The Rise and Fall of World Commerce
Part 3—Greedy Commerce Shows Its True Colors
AS THE 16th century dawned, European commerce was dominated in the north by the Hanseatic League, a mercantile association of North German towns; in the west by England and the Netherlands; and in the south by Venice.
For centuries, Venice monopolized the spice trade. Agreements made with the Arabs, and later with the Ottoman Turks, successfully closed the Eastern trade routes to possible rivals. If others were to challenge this monopoly, they must find new routes to the Far East. The search began. One result of this search was the discovery and subjugation of the Americas.
During the 1490’s the pope gave Portugal and Spain a papal go-ahead for a campaign of conquest of the then unknown world. But it was more than just religious persuasion that motivated these two Catholic powers. Professor Shepard Clough comments: “As soon as claims to the newly discovered parts of the world had been staked, the claimants made a mad rush to get what economic benefits they could from their finds.” He adds: “There was an almost unnatural lust in the haste with which the pioneers expected to get rich. Here was an interesting commentary both on the motives behind exploration and on the prevailing ideologies in the Western world.” The lust for gold and converts drove on the Spanish conquistadores in their plundering of the New World.
Meanwhile, the Netherlands was growing into a dominant commercial power, a trend that none of the other commercial giants could stem. In fact, during the course of the 17th century, it was apparent that only England was sufficiently strong to challenge the Dutch. Economic competition intensified. Within 30 years, by 1618, the English doubled the size of their fleet; by the middle of the 17th century, the Dutch merchant marine was some four times the size of the combined fleets of Italy, Portugal, and Spain.
The commercial center of Europe thus shifted from the Mediterranean to the Atlantic seaboard. Calling it a “commercial revolution” and “one of the great locational changes of history,” Clough says it created an “economic well-being that made possible Western Europe’s political and cultural leadership in Western culture.”
Empires Built on More Than Just Sugar and Spice
In 1602 the Dutch amalgamated a number of trading companies directed by their merchants and formed the Dutch East India Company. In the decades that followed, besides having a measure of commercial success in Japan and Java, it evicted the Portuguese from what is now West Malaysia, Sri Lanka, and the Moluccas (Spice Islands). “Like the Portuguese and the Spanish,” says Clough, “[the Dutch] wanted to keep the benefits of Eastern trade exclusively for themselves.” And no wonder! Trade was so profitable that by the 17th century, the Netherlands had become the wealthiest state per capita in Western Europe. Amsterdam became the financial and trade center of the Western world.—See box, page 23.
Denmark and France formed similar companies. But the first, and the one that subsequently was most influential, was founded in 1600, the English East India Company. It supplanted the French and the Portuguese in India. Later the English gained commercial supremacy in China as well.
Meanwhile, in the Western Hemisphere, the Dutch West India Company was doing business in sugar, tobacco, and furs. And the English, after incorporating the Hudson’s Bay Company in Canada in 1670, were busy trying to find a northwest passage to the Pacific as they traded with the lands adjacent to Hudson Bay.
Journalist Peter Newman says the struggle between the Hudson’s Bay Company and one of its rivals, the North West Company, “was a corporate contest for markets and furs, but it quickly turned into a quest for power and territory. . . . Both sides settled their accounts in blood.” The real victims were the Indians with whom both companies traded. “Liquor became the currency of the fur trade,” he says, adding that this “trade in liquor debauched families and decimated Indian culture.”*
So came into existence two powerful and influential empires, both built on more than just sugar and spice—also on blood! Greedy commerce was showing its true colors. As The Columbia History of the World says: “The Dutch and English sailed the oceans of the world as agents for commercial concerns . . . For these companies the profit motive was preeminent.”—Italics ours.
Profit at the Expense of Others
From the 16th to the 18th century, an economic system known as mercantilism strongly influenced European thought. The New Encyclopædia Britannica explains: “[Mercantilism] insisted that the acquisition of wealth, particularly wealth in the form of gold, was of paramount importance for national policy. . . . The trade policy dictated by mercantilist philosophy was accordingly simple: encourage exports, discourage imports, and take the proceeds of the resulting export surplus in gold.”
Implementing this policy often resulted in grave injustices. Colonies were exploited as tons of gold were confiscated to benefit the mother country. Simply put, mercantilism mirrored the self-centered, greedy attitude that the world of commerce has fostered from its very start, a spirit that still exists.
Mercantilism had its critics, not the least of whom was a Scotsman named Adam Smith. A noted social philosopher and political economist, Smith published a study on economics in 1776 entitled An Inquiry Into the Nature and Causes of the Wealth of Nations. Though opposed to mercantilism, Smith did not speak out against pursuing profit as motivated by self-interest. On the contrary, he contended that humans are led by an “invisible hand” that motivates them to engage in economic competition in the pursuit of individual self-interest; but that same self-interest, he contended, can be beneficial to society as a whole.
