Rs.100,000 in the event of being
found supplying opium to anyone other than the Company.** All
opium was to be collected at Calcutta in a crude state where it was to
be ‘manufactured’ under the superintendence of a nominee of the
Company.*° From 1775 on, the revenues from opium were treated as
excise or tax funds rather than as profit from trade. The management
of the opium business continued to be with the Board of Revenue till
1793 when it was transferred to the Board of Trade.*®

In 1797, the contract system was abolished in favour of an agency
system involving direct control by the Company of the cultivation of
opium. The production was henceforth to be restricted to Bihar and
Banaras and discontinued in Bengal. Two Company officers were
appointed Opium Agents with headquarters at Patna and Banaras
respectively. The formal legislation defining the basic principles of the
new system was set out under Regulation VI of 1799. This edict,
although supplemented by further Acts in 1816, 1857 and 1870,
continued to regulate the opium production and marketing enterprise
until the early twentieth century.*” All private cultivation of poppy
was banned. The peasant was forced to cultivate a specified plot of
land and to deliver its entire production at the fixed government price
to the Agent. If a peasant failed to cultivate the full amount of land
that he was required to and on which he had been given an advance,
he was obliged to pay back pro-rata three times the value of the
advance for the shortfall in the total area cultivated. If it were
established that the shortfall in output had been due to negligence on
the part of the peasant, he was to repay the proportional amount of
advance with 12 per cent interest. If an illicit sale was established, the
rules provided for the confiscation of the lot besides a fine at the rate
of Rs.4 per seer. If confiscation of the lot was not feasible, the fine was
to go up to Rs.10 per seer. In 1816, the rates of the fine were increased
to Rs.8 and Rs.16 per seer, respectively. The rate of interest to be

34 Extract, Bengal Revenue Consultations, 23 November 1773, Appendix 57, Ninth
Report, IOL, L/Parl/2/15.

35 Extract, Bengal Revenue Consultations, 23 November 1773, Appendix 57, Ninth
Report.

36 Second Report of the Select Committee, 1805, Collection 55, f. 21, IOL, L/Parl/2/15.

37 J.F. Richards, “The Indian empire and the peasant production of opium in the
nineteenth century’, Modern Asian Studies, vol. 15 (1), 1981, p. 64.

330

EUROPEAN TRADE AND THE INDIAN ECONOMY

charged on the advances returned because of shortfall in supply was at
the same time doubled to 24 per cent.>8

If a peasant decided to be in the business of producing opium, he
had no option but to deal with the Company. But in principle, he had
the right not to be in the business of producing opium and to reject
the offer of a cash advance in return for pledging his crop to the
English Company Agent. The 1773 document which had specified the
clauses of the opium monopoly had clearly laid down that ‘no
cultivator will be forced to cultivate poppy against his inclination’.°?
Regulation VI of 1799 had repeated ‘... but it is left entirely at the
option of the Ryot or Cultivator, to enter into engagements on
account of Government at a settled price, or to decline it altogether’.*°
But the possibility that the rights of the peasants were not fully
protected and that an element of compulsion was introduced into the
picture is strongly suggested by the need for Governor-General
Cornwallis to make the following stipulation in 1789. He decreed that
henceforth a contractor could not ‘compel the ryots to engage for the
cultivation of a greater number of beeghas than they cultivated the
preceding year’.*! Also, if for some reason a particular peasant was
simply not able to continue engaging in opium cultivation, then he
was required to give up his land as well since it had been earmarked
for opium. The land was then assigned to another peasant undertaking
to produce opium.”

The terms of the contract given to the peasants were enforced quite
rigorously. The true beginnings of the Company’s monopoly system
could perhaps be placed around September 1775, when the opium
contract was awarded to one Griffith. This man arranged for parwanas
to be issued to officials in the opium districts obliging them to ensure
that nobody other than his agents had access to the drug.*? In 1776,
when some Bengali merchants managed to give out opium advances
clandestinely, a strongly worded letter was dispatched to the pargana

38 Benoy Chowdhury, Growth of Commercial Agriculture in Bengal (1757-1900), vol. 1,
Calcutta, 1964, p. 42.

39 Extract, Bengal Revenue Consultations, 23 November 1773, Appendix 57, Ninth
Report, IOL.

4° Second Report of the Select Committee, 1805, collection 55, LOL, L/Parl/2/5 5.

4" Chowdhury, Growth of Commercial Agriculture in Bengal, p. 51.

4 Chowdhury, Growth of Commercial Agriculture in Bengal, p. 51.

43 Minutes of the Dutch Council at Hugli, 13 October 1775, in Enclosures to the memoir
of outgoing Director Bacheracht, ARA, HRB 253 (unfoliated); Letter from Gregorius
Herklots to the Council at Hugli, 20 October 1775, ARA, HRB 253 (unfoliated).

331

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

officials holding them directly responsible for such unauthorized
deals. They were directed to have a public announcement made that if
an opium supplier or cultivator had accepted a cash advance as part of
a clandestine deal, he was not to feel obliged either to honour the
contract or to return the advance. Any complaint that might be
preferred against him in this connection would not be entertained by
the administration.**

The opium enterprise was clearly of great advantage to the English
East India Company, the contractors and other intermediaries partici-
pating in the enterprise, as well as to the private English traders
engaged in the opium trade. Many of the intermediaries and the
traders were servants of the Company. From the point of view of the
Company, an obvious advantage was in terms of an accretion to the
revenues of Bengal. Some evidence available in the documentation of
the Company suggests that between 1773-4 and 1784-5, though there
were significant annual fluctuations, there was generally an upward
trend in the revenue from opium. From a low of £14,256 in 1774-5,
the revenue went up to £49,572 in 1778-9 and to £78,300 in 1783-4,
though in 1784-5 it came down to £5 3,348.*> As a proportion of total
Bengal revenues, the revenue from opium is estimated to have
accounted for 5.2 per cent in 1792, 7 per cent in 1812, ro per cent in
1822 and as much as 20 per cent in 1842.*6

The opium contractors were also known to have made handsome
profits from the enterprise. It has been suggested that in the early
years of the monopoly system, a contractor could stipulate for £10,000
from a subcontractor, who could himself stipulate for £17,000 from
yet another subcontractor, who was still able to make a handsome
profit.4” While it is not at all certain how representative these figures
are over time, they nevertheless suggest the existence of a very positive
situation from the point of view of these people. Finally, as far as the
private English traders engaged in the trade were concerned, the
advantages from the opium enterprise consisted not only in facilitating

44 Parwana dated 8 March 1776, available in Minutes of the Hugli Council meeting, 28
May 1776, Enclosures to the memoir of Bacheracht, ARA, HRB 253 (unfoliated).

45 ‘An account of the annual profits arising to the Company from Opium in Bengal from
the acquisition of Diwani to the date of the latest advices from Bengal’, Collection 20, f. 1,
IOL, Parl/L/2/20.

46 Tan Chung, ‘The British-China-India trade triangle (1771-1840), The Indian
Economic and Social History Review, vol. 11 (4), 1974, pp. 422-3-

47 Marshall, East Indian Fortunes, p. 203.

332

EUROPEAN TRADE AND THE INDIAN ECONOMY

the earning of a high rate of profit, but also in the use of the trade in
the item with China as the principal vehicle for the transmission home
of the profits earned in India. This was done by placing the proceeds
from the China sales of opium at the disposal of the Company factors
in Canton in exchange for bills on London.

As for the peasants participating in the opium enterprise, the
position was more complex. There can be no question that the opium
monopoly involved a certain amount of coercion over the peasants
and it is likely that the degree of this coercion exceeded the officially
stipulated limits. For example, the provision regarding the peasant not
being forced to increase the acreage under opium may well have been
grossly violated. Despite the best efforts of the English Company, a
certain amount of opium continued to be sold clandestinely to Indian
and other merchants by the peasants. To take up only one such case in
the Dutch Company records relating to 1775, when the paikar of the
Dutch Company reached the opium tract of Phulwari, he was
enthusiastically received by the cultivators who offered to enter into
contracts with him for the supply of the drug. The arrangement made
was for the cultivators to call quietly the following day at the place
where the paikar was staying. But before the deal could go through,
the gumashtas of the English Company’s contractor, Griffith, came to
know of it and the paikar was apprehended and taken to the
contractor. Since this was the man’s first offence, he was let off with
the warning that if he were ever seen anywhere in the area again, he
would be subjected to severe punishment.*® While it is obvious that
the price that the peasants would have obtained on these clandestine
deals would have been higher than the Company price, there really is
no reliable information available on the extent of this difference which,
incidentally, could have served as a broad indicator of the extent of the
coercion on the peasants.

