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Document Type: Book Chapter

Title of Book: The Webs of Humankind A World History Volume 2 (1st Edition)

Author(s) of Book: J.R. McNeill

Chapter Title: Chapter 20 The First Global Economy, 1500 to 1800 (pp. 583 – 601, sections titled
“Trade”, “New Business Formats”, and “Global Links and Commercial Revolutions”)

Author(s) of Chapter: J.R. McNeill

Year: 2021

Publisher: W.W. Norton & Company, Inc.

Place of Publishing: the United States of America

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 How did the spice, cotton, and silver trades help Integrate the global economy?
populations in the deeper past shrank when they transi-
tioned from hunting and foraging to farming, so, perhaps,
the buffalo hunters of the plains grew in stature from an
increasingly protein-rich diet.
While we don't have data yet for Africa, China, and
India before the nineteenth century, it appears that
the global trend-to which North America was an
exception-was that people grew smaller even as econ-
omies grew larger. The benefits of expanding economies
(outside of North America) seem to have flowed over-
whelmingly to elites while the standard ofliving for most
people fell between 1500 and 1800.
FALLING INCOMES FOR
WAGE LABORERS
The evidence on incomes for ordinary city folk supports
this discouraging conclusion. In Beijing, Delhi, London,
Amsterdam, and Florence, laborers' real incomes climbed
during the fourteenth and fifteenth centuries. The plague
pandemic of the 1340s had had one silver lining for sur-
vivors: the resulting scarcity of people drove wages up.
Unskilled laborers earned three to four times what they
required for subsistence in 1450, which meant each one
could support a small family. But in the late fifteenth cen-
tury, laborers' incomes began a long slide, which in Bei-
jing, Delhi, and Florence bottomed out around the years
1750-1800. At that point, a laborer barely earned enough
to feed one mouth, which meant in families everyone had
to work. In Amsterdam and London, laborers' incomes
slipped rather less; they climbed a bit in the seventeenth
century, before falling again in the eighteenth. Every-
where, the constraints of an economy based on human
and animal muscle meant that the great majority ofpeople
lived close to subsistence levels. Britain's North American
colonies, again, were an exception to the dismal trend.
In the mid-eighteenth century, unskilled free laborers in
Boston and Philadelphia earned four or five times what
they needed for subsistence, more than anywhere else in
the world for which data exist.
Why did ordinary people grow poorer while economies
grew faster than ever before? At any time of large-scale
economic reorganization, some people are better situated
co benefit from change than others. Most of the eco-
nomic growth from 1500 to 1800 created rewards for chose
involved in trade, finance, and government. Ordinary
peasants and laborers, outside of a few favored locations
383
The Laboring Poor Peasants and laborers-ordinary people­
were hit hardest by major environmental, demographic, and eco­
nomic shifts. A seventeenth-century French painting depicts t he
realities of subsistence life for a peasant family: ragged c lothing
and a few basic dishes empty of food.
such as eastern North America, saw their economic posi-
tion weaken as their numbers grew.
TRADE
The burst ofoceanic voyaging after the 1490s linked mar-
kets as never before. This created opportunities for buying
cheap in one market and selling dear in another. To do
this optimally, one needs more market knowledge than
competitors have-exactly what the people who made the
voyages acquired. These voyagers were mainly Aclantic
Europeans, not the maritime traders of the East China
Sea or the Indian Ocean, nor the caravan merchants of
Iran or Central Asia, who by and large did not go global.
Certain trades, such as cotton, rewarded market
knowledge more than others. You needed to know a loc
in order not co lose your shirt in che cotton business.
On the production side, some varieties of cotton planes
produced better fiber than others. Spinners and weavers
had several techniques for making yarns and cloths of
different quality and cost. Different dyestuffs and printing
methods produced an array of colors and patterns. And
at every stage, spinners, weavers, and other workers had
varying skill levels. So "cotton" amounted co dozens of
different produces.
On the demand side, communities of consumers had
particular preferences, and these might change over time.
CHAPTER 20 The First Global Economy
Cotton Production Technological advances and market know­
how enabled Europeans to begin to compete in the global cotton
trade. In this painting, mid-seventeenth-century French peasants
spin cotton on a spinning wheel and weave it into cloth on a large
frame loom within their own cottage-the typical form of cotton
production at the time.
During the early modern centuries, most Chinese markets
valued plain white cotton. West African markets preferred
vivid hues, while Latin American consumers paid more
for floral motifs. But beneath these generalizations, spe-
cific villages and individuals had different preferences.
Knowledge of these complexities helped people make
money in the long-distance cotton trade. This favored
literate people and chose who actually did the voyaging
and trading: they accumulated broader knowledge faster.
Atlantic Europeans had another important edge in
long-distance trade, noted in the previous chapter. Their
sturdy ships, built to withstand Atlantic gales, accom-
modated heavy cannon. European merchants active in
oceanic trade almost always carried serious armament.
They could fight back against pirates and hope to prevail.
They could engage in piracy themselves when it suited
them, attacking, say, Bengali or Malay ships and seizing
their cargoes. They could threaten co bombard port cities
until local princes and merchants offered their goods at
lower prices. Well-armed ship captains could sell "pro-
tection" to the less well armed, allowing them to live in
peace for a price. These twin advantages, in information
and seaborne firepower, went a long way toward enriching
Atlantic Europe's merchant classes.
Before 1500, the Indian Ocean world, from China to
Egypt, was the central arena of long~distance seaborne
trade. The sea lanes ofthe Atlantic, the Baltic Sea, North
Sea, and the coasts as far south as Senegal were busy too,
but not on the same scale. Regular transatlantic traf-
fic began in the wake of Columbus, and the slave trade
extended it ro African coasts as far south as Angola and
Mozambique. Almost all Atlantic trade took place in ships
owned and operated by Aclantic Europeans. By the 1550s,
this burgeoning Atlantic trade was increasingly linked to
the Indian Ocean commerce. European merchants grad-
ually got involved in the trade circuits of Indian Ocean
and East Asian waters, although never outstripping Asian
trading communities.
Three commodities accounted for a sizeable chunk of
world trade during the early modem centuries: spices,
cotton, and silver. While many other things (as well as
millions of people) were traded, these three played cen-
tral roles in tightening the commercial webs ofrhe world,
integrating far-flung regions in particular.
SPICES AND THE SPICE TRADE
Cooks have flavored food with spices for several thousand
years. When people thought that good health rested on
a proper balance of hoc and cold influences, spices such
as pepper, ginger, and cinnamon acquired reputations as
health foods. (In fact, many spices are rich in micronutri-
ents and antioxidants.) The lands that produced the most
spices were the islands ofSoutheast Asia. Spices featured
prominently in local diets, but more than 2,000 years ago
they also became staples in long-distance trade to both
India and China. Ancient Rome imported spices too, as
did, lacer on, the Muslim caliphates based in Damascus
and Baghdad, and Byzantine markers in Constantinople.
Eventually, spices, especially peppers, were grown in south
India as well as Southeast Asia. In addition to peppers, the
most marketable spices included nutmeg, cinnamon, and
doves, valued for their flavor and purported medicinal
value. The port cities of the Indian Ocean world, from
Malacca to Basra, all had spice bazaars.
In 14001 China and India remained the chief markets
for spices. Europe's supply, maybe 2,000 tons annually,
came mainly via Egypt to Venice. Vasco da Gama sought
a route to the Indian Ocean around Africa in the 1490s,
with the backing of the Portuguese Crown, in part to
cur out the middlemen in rhe spice trade and get to the
 How did the spice, cotton, and silver trades help Integrate the global economy? 585