Smith advocated the theory of laissez-faire (French: “allow to do”), the idea that governments should interfere as little as possible in the economic affairs of individuals. He thus clearly expressed the ideology of classical capitalism.
Capitalism, today’s predominant and, as some claim, most successful economic system, is characterized by private ownership of property, with free trade between individuals or companies that compete with one another for profits. Capitalism’s modern history began in the 16th century in the towns of central and northern Italy, but its roots reach back much further. Professor Emeritus of History Elias J. Bickerman explains that “the economic use of our word ‘capital,’ from the Latin caput, meaning ‘head,’ goes back to a Babylonian term which also meant ‘head’ and had the same economic significance.”
Commerce reveals its true colors in the pursuit of individual or national self-interest. For example, it has not shrunk back from suppressing truth. Says The Collins Atlas of World History: “The cartographer has also been an actor in, and on occasion a hostage to, commercial strategies. Discoveries reveal untold sources of wealth. Can the map-maker be permitted to reveal this information to the world? Must he not rather conceal it from potential competitors? . . . In the seventeenth century, the Dutch East India Company did not publish documents which could give its competitors information.”
Commerce has done far worse. From the 17th to the 19th century, it made a business out of selling an estimated ten million Africans into slavery, thousands of whom died in transit to the Americas. The book Roots, by Alex Haley, and its 1977 television dramatization, painted a graphic picture of this ugly tragedy.
Building Blocks—How Would They Be Used?
From the beginning of human history, imperfect men have learned by trial and error. Not by divine revelation, but by tireless research or perhaps by accident, they discovered basic scientific truths, which were harnessed by new inventions. In 1750, as Great Britain began moving from an agrarian economy to one dominated by industry and the use of machines, some of these inventions—like building blocks—were available for use in constructing a new world.
The windmill, known in Iran and Afghanistan as early as the sixth or seventh century C.E., prepared the way for the discovery and development of other energy sources. But would greedy commerce be willing to forgo exorbitant profits in order to ensure that these sources would be safe, pollution free, and reliable? Or would it take advantage of energy crises—possibly even creating them—for the sake of personal gain?
Gunpowder, invented in China in the tenth century, was a boon for mining and construction work. But would greedy commerce have the moral courage to refrain from exploiting it to make weapons to enrich arms dealers at the expense of human lives?
Cast iron, probably available in China as early as the sixth century C.E., was a forerunner of the steel upon which a modern world was to be built. But would greedy commerce be willing to reduce its profits in order to prevent the pollution, the accidents, and the congestion that an industrial age would bring?
Time would tell. At any rate, these and other building blocks were destined to help bring about a world revolution that, in turn, would help lead to something the world had never seen before. Read in our next issue: “The Industrial Revolution—To What Did It Lead?”
Another innocent victim of greedy commercialism in the New World was the North American herd of 60 million buffalo that, to all intents and purposes, was simply annihilated, often only for the skins and the tongues.
[Box on page 23]
The Business of Banking
B.C.E.: Ancient Babylonian and Greek temples held the coins of depositors for safekeeping; since not everyone demanded his coins at the same time, some of them could be borrowed by others.
Middle Ages: Modern banking begins, developed by Italian merchants who used traveling clerics as agents to transmit letters of credit from one country to another; in England goldsmiths began lending at interest the sums deposited with them for safekeeping.
1408: An institution that some call the forerunner of modern banks was founded in Genoa, Italy, followed by similar ones in Venice (1587) and Amsterdam (1609). One historian says that “the efficient services rendered by the Bank of Amsterdam contributed their share toward making Amsterdam the financial center of the world.”
1661: The Bank of Stockholm, an offshoot of the Bank of Amsterdam, began issuing bank notes (promises by the bank to pay the bearer), a practice the English later perfected.
1670: The first clearinghouse, opened in London, was a banking establishment for settling mutual claims and accounts; the birth of the modern check, also in this year, allowed a bank customer to transfer deposit receipts to other banks or part of his credit balance to other individuals.
1694: Founding of the Bank of England, which became a leading note-issuing bank (creator of paper money).
1944: Creation of the International Bank for Reconstruction and Development, also called the World Bank, a specialized agency closely related to the United Nations and designed to offer financial assistance to member countries for reconstruction and development projects.
1946: International Monetary Fund established to “promote monetary cooperation, currency stabilization, trade expansion; meet balance-of-payments difficulties.”—The Concise Columbia Encyclopedia.
1989: The Delors Plan proposes that the European Community adopt a common currency and set up a European Central Bank during the 1990’s.
1991: Opening of the European Bank for Reconstruction and Development, an agency formed in 1990 by over 40 nations to provide financial help in restoring the weakened economies of Eastern Europe.
[Picture on page 21]
The Indians, often paid in liquor, were victims of commerce with the white man
Harper’s Encyclopædia of United States History