The cause of the opium peasant did find occasional support even at
the highest levels of the English Company hierarchy. Thus in a
communication to their Calcutta factors in December 1776, the Court
of Directors observed:

If you shall be of Opinion that abolishing the monopoly of opium will contribute
in any great Degree to the Relief of the Natives, we authorize you to give up that

48 Letter from Gregorius Herklots at Patna to the Dutch Council at Hugli, 20 October
1775, in Enclosures to the memoir of outgoing Director Bacheracht, ARA, HRB 253
(unfoliated).

333

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Commodity as an Article of Commerce, only fixing and reserving a reasonable
Duty thereon to the Company, which we think should not exceed 30 Rupees per
maund.*?

But the advice was perhaps not meant to be taken seriously and no
note was taken of it. The peasants’ resentment of the system occasion-
ally did find expression in their refusal to accept opium advances but
this problem did not assume serious proportions at any stage.°°

What can we say about the overall implications of the English
Company’s opium monopoly? Was the expansion in output over time
solely a function of the coercion that the peasant was subjected to? Or
is it possible that the peasant found even the monopoly price,
particularly after it was periodically increased between 1823 and 1838,
preferable to the option of growing alternative crops? While no
definitive answers are as yet possible to these questions, certain
tentative suggestions might be made. The cultivation of opium did
involve a four- to five-month commitment to demanding, arduous
work. C.A. Bayly has argued that ‘when labour costs were taken into
account, opium production was relatively unprofitable for the
farmer’.>! The reason the acreage still went on increasing was because
of the liberal policy the government followed in the matter of giving
advances to the actual and prospective opium growers. These advances
came in handy for meeting the peasants’ land rent obligations and
were extremely welcome. The fact that the government monopoly
provided an assured market for the peasants’ output at a predeter-
mined price not subject to alteration by the size of the crop also
worked as a positive factor.°* The cash advances involved the injection
of fairly large sums of money into the commercial agricultural sector
of the region directly through the peasants. The crop that this helped
the expansion of was both of high value as well as being intended
entirely for the market.

The opium obtained by the Company from the peasants was sold
through public auctions held at Calcutta overwhelmingly to the
private English traders engaged in the China trade. This arrangement
was mutually beneficial to the Company as well as the private traders.

49 English Company Directors to factors in Calcutta, 24 December 1776, Appendix 33,
Ninth Report, IOL.

5° Chowdhury, Growth of Commercial Agriculture in Bengal, p. 27.

5' CA. Bayly, Rulers, Townsmen and Bazaars, North Indian Society in the Age of British
Expansion, 1770-1870, Cambridge, 1983, p. 289.

52 Richards, “The Indian empire and the peasant production of opium’, p. 79.

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EUROPEAN TRADE AND THE INDIAN ECONOMY

The bulk of the proceeds from the sale of the drug in China was
placed at the disposal of the Company’s supercargo at Canton for
investment in Chinese silk and tea. In exchange, the Company made
available to the private traders for value received bills of exchange on
London providing for these traders a convenient channel for remitting
their savings home. Holden Furber has termed the rise of the China
trade a ‘commercial revolution’ involving a clear domination of trade
in the Indian Ocean and the South China Sea by the private English
traders.

Such a domination would almost certainly have had a certain
amount of adverse impact on the trading operations of the Indian
merchants engaged in trade in the Eastern Indian Ocean. It is,
however, important to keep the matter in perspective. In earlier
chapters, we noted that the Portuguese and the Dutch attempts to
squeeze the Indian maritime merchants out of business were not
particularly successful at any point. With a certain amount of readjust-
ment in the matter of ports operated from and specific routes along
which trade was carried on, Indian merchants were by and large able
to withstand quite successfully the efforts directed at squeezing them
out of participation in intra~Asian trade. In so far as the English
private traders were indirect beneficiaries of the new political status of
the English East India Company, the situation had admittedly become
somewhat more complicated in the second half of the eighteenth
century. But the overall adverse impact on the fortunes of the Indian
merchants engaged in intra-Asian trade would still not seem to have
been anything like catastrophic. The direct involvement of the Indian
merchants in the China trade had never been of any significance, and
to that extent, a growth in the English private trade in the sector had
no specific and immediate implication for these merchants except that
English ships also did a fair amount of business in southeast Asia on
the way to and from China. It would seem that initially the increased
competition by the English was injurious to the Indian merchants
engaged in trade with this region. But over time the volume and value
of trade on the India-southeast Asia sector would in fact seem to have
registered a significant increase with the Indian merchants getting their
due share in the rising volume of trade.

To summarize, given its ‘bullion for goods’ character, Euro-Asian
trade in the early modern period would seem to have acted as a vehicle
for an expansion in income, output and employment in the subconti-

335

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

nent. The fact that the rate of growth of the Europeans’ demand for
goods such as textiles and raw silk almost always exceeded the rate at
which their output increased turned the market increasingly into a
sellers’ market with significant positive implications for the share of
the producers and the intermediary merchant groups in the value of
the total marketed output. The import of large quantities of precious
metals by the European companies also had important consequences
for variables such as the supply of money and the degree of monetiza-
tion in the subcontinent.

This particular configuration of circumstances, however, underwent
a certain amount of modification during the early colonial period,
particularly in relation to Bengal, the first of the subcontinental
regions to come under the sway of the English East India Company. It
is true that a colonial pattern of trade with agricultural and other raw
materials together with food constituting the bulk of the exports from
the colony to the metropolitan world in exchange for finished
manufactured goods produced on the machine did not emerge in the
case of India until after our period. But already in the second half of
the eighteenth century, important distortions had been introduced
into the system. For one thing, the relationship between the English
Company on the one hand and the intermediary merchant and
artisanal groups on the other had turned into one of widespread
coercion and oppression of the latter depriving them of a good part of
their legitimate share in the total value of the output produced. This
happened on a fairly widespread scale in relation to the procurement
of goods such as textiles and raw silk in the manufacturing sector and
opium in the commercial crop sector.

336

CHAPTER 9

CONCLUSION

One of the principal outcomes of the great discoveries of the closing
years of the fifteenth century was the rise of a pre-modern world
economy. It was the almost simultaneous discovery of the Americas
and of the all-water route to the East Indies via the Cape of Good
Hope that had brought the three potential constituent segments of this
economy, namely Europe, the New World and Asia, together for the
first time. By providing a wide range of goods for both Europe and
the New World, and by absorbing in return an important segment of
the New World output of silver, Asia played a key role in the creation
and the subsequent successful functioning of this global network of
exchange. The nature of the relationship between Europe and Asia
during this early period was essentially one of mutual advantage with
each side perfectly capable of a market-determined response structure
and rational process of decision making.

The principal agencies instrumental in the running of the Euro-
Asian commercial network in the early modern period were the
European corporate enterprises — the Portuguese Estado da India in
the sixteenth, and the Dutch, the English and the French East India
companies in the seventeenth and the eighteenth centuries. A certain
amount of Euro-Asian trade was also carried on by private European
traders, though it would seem to have been quantitatively significant
only in the case of the Portuguese private traders. Traditionally,
pepper and other spices such as cloves, nutmeg and mace had
accounted for an overwhelming proportion of the total Asian imports
into Europe. This continued to be the case through the sixteenth and
the greater part of the seventeenth century. The last quarter of the
latter century, however, witnessed an almost revolutionary increase in
the European demand for Asian textiles and raw silk, leading to a
remarkable shift in the composition of the Asian imports into
Europe. In the case of the Dutch East India Company, for example,
the second half of the century was marked by an increase in the share
of these two items in the total imports from a mere 14 per cent to as
much as 55 per cent. In so far as India at this time was without any

