Based on the maps our first globalizers were traders
and their financiers. Take for example the Assyrian merchants or their
representatives who lived in Kanis, away from their
wives and families, and often took secondary wives. It is estimated that
traders made approximately 100 percent profit on tin and 200 percent on
textiles. The successful traders made enough money to build large houses and
possess expensive lapis lazuli imported from Afghanistan. The trader Pusu-ken's wife, Lamassi, and her
daughters worked at home to knit woolen clothes for export to Kanis. Lamassi wrote to her
husband on a clay tablet. "Since you left, Salim-ahum
[another trader] has already built a house double the size! When will we be able
to do the same?" she asked. (A; calculated by Cecile Michel, Correspondance des marchands de kanish (Paris: Editions du Cerf, 2001), 173. 3· Ibid.,
434.)
Whether to make money to build a
bigger house or just trying to avoid a high customs duty, Pusu-ken
was caught with contraband goods and thrown in jail. One letter mentioned his
being freed after making an unspecified "gift" to the crown prince of
Kanis. The key player in the Assyrian trade was the
wealthy entrepreneur, or um-meanum, who supplied the
necessary capital and goods. Ever concerned with finding markets for his
surplus domestic goods, he supplied his itinerant employees with merchandise
destined either for direct sale to native Anatolian consumers, for delivery to
his agents or regional representative abroad. (For details see Louis Lawrence
Odin, Assyrian Colonies in Cappadocia (The Hague: Mouton, 197°),53.)
The early venture capitalists would
deliver orders not by compurer but on clay tablets,
the size of which had to be kept small in order to
minimize weight for the long journeys. The focus on distance can be seen in the
Assyrian correspondence of the period. A typical business communication written
on a clay tablet addressed to Pusu-ken said:
[Of] the tin and the textiles take
[each] one half, and deposit the corresponding [amount
in] silver yourselves-doing me a favor-and let the silver come to me with
Inaja's caravan. Let not my heart be troubled! If you do not take the tin and
the textiles and [thus] do me no favor, sell it either for cash or on long
terms or on short terms and act in my best imerest.
(Quoted from Mogens Trolle
Larsen, Old Assyrian Caravan Procedures (Istanbul: Nederlands
Historisch-Archaeologisch Institut
in het Nabije Oosten,
1967), 83·) There was also trouble on the path of the donkey caravans that
trekked the long distance from Assur to Kanis over
rugged mountains and deserts. Traders periodically encountered attacks by
bandits and suffered loss of animals. Such attacks were the standard perils of
the long-distance trade over the ages. Concern over the speed of transport and
the costs for delayed delivery has also preoccupied traders ever since. Even
now, the insurance company Lloyd's charges higher premiums for ships that ply
the pirate-infested waters of Southeast Asia. The desire to make more trips and
deliver more goods has led traders to look continually for shorter routes and
faster transport.
Transport of higher capacity was
pressed into service toward the beginning of the Christian era. Although the
domestication of camels got under way between 3000 and 2000 BCE in the Horn of
Africa, it was not until sometime between 500 BCE and 200 CE that the
"North Arabian saddle" was invented and traders in the Arabian
Peninsula could exploit the camel's ability to be a "ship of the
desert." (See Richard W Bulliet, The Camel
and the Wheel (Cambridge, MA: Harvard University Press, 1975), 56.)
Camels can travel approximately
twenty miles in about six hours and carry about 550 pounds, twice as much as a
horse or a mule. Since they foraged along the way, historian William McNeill
notes, "In most Middle Eastern landscapes, where semi-arid wasteland
abounded, caravans captured free energy just as sailing ships did. Thus caravans could often compete with ships on fairly even
terms. They did so for about a thousand years, from the time when the arts of
camel management became firmly established in the Middle East during the early
Christian centuries until improvements in ship design and techniques of
navigation changed the terms of competition after 1300 AD." (See William
H. McNeill, "The Eccentriciry of Wheels, or
Eurasian Transportation in Historical Perspective," American Historical
Review 92 (1987): IIII-26.)
The introduction of camels opened up new trade horizons. Camel caravans across the
Central Asian deserts established the first direct connection between China,
India, and the eastern Mediterranean. A series of trading routes linking oases
and human habitations along the steppes and along the edge of the Taklimakan
Desert and mountain valleys of Central Asia emerged. These were perhaps very
natural passages through which small colonies of migrants out of Africa moved
east, chasing game thirty to forty thousand years earlier. By the first century
CE, foreign traders were present in small oasis towns fringing the Taklimakan,
carrying silk and lacquerware to the Roman Empire and woolen and linen
textiles, glass, coral, amber, and pearl to China. Because Chinese silk was the
most prized commodity transported along the pathways, the nineteenth-century
German geographer Baron Ferdinand von Richthofen gave
this collection of routes the romantic name of the Silk Roads, or Die Seidenstrassen, popularly known today as the Silk Road.
For more than a millennium, this
constantly shifting network of pathways served as the great connector between
the Asian mainland, Europe, and sub-Saharan Africa. Through it the traders
transported more than just the luxuries that European and Asian elites craved.
