16.3 Advent of Europeans

The arrival of the Europeans, beginning with the Portuguese, was the first major external shock to this well established and regulated system of trade. The primary interest of the Europeans was in securing spices for Europe directly. In the olden days, the spices were carried to the Persian Gulf ports and then overland to the Mediterranean. They soon learned that a simple bilateral exchange was not workable in the Asian markets.

This was mainly because there was no demand in the local economies for the products of Europe, other than gold or silver. On the other hand, because of the universal demand in south- east Asian markets for Indian textiles, clothes from India served as a substitute medium of exchange. The demand for the painted fabrics of the Coromandel coast in the Indonesian islands, in particular, made the Dutch and the English set up their establishments on the east coast to procure the cloth that could be profitably exchanged for spices. smaller centres.

If mercantile activity can be deemed to be a pyramid, this class of merchants would be at the base of the pyramid. At its top were the great merchants, who were the prime movers in overseas trade with great reserves of capital, who controlled the producers in the hinterland of the ports. They generally employed the services of a network of brokers and sub-brokers to acquire goods from the interior regions or hinterland of the port towns. These agents could be said to form the middle tier of the merchant pyramid.