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

doubt the largest, and the most cost-competitive, producer of textiles
in Asia — and perhaps in the entire world — and a major producer of
raw silk, an important implication of the shift in the European
pattern of demand was a significant enhancement in the relative role
of India in Euro-Asian trade. Indeed, the principal Indian region
supplying these goods, namely Bengal, by itself now accounted for as
much as 40 per cent of the total Asian imports by the Dutch and the
English East India companies into Europe. This created a situation of
near panic among the European producers of various kinds of
textiles. In England, the manufacturers’ opposition to the import of
Asian textiles was sufficiently vocal to lead to the passage of a
Parliamentary Act in 1700 prohibiting the import of ‘all wrought
silks, Bengals and stuffs mixed with silk or herba, of the manufacture
of Persia, China or the East Indies and all calicoes painted, dyed or
printed or stained there’. But since this simply involved an increase in
the import of white calicoes and muslins from India, which were then
printed in England, another Act was passed twenty years later
altogether prohibiting the use or wear of printed calicoes in England.
Of course, neither of the two Acts affected in any way the re-export
trade in Eastern textiles. Holland also had a fairly well-developed
linen and silk-textile industry. As early as 1643, several manufacturers
of silk textiles in Amsterdam had complained to the States of Holland
that, as a result of the import of silk textiles from the East Indies, a
number of their apprentices had been thrown out of work. They,
therefore, petitioned the States for a total prohibition on the import
of silk textiles by the Dutch East India Company. While nothing
‘came of these efforts, the matter came up again at the time of the.
renewal of the Company’s charter in 1694-5. At the behest of the
silk-textiles manufacturers and merchants of their province, the
representatives of Haarlem in the States-General declared their inten-
tion of not voting for the renewal unless a ban was imposed on the
Company’s imports of cotton textiles, silk textiles and twisted silk.
But all that the representatives eventually achieved was the extraction
of a promise from the Company that in future it would ‘consult’ the
Haarlem silk industry each year before placing orders with the
factors in the East. The industry’s ‘advice’ was not to be binding,
and in 1740 a number of ‘leading manufacturers of gold-, silk-,
wool-, and cotton stuffs’ informed the States of Holland that the
Company had in any case not bothered to carry out the promised

338

CONCLUSION

consultations.! The difference in this regard between the English and
the Dutch East India companies was obviously due to the latter’s
much stronger position in national politics. Such perceived threats of
a ‘deindustrializing’ Europe in response to the invasion by Indian
textiles, however, makes one wonder as to which, between north-
western Europe and south Asia in the early modern period, was the
‘core’ and which the ‘periphery’.

THE SIXTEENTH CENTURY

In keeping with the traditional composition of the Asian imports into
Europe, the principal item sought by the Portuguese Crown in Asia
was spices — overwhelmingly pepper. The procurement of pepper in
India was organized by the Estado da India, while the sales in Europe
were through contract sales based until the middle of the century at
Antwerp and thereafter at Lisbon. The manner in which the Crown
dealt with the matter of the procurement, the transportation, and
particularly the disposal of the Asian pepper in the European market,
has led Niels Steensgaard to characterize the Portuguese Euro-Asian
pepper trade as a redistributive enterprise. As he so succinctly puts it
‘the Portuguese pepper monopoly was not a business but a custom
house’. It is, however, imperative that one keeps the matter in
perspective and does not overstate the redistributive dimensions of the
Portuguese Euro-Asian trade in its entirety. Pepper was indeed the
raison d’étre of the Portuguese Euro-Asian trade in the beginning,
accounting in the first two decades of the sixteenth century for as
much as 95 per cent of the total Asian cargo in physical and 85 per
cent in value terms. The recent work of James Boyajian suggests that
this picture, however, changed drastically from the 1580s onward. The
key factor at work was the extremely important role now played by
the private Portuguese traders — mainly New Christians — in the Euro-
Asian carreira trade. According to Boyajian, private cargoes accounted
for an almost unbelievable 93 per cent of the total value imported over
the period 1580-1640 from Asia. By far the most important consti-
tuent of this cargo was textiles accounting for as much as 62 per cent
of the total imports valuewise, followed by items such as precious

' Om Prakash, The Dutch East India Company and the Economy of Bengal, 1630-1720,

Princeton, 1985, pp. 203-7.

339

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

stones and indigo. Pepper, which continued to be imported under
official auspices, now accounted for no more than 10 per cent of the
total imports. It is indeed true that there are serious problems of both
methodology and evidence with the Boyajian estimates of the private
merchants’ trade, but there would seem to be little doubt that his
revision of current orthodoxy is in the right direction. Since the
redistributive-trade characterization of the Portuguese enterprise at
the European end is overwhelmingly dependent on the role of pepper
in the Euro-Asian trade, such a revision involves a serious erosion of
the appropriateness and validity of this characterization.

What about the Asian end of the Portuguese trading operations as an
element in the redistributive potential of these operations? It is indeed
true that the Estado da India’s attempt at monopolizing the spice trade
was quite unambiguous and called for a total exclusion of Asian
shipping from the Persian Gulf and the Red Sea. But the financial
priorities and compulsions of the Estado soon made it relent and
subject Asian shipping only to the requirement of obtaining a cartaz
involving a small additional cost. The procurement of pepper and the
attendant cartaz system was, however, only a part — and an increasingly
smaller one at that — of the total Portuguese trading activity in the
Indian Ocean. In respect of the bulk of the remainder of the trading
activity carried on by the Portuguese either on an official or on a private
basis, there was no component of a redistributive enterprise whatso-
ever. The brief phase of the Crown involvement in intra-Asian trade
was followed from the second half of the sixteenth century onward by
a fairly intensive participation in this trade by private Portuguese
traders, many of whom were at the same time employees of the
Estado. Besides investing in the Carreira da India, the New Christian
merchants of Goa also participated in intra~Asian trade. Indeed, the
profits from intra-Asian trade financed a good part of the cargo that
these merchants put on the carreira ships at Goa for Lisbon on their
private account. There was nothing redistributive about this trade.

THE SEVENTEENTH CENTURY

The seventeenth century was marked by a fundamental change in the
character of the Euro-Asian commercial encounter. The “Asian trade
revolution’ of the early seventeenth century, however, consisted only
to a certain extent in the Portuguese ‘redistributive enterprise’ giving

340

CONCLUSION

way to the pursuit by the Dutch and the English companies of rational
and productivity-maximizing commercial policies. From the vantage
point of India, the ‘revolution’ consisted even more in the extension of
the Europeans’ trading links to all major segments of coastal India, an
enormous increase in the volume and value of their trade in the
subcontinent in the course of the century, its diversification to include
a whole range of new trade goods for the European and various Asian
markets and, perhaps most important of all, the manner in which the
procurement of goods for trade was organized.

While the Portuguese official presence in India was confined
basically to the southwest coast of the subcontinent, the Dutch and the
English soon extended their respective trading networks to include the
Coromandel coast, Bengal and Gujarat. Their presence in these areas
was essentially coastal, but trading stations were also established at
places in the interior, including places such as Ahmedabad in Gujarat
and Agra in the heartland of the Mughal empire. In the case of the
Dutch East India Company, over the greater part of the century the
importance of the Indian trade was derived chiefly from its role in the
Company’s intra-Asian trade. Textiles from Coromandel and Gujarat
were indispensable for the procurement of pepper and other spices in
the Indonesian archipelago, while raw silk from Bengal was the
principal item exported to Japan. Bengal opium also figured promi-
nently in the exports to the archipelago. The century was also
characterized by a substantial expansion in the value of the Company’s
Asian imports into Europe. Thus from a modest figure of under f.3
million over the three-year period 1619-21, the imports had gone up
to f.t5 million during 1698-1700. The composition of these imports
had also changed dramatically over this period with pepper and other
spices, which had accounted for as much as 74 per cent of the total at
the beginning of the period, accounting for no more than 23 per cent at
its end. The share of textiles and raw silk, on the other hand, had gone
up over the same period from 16 per cent to as much as 55 per cent.
Since Bengal was by far the largest Asian supplier of these two items, it
should come as no surprise that goods procured in this region
accounted for as much as 40 per cent of the total Asian cargo imported
by the Dutch and the English East India companies into Europe at the
turn of the eighteenth century. The English East India Company did
not participate in intra-Asian trade, but the value of its imports into
Europe had risen at a rate even faster than that in the case of the

341

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Dutch, so that at the end of the century, with its three-year total of
f.13-79 million, it had nearly caught up with the VOC. Goods procured
in India accounted for as much as 95 per cent of its total imports into
Europe at this time. The Company allowed its employees a small
amount of trade on their private account on the return voyages from
India. In addition, trade in certain items, including diamonds, was
outside the Company’s monopoly leading to a fair amount of trade in
these precious stones on private account. Indeed, many of the Compa-
ny’s senior employees actively engaged in intra-Asian or ‘country’
trade on their private account with the Company’s permission, used
their intermediary role in the diamond trade as commissioners to raise
the necessary capital resources for investment in this trade.

Considerably more important in its implications than the significant
expansion in the value and the volume of trade from India carried on
by the northern European trading companies and the private Eur-
opean traders was the manner in which the procurement of goods for
this trade was organized in contrast to the pepper trade of the
Portuguese Estado in the sixteenth and the early part of the seven-
teenth centuries. The pepper monopsony, involving the payment of a
price substantially lower than would otherwise have obtained in the
market, that the Estado was able to extract from the rulers in Malabar,
represented a new and sinister form of coercion that the indigenous
producers of and merchants dealing in this spice were up against. The
rapid deterioration in the relationship between the Estado and the
local merchants first at Calicut and then at other places on the Malabar
coast was, therefore, not surprising. The only saving grace in the
situation was the near impossibility, given the terrain of the region, of
enforcing the pepper monopsony in any effective sense. The procure-
ment by the New Christian and other private Portuguese merchants of
textiles and other goods in Malabar and elsewhere in India for both
intra-Asian and Euro-Asian trade, which became quantitatively sig-
nificant from the last quarter of the sixteenth century onward, was, of
course, outside the monopsony framework.

