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Companies, mercantilism and the development of seventeenth-century .

The turn of the seventeenth century witnessed dramatic new developments in the structure of European trade in the Indian Ocean. The century-old reign of the Portuguese Estado da India was put to the test as a series of Dutch and English interlopers rounded the Cape of Good Hope in a bid to capture the lucrative trade in Asian spices. The advent of northern European commercial interests also marked the arrival of a new trading institution, the joint-stock trading company, into Asian waters. Not surprisingly, the confrontation between European colonial interests in the region has thus been seen as a confrontation between two ways of organizing overseas trade: the patrimonial system of the Estado da India and the outwardly capitalist enterprise of the joint-stock companies. If, indeed, this was a competition between two different commercial forms, then subsequent events appear to argue for the triumph of the capitalist company over the state monopoly. Within a few short decades of their incursion into the trading system of the Indian Ocean, the Dutch (VOC) and English (EIC) trading companies made immense gains, monopolizing key sectors of the region's spice and commodity trades. By the end of the seventeenth century, the seeds planted at the turn of the century had borne fruit; the European portion of the Indian Ocean economy was locked under company hegemony. Capitalism had carried the day over patrimonialism.

Had it really? This paper seeks to revise the view of the early decades of the seventeenth century. While the Estado da India underwent a period of serious retrenchment, and while it is difficult to discount the success of the VOC and EIC, it seems inaccurate to portray this moment as the triumph of a more modern form of commerce over a more backward and archaic competitor. It also seems misleading to divide, as do leading historians of the period, the actors in this story into two camps: one capitalist and northern, the other feudal and Iberian. The oppositions evident in the relevant historiography (modern v. archaic; capitalist v. feudal) are inscribed in two general interpretative frameworks. The first relies upon the principle of succession, itself based upon the biological metaphors used to naturalize the purported rise and decline of states and other institutions. This is an explanatory framework with an impressive lineage and staying power, used in antiquity and revived in the memorials of seventeenth-century arbitristas who saw the decline of the Habsburg monarchy and its possessions as part of an inexorable cycle of nature. (1) One finds traces of this explanatory framework in the work of Fernand Braudel and Immanuel Wallerstein, for whom the development of the modern world is charted by the successive rise of new centres of capitalist activity. (2) A second avenue of interpretation puts the comparative successes of the Estado da India and the northern companies in the context of a Weberian discussion concerning the modernity of capitalism. This interpretation holds that the companies won out because of greater rationality, efficiency and entrepreneurial drive: in a word, because of their greater modernity. (3) By contrast, the Estado da India is seen as atavistic and archaic--too mired in the feudal mindset of honour, bloodthirst and corporatist corruption to react effectively to the threats posed by the EIC and the VOC.

This paper will attempt to break down these dichotomies by setting aside the larger units of historical analysis in order to examine the actions of the Portuguese traders from their perspective. How did they perceive the shifting scene of Asian trade? In their view of the world, what loomed large were not the heady abstractions of capitalism, feudalism or modernity, but rather the problem of how to maintain and expand their trading activities. This implied a process--both conscious and reactive--of evaluating and comparing the various forms of organizing the colonial trades. By adopting their viewpoint, the early seventeenth century in Asia appears far more complicated. In a period of transformation, this approach is perhaps more true to the historical experience. These merchants had to resolve the question of where to establish hierarchies of authority within commercial activities. Instead of being divided into separate camps of feudal and capitalist forms of trade, commerce in Asia presented a mixture of options including companies, commercial networks based on ethnicity and kinship, indigenous trade, state-organized monopolies, and European interlopers working outside the bounds of both Crown and companies. The Portuguese traders plying the Asian trades engaged in the entire range of these forms during the first half of the seventeenth century. They collaborated with the Habsburg crown and the Council of Portugal in the commercial undertakings of the Estado da India. Some, as we shall see, proposed and put in place a monopolistic company--the Portuguese India Company--inspired by the model presented by their English and Dutch competitors. Others deeply immersed themselves in the world of local trade, eventually becoming almost indistinguishable from their Indian or Muslim counterparts.

Overall, however, I would argue that the form of Portuguese trade that persisted throughout this period of commercial reconfiguration was the network. This structure, constituted by the ties of family connections and for some, such as the conversos, by their common cultural identity, would prove to be a remarkably flexible, resilient and effective manner of engaging in Asian trade. In fact, if we look at a key indicator for the global volume of trade, the importation of American silver, these networks of private Portuguese traders out-competed the combined trades of the VOC and EIC during the first half of the seventeenth century. Eventually Portuguese trade networks would form one of a number of networks of private and Indian traders that underpinned the advances of European trade in Asia. The circuits they elaborated, the services they provided and the capital they furnished would allow Portuguese networks to weave themselves into the margins of the company sphere. In the case of Madras, for instance, the Portuguese would provide English traders and EIC officials (acting outside the purview of their office) with credit, offer brokering services and provide access to key markets such as Macao and Manila. (4) In a period of company expansion, the continued vitality of the Portuguese trading networks in the Indian Ocean argues for a reconsideration of a historiography that portrays this period as the eclipse of feudal patrimonialism by modern capitalism.

This paper is divided into two sections. The first will review the traditional historiography on the encounter between the Estado da India and the northern companies and will point out the conceptual traps it conceals; the second section will consist of recasting the story of the Portuguese traders during this period by examining, as I have suggested above, the contours of Asian trade from their perspective.

