The global colonial expansion of Spain, Portugal, the Netherlands, France, and Britain after the fifteenth century was a completely new phenomenon for the world. Unlike ancient colonization experiences, such as that of the Romans or Phoenicians, or major waves of migration or occupation, this episode of colonization engulfed the entire globe and made some nations much more powerful and richer, while leaving others poor and dominated.
How did the world end up there? How did these global colonizing empires emerge? And at what expense? This chapter reviews the process that led to the global colonial empires.
1.1 Eurasian Trade: Reverse Flows of Merchandise from Asia Versus Gold from Europe
Eurasian trade has been, and still is, the most important long-range trade in the world. Today, the trade volume of merchandise between Asia and Europe has already surpassed $1.5 trillion,1 notwithstanding the flow of financial and direct investments. By 2016, China had accumulated international reserves of $3 trillion, made possible largely by China’s trade surplus—the difference between the Chinese merchandise exports (mainly to Europe and the USA) and what its imports.
A well-known theory of trade, the gravity model, predicts that countries with high or growing levels of income (total income and not necessarily per capita income) and population are likely to register higher levels of inter-trade despite long distances. Moreover, complementarity in the product ranges of the two parties further enhances the volume of that trade.
Eurasian trade has clearly demonstrated the merits of the gravity model. Europe, which has a high population density, needed products from Asia (and vice versa), either because they were attractive, non-existent, and/or had lower import prices. The history has unfolded more or less in line with that theoretical account except that the differences in tastes were also a very important factor driving the direction and amount of flows.
India, China and the Arabian Peninsula take one hundred million sesterces [Roman silver coins] from our empire per annum at a conservative estimate: that is what our luxuries and women cost us. For what fraction of these imports is intended for sacrifices to the gods or the spirits of the dead?
On the other side of the trade was the perennial demand for gold and silver in Asia, mostly due to cultural and physical reasons. The Asians did not have much desire for the relatively primitive European merchandise. Instead, households, governments, and temples were interested in hoarding gold and silver. As the local reserves of gold and silver were small, the appetite for hoarding had to be satisfied by inflows from other parts of the world. The recently revealed treasure2 of the Padmanabhaswamy Temple in Thiruvananthapuram at the order of 1 trillion Indian rupees (approximately $15 billion at the time) included 2000-year-old Roman coins as well as Dutch, Portuguese, and Venetian money.
Until the nineteenth century, the East must have recorded a surplus in its merchandise trade with the West; the total value of goods shipped from Asia to Europe was higher than the other way around. This trade, and consequently the ‘current account’ deficit, created specie flows from Europe to Asia to pay for it for hundreds of years. In turn, India, together with China has, over centuries, accumulated gold and silver, truly earning the name of the ‘bullion sink’ of the world.
1.2 Economics and Commerce in Medieval Europe Prior to European Geographical Explorations
In medieval times, the Mediterranean became Europe’s most important arena of trade following humble beginnings. Western Europe’s ‘dark ages’ followed the collapse of Rome in the fifth century AD at the hands of the Germanic ‘barbarians,’ as the Romans called them. The first few subsequent centuries were quite gloomy, with a long period of political fragmentation, conflict, feudal pressures, widespread poverty, and overall economic stagnation. The fall in agricultural productivity due to erosion, soil exhaustion, and taxation that started during the Roman Empire—and which also contributed to its collapse—continued through the early barbarian centuries. Economic stagnation and low population growth led to falling prices despite decreasing production.3 The dismantling of the Roman administration led to a simultaneous fall in the amount and quality of public services as well as to lower taxation.
Then came a small relief in the tenth century that continued over the next four centuries, which Robert Lopez calls the ‘commercial revolution of the middle ages’ in Western Europe. During this period, both population and agricultural productivity increased. Rising agricultural production pushed the economy beyond subsistence, offering a surplus for intra- and intercontinental trade.
Increasing population and income, albeit slow, also expanded the demand base. Consequently, trade flourished in Western Europe, first leading to the formation of markets in and around towns—first temporary and then permanent—as well as to the Champagne Fairs, which peaked in twelfth and thirteenth centuries. The latter were regular commercial gatherings at different times of the year in which merchants from different parts of Western Europe travelled overland to exchange merchandise such as textiles, leather, fur, and spices. City administrations welcomed the formation of markets and fairs, as these increased economic activity and income. This expansion of continental trade earmarked the start of what historians later called the ‘commercial revolution.’
1.3 The Silk Road and the Spice Route in Medieval Times: The Mediterranean as Part of Global Trade
In parallel with the domestic trade, Europe’s international trade also expanded. China, India, and Central Asia produced and exported to Europe high-priced merchandise such as silk and other textiles, spices, porcelain, medicine, cotton, and later tea. One reason for the high prices was the scarcity and quality of the products. Another reason was because of the long shipping distance, risks, and high merchant profits. Non-European merchandise was transported to the western world along two distinct intercontinental routes: the so-called Silk Road and the Spice Route.