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The Spice Trade, ea, 1600 The spice trade had flowed along the maritime routes of the Indian Ocean world for millennia. The main
production zones were Southeast Asian islands such as the Moluccas and Bandas, and eventually southwestern India. The biggest
markets by 1600 were China, India, Southwest Asia, and Europe. Before the Portuguese voyages around the southern tip cf Africa,
spices had arrived in Europe overland via Ottoman territories. By 1600, the Ottomans were losing that trade to seagoing European
merchants. The suItans of Aceh kept their grip on the trade passing west from the spice islands th rough the Straits of Malacca until 1600.

source-Southeast Asia and India. An all-sea route low-
ered the price ofspices in Europe, boosting demand. After
da Gama's return in 1498, Lisbon soon became one ofthe
world's great spice markets.
The best spices grew wild on islands such as the Moluc-
cas and the Bandas, now parts oflndonesia. Much ofthe
trade flowed through the port ofMalacca, a great trading
city with perhaps 100,000 people by 1500. Superior fire-
power enabled the Portuguese to defeat the Muslim sul-
tanate ofMalacca in 1511 with a force of only 1,200 men.
This strategic conquest was the most important step in the
Portuguese quest for a commanding position in the spice
trade. Tome Pires, a Portuguese who visited Malacca in
151I, wrote that one could hear 84 languages spoken on its
streets on any given day. Its connections with northwest
India were so strong that Pires wrote: "Melaka cannot
survive without Cambay, nor Cambay without Melaka."
Portuguese merchants now carried increasing shares of
the trade not only to Lisbon, but also to markets in India
and China. The Portuguese language became the lingua
franca ofthe spice trade. Superior market knowledge and
naval firepower permitted tiny Portugal to play this out-
sized role.
The spice trade initially brought spectacular profits for
merchants who survived the dangers oflong sea voyages.
When da Gama first arrived in India, the market price
of pepper there was 4 percent of the price in Europe. In
the Moluccas, spices could be had for 1/700 the Lisbon
price. In the years from 1500 to 1630, an average of seven
Portuguese ships set out each year for Asian spice markets.
Storms, shipwrecks, and pirates claimed an average of
three, but the surviving four brought magnificent profits.
The quantities of spices going to China, India, and
Islamic lands remained greater than chat headed co
Europe. In the pepper trade perhaps a quarter or a third
went co Lisbon, while the rest found its way to Asian mar-
kets, often in Portuguese ships. For cloves, more expen-
sive and profitable than pepper, the proportion (for the
sixteenth century) was roughly 90 percent to Asia and 10
percent to Europe.
After 1550, the sultan ofAceh (on the northern end of
Sumatra) sought to control the spice trade. With allies
586 CHAPTER 20 The First Global Economy
Women In the Marketplace An engraving from a Dutch book of
the late seventeenth century shows women involved in market
transactions on the island of Java. In Southeast Asia, women
often took part in market trading.
in Gujarati traders and even Ottoman sultans, Aceh's
sultan became a formidable competitor for Portuguese
merchants after 1550. They acquired more competitors
after 1590 when the Dutch, and soon English traders
too, tried to get a share of the spice trade. By 1620, the
Dutch and English between them sent about ten ships
laden with spices back to Europe annually, more than
twice what Portugal managed. The more competitive
market meant less profit for everyone, but Durch data
show the spice trade returned an annual profit averaging
27 percent from 1602 to 1650. By the late seventeenth
century, Amsterdam prices were only about 5 times
Malacca prices for pepper, and 15 times for cloves. The
fabulous profits ofthe early years of the spice uade were
gone forever. But more people were able to enjoy spices'
flavors and healthful effects.
With their market knowledge and shipboard can-
non, Portuguese, Dutch, and English merchants won a
large share of the world's spice trade after 15n. They cut
Egyptian and Venetian middlemen out of the trade to
Europe. By 1615, English merchants were trading pepper
to Ottoman markets in the eastern Mediterranean, where
a century before Venetians had purchased pepper co sell
in Europe. Portuguese, Dutch, and English traders also
carried spices from Southeast Asia to Japan, China, and
India, competing with Malay, Gujarati, and other Asian
merchants on their home turf. The spice trade contin-
ued to grow into the eighteenth century. But its relative
importance in global trade dwindled as cotton became
the staple of the long-distance trade between the Indian
Ocean world and the Atlantic.
COTTON AND THE COTTON TRADE
Cotton grows only in lands where there are at least 200
frost-free days and either 20 inches (50 cm) of rainfall
annually or irrigation water. The earliest evidence we have
ofcotton cultivation comes from the ancient Indus valley
about 5,000 years ago. Its cultivation spread outside of
India to Southwest Asia and Egypt mainly during the era
oflslamic expansion, the eighth through the tenth centu-
ries. But world production remained centered on India.
Chinese farmers in the southeastern province of Fujian
grew cotton too. When the Ming decided co accept cotton
as a means ofpaying taxes in the fourteenth century, the
crop spread widely in southern China.
Before 1450, cotton was raised, spun, and woven into
cloth, and traded chiefly in India and China. It was grown
mainly on small farms, spun into thread by women and
children in villages, and woven into cloth usually by men
in village workshops. During the fifteenth through the
seventeenth centuries, India's cotton farming and manu-
facturing was concentrated in the regions ofGujarat and
Punjab, in northwest India, which specialized in cheap
cottons; and in Coromandel, in the southeast; and Ben-
gal, in the northeast, both of which specialized in fine
muslins and high-quality printed cloth such as calicoes
and chintzes.
High-quality cotton, like silk, was well suited for
long-distance trade. It was lightweight and durable, and
it could be folded or rolled into nearly any shape. In the
fifteenth century it was valued from Japan to Spain to East
Africa. Merchants traded it by land and sea, including
along caravan routes ofAsia, many ofwhich were "cotton
roads" as much as "silk roads." In the mid-seventeenth
century, Iran imported 25 to 30 thousand camel loads of
cotton annually from India.
As with spices, it was European oceanic merchants
who most conspicuously expanded the scope ofthe world
 How did the spice, cotton, and silver trades help Integrate the global economy? S87

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The Cotton Trade, ca. 1700 Cotton grew well in several zones around the world in 1700, but India was the biggest producer. With
markets almost everywhere, cotton was one of the first truly global trade commodities. The seaborne circuits shown here include
both transatlantic and transpacific routes to markets in the Americas. Southeast Asia, both East and West Africa, the Ottoman lands,
and Atlantic Europe were also major importers of cotton.

cotton trade. They carried it co new markets in Africa,
Europe, and the Americas. They also competed with Asian
traders carrying cotton from one Asian port to another.
In the course of the sixteenth century, the Atlantic
slave trade came to involve cotton. West Africans already
had a taste for Indian cottons, available at considerable
cost via trans-Saharan routes from North Africa and
Egypt. Between 1500 and 1800, some 50 to 60 percent
of African imports in the slave trade were Indian doth
offered by Portuguese, Dutch, or English merchants. Of
the roughly 8 million Africans bought for shipment to
the Americas in those centuries, over 4 million were pur-
chased with Indian textiles.
People in the Americas also bought Indian cotton
goods. Cotton cloth, like Chinese silk and porcelain,
crossed the Pacific to Spanish America via Manila and
Acapulco. But it also came through Spain's ports and
across the Atlantic. Women in Mexico City wore fine
calicoes from India. According to one eighteenth-century
account, even slave women in Veracruz (Mexico) wore
skirts ofembroidered muslin. Portuguese merchants sold
Indian cotton cloth in Brazil.
European markets eventually bought more Asian cot-
tons than did either Africa or the Americas. The Portu-
guese trade to Indian Ocean ports had initially focused on
spices, but by 1620 textiles-mainly cotton-made up 60
percent ofit (by value). In 1708, the English man ofletters
Daniel Defoe (author of Robinson Crusoe) complained that
imported cotton had "crept into our Houses, our Closets
and Bed Chambers, Curtains, Cushions, Chairs, and at
last Beds themselves were nothing but Calicoes or Indian
stuffs." Indian cotton was sufficiencly good and cheap
that it menaced Europe's wool and linen business and put
thousands ofweavers out ofwork. Responding ro weavers'
riots and complaints voiced by men such as Defoe, France
and Britain enacted tariffs and outright bans on Indian
cloth imports, starting in the 1680s. In 172.0, the British
Parliament passed a law forbidding the use or wearing of
imported calico cloth.
These protectionist measures spurred domestic cotton
588 CHAPTER 20 The First Global Economy