In the literature on the economic history of early modern Europe, the arrival of the joint stock company in the Asian and American trades has often been portrayed as the harbinger of a new, modern form of economy. In this view, the company is seen as one of the key forebears in a long genealogy of capitalist development that winds its way through the centuries, ending in our own time. As one of the cornerstones of early modern commercial capitalism, the company has also been equated with that other ambiguous, though highly suggestive, category, modernity. This is, in part, because the company is portrayed as a more 'rational' means of organizing trade. As Chaudhuri notes, the innovation of the company was based on its ability 'to impose some form of unified decision-making on markets that were traditionally decentralized and fragmented'. (5) It rested on sophisticated commercial instruments. It encouraged speculation, itself an activity often equated with a new, more impersonal, more calculable, manner of viewing economic activity. Historians such as Steensgaard would even appeal to Weber in their search for an ideal type of individual upon whose shoulders the creation and running of the companies rested, the rational entrepreneur. (6)

In the historical literature on early modern trade in the Indian Ocean, the equation of the companies with modernity is made explicit by contrasting them with the Estado da India: a 'patrimonial' model of trade in which state structures pervaded and controlled the operations of commerce. The control exerted by state hierarchies is purported to have acted as a brake on the development of Luso-Indian trade. In Steensgaard's analysis the Portuguese Estado da India is seen as retrograde. At one level this analysis is based on a comparative evaluation of the institutional structures of the Estado da India and the companies. But at another level, Steensgaard rests his argument on a set of propositions regarding the culture, values and mentalite's of the Portuguese. So heavily encumbered with traditions of honour, rank and public appearance, the Portuguese could not possibly conceive of the more modern forms of commercial innovation proposed by their northern counterparts, much less put them into action. (7) 'The Asian trade of the north European trading companies', writes Chaudhuri, 'incorporated a far greater spirit of competitive commercialism than was the case with the Portuguese'. The 'spirit' of modern capitalism was based on coolness, on the ability to value the profit motive over personal considerations. Consequently, Steensgaard prunes the Portuguese state's commercial enterprise from the trunk of an explicitly teleological history of capitalist development. 'The Estado da India', he writes, 'should not be placed in a line of evolution towards capitalist entrepreneurial forms'. But the condemnation of the Portuguese colonial project does not stop there. The Portuguese fixation on honour was entwined with other hallmarks of the feudal mindset: bloodthirst and corruption. (8)

Underlying these comparisons between Iberian patrimonialism and north European capitalism is a more deep-set ideological framework based upon the purported conflict between state power and market exchange, a confrontation here expressed as the conflict between the impulse to conquer and the impulse to trade. (9) These aspects of European colonialism were certainly evident in the Euro-Asian trades but they were not necessarily antithetical to one another. Having separated them, historians made the additional mistake of applying them blanket-like to entire trading systems: the Portuguese enterprise was fixated upon conquest; the Dutch and the English concentrated on trade. Thus Charles Boxer sees the shift from Portuguese dominance to Dutch and English hegemony as the move from a system based on militarism and reasons of state to a system, represented by company trade, based on commerce and the logic of exchange. Bayly will also play with this shift though he will reverse Boxer's chronology. Examining the English experience he traces the East India Company's move from a (relatively) peaceful mode of trade to a violent phase of territorial expansion occurring at the end of the eighteenth and beginning of the nineteenth century. (10) At the heart of the problem appears to be the unit of comparison. Looking beyond the traits historians have ascribed to entire colonial projects, one perceives a much more complicated picture. As we shall see, within the larger Portuguese system of Asian trade there were very capitalist commercial networks. As for the ostensibly peaceful trading of the VOC, Meilink-Roelofsz clearly reveals the extent to which Dutch commercial supremacy in Asia was built on the foundations of military force. (11) And if we move down to the level of individuals the issue of cultural values is far from clear-cut. Who was more the capitalist: the Portuguese merchant who integrated intra-Asian trades with the larger European system of commerce, or the English garrison commander who dreamt of settling into a life of gentrified ease once his tour in the Indies had ended? Sanjay Subrahmanyam rightly criticizes the stereotypical comparison between north European and Iberians. (12) Seizing the problem at its root, Subrahmanyam presents a critique of Weber's thesis of cultural proclivities towards capitalism as applied in the case of the Indian Ocean. Taking up Simon Schama's examination of Dutch culture in the seventeenth century, Subrahmanyam concludes that it is impossible to see the Dutch as unabashed capitalists. (13) Furthermore, drawing on Jonathan Israel's work, he points out that the Dutch habitually took up the 'Portuguese' instruments of legislation, state power and coercion as a means of promoting trade. (14)

While the work of Meilink-Roelofsz and Subrahmanyam stand as valuable and needed correctives to the facile stereotypes that pervade the historiography on the period, they do not manage to break out of the dualistic structure that frames this discussion. They provide counterexamples to the claims of Dutch rationality or the non-violent nature of company trade but they do not challenge the prevalent oppositions that pepper the literature. Though I have focused on a limited set of oppositions at work in this historiographical field (feudal v. capitalist; state v. market; conquest v. exchange), it is important to see these as part of a form of comparison that works by assembling a wide variety of traits and forcing them into one of two possible camps, namely: Portuguese v. Dutch/ English; Catholic v. Protestant; feudal v. capitalist; archaic v. modern; military adventurism v. utilitarian violence; honour-driven v. rational; corrupt v. ebcient; corporatist v. individual; non-entrepreneurial v. entrepreneurial.

Looking back, historians such as Steensgaard and Boxer have imposed an 'either/or' structure to their interpretation of the interaction between European colonial enterprises in the Asian trades. Nonetheless, the complexity of this engagement escapes this reductive analytical framework. There were too many levels of interaction--between state, colony, institution, group, individual--pulling in too many different directions. The complicated reality of their interplay ruptures the tidy divisions of the dualistic model. This does not mean that the colonial Asian trade escapes the historian's analysis. Indeed, what follows is an attempt at a comparative view of the history of the Portuguese capitalist trade in Asia. Adopting the perspective of the actual participants, the shifting contours of maritime Asian trade did not appear as the victory of one institution, mentality, religion, or historical stage over another but rather as a changing terrain that offered an entire range of options.