The Silk Road and the Spice Route
The second was the Spice Route (Fig. 1.1). It was also called the Baharat Route in languages such as Ottoman, in which baharat is taken to mean spices, but in fact it simply comes from the Hindu name for India, Bharat. The Spice Route was a network of sea and land routes joining what is today India and Indonesia to the Middle East and Europe.
After the seventh century AD, seasoned Arab and Indian seafarers carried spices (mostly received from Indonesia) from western ports of India to Egyptian or Arabian ports on the Red Sea. Caravans then carried the merchandise to today’s Syria, that is, Damascus, to the east and to Alexandria to the west.
This Indian Ocean trade was an almost ideal case of free trade. Traders could choose from ports to approach and would compete with others to buy merchandise. If a port imposed duty on merchants, the latter would move on to other ports. Neither the buyers nor the sellers wielded any pricing power over the market.
Venetian ships would take the merchandise from Alexandria to Venice, the greatest entrepôt of Europe of the time. This trade made Venice rich during the medieval period. It would, however, be doomed by Vasco de Gama, who rounded the Cape of Good Hope in 1497 and developed the European sea routes to the Indies. Unluckily, de Gama reached India just before Egypt was incorporated into the Ottoman Empire in 1517, which together with Anatolia and Syria, granted the Ottomans a uniquely strategic position in commercial terms. The most important outlets of both the Spice Route and the Silk Road to Europe now belonged to the Ottoman Empire.
1.4 Venice Reaches the Zenith of Power in the Mediterranean
The commercial revolution of the Middle Ages had culminated in the supremacy of the Italian city-states of Venice, Milan, Genoa, and Florence, which had significant skills in production, banking, and international trade and networks. Venice and Genoa dominated the sea trade on the Mediterranean. Subsequently, in the early fourteenth century, with improved ships, their fleets also extended their sea routes to Flanders on the Atlantic Western European coast. This became an important factor in the weakening of the central position of the Champaign Fairs. Previously, it was more efficient for the Italians to send merchandise to Europe over the land routes through the Alps.5
In their Western European markets, Italians sold both the spices and the silk they bought from the Levantine ends of the Spice Route and Silk Road. As of the fourteenth century, the Italian territories, together with Flanders, also stood out in terms of their superior production skills in textiles. Flanders had developed its weaving industry based mostly on imported wool from England . The Italian industry, as mentioned above, relied more on Anatolian and Syrian cotton. The two could be considered the industrial powers of pre-industrial Western Europe. Italians sold their textiles produced using cotton mostly imported from Anatolia and Syria6 and wool imported from Britain . It was no surprise that the Italian merchants and bankers were characters in Shakespeare’s plays, as they were the ones who developed banking, insurance, trade norms, and bookkeeping in Europe.
Among the four Italian city-states, which were the greatest city economies in Europe except for the likes of Constantinople or Cordoba, Venice stood out as the commercial giant. From a swamp where migrants fleeing the Hun invasion settled in the sixth century AD, Venice slowly but steadily developed, especially through its sea trade with Mamluk Egypt in later centuries. Venice gained its de facto political and religious independence from the Byzantine Empire in the ninth century (as opposed to the official date of independence in the eleventh century) when the body of St. Mark was smuggled from Mamluk Alexandria, with which Venice had very close relations.7 Hence, it became known as ‘New Alexandria.’
Population of selected large cities in Western Europe
1050 | 1200 | 1330 | 1500 | |
|---|---|---|---|---|
Cordoba | 450,000 | 60,000 | 60,000 | – |
Venice | 45,000 | 70,000 | 110,000 | 100,000 |
Paris | 20,000 | 110,000 | 150,000 | 225,000 |
Genoa | – | 30,000 | 100,000 | 58,000 |
London | 25,000 | 25,000 | 35,000 | 50,000 |
Florence | 15,000 | 60,000 | 95,000 | 55,000 |
Lisbon | 15,000 | – | 35,000 | 65,000 |
While in the fifteenth century, the four Italian city-states became the centre stage of the Western European economy, countries and regions in the fragmented western periphery of the continent suffered from being cut out from the show. They also lacked industries to manufacture tradable merchandise. Today’s Portugal, Spain, Southern France, and Great Britain were probably the best representatives of such countries or regions on the rim of the continent suffering greatly from being irrelevant to the international trade flows of the time. Except for France, the governments of the other three must have become acutely aware of their irrelevance and sought solutions to reverse the situation. That became the driving force of expeditions and subsequent colonial expansion, together with religious zeal in the case of Portugal and Spain.