The Dutch East India Company helped the raja of Cochin get rid of
the Portuguese in 1663. In return, the raja was obliged to make
monopoly privileges with regard to the purchase of pepper and the
sale of opium available to the VOC, which left the situation on the
ground largely unchanged from the Portuguese period. But Malabar
was an exception and must be regarded as such. In the rest of the

342

CONCLUSION

Indian subcontinent, none of the European corporate enterprises at
work had access to any kind of coercive authority over the producers
and merchants with whom they did business. They were allowed
complete freedom of trade and had full access to the use of various
elements of a rather efficient economic infrastructure characterizing
the commercial and the monetary sectors of the Indian economy of
the period. But when it came to dealing with the producers and the
merchants supplying the export goods, the corporate enterprises (and
the private European traders) were just another group operating in the
market. The completely market-determined relationship between the
Europeans and the Indian artisanal and intermediary merchant groups
is one of the principal distinguishing characteristic features of the
seventeenth and the first half of the eighteenth century. The period
around the turn of the eighteenth century witnessed a sharply
widening gap between the rate of growth of the Europeans’ demand
for Indian goods such as textiles and raw silk and the rate of growth of
their supply, increasingly turning the market into a sellers’ market.

The political counterpart of the absence of coercion in the market-
place was the nature of the relationship between the European
corporate enterprises and the Indian ruling authorities. The relation-
ship of domination between the Dutch and the raja of Cochin was an
exception: the norm was for this relationship to be generally positive,
free of coercion and businesslike, based on a perception of mutual
advantage. In the event of the emergence of areas of disagreement,
both sides generally took steps to ensure that the conflict did not
escalate beyond a certain point. At work was indeed a rather finely
tuned balance between the Europeans’ unquestioned armed super-
iority on the sea as against their almost total vulnerability on land for a
long time. The latter situation was sought to be partially remedied by
the construction of fortified settlements which often became the core
around which European-dominated coastal cities grew up. The Indian
ruling authorities permitted the construction of such fortified settle-
ments little realizing the inherent danger such a policy entailed for
their own survival tll it was too late to do anything about it.

THE EIGHTEENTH CENTURY

The death of the Mughal emperor Aurangzeb in 1707 was the
symbolic beginning of the process of the collapse of the centralized

343

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

Mughal empire, the rise of the so-called successor states in provinces
such as Awadh, Hyderabad and Bengal, and eventually the takeover of
large parts of the country by the English East India Company,
beginning with Bengal, where it was officially recognized by the
Mughal emperor as the diwan of the province in 1765. Aurangzeb was
followed in quick succession by Bahadur Shah (1707~12), Jahandar
Shah (1712-13), Farrukhsiyar (1713-19) and Muhammad Shah
(1719-48). The imperial fabric was subjected to serious strain during
the early part of the century marked by disaffection of the Rajputs,
growing militancy among the Sikhs and Jats in the north, and
continuing Maratha insurgency in the south. Weakened central
authority encouraged governors in several provinces to establish near-
autonomous regional states only paying lip-service to the emperor’s
authority. The financial bankruptcy of the central government —-
dramatized by episodes such as Jahandar Shah’s own troops remaining
unpaid from the time of his accession — was further accentuated by the
increasing irregularity and default in the receipt of the imperial
government’s share in the land revenues due from the newly emerging
successor states.

The rapid deterioration in the state of law and order seriously
affected the flows of long-distance overland trade within the empire.
An important route that suffered particular damage was the one that
connected the heartland of the empire to Gujarat. Caravans organized
by private merchants, even though protected by hired guards, could
no longer travel safely from Agra to Surat. In view of the problems
faced in the procurement and the transportation of textiles and Bayana
indigo from Agra to Surat, the VOC was obliged to close its factory at
Agra in 1716. The cost of the bills of exchange between these two
cities, which ordinarily used to be no more than 1 to 2 per cent, now
shot up to as much as 12 per cent. In Surat, the imperial mint was shut
down for several years and numerous dealers in money were reported
to have gone bankrupt.”

The nature and the extent of the dislocation described above should,
however, be kept in perspective and care taken that its negative
implications for the overall standard of economic performance are not
overstated. Research done over the past two decades or so suggests the

? Ashin Das Gupta, Indian Merchants and the Decline of Surat, 1700-1750, Wiesbaden,
1979, p- 142; John F. Richards, The Mughal Empire, vol. 1.5 in the New Cambridge History
of India series, Cambridge, 1993, pp. 278-9.

344

CONCLUSION

strong possibility of various sectors in the Indian economy continuing
to perform well during the course of the century. In the words of
Burton Stein, scholars maintaining this position

agree that the rural economy over most of the 18th century India enjoyed
substantial, if uneven, growth notwithstanding both the destructive wars culmi-
nating in those which won the subcontinent for the British, and the supposed
political disorder in many areas. It is claimed that new, smaller states with efficient
tax-gathering procedures replaced the Mughal military imperial order, that market
networks proliferated and became to a degree interlinked, that a more prosperous
agriculture came into being with increased commodity production as a result of
rural investments by the revenue farmers of the time, that all of this was buoyed
up by an ever-increasing level of international trade in which Indian artisans,
merchants and especially bankers played key and lucrative roles, and that this
phase of political economy obtained until the first quarter of the 19th century.

From the perspective of the European trading companies, the most
crucial developments were those taking place in Bengal, by far the
most important of the Asian trading regions, supplying at the turn of
the eighteenth century as much as 40 per cent of the total Asian cargo
that the Dutch and the English East India companies imported into
Europe each year. It is vitally important to note that as far as this
province was concerned, the situation over the greater part of the
eighteenth century was not materially different from that in the
heyday of the Mughal empire in the seventeenth. The man mainly
responsible for this in the early part of the century was Murshid Quli
Khan, who dominated the history of the province between 1701, when
he was sent there as the imperial d:wan with a specific brief to try and
increase the flow of revenues due to the imperial government from the
province, and his death in 1727. By scrupulously ensuring that the
annual flow of the khalisa revenues to Delhi not only continued
uninterrupted but in fact registered an increase over time, Murshid
Quli succeeded in creating a mutually beneficial working partnership
with the imperial government. In the domain of political stability and
the state of law and order, the first four decades of the eighteenth
century were certainly no worse than had been the case during the
seventeenth. It is true that a certain amount of dislocation was caused
in the early 1740s as a result of the Maratha incursions into the
province. But that was essentially a temporary phase and things were

3 Burton Stein, ‘A decade of historical efflorescence’, South Asia Research, vol. 10 (2),
November 1990, pp. 132-3.

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

by and large back to normal by the end of the decade. In brief, the
picture of political confusion and unrest usually associated with the
declining power of the Mughals in the first half of the eighteenth
century is certainly not applicable to Bengal. In fact, the growing
weakness of the centre, particularly in the wake of Nadir Shah’s
invasion during 1739-43, further strengthened regional polities, and
successor states such as Bengal, Hyderabad and Awadh stopped
paying their customary tribute to Delhi on a regular basis making
larger resources available for internal deployment. The Europeans’
trade from Bengal also registered a significant increase during the
period. Thus of the rising total Dutch exports from Asia to Europe
amounting to f.19.24 million over the triennium 1738-40 as against
f.ts million during 1698-1700, the share of goods procured in the
province had gone up to 47 per cent as against 41 per cent at the turn
of the century. The corresponding figures in the case of the English
East India Company were f.23 million as against f.13.79 million with
the share of Bengal goods being at the all-time peak of 66 per cent
during 1738-40 as against 42 per cent during 1698-1700.

The second half of the eighteenth century witnessed a fundamental
alteration in the nature of the Indo-European encounter. The takeover
of Bengal by the English East India Company following the battle of
Plassey in 1757 marked the inauguration of the colonial phase in this
encounter. The nawab’s army, though ten times the size of Clive’s
2,000 sepoys and 900 Europeans, was routed providing the English
Company its first foothold in the subcontinent. The formal acquisition
of diwani rights in 1765 provided it with access to the province’s
revenues. These were used in part to strengthen further the Compa-
ny’s military strength. By 1782, the Company was able to maintain
115,000 men in India (90 per cent of them sepoys) enabling it to
intervene effectively in other parts of the subcontinent such as the
Deccan.