As a means of shifting interpretative frameworks from the dichotomy to the continuum, a profitable first step is to trace the manner in which the Portuguese enterprise in Asia was represented by outsiders. An important guiding thread is the theme of corruption. In Steensgaard and in Van Leur, the archaism of the Estado da India is based upon the extent to which state interests were constantly being subverted by private greed. (15) These were not new arguments. Michael Pearson describes how an entire school of late-nineteenth- and early-twentieth-century English historians all pointed to corruption as the principal reason for the decline of the Portuguese presence in Asia. (16) Corruption was defined as the inability of the Estado da India to maintain efficient and coherent institutions of governance. Actions taken with a view to personal advancement ran counter to the structures of authority and resource flows of the Estado da India. This resulted in inefficient operations and eventually triggered the decline of the institution as a whole. Private trade worked at cross-purposes to the institutional mechanisms of the Estado da India. The integration of individual Portuguese with the local Asian population, which resulted in a 'blurring' of the Estado's formal boundaries of interest and identity, not only encouraged corruption but also produced the physical manifestation of decline in the form of 'a languid population of half-breeds'. (17)

The roots of this view of Portuguese corruption and decline reach back to the sixteenth century. The idea of the deep-seated corruption of Portuguese colonialism was most clearly (and perhaps originally) expressed by van Linschoten in his account of his voyages to the Portuguese Indies in the company of the newly appointed Archbishop of Goa. (18) In his description of Portuguese Goa, Linschoten plays upon the same themes expressed by the nineteenth-century British historians, and by Van Leur and Steensgaard. He focuses on the indolence of the Portuguese, the corruption of state officials and the integration of the Portuguese into local Indian society. It is worth reading Linschoten's account against the grain. Under the veil of his dismissive tone it is possible to see thriving and dynamic commercial activity. In the same passage in which Linschoten criticizes the Portuguese for not engaging in physical work he admires the dynamism of the Goan market-place, which he compares to the bourse in Antwerp. (19) The supposed lassitude of the Portuguese soldiery, to take another example, was rooted in their penchant for engaging in local trade as chattins. These individuals, Linschoten inveighs, '[had] little passing for the common profit or the service of the King, but only their particular profits'. (20) The lure of local trade enticed even the viceroys and it is here that the true significance of Linschoten's picture of 'corruption' is most explicit. The Dutchman placed the interests of state and trade in opposition to one another. Describing the visitas (tours of inspection) of the viceroys, Linschoten writes, 'if they doe it themselves it is more to fill their purses, and to get presents, then to further the commonwealth'. (21) On this last point Linschoten was probably correct. As we shall see, from the perspective of a formally organized institution, private trade was detrimental because it diverted capital, commodities and other resources (such as the time and energy of officials). Nevertheless, it can hardly be argued that this form of activity was proof of a lack of vitality among the Portuguese, as the above portrayals of 'lassitude' and corruption would suggest.

Contrary to the suggestions of Van Leur, Chaudhuri and Steensgaard, Portuguese merchants trading in Asia, under the aegis of the Estado da India, were entrepreneurial, sought to maximize their profits, and had a detailed and astute understanding of the mechanisms of Asian trade. What is interesting is that this dynamism was rooted in some of the very practices presented as proof of Portuguese languor, such as the examples of cultural and social integration. Let us take up a notable example. In 1607, Francisco da Costa, a pepper factor stationed in Cochin, wrote a report to the court concerning the mechanics of the Asian trade. (22) In his report da Costa systematically describes how the pepper trade operates and its place within the larger economy of the Indian Ocean. This was hardly the action of an old fashioned individual blinkered by feudalism. He charted centres of production and connections to their markets. The price of pepper and other Asian commodities are presented in a variety of market-places--Cochin, Malacca, Mangalor--and their interrelationships explained. (23) Da Costa underscored the central position of the intra-Asian trade in relation to European trade in Asia. This would be taken up by other European traders and would provide a model for broader debate relating to trade proposed by the likes of Thomas Mun, apologist for the English East India Company. (24) In addition to describing the Asian exchange system, da Costa also paid close attention to the production side of the pepper trade. One of the key operations in the pepper trade was the drying process. How dry the stock was determined its weight and thus its price. Portuguese traders had to be sure that the pepper they received was completely dry so that it would not lose weight, and value, in the course of the voyage back to Europe. Indian traders and producers, however, had an equally powerful interest in 'dampening' the stock to ensure that they received the most money possible from their exchange with the Portuguese. This process is described in detail, from the harvest of the pepper to the bargaining that ensued in the Portuguese entrepots. (25) Nor was commercial success in Asia, da Costa's account makes clear, simply a matter of understanding commercial exchange and commodity production. Traders, and colonial officials interested in trade, had to be attuned to the ways of local politics and culture. With this in mind, da Costa weaves into his account advice on tribute giving, the changing fortunes of various Indian political factions and, in conclusion, a long description of the rituals of power associated with the funeral of the King of Cochin. (26) There is one final point to be made here concerning da Costa's report, and that is that the factor was putting his considerable expertise in the pepper trade in the service of the Habsburg state. Commercial knowledge, da Costa points out, was critical for the effective operation of state institutions, especially one like the Estado da India whose success was so tightly bound up with the fortunes of the pepper trade. (27)