For rulers, whether in China or India or other countries without pastures for
horse-breeding, Central Asian horses became a prized export item on the Silk
Road. They were not only the equivalent of luxury Mercedes Benz cars but were
essential to building a powerful cavalry. China's Tang dynasty records show the
government spent nearly a seventh of its annual revenue received from bolts of
silk to import one hundred thousand horses. One million bolts of silk were paid
for one hundred thousand horses. In the mid-eighth century, the most prosperous
days of the Tang dynasry, the government collected
7.4 million bolts of plain silk as revenue. Xinru
Liu, Silk and Religion: An Exploration of Material Life and the Thought of
People, AD 600-I200 (Delhi: Oxford University Press, 1996),183.
In the eleventh century, Tibetan
tribes who controlled major trade-routes from Central Asia to China prospered
by exchanging Chinese tea for Central Asian horses-at times trading twenty-two
thousand horses a year. And of course, the Silk Road conveyed much more than
goods. For more than a millennium the path that spanned three continents became
a conveyor belt for the transmission of religions, art, philosophy, languages,
technologies, germs, and genes. See David Christian, "Silk Roads or Steppe
Roads? The Silk Roads in World History," Journal of World History II, no.
I (2000): 1-26; Tansen Sen, Buddhism, Diplomacy, and
Trade: The Realignment of Sino-Indian Relations, 600-I400 (Honolulu:
Association of Asian Studies and University of Hawai'i Press, 2003), II8,
197-215.
Trading on the Silk Road reached its
peak during the thirteenth century, when the Mongol Empire presided over its
entire length. The journey on the backs of double-humped Bactrian camels from
Afghanistan to Peking took a year to complete on the average, but goods did get
delivered. (See Morris Rossabi, "'Decline' of
the Central Asian Caravan Trade," in James D. Tracy, ed., The Rise of
Merchant Empires: Long Distance Trade in the Early Modern World, I350-I750
(Cambridge: Cambridge University Press, 1990), 352.)
A peaceful environment maintained by
Mongol watchtowers and garrisons and the maintenance of caravansaries, or rest
houses, along the route boosted the flow of merchandise. Traders carried wheat
noodles and silk culture from China to Iran and Italy, both of which
established profitable silk industries of their own. Chinese papermaking
technology moved to Europe, providing the basis for book printing and the
Renaissance. Chinese paper technicians sent by the Chinese to set up a paper
factory in Samarkand were captured by the Arabs in 751 CEo
They introduced papermaking technology to Europe. James Burke, Connections
(Boston: Little, Brown, 1978), 100. The story of the Chinese prisoner has
since been discredited, but there is no question that papermaking technology
from China was diffused to Europe through Islamic control of Central Asia. See
Jonathan M. Bloom, Paper beftre Print: The History
and Impact of Paper in the Islamic World ( New Haven
and London : Yale University Press, 2001), 62-65.
Thanks to cobalt brought by traders
from Iran, Ming ceramic workshops developed blue-and-white porcelain designs
specifically for the Islamic market. (See Rossabi,
'''Decline' of the Central Asian Caravan Trade," 358.) In the second to
fifth centuries, traders leading camel caravans opened up
new population settlements in formerly unknown areas of sub-Saharan Africa. By
the fourth century, gold from the sub-Saharan region was bartered for copper
and date palms from North Africa. Date palms growing in abundance in the oases
at the edge of the Sahara were profitably traded for gold. The caravan trade
connection would later emerge as a cultural bridge when enthusiastic Muslim
traders from North Africa carried the Islamic faith to Nigeria, Ghana, Senegal,
and beyond. In the Senegambian language, the word Muslim became synonymous with
traders. (Philip D. Curtin, Cross-Cultural Trade in World History (Cambridge:
Cambridge University Press, 1984), 39.)
In the seventh and eighth centuries,
China's Tang dynasty capital, Chang' an, now Xian, was the eastern terminus of
the Silk Road. With a million inhabitants, it was not only the largest city in
the world but, thanks to the presence of international traders and religious
missionaries, the most cosmopolitan. The Silk Road and Chang' an also played a
role in the spread of Buddhism, which we will explore later. At this point it
is useful to note the city of Chang ' an as a classic example of how traders
connected the world's culture. Historian Valerie Hansen has described Chang' an's foreign quarters around the Western Market as a
bustling place of world culture: "Non-Chinese residents built religious institutions
dedicated to the religions of their homelands. The Persian-speaking merchants
continued to worship at two kinds of temples devoted to religions they brought
with them from Iran. Travelers from Syria embraced their own form of
Christianity, Nestorianism." (Valerie Hansen, The Open Empire: A History
of China to I600 (New York: W.W Norton, 2000), 205.)
The boat was the form of
transportation that opened up huge possibilities of
long-distance connections. One item in great demand in the arid, alluvial
plains of Mesopotamia was wood to build palaces, temples, and furniture, and it
could be found on the shores of the eastern Mediterranean and in India. By the
middle of the second millennium BCE, Phoenician traders had begun to use boats
made of reed to float cedars from the north down the Euphrates to Lower Mesopotamia
and bring hardwood, minerals, and precious stones from western India. (Shereen Ramagar, Trading Encounters: From the Euphrates to the
Indus in the Bronze Age, 2nd ed. (New Delhi: Oxford University Press, 2004),
129-33.)
The riverine trade-based civilization
of Mohenjo-daro and Harappa in the Indian
subcontinent-with craftsmen making wooden boats and artisans turning precious
stones, gold, silver, and ivory into ornaments, and cotton fiber into
cloth-emerged as Mesopotamia's biggest trade partner. (Bridget and Raymond
Allchin, The Birth of Indian Civilization: India and Pakistan before 500 B. C.