A part of the surplus from the Bengal revenues was also used to
finance the procurement of goods for export to Europe. To that
extent, these exports now became ‘unrequited’ involving a drain of
resources from the country — a theme that has legitimately attracted a
great deal of attention in the Indian nationalist historical writings of
the nineteenth century. The bulk of the English Company exports
during this period, however, were financed by rupee receipts obtained
by the Company locally against bills of exchange issued to English

346

CONCLUSION

and other European private traders payable in London and other
European capitals enabling these traders to transmit their Indian
earnings home. Between the Bengal surplus revenues and the rupee
receipts obtained against the bills of exchange, the Company found
itself in a position to suspend altogether the import of treasure from
home for nearly a quarter of a century. It was only in 1784 that these
imports were resumed partly for investment in the procurement of
export goods and partly to strengthen further the Company’s military
presence — a necessary prelude to the conquest of other parts of the
subcontinent.

The altered situation held important consequences for the economy
of the province. For one thing, the substantial reduction in the silver
imports would seem to have been an important element behind the
shortage of money that several contemporaries noted and commented
upon. More importantly, there was a marked deterioration in the
relative share in the total value of the output produced as far as the
Bengali artisanal and the mercantile groups engaged in business with
the English East India Company were concerned. This was a necessary
corollary of the replacement of a market-determined relationship
between the Company and these groups until about 1760 by a
relationship marked by a clear-cut domination by the Company in the
decades that followed. On the basis of its political muscle power, the
Company now enforced unilaterally determined below-market terms
on the producers of and the dealers in commodities such as textiles
and opium. The blatant manner in which this was done, robbing in the
process the producers and the merchants of a good part of what was
legitimately due to them, would, in turn, have introduced distortions
in the incentive structure in the domain of manufacturing and other
production in the province. This, combined with the official Company
and the unofficial private English traders’ monopolies in commodities
such as salt and opium, is likely to have brought about a certain
amount of decline in the value of the total output produced in the
province, though in the present state of our knowledge it is not
possible to indicate even broadly the extent of this decline.

There is a distinct possibility, however, that this decline was not
altogether massive or irreversible and that the structure of both
agricultural and non-agricultural production in the province continued
to be marked by a reasonable degree of vitality and capacity to deliver.
An important, though by no means conclusive, index suggesting this

347

EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

scenario is the continuing growth of both the Euro-Asian and the
intra-Asian trade from the province. It is true that, under the pressure
of the increasingly monopsonistic policies adopted by the English
Company, the trade of the rival companies operating in the region was
on the decline. Thus in the case of the VOC, although the overall
value of its Asian exports to Europe between the trienniums of
1738-40 and 1778-80 went up from f.19 million to f.21 million, the
average annual value of the Company’s exports from Bengal came
down from the all-time peak of f.5 million in 1751-2 to a measly
f.1.32 million in 1784-5. But such a decline was much more than made
up for by the English Company’s own total exports to Europe going
up from f.23 million in 1738-40 to f.25 million in 1758-60 and to an
almost incredible figure of f.69 million in 1777-9 giving us an annual
average figure of f.23 million. Bengal accounted for as much as half of
this value. In intra-Asian trade, the decline in the Dutch Company
exports as well as in those by the Indian merchants engaged in this
trade was similarly much more than made up for by the spectacular
rise in the English private merchants’ trade with China.

The Indo-European encounter over the three-hundred-year period
between 1500 and 1800 was a historical process with extremely
significant and wide-ranging implications for both sides. Within the
overall rubric of the desire to procure Indian goods, the precise
motivation and mechanism behind the arrival of each of the European
trading groups into the subcontinent was different. The Portuguese
came basically for pepper, and throughout the sixteenth and the early
part of the seventeenth century India provided an overwhelming bulk
of the total pepper supplies reaching Lisbon. The Bay of Bengal -
figured prominently in the intra-Asian trading network of the Estado
da India, and later also in the trading operations of the private
Portuguese merchants both within Asia as well as between Asia and
Europe. The Dutch East India Company, on the other hand, procured
its pepper and other spices in the Indonesian archipelago and came to
India looking mainly for the relatively inexpensive mass-consumption
cotton textiles produced on the Coromandel coast, and to a smaller
extent in Gujarat, with a view to using them as a medium of exchange
to procure the Indonesian spices. This became the first link in a chain
that eventually developed into a massive involvement in intra-Asian
trade with other Indian commodities such as Bengal raw silk and
opium also playing a critical role in the successful functioning of the

348

CONCLUSION

complex network. In the last quarter of the seventeenth century, the
fashion revolution in Europe put Indiaz textiles and raw silk at the
head of the imports from Asia catapulting India into the position of
being by far the most important supplier of goods for Europe. The
key role of India in the Dutch East India Company’s overall frame-
work of trade continued well into the early years of the second half of
the eighteenth century when the English East India Company, on the
strength of its newly acquired special status in Bengal, overwhelmed
the Dutch and forced them into reducing the scale of their operations
in the subcontinent substantially. The French were latecomers on the
scene having set up an East India Company only in 1664. In fact, it
was only from the beginning of the second quarter of the eighteenth
century onward that the French trade in the subcontinent became
quantitatively significant. They were engaged in an almost continuous
conflict with the English in south India, but like the Dutch were
eventually unable to withstand the English hostility.

The English involvement in the trade of the subcontinent became
significant only from the second quarter of the seventeenth century,
after they had found it impossible to carry on profitable trade in the
Indonesian archipelago due in part to the opposition by the Dutch.
From this point on, India figured even more prominently in the total
English exports to Europe than was the case with the Dutch. With the
English Company’s takeover of Bengal in the second half of the
eighteenth century, India assumed an altogether new role for Britain.
Bengal revenues provided an indirect subsidy to the British exchequer
and the enormous opportunities — legal and clandestine — for private
gain now available to the Company servants in their personal capacity
created a whole new class of the new-rich ‘nabobs’ returning to
England with fortunes unheard of before. It is, however, highly
unlikely that these private fortunes constituted an element of any
importance in the financing of the Industrial Revolution in Britain
which was then getting under way.

As far as India was concerned, the substantial amount of trade
carried on from her ports by the Europeans, both with Europe as well
as with other parts of Asia, particularly from the early part of the
seventeenth century onward, served to strengthen her status consider-
ably as a premier trading and manufacturing nation in Asia. At the
turn of the eighteenth century, India was probably the largest and the
most cost-competitive textile-manufacturing country in the world. An

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EUROPEAN COMMERCIAL ENTERPRISE IN PRE-COLONIAL INDIA

increase in trade being beneficial for a country is an axiom: in India’s
case the ‘bullion for goods’ character of the European trade consider-
ably enhanced its positive implications and indeed turned it into an
important instrument of growth in the Indian economy. The gold and
silver the Europeans imported from Europe and other Asian countries
such as Japan led to a substantial increase in the supply of money in
the country. The growing level of monetization in the economy, in
turn, facilitated reform measures such as the growing conversion of
the land revenue demand from kind into cash, which led to a further
increase in market exchange and trade. The growing availability of
precious metals in the system also helped the rise of banking firms,
and generally became an important factor in facilitating the expansion
of the Mughal empire.

By not involving a decline in the domestic output of import-
competing goods, the ‘bullion for goods’ character of the European
trade also implied that the positive implications of the growth in trade
for the level of income, output and employment in the economy were
considerably more substantial than would have been the case if this
trade had been of the ordinary ‘goods for goods’ variety. In the
agricultural sector, there was an increase in the acreage under cultiva-
tion, particularly in the case of high-value commercial crops such as
cotton and opium. The increase in output and employment in the
manufacturing sector was clearly on a scale that was not entirely
insignificant. Job opportunities in several segments of the services
sector such as that providing brokerage services would also have gone
up. Besides, the fact that, on average, the rate of growth of the
European demand for Indian goods such as textiles and raw silk was
greater than the rate of growth of their supply, increasingly turned the
market into a sellers’ market. The fact that this involved not only an
increase in the bargaining strength of the intermediary merchants
vis-a-vis the Europeans but also a continuous improvement in the
bargaining strength of the weavers vis-a-vis the intermediary
merchants, implied that the benefits of the continuing rise in the level
of output, income and employment were not confined to the inter-
mediary groups but percolated all the way down to the weavers and
the other constituents of the producing groups.