Commercial acumen in the service of the state, cross-cultural observations and practices, an understanding of the mechanisms of the Indian Ocean economy: the key points of da Costa's reports provide a notable counterweight to Linschoten's dismissive account. These conflicting views of the Portuguese trading world in Asia are an invitation to reconsider the many studies of the Portuguese in Asia from Linschtoen to Steensgaard, and particularly the implicit manner in which attributes are set in opposition to one another. There is an alternative view of the operation of European capitalism overseas, one that departs from the opposition of capitalism and feudalism, state and market, and atavism and 'commercial spirit'. This analytical model, found in Braudel and certain of his successors, views capitalism as being at the centre of the complex relationship between the state and the market-place. (28) In this balancing act between expanding markets and centralizing European nation-states, the advent of the companies serves as an important barometer of how the state-capital relationship was played out, not an indication of the victory of one form of commercial organization over another. The VOC and the EIC were indeed notable innovations in the trading world of Asia. They appear as hybrid institutions that appropriated state-like institutions for the sake of commerce (the famous 'state-within-a-state' model). Consequently, they had to resolve the question of what ought to be the appropriate relationship between commercial enterprise and state power.

The company, however, was not the only possible answer to the issue of how to inter-weave the interests of the state and market performance for the sake of capitalist development. There existed a wide spectrum of options ranging from the state monopoly to the ephemeral but ever-present form of the individual trader. This was a continuum defined by the shifting influences of institutionalized authority and disassociated market activity. It is important to remember that in the early decades of the seventeenth century, it was not at all obvious which type of organization could lead to the hegemony of the Asian trade. The problem of diverse types of enterprise in the seventeenth century has a strong resonance with contemporary sociological theory relating to the relationship between hierarchies, markets and networks. (29) The aim of sociologists is to understand the variables governing the balance between formal structures of authority (hierarchies) and the informal relations of exchange (markets). (30) Addressed systematically by Oliver Williamson, this question has been coined the 'markets and hierarchies' paradigm. Williamson charted the situations in which the elaboration of organized structures of authority were more efficient and durable than the market in the allocation of resources (profits, capital, human resources, information). Hierarchies are seen to allow the stabilization of commercial interactions over the long-term, to create the structures required to address unforeseen events without having to renegotiate a contract, and to assure the services of highly specialized individuals. (31) Seen from this perspective, both the companies and the Estado da India manifested strong hierarchical elements. The key difference between them is the fact that both the VOC and the EIC managed to create their hierarchies with only minimal attachments to the nation-state, whereas the Estado da India was effectively run as a constituent part of the imperial bureaucracy. Either way, this viewpoint makes it difficult neatly to set the companies and the Estado da India on opposite sides of the market-state divide.

Furthermore, since the writings of Williamson and the initial elaboration of the markets and hierarchies paradigm, sociologists have questioned Williamson's opposition of the two. Instead of seeing commercial hierarchies (firms, companies, state monopolies) as 'islands of planned coordination in a sea of market relations', Walter Powell proposes a continuum view that would encompass a series of forms between strong hierarchical structures and 'unorganized' market exchange. (32) Woven into this continuum is the network, a hybrid form that provides many of the functions of a hierarchy (such as long-term coordination and a non-contractual basis for economic activities) while maintaining a critical degree of flexibility. Instead of being organized vertically in chains of command, surveillance and obligation, the network is organized along a horizontal plane articulating interdependent flows of resources and reciprocal flows of communication. (33) Networks can as easily attach themselves to hierarchies as they can pervade the market-place of economic exchange. In the Asian trade, networks would prove to be a critical foundation for more institutionalized forms of commercial organization such as the companies and the Estado da India.

Thus, instead of a division between the Estado da India and the companies it is possible to see the early decades of the seventeenth century in the Indian Ocean as a period when a range of commercial forms competed, interacted and interconnected. Though the following pages will concentrate on the Portuguese experience, it is important to keep in mind that both the Dutch and English company trades did not escape this complex pattern of interaction. S. Arasaratnam demonstrates that even within the VOC, the archetype of monopolistic and highly coherent company trade, there were strong tensions between the institutional structures of the VOC and Dutch traders that acted on their own account and sought to liberalize the VOC monopoly. (34) At one level, Dutch merchants such as Rael and Van der Gaen sought to free the spice trade for classic liberal (avant la lettre) rationale: monopolies were seen to drive up prices, constrain local merchants and diminish local production. At another level these merchants argued that the deleterious effects of the monopoly would push local traders into confrontation with the VOC. This confrontation would take the form of clandestine trading and would break the collaborative system upon which the spice trade in general depended. (35) A similar tension between private trade, based on collaborative networks of European and local merchants, and the monopolistic company trade was also evident in the case of the EIC. Private trading, as the works of Marshall and Watson make clear, was based on the close connections forged between English traders and local networks of creditors, shippers and producers. (36) These connections were in equal measure economic and cultural. Private traders such as Mathias Vincent and Alexander Hamilton plunged into the milieu that surrounded them. These linkages allowed such traders to obtain favourable trading arrangements with local rulers that were beyond the reach of the EIC. More interesting, however, was how these non-institutional, that is network, forms of trade interacted with the EIC. Many private traders, including the notable example of Thomas Pitt, eventually joined the company fold after a profitable career as interlopers. In doing so private traders brought with them valuable contacts and knowledge that subsequently allowed the EIC to move into new regions and markets. (37) Nor did they entirely give up their private connections with local networks. As a consequence these individuals blurred the neat divisions between the institutional structures of the EIC and the larger, more complex, world of Indian traders.