The Cotton Trade Painted cloth from the Madras region of India shows an Indian woman (center)-perhaps a cotton-spinner her-
self-conversing with European traders. Traders shipped Indian textiles to western Europe, where they became the basis for luxury
commodities such as this fashionable eighteenth-century gown made of Indian muslin. The pleated, floor-length fabric at the back
falls loosely as a slight train.

manufacturing industries in England and France, using trusts. In practice, the cash ofthe early modern world, as
imported raw cotton. By the 1760s, European cotton mills before, came in the form ofprecious metals such as gold,
could compete successfully against Indian producers in silver, and copper. In long-distance trade, silver emerged
African and American markets. Cotton was now a global as the best option because copper wasn't valued enough,
business-one that, as much as anything else, brought the gold was too rare, and paper money or promises offuture
Indian Ocean and Atlantic Ocean into a unified trading payment were unreliable.
world, providing a strong strand in the Global web. The silver needed to keep governments going and
long-distance trade humming came mainly from Span-
ish America, central Europe, andJapan. New silver strikes
SILVER AND THE SILVER TRADE
Silver became another ofthe first global trade commod-
ities, but with a difference. It served primarily as money,
whereas cotton was most often used for clothing and only
occasionally as money. There were two main reasons for
silver's expanded role. First, governments, always in need
of revenue, found it advantageous to demand that taxes
be paid in silver as opposed to grain, cotton, livestock,
labor, or anything else. Silver gave them the flexibility
to pay for weapons, soldiers, or whatever else they might
need on short notice. The Mughals gradually put tax pay-
ments in India on a silver basis. The Ming did the same
in China, where tax had previously come most often in
the form of rice. In the 1570s they changed the laws to
require everyone, even peasant families, to pay taxes in
silver. A huge proportion of the world's population now
needed silver.
Silver Production An illustration of the patio process shows
The second reason for the rise of silver as a global workers at a mine in Mexico refining silver on an industrial
commodity was that it solved a problem of mistrust that scale-producing the pure silver that was increasingly fueling
the global economy. Transmission of the most efficient mining
hampered long-distance trade. When people don't know and ore-refining technologies of the day boost silver output
and trust one another, they need money that everyone around the world.
 How did the spice, cotton, and sllver trades help Integrate the global economy? 589

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The Sliver Trade, ca. 1600 Silver became a truly global commodity in the sixteenth century. The main silver-mining zones were in
Japan, central Europe, and Spanish America-especially in Zacatecas, Mexico, and Potosr. Silver was crucial to the Spanish Empire's
finances. However, it commanded a higher price in India and China than anywhere else, so silver flowed across land and sea to the
Mughal and Ming empires. Silver was so prized in China that it could bear the high transport costs across the length of Asia by
overland caravan.

took place in Japan in the 1520s through the 1540s, in
Mexico during the years 1545 through 1558, and the biggest
ofall-as we've seen-at Potosi (in today's Bolivia) high
in the Andes, in 1545. In Japan, Chinese and Korean min-
ing technology adopted in the 1550s improved the yield of
silver veins. In the Americas, the latest German technol-
ogy was applied in Mexico in the 1550s and at Potosi in
the 1570s. Japan's mines adopted it, via Mexico, by 1580,
leading to a peak in production from 1602 to 1630.
These technologies, especially the so-called patio
process in Spanish America, made it easier to separate sil-
ver from its surrounding rock, so lower-grade ores became
worth mining. Japan in the sixteenth century mined about
30 percent ofthe world's silver, and in the seventeenth cen-
tury about 15 percent. Spanish American mines produced
a good deal more, and Potosi alone accounted for 60 per-
cent of world silver production between 1550 and 1650.
Thus the transmission of technology along international
circuits helped advance a silver mining boom on three
continents. The effects enabled some monarchs to spend
as never before and tightened the Global web through the
enhanced use ofsilver in global trade.
FINANCING THE SPANISH AND JAPANESE
STATES The rising tide of silver production floated the
Spanish and Japanese states and tempted them to over-
reach. Despite Spain's small population (about 7 million)
and poverty ofnatural resources, it became a great power
in Europe and controlled much of the Americas and the
Philippines after the mid-sixteenth century. In Europe,
the Spanish Crown-a branch of the Habsburg dynasty
from 1519 to 1700-used its silver bonanza to fight end-
less wars and champion the Catholic effort to roll back
Protestantism. Spanish monarchs also committed to con-
tinual warfare against the Ottomans (and Muslims more
generally) in the Mediterranean. A Spanish friar writing
in 1638 put it this way: "Potosi lives in order to serve the
imposing aspirations of Spain: it serves to chastise the
Turk, humble the Moor, make Flanders tremble and ter-
rify England." By law, the Crown was entitled to one-fifth
1590 CHAPTER 20 The First Global Economy
Spanish Power A painting depicts the port city of Seville at the height of Spanish power in the late sixteenth century. Seville's port
played a key role in the silver trade that contributed mightily to the Spanish Crown's vast wealth.
of all silver production in the Spanish Empire. At times,
upward of40 percent ofSpain's government revenue came
from Potosi alone.
The silver mountain's bounty peaked in rhe 1590s and
slipped sharply after about 1640. Spanish kings managed
to spend all the silver that crossed the Atlantic on royal
account and then some. When pinched for funds after
production started to fall, they sometimes grabbed private
traders' silver as it came ashore. Felipe IV (r. 1621-1665)
said, "Nothing do I regret more than having to seize sil-
ver." But he did it anyway to fight wars.
Similarly, in Japan, the military entrepreneurs who
unified the country-Oda Nobunaga (1534-1582), Toy-
otomi Hideyoshi (ca. 1536-1598), and Tokugawa Ieyasu
(1543-1616)-financed their campaigns against rival war-
lords with silver. They converted the mines into a state
monopoly exploiting convict labor. Silver revenues also
helped pay for Hideyoshi's unsuccessful invasion ofKorea
in the 1590s. Like Habsburg Spain (and, for chat matter,
like Athens of the fifth century BCE), Tokugawa Japan's
hard power rested largely on military force supported by
the yields ofsilver mines while they lasted. By 1640, Japan's
silver production had shrunk to halfits peak levels of1621.
PROMOTING ECONOMIC GROWTH IN CHINA
AND INDIA The silver that was mined in Spanish
America and Japan traveled around the world. Most of it
eventually went to China or India, where it served to pro-
mote commerce and underpin economic growth. When
both the Ming and the Mughals insisted on silver for tax
payments in the sixteenth century, silver became more
valuable in those lands than anywhere else. People could
exchange silver for more goods, or more gold, in India
and China than elsewhere. Anyone who could survive
the risks oftrading across the seas could do well exchang-
ing silver for Indian cotton cloth and pepper, or Chinese
silk and porcelain. As a Portuguese official in Macau,
Manuel de Comara de Noronha, put it in 1630, "When
the Chinese smell silver, they will bring mountains of
merchandise." In the same year, He Qiaoyuan, a Ming
scholar and official, remarked that silver acquired through
foreign trade resulted in massive exports, thereby ensuring
«employment for weavers, potters, and merchants, whose
waxing affluence augured higher standards of living for
all." The ceramic kilns at the southern town ofJingdezhen
employed more than 10,000 workers during the late Ming.
Silver Hows helped to bolster both the Chinese economy
and world trade.
Merchants sent Japanese silver to China, often in
Dutch or Portuguese ships becauseJapanese were officially
forbidden to trade with foreigners. American silver flowed
along many pathways. Some bullion crossed the Pacific via
Acapulco to Manila in the Philippines, and on to China
from there. In this way, Chinese silk and ceramics entered
markets in Mexico and Spanish America generally. The
bulk ofAmerican silver crossed the Aclantic, usually via
Cuba's main port ofHavana, to Seville in Spain. But it did
not rest there long. Some of Spain's incoming silver went
 What was the significance of the new business formats that emerged during this period?
to repay loans from
Italian and German
bankers, including the
house ofFugger. After
the 1560s, plenty of it
went to finance Spain's
army, which was at
Chinese Ceramics The export of
Chinese luxury goods, like this war with the Dutch.
intricate Ming-era painted and Once delivered to
enameled porcelain box, brought
bankers or the Spanish
the silver needed for coinage and
tax payments in China. army, American silver
flowed through Otto-
man lands, the Baltic, and Russia, or traveled in European
ships sailing around Africa, always heading for India and
China, as ifpulled by a magnetic attraction.
For two centuries nothing produced in the rest ofthe
world, except at times European cannon, interested Chi-
nese and Indian merchants as much as silver. But by 1750
or so, China had enough silver in circulation to satisfy
demand and reduce its price to about the same as the
world price. Silver flows slowed and no longer quickened
global commerce.
Silver, cotton, and spices: they could be produced only
in some places but were in demand everywhere. They
formed the lifeblood of global trade between 1500 and
1750, and they exemplify the process by which merchants
connected far-flung markets in a global commercial web.
Tea, sugar, silk, gold, ivory, and many other items-
even dried fish-were traded across the oceans as well.
So were millions of slaves. At any given time after 1550,
hundreds of ships were sailing on well-traveled routes,
linking ports such as Guangzhou, Manila, Cambay, Goa,
Basra, Cape Town, Elmina, Seville, Amsterdam, Lon-
don, Bahia, Havana, Acapulco, and many others. Year
after year ships and cargoes sailed, tightening the web of
global commerce.
NEW BUSINESS
FORMATS: PLANTATIONS,
COMPANIES, BANKS
The quickening pace ofglobal commerce invited creative
entrepreneurs to invent or refine the institutions through
which they did business. Three of the most important
591
in the early modern centuries were plantations, trading
companies, and banks.
PLANTATIONS
A seventeenth-century Barbadian slave was quo red in 1676
as saying, "The devil was in the Englishman that he makes
everything work; he makes the Negro work, he makes
the horse work, the ass work, the wood work, the water
work and the wind work." But it was not the devil that
inspired Englishmen on Barbados to try to force everyone
and everything to make sugar. It was the opportunity to
get rich by selling sugar grown, harvested, and processed
by enslaved labor on plantations.
Plantations are large-scale commercial farming opera-
tions with labor forces ofdozens or hundreds ofpeople-
sometimes free wage workers, sometimes unfree laborers,
and often both. They have existed here and there since
ancient times. But the interconnected commercial world
that developed after the 1490s improved the economic
logic of plantations. When many markets were within
reach, the rewards co large-scale production (known as
economies of scale) multiplied. Nothing worked better
as a plantation crop than sugar.
Sugar is a grass native to Southeast Asia. It will grow
in tropical and subtropical latitudes where temperatures
are warm for most of the year. It needs either abundant
rain or irrigation, and fertile soils. In the harvest season,
Sugar Plantations In this early nineteenth-century scene repre-
senting a sugar plantation in Antigua, a British Caribbean colony,
enslaved men and women prepare the ground for planting. The
world's sugar trade rested on the plantation system and slave
labor. The windmill provided the power that squeezed cane juice
from harvested sugarcane.
592 CHAPTER 20 The First Global Economy