(Baltimore: Penguin, 1968), 271-72.)
We also have seen the Akkadian ruler
Sargon's boast that ships of Meluhha, the Sumerian
name for South Asia, and other lands were docked in the quay of his capital on
the Euphrates. (Shereen Ramagar, Understanding
Harappa: Civilization in the Greater Indus Valley (New Delhi: Tulika, 2001), 10, 53.)
Exports from India were not just
luxuries: even small monkeys from the subcontinent became popular pets for
wealthy Mesopotamians. The Phoenicians who inhabited the east coast of the
Mediterranean-Sidon and Tyre in present-day
Lebanon-were the first specialized merchants whose seafaring skill enabled them
to spread their trading network througho Persian Gulf
and the Mediterranean. Copper from Cyprus and cedar Lebanon were transported
throughout the Levant. The need to communicate with a variety of people led the
Phoenicians to develop the alphabet in place of a complex hieroglyphic and
cuneiform writing. The known world expanded population pressure at home
and the search for wider markets led the Phonecians
to establish colonies on the North African coast, in Sicily, in Sardinia, along
the coast of Spain .
In the first millennium BCE, Greek
traders followed in their footsteps Greek settlements spread throughout the
eastern Mediterranean and the BIack Sea coasts.
Southern Italy and Sicily were so heavily colonized by the Greeks that the
region came to be known as Magna Graecia, or Greater Greece. (See Rondo
Cameron, A Concise Economic History of the World: From Paleolithic Times to the
Present (New York: Oxford Universiry Press, 1997),
35.)
Trade between the Mediterranean and
India had developed enough in the Century BCE for the Indian king Bindusara to
ask the Greek king Antiochu send him "some sweet
wine, dried figs, and a sophist." (Romila
Thapar, Early India: From the Origins to A.D. I300 (London: Penguin, London,
2003), 178.)
In the first century CE, the Roman
Empire reached the Red Sea, and the d was fully opened to trade with India, the
long-coveted source of exotic luxUI We do not know
the names of any traders, but a remarkable navigation: trading manual written
in Greek by an anonymous author in the middle of first century offers a
detailed picture of the expansion of the "known world.' The Periplus of
the Erythraen Sea (the circumnavigation of the sea
that encompassed the Red Sea, Arabian Sea, and Indian Ocean), the author writes
knowledgably of a journey down the African coast and along the Indian coastline
the way up to Bengal, beyond which lies the region of China.
He mentions the happy
"discovery" of the southwest wind by a Greek Egyptian navigator named
Hippalos, by which ships leaving the mouth of Red Sea
in summer could ride most of the way to India 's Malabar Coast and turn in the
winter when the wind blew in the opposite direction. This which later came to
be known as "monsoon," from the Arabic word for season mausim, and Pliny later wrote how this discovery "and
the thirst for gain. brought India still nearer us." (Quoted in Jay S.
Fein and Pamela L. Stephens, eds., Monsoons (New York: Wiley, 1987), 143·)
Following the wind and currents
drastically reduced the sailing time between India and Egypt -the eastern edge
of the F man Empire-from thirty months to three months for a round trip.
(Pliny's comment that it took forry days to reach the
Malabar Coast is considered a mistake. With the Southeast Monsoon pushing the
sail, modern researchers say, it would have taken rwenry
days to make the journey from Bab el Mandeb to the Malabar Coast. Lionel Casson, " Rome 's Trade with the East: The Sea Voyage
to Africa and India," Transactions of the American Philological
Association IIO (1980): 33.)
As a one historian ignored, the
predictability of a homeward wind made the Indian Oct the most benign
environment in the world for long-range voyaging. (See Felipe Fernindez-Armesto, Civilizations ( London
: Pan Books, 2001), 462.)
In fact
until the introduction of steamships in 1780, the speed of transporting goods
remained stable for seventeen hundred years. This success in shortening the
sailing time across some three thousand nautical miles of sea to India
intensified contact and produced rising trade volume. The Greek geographer
Strabo wrote: "Previously not twenty ships dared ... peep outside the
Straits [of Bab-el-Mandeb], but now great fleets are sent as far as India and
the extremities of Ethiopia." (Cited by Lionel Casson,
"Rome's Ttade with the East: The Sea Voyage to
America and India," Transactions of the American Philological Association
no (1980): 21-36.)
Compared to barely twenty ships a
year before the discovery, now a merchant ship left Egypt for India almost
every day of the season carrying tin, lead, wine, coral, glass, and gold and
silver coins. The gain in shipping time and advances in building sturdy, hulled
vessels to sail the open seas came at the same time that
Rome had emerged as the hub of the "world economy."(Lionel Casson, ''Ancient Naval Technology and the Route to
India," in Vimala Begley and Richard Daniel De Puma, eds., Rome and India:
The Ancient Sea Trade (Madison: University of Wisconsin Press, 1991), IO.)