Establishing this setting is a helpful starting point in the discussion of the relationship between private networks of Portuguese traders, the Estado da India, and the failure of the Portuguese India Company project. The integration of Europeans into Asian society, which would re-emerge in the case of English private traders, was the principal social foundation for European commercial pursuits in Asia. Given the necessity of forming connections with Indian and Muslim traders who controlled access to spice producers (for example the pepper producers in Kerala), the Portuguese practice of integrating into the web of local social relations appears as a reasonable strategy. (38) Whether this integration occurred to the detriment of the Estado da India is another question, but certainly the 'corruption' of the Portuguese in Asia was not a mark of their feudal mentality or aversion to commercial gain.

By the first quarter of the seventeenth century, Anthony Disney argues, the most dynamic commercial interests had moved into the non-monopoly trades, that is outside the strict ambit of the Estado da India. (39) According to Disney, this shift was based on the growing aversion of colonial merchants to the comparatively low returns and high risks generated by the official Goa-Lisbon trade. This is an intriguing turn of events; one that bears some investigation. If it is true it would seem that a split had occurred between the institutionalized structures of the Estado da India and the world of the private traders--a world increasingly integrated into the sphere of intra-Asian trade through hybrid networks forged by the connections between Portuguese and Indian traders.

An important factor to consider here was the growing volume of silver arriving directly from the Americas, either via the Manila galleon trade or the contraband route down the Rio de la Plata. (40) This influx, I would argue, reconfigured in a rather drastic manner the structural parameters of the Asian trade: silver, the key European import, no longer flowed exclusively via Seville and Lisbon, ports where the Habsburg state maintained the institutions needed to enforce their monopoly over colonial trade. The massive diversion of American silver is a central piece of the story of the growing divide between the institutional hierarchies of the Estado da India and the networks of private trade. The amount of silver imported directly into Asia through Manila was considerable, rivalling the total importation of silver by both the EIC and the VOC combined during the first half of the seventeenth century. According to Ward Barrett, the average annual export of silver to the Philippines for the period 1600 to 1650 was between sixteen and seventeen tonnes. Compare this to an annual average for the EIC and VOC combined of eight tonnes for the period 1601-25, nineteen tonnes for the period 1626-50, and twenty tonnes for the period 1651-75. Thereafter the amount of silver moved through the VOC and EIC shot up dramatically. The point here is that during the first decades of the seventeenth century, when the question of which model of colonial trade to adopt was still in the air, private Iberian (Portuguese and Spanish, converso and Old Christian) trade networks easily kept pace with the company model. (41) Nor do these amounts take into account what appears to have been a considerable amount of silver flowing down the Rio de la Plata. Thanks to the work of Lewis Hanke and Alice Canabrava, we know that the contraband trade of silver from Potosi to Buenos Aires was well established and well entrenched. It would last, in fact, well into the nineteenth century. (42) What is less clear is the movement of this silver once it was picked up from the estuaries of the Rio de la Plata; Europe, Brazil and Africa were all possibilities. (43) As, indeed, was Asia. Linschoten describes how the ship he took in the company of the newly appointed Archbishop of Goa tacked all the way to the mouth of the Rio de la Plata. Ostensibly this was to avoid the shoals off the north-eastern coast of Brazil and to escape the doldrums o cents the coast of Africa. (44) These were certainly factors, but to the astute commercial observer this errant tacking across the Atlantic could mean only one thing, a route to relay American silver to Asia via the Cape. The work of Amaral Lapa substantiates the existence of a vital connection between the silver from Potosi and the Asian economy via the Rio de la Plata; a connection, it should be added, dominated by private Portuguese traders. (45)

It is precisely the vibrancy of Portuguese trade outside the aegis of the Estado da India through private networks that undercuts the motivation of Portuguese capitalists to engage in the company model of colonial trade. It certainly was not a question of archaism as intimated by Steensgaard and the like. It was not until the 1620s, when the full impact of the VOC and EIC on the Portuguese trade circuits was beginning to be felt, that there was any perceived need to install monopolistic forms of commerce. The fact that the Portuguese converso network--one of the principal trading groups in the Asian-American trade--was already structurally coherent seems to argue against the need for closer rapprochement with the state which was implied by the company form of trade. This rapprochement appears to have been all the more unlikely given the increasingly precarious relationship between Iberian capitalists and state institutions from the turn of the seventeenth century onwards. In a situation of over-saturated consumption markets (inelastic according to Steensgaard) the heavy-handed actions of the state to maintain artificially high prices would have been a key point of tension between the Habsburg state and Portuguese capitalists. (46) These tensions could escalate to the point where metropolitan merchants found themselves imprisoned for refusing to buy at the Crown's price: hardly the sort of measure meant to promote merchant-state accord. (47) More than anything else, however, this sort of action appears to have been a sign of desperation as the Habsburg state realized that its monopoly could not cover its own costs. (48)