/lfadeirao

Canary ls. .c,

\

ATLANTIC
OCEAN
\(\:~RICA
o Sugar cullival ion area, s.w, Tom~ o { . ,
beginning prior to 1620
~
O Sugar plantation area,
after 1620
O Sugar refining center, 1750
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1
Colonial lerrltorles, ca. 1750
•
•
•
British
Dutch
French
Portuguese
Spanish
0_ __,,,=;;;;;;;,===
1,000 2,000 ml
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0 1,000 2,000km

The Sugar Industry, ca. 1750 People had been cultivating sugar for millennia, but it became a major commodity, produced on
plantations with slave labor. in the Mediterranean world around 1000 CE, In the sixteenth century, Portuguese and Spanish entre-
preneurs brought sugar plantations into the Atlantic world, first to islands such as Madeira, the Canaries, and S~o Tome, then across
the ocean to the Caribbean and coastal Brazil. Sugar refining was concentrated in Hamburg, Amsterdam, and London, with smaller
centers elsewhere in Europe and in British North America, especially Boston and Philadelphia.

it needs a burst of labor. Its economies of scale came in
the processes of milling and refining, in which juice is
squeezed by rollers from sugar cane and then boiled into
a goopy mass that dries into crystals. To make sugar
pay, one needed to make big investments in land, labor,
machinery, buildings, and other infrastructure. Sugar is
rarely a small farmer's crop, and for the last thousand years
it has been mainly a plantation crop.
Sugar was grown on a modest scale in China and India
in ancient times. By 650 CE it had appeared in Iraq and
Egypt. By 800 its cultivation had spread to several Med-
iterranean islands, southern (Islamic) Spain, and river
valleys ofMorocco. In the Muslim lands of the Mediter-
ranean, slaves-mainly captives from Christian Europe-
formed the backbone ofthe sugar labor force. In Morocco
by 1450, entrepreneurs and emirs imported African slaves
across the Sahara to work on sugar plantations. Portuguese
and Spaniards did the same on Atlantic islands such as
Madeira, the Canaries, and Sao Tome.
THE SPREAD OF THE SUGAR PLANTATION Sao
Tome, in the Gulf of Guinea, pointed the way toward
a large-scale slave-and-sugar complex. Portuguese mari-
ners settled the formerly uninhabited island in the 1490s.
Its volcanic, nutrient-rich soils and rainy climate proved
ideal for sugar. By the 1550s, the island's economy focused
so tightly on sugar chat it raised too little food for its
population. Merchants brought food from Portugal, a
month away by sail. The plantations required a constant
influx of people-slaves from Kongo on the mainland
ofAfrica, and settlers, often unwilling migrants, mostly
from the communities of Portuguese Jews, debtors, and
criminals, and other populations the Portuguese Crown
was happy to deport. For nearly halfa century, Sao Tome
 What was the significance of the new business formats that emerged during this period?
served as the leading example of a new business format,
che large-scale slave plantation.
In the rnos, Portuguese businessmen took the planta-
tion format to the northeast of Brazil. There they found
good soils and climate for sugar cultivation, but a short-
age of labor. They tried enslaving the Amerindian pop-
ulation, but extremely high death rates from disease and
maltreatment convinced them that the answer to their
problem was massive imports of African slaves. By the
1590s, Brazil led the world in sugar production. By the
1640s, the tandem of sugar and slavery was booming in
the Caribbean too, where planters on Spanish, French,
British, and Dutch islands all raised cane in quantity.
Some Caribbean planters at first tried using enslaved Scots
and Irish, but too few could be found. Next came inden-
tured European laborers, who were bound to work for a
fixed number ofyears in exchange for free passage across
the Atlantic. But too few volunteered (or could be kid-
napped), and once in the Caribbean they died fast from
diseases. So, as in Brazil, Caribbean planters turned to
Aclantic Africa, where local merchants offered slaves in
great numbers at advantageous prices. Thereafter, for 200
years, Brazil and the Caribbean led the world in sugar
exports and slave imports.
The slave-and-sugar plantations in Brazil and the
Caribbean were a novel form of enterprise, far larger and
more efficient than their predecessors in Sao Tome or the
Mediterranean. The plantations, at least on the smaller
islands ofthe Caribbean such as Barbados, imported most
of their food from afar, as had Sao Tome-so they could
specialize on one product, sugar. Plantations usually held
between 100 and 500 slaves, and sugar districts supported
the densest rural populations anywhere in the Americas.
They were all located near the seacoasts because sugar was
an export crop, destined for European markets in Lisbon,
Seville, Bordeaux, Antwerp, Amsterdam, or London-
and after r730 or so also North American ones such as
Baltimore, Philadelphia, or Boston. They were often enor-
mously profitable for planters.
SUGAR AND PLANTATION SLAVERY Sugar prof-
its rested on a double exploitation. Sugar monoculture
depleted soil nutrients, so planters periodically had to
move to virgin fields, usually to forested land. In time,
often about 50 to 75 years, plantations on smaller Carib-
bean islands became unprofitable due to nutrient loss,
598
and the sugar industry gradually shifted to bigger islands
such as Jamaica, Hispaniola, and Cuba. The big islands
had more land and forests that, when burned, released
in their ash a pulse of nutrients to the soil from which a
bumper crop could spring for a few years.
The exploitation of people was more consequential.
From 1550 to 1850, about halfofthe nearly n million Afri-
cans shipped across the Atlantic went to sugar planta-
tions in Brazil and the Caribbean. The majority were field
slaves who worked long hours in labor gangs overseen
by armed men. During the harvest and milling seasons,
men, women, and children worked around the clock with
scant rest. A combination of strenuous work, brutality,
and a lethal disease environment made sugar plantations
notoriously unhealthy and contributed co the short life
expectancy of slaves on these plantations: shorter than
anywhere else in the Americas, averaging about 10 years
after arrival for those born in Africa. (Free blacks' life
expectancy was marginally longer, indentured Europe-
ans' slightly shorter.) Among slaves on sugar plantations,
deaths outstripped births until the nineteenth century. So,
after more than two centuries ofcontinuous slave imports,
the population on sugar plantations in the Americas in
1790 stood at about 2 million people, 90 to 95 percent of
them slaves.
Brutality stood at the core ofsugar plantation society.
Masters and overseers resorted to violence and the threat
of violence as the chief means of enforcing discipline
among the labor force. Thomas Thistlewood, an overseer
on a Jamaican plantation starting in 1750, left a diary in
which he derailed the various punishments and tortures
he inflicted on slaves. His diary also recounts his sex life
with slave women, showing him to be a sexual predator
and a rapist. Thistlewood's conduct was not unusual for
overseers and slavemasters. Their brutalities were calcu-
lated to make slaves choose obedience over defiance. That
calculation worked most but not all of the time. Slaves
defied Thistlewood on occasion, for which he made them
suffer.
Slaves from time to time risked everything on attempts
to run away or rebel. In 1760, some 1,500 slaves, led by
Akan-speakers from what is now Ghana, tried to rake over
the island ofJamaica. Tacky's War, as it is called, lasted a
few months and shook the foundations ofthe plantation
regime on that island. As we've seen, in northeast Brazil
a community of runaway slaves, Palmares, managed to
594 CHAPTER 20 The First Global Economy

defend its independence from 1605 to the 1690s. The great-