The Roman elites accumulated
enough wealth to indulge their taste for the exotic, and they were ready to
invest in overseas trade and finance risky, long sea voyages. Luxuries from
faraway places defined the power of the Roman Empire, and Rome had emerged as a
consumer city par excellence, chic and cosmopolitan. As Grant Parker notes,
"To Roman consumers, the actual existence of so distant a place, directly
visited by so few people of note, was far less important than its impact on the
imagination." (Grant Parker, "Ex oriente luxuria: Indian Commodities and Roman Experience,"
Journal of the Economic and Social History of the Orient 45, no. I (2002):
40-95.)
A special spice market was built in
Rome, and the city's most glitzy street was named Via Piperatica,
Pepper Street. The search for luxuries spread Roman trade far. Roman artifacts
found in a Vietnamese port, including a gold medallion of the emperor Antonius
Pius from 152 CE, showed the extent of Roman trade with Asia. (Michael Cook, A
Brief History of the Human Race (New York: W W Norton, 2003), 163. 2.8. Robert B. Jackson, At Empire's
Edge: Exploring Rome 's Egyptian Frontier (New Haven and London: Yale
University Press, 2002), 88.)
The rising demand for luxuries
probably drained the Roman treasury, which obtained its gold from Spain. It led
the emperor Tiberius to complain to the Senate: "How shall we reform the
taste for dress? How are we to deal with the particular
articles of feminine vanity, and in particular with that rage for jewels
and precious trinkets, which drains the empire of its wealth, and sends, in
exchange for baubles, the money of the commonwealth to foreign nations, and
even the enemies of Rome?" ( Ibid., 87.)
Historians, however, doubt the
authenticity of Tiberius's moralistic and, in modern parlance, protectionist
accusation, pointing out that the Roman treasury collected a 25 percent customs
duty on all imports. The complaint nevertheless points to the significance of
Asian trade to the Roman economy.
Indeed, hoards
of Roman imperial coins discovered in south India, and evidence of Indian
traders' presence in ports on the Red Sea, bear testimony to the volume of this
trade. Al the elites of the Roman Empire consumed ever larger quantities of
Indian spices-black pepper and ginger-along with ivory and silk, amphorae full
of Italian and Greek wine, olive oil, and garum (fish sauce) were reaching
India for Greek and Roman settlers and for the Indian aristocracy. A
contemporary shipping document written on papyrus shows that just one shipment
of ivory, textile, and aromatic herbs fetched a value large enough to buy 2,400
acres of the finest farmland in Egypt. One modest-sized ship of five hundred
tons could carry 150 such consignments. (Ibid., 87).
The most important Indian port for
trading with Rome in the beginning of the Christian era was Arikamedu,
on the southern coast of India, which received a large amount of Roman gold
coin and vast quantities of Greek and Italian wine from the exchange. An
ancient Tamil poem exulted in how one "increased the joy by giving to the
girls of shining bangles, who everyday have taken in hands vessels beautified
by gold, to drink the cool fragrant wine brought by the yavanas
[westerners] in beautiful bowls." (Vimala Begley, The Ancient Port of Arikamedu: New Excavations and Researches, I989I992
(Pondicherry: Ecole Francaise d'Extreme-Orient,
1996), 23.) Archaeologists have discovered that the fine wine produced on the
Greek island of Kos was so famous that large amounts
of what Elizabeth Will has called "factitious Italian-made Koan wine" was exported to India in typical Koan amphorae. (Elizabeth Lyding
Will, "The Mediterranean Shipping Amphoras from Arikamedu,"
in Begley and De Ouma, eds., Rome and India, 151-52.)
Since the amphorae are dated between
the first and second centuries BCE, this must be some of the earliest evidence
in the history of global trade of pushing an imitation product. Other more
serious ills of global trading were visible from the earliest times. Trading in
slaves has been practiced since the third millennium, and trafficking in women
was added at least at the beginning of the Christian era. As the author of the Peripus noted, among the merchandise exported to the Indian
king of Barygaza, today's Broach, were "choice
girls for the Royal Harem." (M. P. Prabhakaran, The Historical Origin of
India's Underdevelopment: A World-System Perspective (Latham, MD: University
Press of America, 1989), 15.)
The fourteenth-century harem of
rulers in Bengal reportedly boasted Chinese and "Roman" (European)
concubines. (Haraprasad Ray, Trade and Diplomacy in
India-China Relations: A Study of Bengal during the Fifteenth Century (London:
Sangam Books, 1999), I05.)
Given the rigor of travel across the
vast ocean in primitive boats, the numbers of such human cargo were presumably
small. Large-scale trafficking in slaves and women from Central Europe and
Africa had to wait until large-scale caravans and ocean shipping had begun.
Trading with the monsoon winds transformed the Indian Ocean into a vituallake, with ports and entrepots sprouting on India 's
west coast, along the Red Sea, and on the east coast of Africa. Indian traders
looking for profit also turned east, sailing to the uncharted waters of island
Southeast Asia in search of gold and fragrant wood. An ancient Indian writer
put down the stakes clearly: "Who goes to Java, never returns. If by
chance he returns, then he brings back enough money to support seven
generations of his family." (1. C. Glover, "Early Trade between India
and Southeast Asia: A Link in the Development of a World Trading System"
(University of Hull, Centre for South-East Asian Studies, Occasional Papers 16,
1989)
Rising monsoonborne
trade boosted the coastwise traffic around the Arabian Peninsula, lower ing the freight rate and affecting the inland caravan
trade. In the resulting shakeout of the caravan trade, one Arabian tribe, the Qurayish, seized whatever was left of the carrying trade
and established a permanent settlement in the Mecca Valley around the year 400.