This was the context for Duarte Gomes Solis' proposal for the formation of a Portuguese monopoly company. Gomes Solis was a member of one of the key converso families involved in the Asian trade and had himself been a factor in Goa prior to turning to a career of political lobbying in Madrid. (49) Thus it appears strange that he should be arguing for state intervention in what had been a vibrant and successful private trade. According to Disney, Gomes Solis had produced his proposal around 1612. (50) Interestingly enough he did not publish it until 1622. (51) The delay reveals a telling degree of ambiguity vis-a-vis the company project. It would appear that the end of the Twelve-Year Truce(1621) and the escalation of the trade war with the Dutch and English provided Gomes Solis with the impetus (ten years later) he needed to publish his proposal. Though he might not be entirely enthusiastic about creating formal ties between private trade networks and the Habsburg state, the prospect of being pushed out of the Indian Ocean altogether perhaps encouraged Gomes Solis to argue for the lesser of two evils. By creating an institutional framework for trade, the company would be able to mobilize a greater number of resources and thus invest in the military infrastructure required to fend off the incursions of the EIC and VOC. (52) There were other considerations as well, perhaps the most important being the increasingly precarious situation of the conversos within the Habsburg world. Gomes Solis would accompany his published proposal with private requests for greater mobility and increased freedom to practise for the Jews in the Habsburg world. (53) Sensing a shift in the tide, both within the worlds of politics and of trade, conversos such as Gomes Solis called for a re-opening of the negotiations between state and capital. The manner in which this proposal was framed is noteworthy. Gomes Solis, while acknowledging the need to reinvigorate the position of the Habsburg state in the world of Asian trade, was remarkably cautious, almost reluctant, in his delivery. He points out that the proposed company would take as its model the republic, in order to keep it at arms length from the caprices of the Emperor. As Gomes Solis explained, the imposition of juros by the Habsburg crown had done much to hurt merchant interests, which in turn proved prejudicial to the bien comun ('common weal') of the republic. (54) The company's operations would be centred on intra-Asian circuits rather than being run for the direct profit of the metropolis. Finally, Gomes Solis argued forcefully for the strengthening of trade links between India, China and the Philippines. (55)

It is also important to place the company project, forwarded by this prominent converso merchant, in the context of the asiento negotiations between converso capitalists and the Count-Duke of Olivares. These were delicate negotiations for both sides. Olivares had to confront his own detractors from within the court, factions that had coalesced around the cause of curbing the power of both the Count-Duke and the 'Jewish' influence that he sanctioned. (56) Ultimately both the financial brokering and the company project floundered. The Inquisition, starting from the peripheries, unravelled the converso trading network. On the Peninsula, the converso merchant-bankers developed cold feet and refused to capitalize the company project. Not one of the future directors of the company, men chosen for their understanding of the workings of the Asian trade, invested money in the company. (57) Apart from the issue of the connection between the state and the company, merchant capitalists balked at the low rates of return proposed for their initial investments. Accepting dividends of four per cent over twelve years as specified by the charter was folly at a time when investors could easily expect to make profits of around one hundred per cent on the Asian market. (58) The same reluctance to invest on the part of those most closely engaged in the Asian trade was evinced by the Asian camaras who contributed nothing to the project apart from the minor exception of Chaul. (59) Other subscriptions were raised through municipal bonds. Nor had Gomes Solis succeeded in staying the heavy hand of Habsburg patrimonialism. Throughout the funding drive for the Portuguese India Company, crown officials threw their weight around, even going so far as to threaten converso merchants with mandatory subscriptions. (60) The 300,000 cruzados originally promised as seed capital by private subscribers were diverted at the last moment by Olivares in order to fund the war effort in Flanders. (61)

Crisis would build upon crisis and by 1640 the resurgence of Portuguese political self-determination relegated all these issues of trade and finance to the background.

Thus ended the brief life of the Portuguese India Company. The relatively late date of its creation and the brevity of its operations has, I believe, encouraged historians to see these events as symptomatic of the Portuguese inability to continue to innovate within the sphere of Asian commerce. I have tried to argue that the appropriate context for the comparative history of European commerce in Asia lies not in a discussion of modernity or within a linear genealogy of capitalism. Rather one needs to examine the workings of smaller-scale social units, notably the network, within the larger interaction between state institutions and market activity during this period. Casting the issue in this mould allows for a variety of outcomes predicated on the complex manner in which this relationship was articulated rather in the more essentialist attributes of rationalism, entrepreneurialism, corruption, etc. Indeed, by way of a short epilogue, Portuguese networks appear to have survived quite handily the reconfiguration of the world of trade in the Indian Ocean over the course of the seventeenth century. Conversos, Jews and Portuguese developed strong attachments to private English traders and became a vital part of the trading communities installed in the EIC's factory towns, or should we say towns in which the EIC had settled factories? If we take the case of Madras, Portuguese merchants would provide access to the important Macao and Manila trades, they would tender capital to both private merchants and to EIC officials working on their own account, and they offered important links to local trading circuits and production centres. (62) When examining the eighteenth and nineteenth centuries, historians have tended to focus on the EIC and VOC, seeing them as compromising the sum total of European trading activities in the region. This is why it is easy to see the company form of commerce as having triumphed over the Portuguese Estado da India. Further work on Portuguese merchants during this period and their activities in the important world of private trade will shed light on the resilience of the Portuguese trade networks. It may also encourage historians to revise their vision of the development of European overseas capitalism during the early modern period. (63)

YALE UNIVERSITY

(1) John H. Elliott, 'Self-Perception and Decline in Early Seventeenth-Century Spain', in Spain and its World, 1500-1700 (New Haven: Yale University Press, 1989), p. 248.

(2) Fernand Braudel, Civilization and Capitalism (Berkeley: University of California Press, 1982); Immanuel Wallerstein, The Modern World-System (New York: Academic Press, 1974-80).

(3) According to Weber's vision of modernity at any rate. See Max Weber, The Protestant Ethic and the Spirit of Capitalism (New York: Scribner's, 1958).

(4) Peter J. Marshall, 'Private British Trade in the Indian Ocean Before 1800', in Ashin Das Gupta and Michael N. Pearson, India and the Indian Ocean (Calcutta: Oxford University Press, 1987), p. 287.

(5) K. N. Chaudhuri, 'Markets and Traders in India, 1601-1800' in K. N. Chaudhuri and Clive Dewey, Economy and Society: Essays in Indian Economic and Social History (Delhi: Oxford University Press, 19979), p. 145.