est ofall slave risings took place in the 1790s in the French
sugar colony of St. Domingue, as we will see in Chapter
21. By and large, slaves on the smaller islands were less
likely to try co run away because recapture was more likely
there than on bigger islands or in Brazil, where sparsely
populated forests beckoned slaves yearning to escape the
plantation.
Sugar was not quite the global commodity that silver
or cotton was. Because it does not keep as well as silver
or cotton, and could be grown widely, it was not traded
from the Atlantic basin into the Indian Ocean or Pacific
on any scale. The primary significance of sugar for the
global economy was that it demonstrated the viability of
the large-scale slave plantation.
Other crops in the Americas, notably tobacco, cotton,
rice, and indigo, would also be produced on the planta-
tion model. The particulars varied from place to place
and from crop to crop. But plantation owners all used Stock Exchanges The Dutch painter Emanuel de Witte made this
slave labor, relied heavily on terror for labor discipline, painting of the Beurs, or Amsterdam stock exchange, in 1653.
systematically sought economies of scale, and filled dis- Investors met in this busy courtyard to trade shares in increas-
ingly popular and profitable joint-stock companies.
tant markets with their products. By the mid-eighteenth
century, some ofthe richest men in the world made their
money this way. along the coast ofChina or che merchant empire ofVirji
Vora in India.

CHARTERED JOINT-STOCK COMPANIES

The commercial opportunities of the Global web offered
economies of scale in long-distance trade as well as in
cash-crop production. Just as the slave planration brought
new levels ofefficiency, human suffering, and profit to the
business ofsugar production, so the joint-stock company
did for oceanic trade.
Intercontinental shipping was risky business. Storms,
pirates, disease outbreaks, and other hazards could ruin
any voyage. To make business sense, ventures needed to
be big: big enough to fight offpirates, negotiate bulk dis-
counts on trade goods, and ensure that some ships would
surely survive a storm. Sending several ships together
made sense, and sending a fleet was better still.
To achieve economies of scale in long-distance trade,
merchants found ways to cooperate and pool their
resources. Traders and businessmen had done this for
millennia, usually with family members or close friends
because mutual trust was crucial. These kin-based con-
cerns could be gigantic, like the Zheng family operations
ORIGINS During the sixteenth century, more anon-
ymous forms of partnership developed to spread and
share the risks of long-distance trade. Some were char-
tered companies, granted monopoly rights over certain
trades by governments. Others were joint-stock compa-
nies in which hundreds or thousands of investors might
own shares, as in modern corporations. Some were both,
such as the English Muscovy Company, founded in 1555,
or the Levant Company, chartered by England's Queen
Elizabeth in 1581 to conduce trade with Ottoman lands.
All had professional managers. This was a business model
that could expand to indefinite size more readily than the
kin-based business empires of the Zhengs or Virji Vora.
The English pioneered chartered joint-stock
companies. France and the Netherlands soon followed,
and during the eighteenth century Spain, Denmark, and
others did too. One ofthese, the Hudson's Bay Company,
begun in 1670 to handle the fur trade in Canada, still
exists, albeit in much different form. The gold standard
ofchartered joint-stock trading companies was the Dutch
 What was the slgnlffc:ance of the new business formats that emerged during this period?
East India Company, the VOC, founded in 1602, which
we've already encountered in South Africa and in East
Asian waters.
THE DUTCH EAST INDIA COMPANY (VOC) The
VOC was a chartered joint-stock company, formed to
share the risk ofvoyages to the spice islands oflndonesia.
Voyages in the seventeenth century from Amsterdam to
Indonesia and back typically took 200 to 300 days out-
bound, and more than 300 on the return. About 3 to 5
percent never returned, better than the 40 percent rate for
Portuguese ships in the sixteenth century.
The VOC proved a spectacular success for nearly
200 years. Between 1602 and 1796, the company sent
nearly 5,000 ships around Africa to the Indian Ocean.
They brought back some 2.5 million tons of trade goods
and exchanged countless cargoes between Asian ports.
Detailed records for a 300-ton ship, the Ceulen, which
sailed from Java to Amsterdam in 1697, reveal something
of the business: in addition to a crew of 105 seamen and
30 soldiers, it carried a cargo ofJapanese copper, tin from
Thailand, ceramics from China, aromatic wood, saltpe-
ter, tea, ginger, nutmeg, cloves, cardamom (another spice),
bird's nests, cotton, silk yarn-and black pepper equal
to the ship's weight. The Ceulen was small as VOC East
Indies ships went, less than one-third the size of a typical
East India man, as the biggest ships were called. The VOC's
most lucrative trade was buying Indian doth and selling
it for spices destined for European or Chinese markets.
As part of its strategy, the VOC captured port cities,
many such as Malacca in 1641 taken from the Portuguese,
and built others, such as Cape Town, founded in 1652.. It
held dozens of fortified posts and at times had as many
as IOO hundred heavily armed merchant ships cruising
Indian Ocean waters. By 1669 it had 50,000 employ-
ees, 10,000 soldiers, and a navy of 40 warships. It con-
stituted a privately funded, state-sanctioned, maritime
empire devoted to commercial gain, a smaller version of
the Zheng family business empire but with more global
reach and governmental support.
The VOC captains enjoyed a military edge in the
Indonesian archipelago. VOC forces were frequently out-
numbered, but rarely outgunned. Wherever they could
maneuver their big floating fortresses, they could concen-
trate firepower enough to destroy a city in hours. In order
to found their center ofoperations on Java, they destroyed
595
voe Conquests This detail of an illustration of voe forces
assaulting a local sultanate in the spice islands (part of Indonesia
today) Indicates the typically violent methods that the VOC used
to establish a foothold in lucrative trading locations.
a local town and rebuilt it as Batavia in 1619. In an effort
to monopolize the clove and nutmeg trades in the 1620s,
they attempted to kill the entire population of the Banda
Islands and replace them with loyal settlers. They tried to
burn all pepper vines and clove or nutmeg trees not under
their control to undermine their competition. They took
part in a slave trade in Southeast Asia that specialized in
the sale ofwomen from the island of Bali.
In general, the VOC's business model consisted of
using force or the threat of force to extract favorable terms
of trade-preferably a monopoly-from local rulers and
merchants. The approach was backed up with merciless
punishment of anyone who traded with rivals. The cen-
trality of violence to their business is captured in a letter
from the governor general of the Dutch East Indies, Jan
Pieterszoon Coen, in 1614 to the directors of the VOC.
Coen, the man later responsible for the effort to extermi-
nate the Banda Islanders, wrore: ~You gentlemen ought
to know from experience that trade in Asia should be
conducted and maintained under the protection and with
rhe aid ofyour own weapons, and those weapons must be
wielded with the profits gained by the trade. So trade can-
not be maintained without war, nor war without trade."
Violence half a world away was part of the price for add-
ing a pinch of nutmeg to millions of cakes, sauces, and
glasses ofcider.
This business strategy worked brilliantly for Coen and
the VOC. Before it was liquidated amid a morass of cor-
ruption in 1799, the VOC averaged roughly 18 percent
696 CHAPTER 20 The First Global Economy