Two centuries later a Qurayish trader would emerge as
the Prophet Mohammed to turn the trading tribe into an incipient state and lay
the foundation of an Islamic empire. (Eric R. Wolf, "The Social
Organization of Mecca and the Origins of Islam," Southwestern Journal of
Anthropology 7 (Winterr95I): 329 - 56.)
The impact of the increasing Indian
Ocean trade was visible in the following centuries with the rise of Sofala, Kilwa, Mogadishu, and
Malindi as bustling ports with a growing population of Arab and Indian traders.
Slaves, gold, ivory, fragrant wood, resin, and other exotic products that once
attracted Queen Hatshepsut to dispatch an expedition down the Red Sea at the
dawn of Egyptian civilization were made accessible not just to the wealthy in
the Mediterranean but to the elites in faraway India and China. Chinese coins
of the eighth and ninth centuries have been found on the East African coast at
Mogadishu, at Kilwah, and on the Mafia Islands. (G.
A. Wainwright, "Early Foreign Trade in East Mrica,"
Man 47 (November 1947): 143-48.)
Philip D. Curtin says that Chinese
sources mention slaves from Zenj, in sub-Saharan
Africa, as early as the seventh century, and by the early twelfth century, most
of the wealthy people of Canton were said to have possessed slaves from Africa.
Thousands of slaves were taken to Persia to work in the saltpeter mines and to
Iraq to clear the marshes. (Milo Kearney, The Indian Ocean in World History
(New York: Routledge, 2004), 64.)
Linked by the Tigris to the Persian
Gulf, the Abbasid capital of Baghdad rose to become the center of wealth and
luxury as the terminus of eastern trade. As one Abbasid ruler proclaimed:
"This is the Tigris; there is no obstacle between us and China; everything
on the sea can come to us on it." (George F. Hourani, Arab Seafaring in
the Indian Ocean in Ancient and Early Medieval Times (Princeton, NJ: Princeton
University Press, 1951), 64.)
Indeed, ocean shipping to China and
India by Arab sailors had become routine by the mid-ninth century, when ships
sailed from the Gulf and the Red Sea for a year's round trip to China. As a
ninth-century account of Baghdad put it, there was a continuous flow of
merchandise of East and West, "from India, Sind, China, Tibet, the lands
of the Turks, the Dailamites, the Khazars
and Abyssinians." Silk, cinnamon, paper, ink, and ceramics from China;
sandalwood, ebony, and coconut from India; fine textiles and papyrus from
Egypt; paper from Samarkand; and prepared fruits and nuts from around the
Muslim world all moved around the globe. (Michael McCormick, Origins of the
European Economy: Communications and Commerce, A.D. 300-900 (Cambridge:
Cambridge University Press, 2001), 585., 64.)
Another town on the Persian Gulf, Siraf, rode the monsoon trade with Africa, India, and China
to unprecedented prosperity. Trading inspired the growth of a range of
professions: shipwrights, weavers, metalworkers, jewelers, and potters. As
Jerry Bentley notes, "During the ninth century residents of Sirafbuilt a great mosque and a bazaar, and they set their
tables with porcelain imported from China. "Jerry H. Bentley,
"Hemispheric Integration, 500-1500 C.E.," Journal of World History 9,
no. 2 (1998): 237-54.)
Large colony of Arab, European, and
Jewish traders became established in the Chinese port city of Canton, known to
Arabs as Khanfu. A contemporary account says that at
the onset of the westerly return monsoon, large Arab ships laden with silk,
fabrics, camphor, musk, and spices left Canton, "passing hundreds of craft
of every shape and size from all parts of Asia." (Hourani, Arab Seafaring
in the Indian Ocean, 73.) Chinese documents of the seventh and eighth centuries
list Persians, Indians, and Malaysians as owners of the visiting ships.
By the tenth and eleventh centuries,
Arab traders and Indian artisans had set up a rudimentary supply-chain
production involving ivory. The ivory from elephants found in India and
Southeast Asia was more expensive and harder than African ivory. Arab traders
along the African coast exported large quantities of
elephant tusks to India, where artisans carved them into jewelry, ornaments,
and religious icons for export to China and the Mediterranean. (R. W Beachey, "The East Mrican
Ivory Trade in the Nineteenth Century," Journal of African History 8, no.
2 (1967): 269-9.) In addition to the old trading favorite-spices-the Indian
artisans' skill in making stone beads, weaving and dyeing cotton textiles, and
manufacturing bronze artifacts and steel swords attracted foreign traders to
India. India's early success in exports was built on the organization of
ivory-carvers, goldsmiths, silversmiths, and a whole range
of crafts into guilds, along with the development of an intricate system of
financing and marketing by specialized individuals.
Travel required such a long time that
trading diasporas grew almost as soon as long-distance trade began, as we have
seen in Arlatolia and in India 's Arikamedu,
near Pondicherry. As the volume of trade grew, the need for a layover of
several months to avail of the monsoon became another reason for foreign
traders to settle on India 's Malabar Coast. ''An Arab geographer named Yaqut (1179-1229 AD) coined the word 'Malabar' by combining
' Mali ' (from 'Malayalam') with 'bar' (Persian for 'country)." Bindu Malieckal, ("Muslims, Matriliny and A Midsummer
Night's Dream: European Encounters with the Mappilas of Malabar, India,"
Muslim World95 (April 2005): 297-316.)