During the early colonial phase in the post-1760 period, this
situation continued unaltered in many respects but underwent major
modification in others. The composition of the trade with Europe

35°

CONCLUSION

remained unchanged, and except for the ‘unrequited’ part of the
exports financed through the investment of the Bengal surplus rev-
enues, the ‘bullion for goods’ character of the trade continued to be
valid, though in a more restrictive and limited way. From the point of
view of the English Company, the suspension of silver imports for a
while and the financing of the exports mainly through the bills of
exchange only meant that the payment in silver was now made in
Europe rather than in India. But of course, this silver never reached
India. Also, in so far as the relationship between the English East India
Company on the one hand and the Indian intermediary merchants and
producers on the other was no longer governed by the market but was
dictated by the Company, a good part of the legitimate share of the
producers and the merchants in the total output was now appropriated
by the Company. As the Industrial Revolution began to mature in
Britain, more fundamental changes followed. From the second quarter
of the nineteenth century onward, India began to lose the European
market for its textiles. Later in the century, the so-called colonial
pattern of trade came into operation in a full-fledged manner and India
was converted into an important market for textiles manufactured in
Manchester and Lancashire.

351

BIBLIOGRAPHIC ESSAY

General studies

A useful starting point for the necessary background material would be the
Cambridge Economic History of India, vol. 1 (Cambridge, 1982) edited by
T. Raychaudhuri and Irfan Habib. Part 1 of vol. 1 (Cambridge, 1983) edited
by Dharma Kumar would also be found useful. A concise history of Mughal
India is now available in John Richards’ The Mughal Empire (Cambridge,
1993) in the New Cambridge History of India series. Richards’ earlier Mughal
Administration in Golconda (Oxford, 1975) is the standard work on the
subject. Irfan Habib’s The Agrarian System of Mughal India (Bombay, 1963),
with its detailed discussion of the fiscal structure of the empire, continues to
be indispensable. Also see Shireen Moosvi, The Economy of the Mughal
Empire c. 1595 (Delhi, 1987). For south India, Burton Stein’s Vijayanagara
(Cambridge, 1989) in the New Cambridge History of India series may be
used profitably. Frank Perlin’s ‘Proto-industrialization and _pre-colonial
South Asia’, Past and Present, No. 98 (1983), is valuable in as much as it raises
a number of important issues.

The nature of economic change in the subcontinent during the eighteenth
century consequent upon the collapse of the Mughal empire has been the
subject of a lively debate over the past two decades or so. Many of the issues
raised in that debate are of direct interest for our field of enquiry. Among the
more important contributions which make a case for a positive interpretation
of the developments in the eighteenth century are C.A. Bayly’s Rulers,
Townsmen and Bazaars, North Indian Society in the Age of British Expansion
1770-1870 (Cambridge, 1983) and Indian Society and the Making of the
British Empire (Cambridge, 1988) in the New Cambridge History of India
series. Muzaffar Alam’s The Crisis of Empire in Mughal North India, Awadh
and the Punjab, 1707-48 (Delhi, 1986) and Chetan Singh, ‘Centre and
periphery in the Mughal state: the case of seventeenth century Panjab’,
Modern Asian Studies, vol. 22 (1988) are in the same broad genre. D.A.
Washbrook’s ‘Progress and problems: South Asian economic and _ social
history c. 1720-1860’, Modern Asian Studies, vol. 22 (1988) and Burton
Stein’s ‘A decade of historical efflorescence’, South Asia Research, vol. 10
(1990) and ‘Eighteenth century India: another view’, Studies in History, vol. 5
(1989) are among the other important contributions subscribing to a non-
negative view of the eighteenth century. This view has been contested by
scholars such as M. Athar Ali in several papers including ‘Recent theories of
eighteenth century India’, Indian Historical Review, vol. 13 (1986-7) and

352

BIBLIOGRAPHIC ESSAY

‘The Mughal polity — a critique of revisionist approaches’, Modern Asian
Studies, vol. 27 (1993).

Important studies relating to eighteenth-century Bengal include N.K.
Sinha, The Economic History of Bengal From Plassey to the Permanent
Settlement (Calcutta, 1956) and PJ. Marshall, Bengal, The British Bridge-
head: Eastern India 1740-1828 (Cambridge, 1987) in the New Cambridge
History of India series. Abdul Karim’s Murshid Quli Khan and His Times
(Dhaka, 1963) and K.K. Datta’s Alivardi and His Times (Calcutta, 1963)
continue to be important. Two papers by Philip B. Calkins, “The formation
of a regionally oriented ruling group in Bengal 1700-40’, Journal of Asian
Studies, vol. 22 (1970) and ‘The role of Murshidabad as a regional and sub-
regional center in Bengal’, in R.L. Park (ed.), Urban Bengal (East Lansing,
Michigan, 1969) may also be used profitably. Zahiruddin Malik’s Reign of
Mubammad Shah 1719-48 (Delhi, 1977) contains a useful discussion of
Bengal’s relations with the Mughal centre. Benoy Chowdhury’s Growth of
Commercial Agriculture in Bengal (1757-1900), vol. 1 (Calcutta, 1964)
continues to be indispensable.

Studies relating to the field

Over the past two decades or so, there has been a fair amount of work in our
field. This is partly in the form of collections of essays published as
proceedings of international seminars, as festschrift volumes, and as volumes
on selected themes to which groups of scholars were invited to contribute.
L. Blussé and F.S. Gaastra (ed.), Companies and Trade, Essays on Overseas
Trading Companies during the Ancien Regime (The Hague, 1981) and J.R.
Bruijn and F-.S. Gaastra (ed.), Ships, Sailors and Spices, East India Companies
and their Shipping in the 16th, 17th and 18th Centuries (Amsterdam, 1993)
are mainly concerned with the European end of the Companies’ operations,
though the former volume also contains some essays dealing with Asia. The
two volumes edited by James D. Tracy, The Rise of Merchant Empires, Long-
distance Trade in the Early Modern World 1350-1750 (Cambridge, 1990) and
The Political Economy of Merchant Empires, State Power and World Trade
1350-1750 (Cambridge, 1991) contain several major pieces in our area.
Among the collections of essays specifically dealing with trade in the Indian
Ocean and the South China Sea, one might note first of all, Ashin Das Gupta
and M.N. Pearson (ed.), India and the Indian Ocean, 1500-1800 (Calcutta,
1987) which might almost be regarded as a textbook on the subject. Other
major collections in the field include Blair B. Kling and M.N. Pearson (ed.),
The Age of Partnership, Europeans in Asia before Dominion (Honolulu,
1979), Roderich Ptak and Dietmar Rothermund (ed.), Emporia, Commodities
and Entrepreneurs in Asian Maritime Trade (1400-1750) (Stuttgart, 1991) and
Jorge Manuel Flores (ed.), The Asian Seas 1300-1800, Local Societies,
European Expansion and the Portuguese, Revista de Cultura, vols. 13/14
(1991), which contains papers on trading entities other than the Portuguese as
well. Finally, one might note the two volumes edited by K.S. Mathew, Studies

353

BIBLIOGRAPHIC ESSAY

in Maritime History (Pondicherry, 1990) and Mariners, Merchants and
Oceans, Studies in Maritime History (Delhi, 1995).

The Variorum Collected Studies Series published by Ashgate Publishing
Ltd, Aldershot, Hampshire, UK, where papers published by an individual
scholar around a particular theme are reprinted in a volume, is well known to
researchers in our field mainly through the four volumes of essays by C.R.
Boxer, From Lisbon to Goa, 1500-1750, Studies in Portuguese Maritime
Enterprise (1984), Portuguese Conquest and Commerce in Southern Asia,
1y00-1750 (1985), Portuguese Merchants and Missionaries in Feudal Japan,
1§43-1640 (1986) and Dutch Merchants and Mariners in Asia, 1602-1795
(1988). Another early volume was Genevieve Bouchon, L’Asie du sud a
V’époque des grandes découvertes (1987). The coverage of the series has now
been substantially expanded and the volumes published over the past few
years include P.J. Marshall, Trade and Conquest, Studies on the Rise of British
Dominance in India (1993), John F. Richards, Power, Administration and
Finance in Mughal India (1993), Om Prakash, Precious Metals and Com-
merce, The Dutch East India Company in the Indian Ocean Trade (1994),
Ashin Das Gupta, Merchants of Maritime India, 1500-1800 (1994),
S. Arasaratnam, Maritime Trade, Society and European Influence in Southern
Asia, 1600-1800 (1995), G.V. Scammell, Ships, Oceans and Empires, Studies in
European Maritime and Colonial History 1400-1750 (1995), S. Arasaratnam,
Ceylon and the Dutch, 1600~1800, External Influences and Internal Change
in Early Modern Sri Lanka (1996) and Dennis O. Flynn, World Silver and
Monetary History in the 16th and 17th Centuries (1996). The publishers of
the Variorum series have recently also launched a thirty-volume reprint series,
An Expanding World, The European Impact on World History 1450-1800
under the general editorship of A.J.R. Russell-Wood. Volumes in our area
already published include Anthony Disney (ed.), Historiography of Europeans
in Africa and Asia (No. 4), Sanjay Subrahmanyam (ed.), Merchant Networks
in the Early Modern World (1450-1800) (No. 8), Om Prakash (ed.), European
Commercial Expansion in Early Modern Asia (No. 10), M.N. Pearson (ed.),
Spices in the Indian Ocean World (No. 11) and Pieter Emmer and Femme
Gaastra (ed.), The Organization of Interoceanic Trade in European Expan-
ston, 1450-1800 (No. 13).