(6) Nils Steensgaard, The Asian Trade Revolution of the Seventeenth Century: The East India Company and the Decline of the Caravan Trade (Chicago: University of Chicago Press, 1973), pp. 7 and 15-16; Steensgaard, 'The Growth and Composition of the Long-Distance Trade of England and the Dutch Republic before 1750', in James Tracy, The Rise of Merchant Empires (Cambridge: University of Cambridge Press, 1990), pp. 103 and 107; Larry Neal, 'The Dutch and English East India Companies compared: evidence from the stock and foreign exchange markets', in Tracy, p. 195; K. N. Chaudhuri, The Trading World of Asia and the English East India Company, 1660-1760 (Cambridge: University of Cambridge Press, 1978), p. 6; Frederic Mauro, 'Towards an "intercontinental model": European expansion between 1500-1800', Economic History Review, 14 (1961), 1-17; Kenneth R. Andrews, Trade, Plunder and Settlement: maritime enterprise and the genesis of the British Empire: 1480-1630 (New York: Cambridge University Press, 1984); John Hicks, A Theory of Economic History (Oxford, Oxford University Press, 1969).

(7) Steensgaard, The Asian Trade Revolution, p. 85.

(8) According to Boxer Portuguese expansion into Asia was effected, 'by brute force and not by peaceful cooperation': Charles Boxer, The Portuguese Seaborne Empire, 1415-1825 (NY: Knopf, 1969), p. 46.

(9) On the intellectual history of this framework see Albert O. Hirschman, The Passions and the Interests. Political Arguments for Capitalism before its Triumph, 2nd edn (Princeton: Princeton University Press, 1997).

(10) Christopher Bayly, Indian Society and the Making of the British Empire (New York: Cambridge University Press, 1988).

(11) M. A. P. Meilink-Roelofsz, AsianTrade and European Influence in the Indonesian Archipelago between 1500 and 1800 (The Hague: Martinus Nijhoff, 1962).

(12) Sanjay Subrahmanyam, The Portuguese Empire in Asia 1500-1700: A Political and Economic History (London: Longman, 1993), p. 272-73.

(13) Simon Schama, The Embarrassment of Riches: An Interpretation of Dutch Culture in the Golden Age (Berkeley: University of California Press, 1988), p. 289-372.

(14) Jonathan Israel, The Dutch Republic and the Hispanic World, 1606-1661 (Oxford: Clarendon, 1982), and Dutch Primacy in World Trade, 1585-1740 (Oxford: Clarendon, 1989).

(15) 'There was no hierarchy of officials with a distinction between civil and military administration [...] the officials in authority provided their own equipment and carried out exploitation for their own benefit by means of offices bestowed on them, frequently on a short-term basis': J. C. Van Leur, Indonesian Trade and Society. Essays in Asian Social and Economic History (The Hague: Van Hoeve, 1955), p. 170. See also Steensgaard, The Asian Trade Revolution, pp. 82-85.

(16) Michael N. Pearson, 'Corruption and Corsairs in Sixteenth-Century Western India: A Functional Analysis', in Blair B. Kling and Michael N. Pearson, The Age of Partnership: Europeans in Asia before Dominion (Honolulu: University of Hawaii Press, 1979), p. 17. The histories in question are: F. C. Danvers, The Portuguese in India: Being a history of the rise and decline of their eastern Empire, 2 vols (London: Allen, 1894); R. S. Whiteway, The Rise of Portuguese Power in India, 1497-1550 (Westminster: Constable, 1899); W. W. Hunter, A History of British India, 2 vols (London: Longmans, Green, 1899-1900); V. A. Smith, The Oxford History of India, 4th edn (Delhi: Oxford University Press, 1981).

(17) Quoted in Pearson, p. 17.

(18) Jan Huygen Linschoten, The Voyage of Jan Huygens van Linschoten to the East Indies. From the old English Translation of 1598, Hakluyt Society Publications Nos 70-71, ed. by Arthur C. Burnell and P. A. Tiele (New York: Burt Franklin, 1885).

(19) Linschoten, pp. 175 and 184-88.

(20) Linschoten, pp. 201-03.

(21) Linschoten, p. 219.

(22) Francisco da Costa, Documentacao Ultramarina Portuguese, 7 vols (Lisbon: Centro de Estudos Histo ricos Ultramarinos, 1963), III, 265-379.

(23) da Costa, III, 305-07, 323, 331, 333 and 337.

(24) Thomas Mun argued for the exportation of English silver in order to fuel the Asian trades. See A Discourse of Trade, from England into the East Indies (London: Pyper, 1621); England's Treasure by forraign trade: or, The balance of our forraign trade is the rule of our treasure (London: John Mun, 1664); and The Petition and Remonstrance of the Governor and Company of Merchants of London Trading to the East Indies (London: Nicholas Bourne, 1628).

(25) da Costa, III, 349-53.

(26) da Costa, III, 314, 325-26, 355-61.

(27) da Costa, III, 303-04.

(28) Fernand Braudel, Civilization and Capitalism, 15th-18th century, trans. by Sian Reynolds, 3 vols (Berkeley: University of California Press, 1992), II; Giovanni Arrighi, The Long Twentieth Century (London: Verso, 1994).

(29) J. L. Bradach and R. G. Eccles, 'Markets v. Hierarchies: From ideal types to plural forms', Annual Review of Sociology, 15 (1989), 97-118; Markets, Hierarchies and Networks: The Coordination of Social Life, ed. by Grahame Thompson et al. (London: Sage, 1991); E. M. Rogers and D. I. Kincaid, Communication Networks: Toward a New Paradigm for Research (New York: Macmillan, 1981); Oliver E. Williamson, Markets and Hierarchies: Analysis and Antitrust Implications (New York: Free Press, 1975); Williamson, The Economic Institutions of Capitalism (New York: Free Press, 1985).