Arab, Persian, Armenian, and Jewish
traders made up for a sizable part of the Calicut, Cranganore
(known in Roman times as Muziris), and Quilon
populations. So welcome were the foreign traders as the harbinger of prosperity
that they were called Mapilla, or sons-in-law. By the
time the Portuguese explorer Vasco da Gama landed in Calicut in 1498, Mapilla had come to mean exclusively the Muslim
traders-descendants of Arab and Persian traders from the ninth century.
Clearly, traders had not only exchanged goods across oceans but enriched the
host country's gene pool!
By the time the long wars of the
Crusades had ended and Islam had regained control of
Jerusalem, long-distance trading had been given a new impetus. Western
Europeans who had come to the Levant as Crusaders to fight the Muslims returned
home with a new taste for spices and other Asian luxuries, creating- fresh
demand for imports. As merchants sought improved means to meet the demand, the
prosperous trading cities of Genoa and Venice combined technologies from around
the world and instigated a major revolution in nautical technology that would
enable stable, all-weather sailing. In II04, Venice created its first public
shipyard, the Arsenal, in which shipwrights would build a fleet of large, oared
galleys, boosting trade to new heights. Unlike ships on the Indian Ocean, which
could navigate essentially by following the direction of the monsoon wind and
gazing at the stars, European ships had been restricted, especially in the
fog-bound waters of the North Sea. Europeans now adopted the Arab "lateen
sail" -a triangular sail fitted to a mast and a movable boom-which allowed
them to achieve speed and sail close to the wind. They also adopted from the
Chinese the use of the sternpost rudder, which enabled them to steer ships
safely to port. Thanks to the abundance of hardwood from northern Europe,
shipwrights could construct three-masted sailing
ships-equipped with square, lateen, and staysails-to be used for ocean
shipping. (Hourani, Arab Seafaring in the Indian Ocean, I04.)
Scholars disagree about whether the
compass was introduced from China, which had known about the device since at
least the ninth century. Whatever its origin, the compass, introduced to Europe
in the late thirteenth century, made voyages safer and·doubled
the volume of trading as ships could now make two voyages a year from
Mediterranean ports to the English Channel and the Levant.
Chinese shipbuilders, too, made
impressive advances. By the time Marco Polo sailed from China to India in 1292,
Chinese-made ships were large enough to carry I,520 to I,860 tons and had
multiple decks with private cabins. Two hundred years later, when Chinese
admiral Zheng He sailed his fleet in the Indian Ocean, ship-building technology
had advanced to create his nine-masted "treasure
ships," four-hundred-foot-Iong vessels capable
of carrying a crew of a thousand men. These impressive advances in Chinese
marine technology, however, did not help Chinese exports much, since by an
imperial fiat China turned inward soon after Zheng He's foray into the Indian
Ocean. But together, technological improvements in shipping and the rising
demand for spices in Europe quickened the tempo of voyages and widened trading
connections. The historian James Burke has described how these innovations
affected European commerce: The immediate effect of the spread of the lateen
was to increase the number of voyages, since masters no longer had to wait for
a favorable offshore wind before leaving porro The pace of trade quickened, and in consequence the size of
ships increased, for as more and more cargo left harbor for more and more
ports, it made sense to make one ship do the work of two. It saved money, and
increased profit. ... The rudder gave the masters the necessary longitudinal
control of their big ships, which in turn encouraged the merchants ....
Together with the use of the combination of lateen and square sail, and the
sternpost rudder, the compass altered the sailing schedule almost immediately
.... With the aid of the compass, ships could sail under cloudy skies by day
and night. The number of voyages doubled, and crews were kept in regular
employment. This in turn encouraged the investors, and the number of voyages
further increased. (Frederic C. Lane, "The Economic Meaning of the Invenrion of the Compass," American Historical Review
68 (1963): 6°5-17. See also Amir D. Aczel, The Riddle
of the Compass: The Invention That Changed the wourld
(New York: 2001), 77-109. )
Case Study The
Fraudulent Use of Zheng He:
A fascinating glimpse into this
rising volume of trade and wide dispersal of traders is offered by twelfth- and
thirteenth-century documents preserved in a Cairo synagogue. Because Jewish
custom forbade the desecration of papers in which the name "God" is
written, hundreds of thousands of pages of commercial correspondence by Jewish
traders were preserved in the synagogue's special vault known as the Geniza, offering historians a treasure trove of
information. Thus, literally by the grace of God, we have come to know traders
who sailed to distant shores-the Far East, India and Yemen, Egypt, Palestine
and Syria, Tunisia and Morocco-and wrote about their commercial as well as
personal concerns. They traded in textile, metals, flax, medicinal plants and
preparations, spices and aromatics, and perfumes and incenses.
In the Geniza
correspondence we meet Abraham Yiju, a Jewish
merchant from Tunisia who ran a bronze factory on India's Malabar Coast, where
his Indian employees turned copper, tin, and old bronze vessels sent from Aden
and Spain into new vessels. Other objects such as iron, spices of all
descriptions, and textiles also formed part of his shipment from India.
