WHEN ASIA WAS THE WORLD ECONOMY | Global Trade Magazine
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  August 2nd, 2016 | Written by

WHEN ASIA WAS THE WORLD ECONOMY

AND HOW THE PORTUGUESE CHALLENGED THE SYSTEM

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  • The Asia-centered World Economy
  • The Age Of Mercantilism
  • The Beginning Of The Europe-centered World Economy

Every schoolchild knows Columbus was looking for India when he stumbled upon the Americas. But the Portuguese actually reached India by sea in the 1490s. And while they did not overwhelm the societies they encountered as the Spanish did in the New World, they did help to undermine a vast commercial system centered on the Indian Ocean.

This Asia-centered world economy had been taking shape since the rise of Islam in the seventh century. As the first Arab converts conquered much of the Byzantine world (especially Egypt and Syria) to their west and the Sassanid lands (Iran and Iraq) to their east, they laid down few economic rules. Both the converted and unconverted (mostly Jewish or Christian) traders of Cairo, Damascus, Baghdad and Tashkent continued business as usual. The conquest meant that a single power, the Islamic caliphate, could guarantee safe passage between two worlds—the Mediterranean Sea and the Indian Ocean—separated since the decline of Rome.

As later generations extended the Islamic conquests from Spain to Somalia and Java, the networks of Hindu and other traders were welded to those of the West and Near East. Commerce boomed. At the edges of the empire, merchants dealt with a still larger world. Traders bought Chinese porcelain and silk in Canton and Malaysia. Europeans shipped Indonesian spices via the Red and Mediterranean seas. And from Eastern Europe, Turkey and sub-Saharan Africa came other crucial imports: gold (principally for coining money), iron, timber and slaves both white and black.

The limited unity that the caliphate created—particularly in currency—was essential to this burgeoning trade. So was the urban elite’s insatiable demand for exotica. But the looseness of Islamic rule was even more important: As long as tribute was paid, local rulers were allowed to do much as they pleased. Most rulers allowed traders of all faiths to move freely from port to port. Wars were frequent, but usually limited to land, while the seas remained open. Merchants who encountered problems in one port simply moved to another. Piracy was common but manageable. Merchant groups, which often organized along ethnic or religious lines, maintained insurance funds to ransom any members captured at sea. Kidnapping became so pervasive a business pursuit that, in the 1200s, a standard ransom rate prevailed throughout the Mediterranean.

Within this cosmopolitan world, businesses spanned vast areas. The letters of one group of Jewish merchants, found centuries later in a Cairo synagogue, reveal a family firm with branches in India, Iran, Tunisia and Egypt. Moreover, a complex international division of labor developed: The soldiers who resisted the Crusades wore chain mail from the Caucasus and carried steel swords smelted in India from iron mined in present-day Tanzania. Not only luxury goods but such bulky necessities as flour and firewood were exchanged across huge distances. The density of exchange also favored the worldwide diffusion of knowledge and products. Rice growing, which had spread slowly from Eastern Asia to India and parts of Mesopotamia, was now adopted in Egypt, Morocco and Southern Spain; sorghum spread from Africa to the Mediterranean. Cotton was introduced from India to Iraq as early as the 600s; from there it followed the trade routes to Syria, Cyprus, Sicily, Tunisia, Morocco, Spain and eventually to the Nile Valley. Islamic trade routes brought papermaking from China to Europe and Greek medicine back into a Europe that had lost it.

By the time the Portuguese arrived, this system was already in trouble. Invasions, ecological problems and revolts by slaves, overtaxed peasants and the urban poor had led to economic contraction and fragmentation. Yet the volume of trade was still enormous, and the basic rules by which it was conducted still held. The Portuguese government was the first to attack the principle—common throughout the region—that the sea belonged to no one, and the first to use force to redirect trade. Within 20 years of sailing into Asian waters, they created forts at two of the three places where major westbound trade routes could be blocked: Malacca, in the straits that connect the Indian and Pacific oceans, and Hormuz, at the entrance to the Persian Gulf. (They failed to take Aden, at the mouth of the Red Sea, but succeeded in blockading it during the annual sailing season.) They also built numerous coastal forts, mostly in India. They claimed a monopoly in the pepper trade and the right to board or sink any ship in the hemisphere to which they had not issued a pass (or cartaz). The cartaz was cheap, but the buyer also had to agree not to trade in certain commodities and to boycott certain ports.

Portuguese pretensions far exceeded their power. Their settlements were always vulnerable because they were not self-sufficient. Indeed, most survived only because they were obviously too weak to threaten major land powers. Thus, nearby kingdoms felt free to feed the Portuguese in return for cartazes and safety at sea. And though Portuguese ships dealt harshly with those caught violating their monopoly—sinking ships, bombarding ports and burning crops—they could not truly rule the ocean.

By the middle 1500s, the counterattack began. The Sultan of Aceh led an offensive at sea and on land, reopening the Red Sea trade routes in the 1540s with the help of Indian merchants and besieging Malacca (with Turkish help) over and over in the late 1500s. Before long, more powerful Europeans appeared: the Dutch and English. By the early 1600s, the Portuguese empire in Asia was in irreversible decline. But the age of mercantilism, trade wars and a Europe-centered world economy was just beginning.


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