Asia’s Inland Trade, or How the Spice Trade Worked

The official trading area of the Dutch East India Company

The way we learn the story in elementary school in the United States, European trading companies sailed East in search of spices and other luxury goods. What those merchants took with them to trade is generally left unmentioned–perhaps because it makes it clear that Europe was a backwater in the global marketplace until well into the eighteenth century.

The truth is that in the early centuries of the Asian trade most European-made merchandise was a dud in the Asian marketplace. Some products, like mechanical clocks and toys, were too expensive for any but the wealthiest to purchase. Others, like heavy woolen cloth, were simply not useful or appealing. The only thing Europeans had that Asian were interested in was precious metal from the mines in Latin America.

The Portuguese, who controlled the trade routes from Europe to Asia for almost a hundred years, were content to pay silver for the luxury goods that reached their Indian stronghold at Goa. When the Dutch entered the spice trade in 1595 , they didn’t have the luxury of paying for everything with hard currency. It was too expensive to simply trade with the Indies. Instead they learned to trade within the Indies: carrying goods from one Asian market to another as part of what they called the “inland trade”.

The Dutch didn’t invent the inland land. Merchants from all over Asia bought and sold goods at busy seaports along the Red Sea, on the coast of India, throughout the Indonesian archipelago, and in China and Japan. Islamic merchants in the Persian Gulf shipped raw cotton, coffee, dried fruits and nuts, and attar of roses across the Indian Ocean. Chinese merchants sold silks, tea, porcelain and zinc. India produced printed cotton textiles that were popular throughout Asia. South East Asia was the source for pepper, sandalwood, spices, and ivory.

Asia ships seldom sailed all the way from the Persian Gulf to China. Instead, an Arab ship would sail from Mokha to Surat and back. An Indian merchant would travel between Surat and Java. Chinese junks controlled the trade between Canton and Bantam. A chest of tea or a load of pepper would be bought and sold several times , and transported from port to port in several different ships.

Instead of concentrating on trade between two ports, the way most Asian merchants did, the Dutch East India Company (VOC) traded throughout the entire system, trading one type of goods for another, which was then used to buy a third. From one end of the chain to the other, Dutch traders handled more than one hundred Asian products, including raw silk, sandalwood, saltpeter, tin, opium, and cowry shells. Each item was bought for a low price in the place where it was made and then sold for a higher price in another part of Asia in which it was in demand.

In order to make the most of this complicated series of trades, the VOC set up a network of permanent trading stations along the major trade routes in Asia–a process that often involved violence against local rulers and other European merchants. By 1785, the company had roughly 20,000 employees in twenty settlements spread across Asia, including company-owned spice plantations in Indonesia and walled warehouses in port cities in China, Japan, and India.

The spice trade–more than just pepper.

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