Abraham Yiju
was one of the many lucky foreign traders who made fortunes for their families
to live on and in the process integrated the world. Thanks to the Silk Road and
the booming Indian Ocean trade, an international trade economy developed,
stretching all the way from northwestern Europe to China and generating
unprecedented wealth in the process. The sea trade of Genoa in 1293 was three
times as large as the revenue of the kingdom of France in the same year.50 Of
course, because this trade involved mostly luxury items for elites, it did not
create the close interdependence that globalization has come to imply today.
Yet parts of these countries' economies-a network of trading cities connected
by overland or sea routes, with the hinterlands producing export items-became
increasingly dependent on foreign trade. To some, trade brought unimaginable
prosperity, to others exploitation and pain.
In 1409 a Malay prince, Parameswaram, sought to capitalize on the region's growing
trade link by founding the city of Melaka at the site of a fishing village on
the Strait of Malacca. With Muslim traders predominant in the region, he
converted to Islam and led his citizens to do the same. Yet, mindful of the
multinational and multifaith character of the traders who gathered in Melaka,
he maintained strict neutrality. Because of his wise trader-friendly policy and
low taxes, Melaka, or Malacca, became one of the most vibrant cosmopolitan
cities in Southeast Asia. Situated at "the end of the monsoons," the
winds that brought traders from the west on the southwest monsoon and those
from Japan and China on the northeast monsoon, Malacca became the favorite entrepot
for swapping goods. Not surprisingly, within barely two decades of Vasco da
Gama's arrival in the Indian Ocean, Malacca fell prey to the Portuguese
gunboat. A Portuguese apothecary-turned-trader and diplomat named Tome Pires
left a lively account of a region that was totally integrated with world trade
in his Suma Oriental (Eastern account, 1512). Pires estimated Melaka's
population at forty to fifty thousand, with sixty-one "nations"
represented in its trade and some eighty-four languages spoken at the port. He
expressed admiration of the enormous profits foreign traders made by carrying
goods back and forth between the Persian Gulf and Asia, writing: "Malacca
is a city that was made for merchandise, fitter than any other in the world;
the end of monsoons and the beginning of others. Malacca is surrounded and lies
in the middle, and the trade and commerce between the different nations for a
thousand leagues on every hand must come to Malacca .... Whoever is lord of
Malacca has his hand on the throat of Venice."
The power and prosperity of Melaka
rose, not just from its geographical location as a stopping place halfway
between India and China, but from the growing world demand for pepper. In the
hundred years since the arrival of Portuguese, Spanish, Dutch, and British
traders, international commerce and religious conversion had transformed
spice-growing Southeast Asia. As historian Arrthony
Reid has observed, "New cities and states flourished, most Southeast
Asians were brought within the ambit of scriptural and universal faiths, and
large proportions of the population became dependent on international trade for
their livelihood, their clothing and everyday necessities, and even their
food." This dependence would soon bring great tragedy and suffering to those
who were killed by the thousands for their spice orchards or turned into
slaves. Their story would be repeated allover the
world in the years of European conquest and rise of commercial empires. For
now, it may be useful to step back and look at the origins of the desire for
spice that brought about the eventual Western European dominance of Asia. As we
have seen, the desire for spices led to extensive trade during the Roman
Empire. In 408, the Visigoths demanded a ransom in gold, silver, and pepper as
a condition for halting their siege of Rome. After the empire fell, however,
trade dropped off amid general economic and political insecurity. Spices, which
had already drained the gold of the Roman Empire, became costlier. Then the
rise of Islam-including the fall of Alexandria, the great entrepot for
transferring Asian spices from the Red Sea to the Mediterranean-dealt a heavy
blow to trading. Amid the general scarcity and rising prices of spice, Venetian
merchants struck a deal with the Muslims to emerge as the near-exclusive
distributor of spice in Europe. Italian city-states played this role even
during the Crusades of the late eleventh to thirteenth centuries, when
Europeans' attempts to regain the Holy Land from the Muslims disrupted
commerce. Spice, always precious, rose to a new level of social value as a
luxury. When in 1i94 the king of Scotland paid a visit to his fellow monarch
Richard I of England, he received, among other tokens of hospitality, daily
allotments of two pounds of pepper and four pounds of cinnamon.
The escalating consumer demand in
Europe for Asian spices and the Christian monarchies' desperate desire to find
a way to the source, while bypassing the Islamic traders in the Middle East,
spurred exploration of new routes around Africa and the building of ships
capable of undertaking hazardous journeys over vast distances of open ocean.
Long-distance trade has always required daring and desire. In the fifteenth
century, Portugal's Prince Henry the Navigator emerged as a pioneer in the
search for a new route to Asia around Africa and took up the role Venice's
Arsenal had played in the design of ships and navigational tools for longer sea
voyages. In 1497 King Manuel I of Portugal authorized Vasco da Gama's voyage to
India "in search of spices." Seeing da Gama's first messenger on
shore in Calicut, a Muslim merchant from Tunis asked him in Spanish, "The
devil take you, what brought you here?" His succinct reply: "We came
to look for Christians and spices."
The question was not out of place,
for the hazards of travel were enormous. Between 1500 and 1634, Philip D.
Curtin estimates, 28 percent of all ships that set out from Portugal bound for
India were lost at sea. In their first voyages to Asia, da Gama and Cabral lost
half their crew and more than half of their ships. But the lure of high profit
kept the ships coming. The Catalan monarchy of Portugal's neighbor Spain
sponsored Christopher Columbus's effort to find a direct route to India across
the Atlantic. The result of this effort was a sudden widening of the horizon.