Among the major general works concerned with our field, one might begin
with Fernand Braudel’s The Mediterranean and the Mediterranean World in
the Age of Philip II (2 vols., second edition, London, 1981). K.N. Chaud-
huri’s Trade and Civilization in the Indian Ocean, An Ecnomic History from
the Rise of Islam to 1750 (Cambridge, 1985) and Asia Before Europe:
Economy and Civilization of the Indian Ocean from the Rise of Islam to 1750
(Cambridge, 1990) are very much in the Braudilian tradition. Parts of Donald
F. Lach’s Asia in the Making of Europe (3 vols. in 9 books, vol. m1 with
Edwin J. van Kley, Chicago, 1965-93) also contain useful material. More
immediately relevant is Holden Furber’s masterly Rival Empires of Trade in
the Orient, 1600-1800 (Minneapolis and Oxford, 1976). A slim volume by
Dietmar Rothermund, Asian Trade and European Expansion in the Age of

354

BIBLIOGRAPHIC ESSAY

Mercantilism (Delhi, 1981) may also be used with profit. Jacob van Leur’s
classic Indonesian Trade and Society: Essays in Asian Social and Economic
History (The Hague, 1955) and M.A.P. Meilink-Roelofsz. Asian Trade and
European Influence in the Indonesian Archipelago between 1500 and about
1630 (The Hague, 1962) are valuable for their theoretical ideas, and in the case
of the latter also for its detailed empirical content.

The Portuguese

There is a great deal of primary source material pertaining to the Portuguese
which is available in printed form. This material has been described in some
detail in a bibliographical essay in the recent George D. Winius (ed.), Portugal,
the Pathfinder: Journeys from the Medieval towards the Modern World
1300~ca. 1600 (Madison, 1995). The twenty essays in this volume deal with the
geographical explorations of the Portuguese as well as with their commercial
and diplomatic activities. Many of the essays deal with Asia. Another useful
collection of essays dealing exclusively with Asia is Roderich Ptak (ed.),
Portuguese Asia: Aspects in History and Economic History (Sixteenth and
Seventeenth Centuries) (Stuttgart, 1987). The Proceedings of the International
Seminar on Indo-Portuguese History usually held every two years alternately
in India and Portugal also contain important contributions in this area. Eight
seminars have been organized in the series so far and the published Proceed-
ings include John Correia-Afonso (ed.), Indo-Portuguese History: Sources and
Problems (Bombay, 1981), Teotonio R. de Souza (ed.) Indo-Portuguese
History: Old Issues, New Questions (Delhi, 1985), Artur Teodoro de Matos
and Luis Filipe F. R. Thomaz (ed.), As Relagoes entre a India Portugesa a Asia
Do Sueste eo Extremo Oriente (Macau/Lisbon, 1993) and Portuguese India
and its Northern Province, Mare Liberum (No. 9, July 1995).

Charles Boxer’s The Portuguese Seaborne Empire, 1415-1825 (London,
1969) continues to be valuable as an entry point into the field. Bailey W.
Diffie and George D. Winius, Foundations of the Portuguese Empire
1415-1580 (Minneapolis, 1977) is strong in the domain of political, military
and administrative history of the Portuguese expansion. Another major work
in the field, especially useful for economic history, is V. Magalhaes-Godinho,
Os Descobrimentos e a Economia Mundial (3 vols., Lisbon, 1981-4). Niels
Steensgaard’s The Asian Trade Revolution of the Seventeenth Century, The
East India Companies and the Decline of Caravan Trade (Chicago, 1974) is
also an important work. Valuable studies pertaining to the operations of the
Portuguese in Asia include Sanjay Subrahmanyam, The Portuguese Empire in
Asia 1500-1700, A Political and Economic History (London, 1993) and
Improvising Empire: Portuguese Trade and Settlement in the Bay of Bengal
1300-1700 (Delhi, 1990), M.N. Pearson, The Portuguese in India in the New
Cambridge History of India series (Cambridge, 1987), Coastal Western India,
Studies from the Portuguese Records (Delhi, 1981) and Merchants and Rulers
in Gujarat: the Response to the Portuguese in the Sixteenth Century (Berkeley,
1976), Genevieve Bouchon, Regent of the Sea, Cannanore’s Response to

355

BIBLIOGRAPHIC ESSAY

Portuguese Expansion, 1507-1528 (Delhi, 1988) and George B. Souza, The
Survival of Empire: Portuguese Trade and Society in China and South China
Sea, 1630-1754 (Cambridge, 1986).

The literature on the Portuguese Euro-Asian pepper trade includes
Magalhaes-Godinho’s, Os Descobrimentos e a Economia Mundial, Genevieve
Bouchon’s ‘L’Inventaire de la Cargaison rapportée de I’Inde en 1505’, Mare
Luso Indicum, vol. 3 (1976) and Navires et cargaisons retour de I’Inde en 1518
(Paris, 1977), and Hermann Kellenbenz, ‘Autour de 1600: le commerce du
poivre de Fugger et le marché international du poivre’, Annales, ESC, vol. 11
(1956). An excellent study dealing with the pepper trade in the early part of
the seventeenth century is A.R. Disney, Twilight of the Pepper Empire,
Portuguese Trade in Southwest India in the Early Seventeenth Century
(Cambridge, Mass. and London, 1978). The question of the relative amount
of pepper shipments via the Cape as against those via the water-cum-land
route is covered in two papers by Frederic C. Lane, “Venetian shipping during
the commercial revolution’, and ‘The Mediterranean spice trade, further
evidence on its revival in the sixteenth century’, published in the American
Historical Review, vol. 38 (1933) and vol. 45 (1940) respectively, in a paper by
C.H.H. Wake, ‘The changing pattern of Europe’s pepper and spice imports,
ca 1400-1700’, Journal of European Economic History, vol. 8 (1979), and in
C.R. Boxer’s ‘A note on Portuguese reactions to the revival of the Red Sea
spice trade and the rise of Atjeh, 1540-1600’, Journal of Southeast Asian
History, vol. 10 (1969). In his ‘Navigation between Portugal and Asia in the
sixteenth and seventeenth centuries’ in E.J. van Kley and C.K. Pullapilly (ed.),
Asia and the West: Encounters and Exchanges from the Age of Explorations
(Notre Dame, 1986), T. Bentley Duncan provides a new series of shipping
movements between Portugal and Asia. In the recent Portuguese Trade in
Asia under the Habsburgs, 1580-1640 (Baltimore and London, 1993), James
C. Boyajian provides an almost revolutionary revision of current orthodoxy
in the matter of the relative role of the private Portuguese traders in the Euro-
Asian carreira trade. Boyajian’s book also deals extensively with the Asian
end of the Portuguese enterprise. Regional studies in that domain include
Sanjay Subrahmanyam, The Political Economy of Commerce, Southern India
1500-1650 (Cambridge, 1990), Jan Kieniewicz, “The Portuguese factory and
the trade in pepper in Malabar during the sixteenth century’, Indian Economic
and Social History Review, vol. 6 (1969), and K.S. Mathew, Portuguese Trade
in India in the Sixteenth Century (Delhi, 1983). An important paper dealing
with the private Portuguese merchants’ intra-Asian trading operations is Luis
Filipe F.R. Thomaz, ‘Les Portugais dans les mers de |’Archipel au XVIe
siecle’, Archipel, vol. 18 (1979).

The Dutch

The manuscript and printed sources in respect of the Dutch East India
Company are described in an appendix and the bibliography of Om Prakash,
The Dutch East India Company and the Economy of Bengal, 1630-1720

356

BIBLIOGRAPHIC ESSAY

(Princeton, 1985). His “Dutch source material on Indian maritime history in
the early modern period: an evaluation’, Indian Historical Review, vol. 8
(1981-2) can be consulted usefully as an entry point into the Dutch archives.
A small volume of the manuscript sources is available in English translation
and annotation in Om Prakash, The Dutch Factories in India, 1617-1623, A
Collection of Dutch East India Company Documents Pertaining to India
(Dethi, 1984).

