The Rise of Merchant Empires: Long-Distance Trade in the Early Modern World, 1350-1750

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Tracy, J. D., ed., The Rise of Merchant Empires: Long-Distance Trade in the Early Modern World, 1350-1750 (1990), 442p. and The Political Economy of Merchant Empires: State Power and World Trade, 1350-1750 (1991), 504p.

These two substantial volumes are a result of a 1987 conference at the University of Minnesota’s respected Center of Early Modern History on long distance trade and state power in the shaping of the early modern global economy and trade. According to Tracy, these volumes, which contain twenty-four chapters produced by a broad range of experts in the field, are in part a response to the single author synthesis of Fernand Braudel’s three volume Commerce and Civilization (1967-79, English translations 1981-84)) and Immanuel Wallerstein’s four volume, The Modern World System (1974-2011). The Merchant Empire volumes provide well-written and accessible introductory chapters with a variety of perspectives on the major topics and questions about Europe’s rise to pre-eminence in world trade during the period. The Rise of Merchant Empire: Long-Distance Trade in the Early Modern World volume concentrates on explaining the composition and growth of world-trade during the period and the merchants, both European and indigenous, who conducted it. Herman van der Wee explains the structural changes in Europe’s long-distance trade from the south, especially around the Mediterranean, to the north, along the Atlantic coast, the Baltic and especially the North Sea, between 1350-1750. There are chapters on the growth and composition of trade, by Carla Rahn Phillips on the Iberian empires, 1450-1750; by Niels Steengard on the English and Dutch Republic before 1750; and by Paul Butel on the French. There is a useful chapter by Larry Neal comparing the Dutch and English East India Companies and a more specialized chapter by the leading expert on the competitiveness and profitability of Dutch shipping. It has often been said that the European and Asian trade networks were united by the flow of silver from the New World. Ward Barrett provides a chapter on world bullion flows from 1450 to 1800. The second part of this volume deals with merchant communities, with a chapter on the sociology of merchant communities in both Europe and Asia, and individual chapters on merchants in India, China, the caravan trade of central Asia and the Atlantic slave trade.

The second volume, The Political Economy of Merchant Empires, concentrates on “whether the eventual triumph of the Europeans can best be understood in terms of superior forms of business organization or superior weaponry.” The editor’s introduction begins with a quotation from Jan Pieterszoon Coen’s letter of 1614 from Bantam (in what is now Indonesia) to the Directors of the Dutch East India Company: “From experience, your lordships ought to know very well that in India trade is driven and maintained under the protection and favor of your weapons, just as the weapons are furnished from the profits of trade, in such wise that trade cannot be maintained without war, nor war without trade.” One can argue that Europeans had better transportation, business organization, or business methods. By contrast, one could argue that Asian business methods were not inferior and that Europeans triumphed largely because of their superior armaments. One can also insist, as Steensgaard does, that Europeans succeeded because they formed organizations in which “the use of violence was subordinated to the rational pursuit of profits.” These essays show that one of the chief differences between European and indigenous trade networks was that Europeans organized their overseas commercial ventures as an extension of the state, such as Portugal and Spain, or as autonomous trading companies, such as the Dutch and English East India companies, which had the right to act like states and to use war to further their interests. Douglas North, who is one of the founders of institutional economics, argues that institutions play a crucial role in determining the rate of economic growth and emphasizes the role of European governments in enforcing property rights in a chapter on Institutions, Transaction Costs, and the Rise of Merchant Empires. M.N. Pearson provides a useful overview of the roles European and Asian governments played in economic development in a chapter on Merchants and States, in which he argues that long distance trade during the period did not play a major role in Europe’s economic development. He explains why Asian governments were less interventionist in promoting economic development than European states but that European states’ role in long distance trade “was at best facilitative, helpful but not determining or interventionist, at least not on the basis of any coherent body of doctrine” (p.115). Thomas A. Brady provides a counterpoint and argues that European “warrior merchants,” whose property was secured by the state in Europe but that those states also limited the freedom of he merchants. In the East they managed to escape these limitations from custom, law and obligation and they acted like “the lords of human kind” and forged merchant empires with both military power and the greater efficiency of economies of scale. Geoffrey Parker, a well-known military historian, contributed a chapter on Empire and the Wider World, 1500-1700. There are chapters on transport costs by Russell Menard and transaction costs, such as credit and private trade, by Jacob Price. There are also chapters on the Portuguese empire in the Indian Ocean in the sixteenth century and the Luso-Brazilian Empire from 1500 to 1808. The importance of silver is discussed in an interesting chapter that compares the Tokugowa Shogunate with Hapsburg Spain. Finally, K. N. Chaudhuri’s “Reflections on the organizing principle of pre-modern trade” reminds us that trade, and the social status of merchants, were seen very differently during the early modern period in the territorial states of Asia than the city-states of Europe, such as Venice, or the precocious Dutch Republic. He provides a useful introduction to major theoretical explanations of the origin and nature of trade and provides interesting examples from the period to suggest why merchants had a much higher status, and why trade was considered more valued, in Europe’s most developed economies than in Asia’s territorial empires. There are useful maps in the first volume and an annotated bibliography for both books in the second volume.

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