first had to discard the idea that lending money at interest

was immoral. Hindu, Buddhist, Islamic, and Christian
scripture and tradition include objections to the practice
ofcharging interest, or too much interest, for loans. Jewish
law prohibits lending at interest to fellow Jews, although
not to ochers. Plato, Aristotle, Cicero, the Buddha, Jesus,
Muhammad, and Aquinas all denounced lending at inter-
est, and Confucius disdained money-grubbing ofall sorts.
Luther got his start railing against usury, and early Prot-
estants generally regarded lending at interest as sinful. So
robust banking required cultural change.
In Europe the moral objections and legal prohibitions
Dutch Colonlsts Some merchants settled down in voe colo- against lending at interest weakened in places such as
nies-such as the Dutch merchant Pieter Cnoll, who managed northern Italy, where small fumily banks emerged as early
trade in Batavia, the capital of the Dutch East Indies. Cnoll is
shown here with his half-Dutch, half-Japanese wife, their chil-
as the thirteenth century, and Barcelona (northeastern
dren, and their servants. Spain), where a city-owned bank appeared by 1381. Else-
where in Europe, those objections eroded during the six-
teenth and seventeenth centuries. The intellectual climate
annual profit on the totality of its business. Other com- in which old truths were subject to renewed question-
panies imitated its formula, most notably the English East ing, combined with economic changes that heightened
India Company (EIC). But in its entire career, 1600 to the demand for finance, probably both contributed to
1857, the EiC managed to carry only about one-fifth the this cultural trend. Lending at interest gradually lost its
goods traded by the VOC. taint among Protestants, and eventually Catholics as well,
despite repeated papal pronouncements about the evils
of usury.
BANKS
The Bank of Amsterdam, founded in 1609, was the
As long-distance trade grew in volume and reach, busi- first modern bank. It attracted depositors, cleared debts,
nesses more often needed to finance their operations by offered quick transactions, and maintained public trust
borrowing money. They borrowed to mount large trad-
ing ventures that could realize economies of scale. They
also borrowed to cover the period between their purchase
of goods and the subsequent sale of those goods, which
might be years in trade between Europe and Southeast
Asia or China. So the demand for private finance grew
dramatically after 1500.
New institutions evolved quickly in response to this
demand and governments' constant need for cash to pay
military expenses. Most notable among these institu-
tions were modern banks, bond markets (in which people
traded governments' debt), and stock exchanges (in which
people traded shares ofcompanies). All these institutions
helped both governments and merchants get cash when
they needed it and earn a return on their money when
they didn't need cash.

Banking The Bank of Amsterdam, the first modern bank, was

LENDING AT INTEREST Ofthese, thernostimporcanc
originally located inside the Amsterdam town hall-shown here
were banks. To have a flourishing banking sector, societies in a 1672 painting.
CONSIDERING THE EVIDENCE
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On the Circulation ofBlood and Money

Usually, the value of a commodity drops when more of For the Italian scholar Bernardo Davanzati, usury
lt is in clrculat!on. However, as the gold and silver mined was Just one of the mischiefs people could make with
in the Americas became more plentiful in Europe, their money. In a 1588 lecture on coins, he described money
value increased because more people demanded cold as the lifeblood of states to illustrate why money must
hard cash instead of accepting bartered goods. Some circulate to retain its value. Although a scientific descrip-
people even began shaving small slivers of metal off of tion of blood circulation eluded Europeans until William
coins before passing them on. Bankers and loan sharks Harvey published his research on the subject In 1628, it
simply lent the money they had in return for a larger was commonly understood that blood moved through
amount of money later. Today that difference is known the heart and lungs to nourish the rest of the body. Over
as interest, but European theologians and politicians a century after Davanzatl delivered his lecture, a Brit-
saw interest as a euphemism for the sin of usury (i.e., ish philosopher named John Toland translated it into
lending at Interest) that should be banned, or at least English, introducing Davanxatl's Ideas to a new gener-
regulated. It seemed right to be paid for a hard day's ation of thinkers and bankers on the other side of the
work or a risky Investment in overseas trade, but making continent. As the center of banking moved from Italy to
money from money struck Christians, Jews, and Muslims England, so did the demand for ideas about how to deal
alike as immoral.
- ______
... ...................................._..
with money problems.
_ _______.......................................... ____
Some grave and famous Authors have call'd Money the Sin- the livingMember ofthe Common-wealth, and to preserve it
ews ofWar and Government; but, in my Opinion, it may be from those Mischiefs which usually befal it, when not care-
more properly stil'dthe Second Blood thereof. [F]or as Blood, fully look'd after; such as Counterfeiting, Monopolizing,
whichis the Juice and Substance ofMeat inthe natural Body, Simony [buying religious privileges), Usury, and the like,
does, by circulating out ofthe greater into the lesser Vessels, already decri'd, and known everywhere. But, ... I shall now
moisten all the Flesh, which drinks it up as parch'd Ground confine my Discourse only to ••• debasing ofCoin.
soaks Rain Water; so it nourishes and restores as much of Source: Bernard o Davaozatl, A Discourse upon Coins, trans. John Toland
it as was dri'd up and evaporated by the natural Heat: In (London: 1696).
like manner, Money, ••. does, by circulating out ofthe richer
Purses into the poorer, furnish all the Nation.... From the ----·--....-....._.... ____
poorer it returns again into the richer Purses; and thus cir- '
' QUESTIONS FOR ANALYSIS
culating without Intermission, it preserves alive the Civil
Bodyofthe Common-wealth. Hence ... every Statemust have
1, How is the circulation of money in a state like the
a quantity of Money, as every Body a quantity of Blood to circulation of blood in a body?
circulate therein. But as the Blood stopping in the Head or 2, Why does Davanzati think that concentrating
the larger Vessels puts the Body naturally into a Consump- money in a few hands is dangerous?
tion, Dropsy, or Apoplexy, etc. so [if] all the Money be only 3, In what ways did ideas about how to manage
in a few Hands, as in those ofthe rich for Example, the State money, and money problems, circulate in
falls unavoidably into Convulsions, and other dangerous ' Europe?
Distempers.... We ought therefore to set a high Value upon ·-······-······-····-···-···-···,.

