Empire in Asia

A New Global History

The Asian Trade Revolution of the Seventeenth Century

Book Cover

Book Title

The Asian Trade Revolution of the Seventeenth Century: The East India Companies and the Decline of the Caravan Trade. Chicago: University of Chicago Press, 1974


Steensgard, Niels


The main parameters of this book are drawn to emphasize the dramatic shift of balance in the European-Asian trade in the decades following 1600. The decline experienced by the Portuguese Empire in Asia, the similar decline of the intercontinental caravan trade and the victories of the Dutch and English East India Companies in dominating maritime trade were seen as a pivotal moment in world history. This highlights the development of a new form of distribution of wealth and power which would characterize the later centuries of the world in which we live. This gradual shift of balance could best be seen as the outcome of a confrontation of structures or a structural crisis and thus any attempt to form a comparative analysis should focus on the key institutional features.

The downfall of the caravan trade, the defeat of the Portuguese and the triumph of the Companies was an episode in the historical process during which the Middle East and the Mediterranean region began to relinquish the economic leadership in favor of the Atlantic regions. In this way, it was also part of the confrontation between the Catholic Iberian powers and the Protestant Channel powers, and it represented the decisive move towards the development of a modern economy.

Scope (Topics Covered, Time Period)

The book largely addresses the processes economic restructuring in the centuries prior to the period of High Imperialism, where there was a higher degree of formal colonial control. The focus remains on the redirection and redefinition of world economy and its trading systems in favor of sea routes, particularly that of Companies operating in Asian waters. As such, this book represents a fair attempt at an in-depth exploration of the structural institutions of the Companies, with the fall of Hormuz serving as a case study for the changing ways of trading, the attempt at redirection of the silk trade and its importance in the Companies' deliberations.

Argument (Methodology, Significance)

The book places a large focus on Hormuz, the Portuguese fortress at the entrance to the Persian Gulf, which had fallen in 1622 as the result of a combined Persian and English attack. This town was selected because its fate accentuates the breach of continuity; its very existence had depended on transit trade, and thus its subsequent fall which had been so definitive reflected the larger developments in world trade. Thus, in understanding why Hormuz fell, one can be on the path of discovering why the Companies not only ousted the Portuguese, but also took over most of the trade which by the end of the sixteenth century still passed along the traditional transcontinental trade routes.

Two different methodological procedures have been chosen when investigating the problem: the comparative approach and the method of investigative inquiry which followed the sequence of events leading up to the fall of Hormuz. In the comparative form of study, the institutions concerned are compared, assuming that their institutional structures would possess the vital features able to provide justifications for their advance or decline. The question of why the Companies triumphed and the Portuguese failed may thereby be reformulated. The vital question should be: Was it the intrinsic structure of the Companies that presented the features that led to their success as compared with those of the competing institutions of the Portuguese and the overland trade?

The conclusion was that the Companies were victorious over the transit trade and the redistributive institutions because, they had greater control of the market and the internalization of protection costs. In this way, by subordinating the production of protection to the market mechanism, they were able to utilize the resources more economically than the older institutions. Finally, the Companies represented a new entrepreneurial form as far as Asia was concerned, but they did not revolutionize the Asian market. The Company were instead an element in "the early Asian trade" in the initial stages.

Annotated by Michelle Djong