(30) Tony McGuiness, 'Markets and Managerial Hierarchies', in Thompson, pp. 66-68.

(31) McGuiness, p. 70.

(32) Walter W. Powell, 'Neither market nor hierarchy: Network forms of organzation', in Thompson, p. 267. See also Mark Granovetter, 'Economic Action and Social Structure: The Problem of Embeddedness', The American Journal of Sociology, 91 (1985), 487-510.

(33) Rogers and Kincaid.

(34) S. Arasaratnam, 'Monopoly and Free Trade in Dutch-Asian Commercial Policy: Debate and Controvery within the VOC', Journal of Southeast Asian Studies, 4 (1973), 1-15.

(35) Arasaratnam, pp. 3-4.

(36) Marshall, pp. 278-81; Bruce Watson, 'Indian Merchants and English Private Interests: 1659-1760', in Das Gupta and Pearson; Watson, Foundation for Empire: English Private Trade in India 1659-1760 (New Delhi: Vikas, 1980).

(37) Anne Kroell, 'Les marchands interlopes dans les eaux indiennes a la fin du 17e siecle', in Denys Lombard and Jean Aubin, Marchands et hommes d'affaires dans l'Ocean Indien et la mer de Chine, 13e-20e siecles (Paris: L'ecole des Hautes Etudes en Sciences Sociales, 1988), pp. 184-88.

(38) Genevieve Bouchon, 'Les Musulmans du Kerala a l'epoque de la decouverte portuguaise', Mare Luso-Indicum, 2 (1973); Ashin Das Gupta, 'Indian merchants and the western Indian Ocean. The early seventeenth century', Modern Asian Studies, 19 (1985).

(39) Anthony Disney, The Twilight of the Pepper Empire:Portuguese trade in Southwest India in the Early Seventeenth Century (Cambridge, MA: Harvard University Press, 1978), p. 81.

(40) Carmen Yuste Lopez, El Comercio de la Nueva Espana con Filipinas, 1590-1785 (Mexico, DF: INAH, 1984); William Lytle Schurz, The Manilla Galleon (New York: Dutton, 1939); Alice P. Canabrava, O comercio portugues no Rio da Prata (1580-1640) (Sao Paulo: Editora da Universidade de Sao Paulo, 1984).

(41) Ward Barrett, 'World Bullion Flows, 1450-1800' in Tracy, pp. 249 and 251.

(42) Canabrava; Lewis Hanke, 'The Portuguese in Spanish America with Special Reference to the Villa Imperial de Potosi', Revista de Historia de America, 51 (1961), 1-48; Kenneth Maxwell, Conflicts and Conspiracies: Brazil and Portugal, 1750-1808 (Cambridge: Cambridge University Press, 1973), p. 8.

(43) Carl Hanson, Economy and Society in Baroque Brazil, 1668-1703 (Minneapolis: University of Minnesota Press, 1981).

(44) Linschoten, The Voyage ..., p. 18.

(45) Jose Roberto do Amaral Lapa, Bahia e a Carreira da India (Sao Paulo: Universidade de Sao Paulo, 1968), pp. 253-300. On the control of Buenos Aires by Portuguese merchants in the seventeenth century see Zacarias Moutoukias, Contrabando y control colonial en el siglo XVII. Buenos Aires, el Atlantico y el Espacio Peruano (Buenos Aires: Centro Editor de America Latina, 1988).

(46) Steensgaard, 'The Growth and Composition of Long-Distance Trade', p. 123. On general contours of the European spice trade see, C. H. H. Wake, 'The changing pattern of Europe's pepper and spice imports, ca. 1400-1700', Journal of European Economic History, 8 (1979).

(47) James C. Boyajian, Portuguese Bankers at the Court of Spain, 1626-1650 (New Brunswick, NJ: Rutgers University Press, 1983), p. ix.

(48) Artur Teodoro de Matos, 'The financial situation of the State of India during the Philippine period (1581-1635)', in Indo-Portuguese History. Old Issues, New Questions, ed. by Teotonio R. De Souza (New Dehli: Concept, 1984). See also data compiled by Vitorino Magalhaes Godinho, Les finances de l'etat Portugais des Indes Orientales (Paris: Fundacao Calouste Gulbenkian--Centro Cultural Portugues, 1982).

(49) Boyajian.

(50) Disney, p. 73.

(51) Duarte Gomes Solis, Alegacion en favor de la compania de la India Oriental Comercios Ultramarinos que de Nuevo se Instituyo en el Reyno de Portugal [Madrid: 1622], ed. by Moses Bensabat Amzalak (Lisbon: Imperiol, 1955).

(52) Duarte Gomes Solis, p. 17.

(53) Duarte Gomes Solis, 'Propuestas de Duarte Gomes Solis, sobre o comercio da India [n.d.]', and 'Pedro Alvares Pereira to Phillip IV, Carta sobre Duarte Solis y sus propuestas--01/07/1622', in Documentacao Ultramarina Portuguesa, 7 vols (Lisbon: Centro de Estudos Historicos Ultramarinos, 1960-73), II, 281-86.

(54) Alegacion en favor de la Compania, pp. 17 and 42-44.

(55) Alegacion en favor de la Compania, pp. 36-38.

(56) John H. Elliott, The Count-Duke of Olivares: A Statesman in an Age of Decline (New Haven: Yale University Press, 1986).

(57) Elliott, p. 93.

(58) Documentacao Ultramarina, II, 549.

(59) Disney, p. 78.

(60) Documentacao Ultramarina, II.

(61) Disney, p. 81.

(62) Marshall, pp. 279 and 287.

(63) My thanks to Diogo R. Curto and Francesca Trevellata for their helpful comments and insights.
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