by reliably allowing anyone ro withdraw a deposit on problem by creating a new bank chat kept accounts of
demand. In 1609, at least Boo different coins circulated merchants' deposits and converted them to a single stan-
in Amsterdam, including copper, silver, and gold coins dard, at first a tally ofwho owed whom how much of an
from dozens of countries as far away as Japan. Doing abstract accounting unit, called bank money. lhis prac-
business amid this diversity of money-like conducting tice reduced transaction costs and attracted yet more busi-
conversations in Boo languages-was enormously ineffi- ness to Amsterdam. The city required merchants to use
cient. The city council ofAmsterdam sought to solve this the bank for all big transactions. Soon the bank routinely
698 CHAPTER 20 The First Global Economy
Financial Power A detail of an illustration of Jacob Fugger's lav"
ishly decorated house in Augsburg shows visitors bowing before
the powerful merchant, Fugger is a key example of someone who
leveraged the opportunities presented by long-distance trade
and rulers' need for loans to amass vast wealth,
lent out more money than it held, a practice typical of
modern banks called fractional reserve banking. This
innovative, expansive practice had the effect of creating
money in the form of credit; although if all depositors
demanded their money at the same time, the bank would
be unable to pay. To avoid this problem, any bank engaged
in this practice had to maintain a solid reputation, as the
Bank ofAmsterdam did for nearly 200 years. Fractional
reserve banking helped lubricate the wheels ofcommerce
by making credit more easily available to merchants.
BANK NOTES AND CREDIT Bank notes boosted
commerce too. The Bank of Amsterdam did not issue
paper money. Other banks had cried and found custom-
ers mistrustful, often rightly so. Banks sometimes would
print coo many notes and then refuse co honor chem. Bur
the Bank of Sweden in the 1670s, and then the Bank of
England, founded in 1694, managed to win public trust
in bank notes. They successfully lobbied for government
monopoly rights on printing bank notes and issued chem
only in modest quantity. Both fractional reserve banking
and the use of paper money-if trusted-expanded the
amount of money in circulation and reduced the trans-
action costs of commerce.
Banks often found that their best cusromers were kings.
As we've seen, the spiraling costs of warfare, navies, and
standing armies put pressure on royal treasuries. Borrow-
ing was one of the few solutions monarchs could find. If
che costs of, say, five years ofcampaigning could be spread
out over the next 50 years, then the need to raise taxes
would not be so sharp, making tax revolts less likely. Early
modern monarchs had every reason to wish to see healthy
banking systems in their countries. The Habsburgs had
relied heavily on the banking house of Fugger to attain
and retain power.
In practice, northwestern European monarchs, and
the Dutch Republic, had the most extensive banking sys-
tems to draw upon. Creditworthiness became a strategic
asset for states: in the eighteenth century, bankers lent the
British government money at half the rate they charged
the French Crown. Indeed, the British government's rep-
utation for repaying debts enabled it co spend as much on
war as could the far larger Qing empire: it could borrow
at low rates and the Qing could not borrow at all. Banks
kept kings and governments solvent, and kings and gov-
ernments, ifthey paid their debts, helped keep banks prof-
itable. Governments without access to banks, or deemed
poor credit risks by bankers, struggled financially.
Large-scale plantations, joint-stock companies, and
banks were among the new business formats that devel-
oped in response to the opportunities and challenges pre-
sented by the Global web. Partnerships and family-run
businesses survived, of course. But they could not take
full advantage ofpotential economies of scale in produc-
tion, commerce, and finance that resulted from the newly
global reach of ships, the connections among far-flung
markers, and che frequent need for ready cash on the part
of kings and merchants.
GLOBAL LINKS AND
COMMERCIAL REVOLUTIONS
In eastern Canada about 1680, a Mi'kmaq told a French
priest, "In truth, my friend, the beaver does everything to
perfection. He makes for us kettles, axes, swords, knives,
and gives us drink and food without the trouble of cul-
tivating the ground." By trapping beaver and selling fur,
Mi'kmaqs and other Amerindians could buy an array
of useful goods produced across the Atlantic in Europe.
A Khoisan raising cattle in South Africa or a Dayak in
 Which world regions experienced commercial revolutions, and why? G99

during the Song dynasty (960-1279). This second one,

under the late Ming and then the Qing, was something of
an economic miracle. China doubled its population with-
out impoverishing it. This was achieved partly by conquest
of new lands, not only in Mongolia and Tibet (econom-
ically not all that helpful) but also in western Sichuan
and other southwestern lands populated by non-Han
minorities. China absorbed, killed off, or pushed out these
peoples and put their lands to more intensive use with
state-of-the-an agricultural technologies. This resulted in
more rice paddies and millet fields, and less swampland,
forestland, and grassland-hence a bigger economy and
more tax receipts for the emperors.
But even more than frontier conquest and territorial
Chinese Commercial Revolution In this 1696 painting, a peasant
and a water buffalo prepare the soil for rice planting. The poem in
expansion, China builc its economy through increased
the upper left praises the farm tool depicted, which flattens the commercialization of both agriculture and manufactur-
ground. New, intensive agricultural practices enabled late Ming ing. Regions came to specialize more in certain products,
and Qing China to become more commercialized.
such as tea or cotton, and to import their food from else-
where in China or even Vietnam. Most of chis special-
Borneo gathering sandalwood might have said much the ization and exchange took place within China. Bue some
same thing. They all found advantages in caking part in of it linked up to foreign markets, especially for silk and
global commerce, selling something they were good at porcelain.
producing in order to buy other things they could not The Ming and Qing governments had ambivalent
easily produce. People had taken part in such exchanges views about foreign trade. Sometimes they tried to ban
for millennia before 1500. But now more people did so it, and sometimes they encouraged it. In the 1560s the
more often, and over longer distances.
During the early modern centuries (1500-1800) the
world's trade networks fused into one giant, but patchy,
commercial web. Regular shipping linked places chat
had previously been isolated, such as Caribbean islands
or southernmost Africa. Strong links emerged across the
Atlantic where none had existed before, such as the trade
routes between Mexico and Spain, or Angola and Brazil.
New routes also spanned the Pacific between Acapulco and
Manila. Strong links also developed where only weak ones
had existed before, such as between south China and the
Philippines or between Atlantic Europe and West Africa.
These links and shifts to a more commercial orientation
touched some places more than others. The commercial
transformation ran deepest in coastal China and Atlantic
Europe, ac the two ends of the Eurasian landmass.