As in the case of the Portuguese, C.R. Boxer’s general survey of the Dutch
expansion, The Dutch Seaborne Empire (London, 1965) is a useful introduc-
tory volume. The organizational structure of the Dutch East India Company
at the European end is discussed in F.S. Gaastra, Bewind en Beleid by the
VOC 1672-1702 (Zutphen, 1989). The best general account of the Company
is also by Gaastra, De Geschiedenis van de VOC (Zutphen, 1991). The
financial accounting of the Company is described in detail in J.P. de Korte,
De Jaarlykse Financiele Verantwoording in de Verenigde Oost-Indische
Compagnie (Leiden, 1984). Jonathan I. Israel’s Dutch Primacy in World
Trade, 1585-1740 (Oxford, 1989) is a comprehensive survey of the rise of the
Dutch as a commercial power from the closing decades of the sixteenth
century onward. Niels Steensgaard in his “The Dutch East India Company as
an institutional innovation’, in Maurice Aymard (ed.), Dutch Capitalism and
World Capitalism (Cambridge, 1982) argues the case for a qualitative differ-
ence between the Portuguese enterprise and the Dutch East India Company.
The Dutch Company’s expansion into the Indonesian archipelago during the
early decades of the seventeenth century is best analysed in the much-
neglected The Cradle of Colonialism (New Haven, 1963) by George
Masselman. Kristof Glamann’s masterly Dutch—Asiatic Trade 1620-1740
(Copenhagen/The Hague, 1958, reprint 1981) continues to be indispensable.
Also extremely useful is the three-volume Dutch—Asiatic Shipping in the 17th
and 18th Centuries (The Hague, 1979-87) by J.R. Bruijn, F.S. Gaastra and I.
Schoffer. While the second and the third volumes contain a full listing
respectively of the outward- and the homeward-bound ships operating on the
account of the Company, the first volume contains useful details regarding
the organizational structure and the shipping of the Company. A general
survey of the Company’s expansion into India is provided by George D.
Winius and M.P.M. Vink, The Merchant-Warrior Pacified, The VOC and its
Changing Political Economy in India (Delhi, 1991).

On the Dutch East India Company’s trading operations in Asia, several
useful studies are available in M.A.P. Meilink- Roelofsz. (ed.), De VOC in
Azie (Bussum, 1976). Other studies on the Dutch in Asia include Om
Prakash, ‘Restrictive trade regimes: VOC and the Asian spice trade in the
seventeenth century’, in R. Ptak and Dietmar Rothermund (ed.), Emporia,
Commodities and Entrepreneurs in Asian Maritime Trade, c.1400-1750
(Stuttgart, 1991), and “Trade in a culturally hostile environment: Europeans in
the Japan trade, 1550-1700’, in Jens Christian V. Johansen, Erling Ladewig
Petersen and Henrik Stevnsborg (ed.), Clashes of Culture, Essays in Honour
of Niels Steensgaard (Odense, 1992), and S. Arasaratnam ‘Some notes on the

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BIBLIOGRAPHIC ESSAY

Dutch in Malacca and the Indo-Malayan trade’, Journal of Southeast Asian
History, vol. 10 (1969) and ‘Dutch commercial policy in Ceylon and its effect
on Indo-Ceylon trade, 1690-1750, Indian Economic and Social History
Review, vol. 4 (1967).

For the Indian subcontinent, regional studies include, for Coromandel,
T. Raychaudhuri, Jan Company in Coromandel 1605-1690 (The Hague,
1962), S. Arasaratnam, Merchants, Companies and Commerce on the Coro-
mandel Coast, 1650-1740 (Delhi, 1986) and Sanjay Subrahmanyam, The
Political Economy of Commerce, Southern India, 1500-1650 (Cambridge,
1990). Unpublished PhD theses dealing with this region include Joseph J.
Brennig, “The textile trade of seventeenth century northern Coromandel: a
study of a pre-modern Asian export industry’ (University of Wisconsin,
Madison, 1975) and Bhaswati Bhattacharya, “Ihe Dutch East India Company
on the Coromandel coast’ (Visva Bharati University, Santiniketan, 1993).
Studies on Bengal include Om Prakash, The Dutch East India Company and
the Economy of Bengal, 1630-1720 (Princeton, 1985) and Frank Lequin, Het
Personnel van de Verenidge Oost-Indische Compagnie in Azie in de Acht-
tiende Eeuw, meer in het byzonder in de Vestiging Bengalen (2 vols., Leiden,
1982). As far as Gujarat and its north Indian hinterland is concerned, an
important study is that by H.W. van Santen, De Verenigde Oost-Indische
Compagnie in Gujarat en Hindustan, 1620-1660 (Leiden, 1982). Ann Bos
Radwan’s The Dutch in Western India, 1601-1632 (Calcutta, 1978) is rather
thin. An unpublished doctoral dissertation is that by V.B. Gupta, ‘The Dutch
East India Company in Gujarat trade 1660-1700: a study of selected aspects’
(Delhi School of Economics, University of Delhi, 1991). Finally, as far as the
Malabar coast is concerned, the first work done on the region was De
Vestiging der Nederlanders ter Kuste Malabar (The Hague, 1943) by M.A.P.
Roelofsz. More recent is H.K. s’ Jacob, De Nederlanders in Kerala 1663-1701
(The Hague, 1976) which is a collection of the memoirs and the instructions
left behind by the outgoing Dutch ‘“commandeurs’ of the region. Ashin Das
Gupta’s Malabar in Asian Trade, 1740-1800 (Cambridge, 1967) while dealing
with the Dutch Company trade also goes into other issues such as the Indian
merchants’ trade from the region.

The English

The English Factories in India 1618-1669 (ed. W. Foster, 13 volumes, Oxford,
1906-27) and The English Factories in India (New Series 1670-1684 ed.
C. Fawcett, 4 volumes, Oxford, 1936-55) have been used extensively over the
years by researchers working on the English East India Company. For a
description of the manuscript and other printed sources in respect of the
English Company, see the bibliography in K.N. Chaudhuri, The Trading
World of Asia and the English East India Company 1660-1760 (Cambridge,
1978) which is a definitive account of the trading operations of the Company
in India. The earlier phase of the Company’s trade in Asia is covered by
Chaudhuri in his The English East India Company: the Study of an Early

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BIBLIOGRAPHIC ESSAY

Joint-Stock Company, 1600-1640 (London, 1965). The Company’s trading
operations in the Far East are described in D.K. Bassett, ‘The trade of the
English East India Company in the Far East, 1623-1684’, Journal of the
Royal Asiatic Society of Great Britain and Ireland (1960). Two useful papers
dealing with Persia are by R.W. Ferrier, “The trade between India and the
Persian Gulf and the East India Company in the 17th century’, Bengal Past
and Present, No. 89 (1970) and ‘The Armenians and the East India Company
in Persia in the seventeenth and early eighteenth centuries’, Economic History
Review, vol. 26 (1973).

Specifically for the Indian subcontinent, in addition to K.N. Chaudhuri’s
Trading World of Asia, we have for the Coromandel coast the little-noticed
Economic Progress of the East India Company on the Coromandel Coast
1702-1746 (Nagpur, 1974) by R.N. Banerji, and the recent Maritime Com-
merce and English Power, Southeast India 1730-1800 (Delhi, 1996) by
S. Arasaratnam. Arasaratnam’s earlier Merchants, Companies and Commerce
on the Coromandel Coast 1650-1740 (Delhi, 1986) also contains material on
the English Company’s activities on the coast. The two volumes by Sushil
Chaudhury, Trade and Commercial Organization in Bengal, 1650-1720
(Calcutta, 1975) and From Prosperity to Decline, Eighteenth Century Bengal
(Delhi, 1995) deal, among other things, with the Company’s trade in the
region. Ashin Das Gupta’s Malabar in Asian Trade, 1740-1800 (Cambridge,
1967) and Sanjay Subrahmanyam’s The Political Economy of Commerce,
Southern India, 1500-1650 (Cambridge, 1990) also contain material on the
English Company on the Malabar coast.

There is also an extensive literature on the commercial activities of the
private English traders engaged in the Indian Ocean trade. Holden Furber’s
pioneering John Company at Work, A Study of European Expansion in India
in the Late Eighteenth Century (Cambridge, Mass., 1948) continues to be
valuable. Ian Bruce Watson’s Foundation for Empire, English Private Trade
in India 1659-1760 (Delhi, 1980) is a detailed account of the subject. P.J.
Marshall’s ‘British private trade in the Indian Ocean before 1800’, in Ashin
Das Gupta and M.N. Pearson (ed.), India and the Indian Ocean 1500-1800
(Calcutta, 1987) is of fundamental importance. The English private merchants’
trade with southeast Asia is covered in $.D. Quaison, English ‘C

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