CHINA Chinese Manufacturing Chinese goods manufactured in large

industrial workshops, such as those in the town of Guangzhou,
Between 1550 and 1800, China underwent a second could be traded worldwide. Guang;,:hou's manufacturing district
commercial revolution. The first one had occurred is shown here in an 1807 painting.
600 CHAPTER 20 The First Global Economy
Ming rescinded an earlier ban, helping to create a surge in
foreign trade. Restrictions returned, but under the Qing
between the 1680s and 1760s foreign trade again gener-
ally met with official approval and grew apace. Shipping
from south China to Manila tripled from 1684 to 1715, to
some 20 ships per year. Silver imports increased by nearly
sixfold between 1728 and 1800, and exports increased by a
similar proportion. By 1800, some IO percent of Chinese
grain, 25 percent ofcotton, 90 percent ofsilk, and 95 per-
cent of tea was produced for markets, whether domestic
or foreign. Only a few other spots in the world matched
this degree of commercialization.
ATLANTIC EUROPE
One was Atlantic Europe, which also underwent a com-
mercial revolution. Here, as in China, frontier expansion
played a role. Some settlement and agricultural expansion
took place in drained wetlands in Europe, especially in
England, the Netherlands, and along Baltic shores. But
the main thrust came overseas. The plantation zones of
Brazil and the Caribbean were under the control ofAtlan-
tic Europeans. By the 1690s, smaller plantation regions
were taking shape in South Carolina (rice) and around the
shores of the Chesapeake (tobacco). Most of the wealth
squeezed from plantations enriched Atlantic Europeans.
But, as in China, the heart of the commercial revolu-
tion in Atlantic Europe took place at home. Ever-larger
shares of agricultural harvests went to nearby markets.
Wool and cotton textile businesses expanded. In Atlantic
Europe as a whole, the proportion ofpeople working the
land in 1500 was about 75 to 80 percent-less in the Neth-
erlands, more in Iberia. By 1750 that proportion had fallen
to about 60 percent, and in England and the Netherlands
was well under hal( Manufacturing and services made up
the rest, both attuned almost entirely to market produc-
tion. Market towns sprouted and financial centers, such as
Antwerp, Amsterdam, and London, flourished. By 1600,
even bulk items were traded over long distances, such as
grain from Poland to Amsterdam or to north Italian cities.
This slow but steady march toward market societies in
China and Atlantic Europe distinguished them from the
rest ofthe world. Elsewhere, except in the plantation zones
and India's cotton districts, markets and commercial pro-
duction existed in pockets but did not pervade societies.
This did not mean ordinary people in Atlantic Europe
and coastal Chinawere better off than those elsewhere. By
and large they were not. Bur their societies were richer and
included more prosperous families, generally merchant
families and owners of agricultural estates. In Atlantic
Europe, but less so in China, rulers became more respon-
sive to the wishes ofcommercial elites, nowhere more so
than the Dutch Republic, where the rulers and the com-
mercial elite were the same people.
OTHER REGIONS IN THE
GLOBAL ECONOMY
India's connections also expanded after 1500, thanks
above all to the cotton trade. They now reached to the
Americas and West Africa, although rather thinly. The
older links to Southeast Asia, East Africa, and Southwest
Asia only strengthened, although some ofthe actual con-
necting was now done by European merchants, including
the VOC. In general, India's position with respect to the
world's webs changed less than coastal China's or Atlan-
tic Europe's: it had long been tightly linked throughout
the Indian Ocean trading world, by foreigners-Malays,
Persians, and Arabs mainly-as much as by Indian mer-
chants, and that remained true after 1500, although the
foreigners involved now sometimes included Europeans.
Those parts of India where cotton growing, spinning,
and weaving were concentrated-Gujarat and Bengal
especially-became yet more commercial in orientation.
So did Kerala, in the southwest, where peasants and land-
owners found that raising peppers for export and buy-
ing food was a preferable strategy to subsistence food
production.
Europe east of the Elbe River also underwent a shift
to a more commercial economy after 1500 or 1550. Land-
owners in Prussia, Poland-Lithuania, and Russia devel-
oped big grain-producing estates and sold their harvests co
cities around the Baltic and in Atlantic Europe. Like the
plantations ofthe Americas, these estates relied on forced
labor. Peasants-called serfs because they were legally
tied to the land and not free to leave-increasingly were
required to work several days a week on their landlord's
estate. In Russia, serfs could also be bought and sold, and
their status differed little from that of slaves in Brazil or
the Caribbean. Landlords also monopolized the right to
make alcohol from excess grain and sell it. Commercial-
ization in eastern Europe was agrarian: it did not lead to
rapid urban growth but to the proliferation ofbig estates,
each one a world unto itself but with ties to ports and
 Which world regions experienced commercial revolutions, and why? 601

through them to overseas urban markets-again like the

plantations of the Americas.
Southwest Asia before the 1490s had stood at the cen-
ter of the Old World web, a crossroads of trade, travel,
and information. Under Ottoman control by 1550, this
region together with Egypt had long been among the
most commercialized in the world-since the cloth
workshops ofancient Sumer. By 1800, it was still closely
linked to neighboring lands, and by sea to the Indian
Ocean's ports. But the biggest flows ofworld trade now
passed it by. The relative importance of caravan trade
across the steppe lands ofAsia declined, even if absolute
quantities did not. Trade and information flows else-
where in the world-across the Atlantic, for example, or
between China and Southeast Asia-grew far faster than
The Fur Trade An 1845 watercolor depicts a white trapper and
anything involving Southwest Asia. Its economic impor- his Amerindian family navigating the waters of interior North
tance in the world dwindled, and its former advantages in America. Mixed families like this worked at the source of what
was a transatlantic trade in furs.
access to information about distant markets and foreign
technologies disappeared. In a sense, Atlantic Europe
dethroned Southwest Asia between 1500 and 1800. were thoroughly enmeshed in the commercial web that
One indication of that change is the connections in now spanned the globe. By 1800 even some small-farming
which Africa was enmeshed. Before 1500, Africa's stron- districts, such as those of southern New England, were
gest linkages, by far, were with Southwest Asia, both by substantially market oriented and took part in a transat-
land via Egypt and by sea. But in the course of the next lantic economy that extended not only to Atlantic Europe
few centuries, while these connections persisted, stronger but to the Caribbean and West Africa too. Many of the
ones developed linking Africa to Atlantic Europe and to Amerindian peoples had also linked up to market econo-
India, mainly in the form of the slave and cotton trades. mies, whether through the mines ofthe Spanish Empire,
Nonetheless, the bulk ofAfrica's economies, devoted the fur trade ofFrench North America, or a deerskin trade
to farming and pastoralism, bore little connection to the that thrived in the Carolinas in the eighteenth century.
outside world except for the gradual spread ofAmerican Only a few people in 1800, maybe 2 to 4 million in all the
food crops. Most families produced for themselves. Few Americas, conducted their economic lives locally without
sought to maximize production in the ways that Chinese reference to distant markets.
or Indian cotton-producing peasants did in response to This patchiness of the global economic web carried
market incentives. The African entrepreneurs attuned consequences that we will return to in later chapters. The
to distant markets were mainly slave traders or in the most momentous of them flowed from the fact that by
elephant-hunting and ivory export business. They were the late eighteenth century the most connected place of
just as ruthless profit-maximizers as Dutch VOC trad- all-not the happiest, not the most just, not the best in
ers or Gujarati cotton merchants, but this culture of any moral sense, but the most connected-was Atlantic
commercialism was a rarity in Africa. Where the vio- Europe.
lence and commercial opportunities ofthe slave trade did
not intrude, African economic life was more stable, less
dynamic and disruptive, and less market oriented than in
either coastal China or Atlantic Europe. CONCLUSION
The Americas, in contrast, became much more pow-
erfully, and disruptively, connected to the wider world In the three centuries after 1500, a true global economy
between 1500 and 1800. The plantation zones, the mining developed for the first time in world history. Like all eco-
regions, and the northern lands devoted to the fur trade nomic shifts, it benefited some and hurt ochers.