Within two decades of Columbus's serendipitous discovery of the New World,
Ferdinand Magellan's crew (only 10 percent of whom survived) circumnavigated
the world, creating for the first time truly global linkages. Trading on a
worldwide scale took off, and the often blurry
distinction between traders, explorers, missionaries, and conquerors grew
fainter. But the ensuing scramble for resources, slaves, and new markets for
the countries' own products connected the world ever more tightly. For the
first time, all the continents were connected by direct shipping instead of a
relay through a chain of intermediaries using boats, mule packs, and camel
caravans.
The Portuguese establishment of
beachheads in Goa in India, Melaka in Malaysia, and Macao in China in the
sixteenth century created the framework of truly global trading. The
availability of regular shipping to the East led to the rise of
specialization-from Chinese porcelain to Indian diamonds. After Portuguese
traders returned from Asia with fine China porcelain, the Portuguese king and
his courtiers became the first to be infected by "the contagion of
China-fancy," as Samuel Johnson caustically described it. By 1580 Lisbon's
Rua Nova dos Mercadores
alone had six shops for Chinese porcelain. In response to the craze for
porcelain, Western merchants imported at least seventy million pieces in the
seventeenth and eighteenth centuries.
From the mass of correspondence left
by traders in European ports, we meet a successful Jewish diamond merchant in
the Italian port of Livorno. Isaac Ergas of the
trading house of Ergas and Silvera
took customers' orders for diamonds from India's famous Golconda mines. Italian
scholar Francesca Trivellato, who has studied the
eighteenth-century Jewish traders of Livorno, says that customers placed
specific orders. Much like I ordered my iPod from Apple, an Italian customer
looking for a diamond would approach Ergas and
deposit cash. Since the traders in India, who would supply the diamond, did not
much care for Italian lire, Ergas and Silvera would ship Mediterranean coral beads. Some
customers were lucky enough to place an order in time for the annual monsoon
journey to India, and the coral shipment would be sent to Lisbon aboard British
or Dutch vessels. There it would be transferred onto large-hulled carracks
leaving for the yearlong journey to Goa. Hindu trading houses in Goa would
assess the market value of the coral and accordingly send back diamonds of different sizes and qualities. If everything went well-and
the ship did not sink in a storm-the customers
received the diamonds a year or two later.
The arrival of Portuguese and Dutch
traders in the Arabian Sea opened the door for another specialty trade, coffee.
Early in the eighteenth century, French trader Jean de la Roque led the first
French ship around the Cape of Good Hope to Aden and Mocha. He undertook this
dangerous yearlong voyage to get coffee beans from the source rather than at a
high price from Turkish, Dutch, or English middlemen. His trip took two and
half years to complete, but the profit he made on six hundred tons of coffee
was worth his trouble. More important, perhaps, his ensuing book, Voyage de l'Arabie heureuse (1716), offered the first detailed description of
the product that grew in Ethiopia and Yemen before it took over the world. Two
decades after de la Roque's voyage to Mocha, a French captain would take a
coffee plant to the Caribbean.
Not surprisingly, the transportation
revolution that linked the continents created the conditions for the emergence
of the first multinational trading company. The business venture that Assyrian
traders ran from Anatolia in the third millennium BCE has been called the
world's first multinationa1. The definition of multinational as an enterprise
with substantial foreign direct investment and engaged in trade intermediation
between countries can certainly be applied in at least its embryonic form to
enterprises such as those run by Pusu-ken, whom we
met earlier in this chapter. But the formation of government-chartered trading
monopolies, such as the English and Dutch East India Companies in the early
1600s, marked a new stage and presaged the rise of global companies. From some
five hundred at the end of the seventeenth century, multinationals now number
more than sixty-three thousand. The number of consumers has grown apace.
A major contribution to the soaring
ocean trade came from relative latecomers to exploration, the Dutch. By the
late sixteenth century, the Dutch had developed a cheap, general-purpose cargo
vessel known as the fluyt, or fIyboat.
Shorn of gun platforms and armor plating, de rigueur for sailing in pirateinfested oceans, the lighter and more spacious fIuyt, weighing just two to three hundred tons, could not
only carry larger cargo but operate with a smaller crew. Fluyts
sailed in safe waters or were accompanied by men-of-war. A welle
quipped fIuyt could complete a return journey from
Europe to Asia in eight months. To catch up with the Dutch, who dominated
shipping, the British government financed and encouraged research into
astronomy and magnetism.
Case Study:
Europe’s Rise to Industrial Power.
While other minor innovations
shortened sailing times and enhance safety by the end of the eighteenth
century, the next big jump in speed (the introduction of steam power). Freight
costs now dropped dramatically, and the volume of merchandise exchanged
between major nations rose rapidly. But not until the advent of air car
anything shrink the world as much as the Suez and
Panama canals.
Even before Panama Canal was opened,
another idea to boost shipping came from the serendipitous discovery of
petroleum in Pennsylvania. From ancient times, oil oozing from shale in the
earth had been used to light torches and lamps to illuminate the night. The
first patent to refine this bounty of nature for other uses was granted by the
British monarch in 1694 to three subjects who had found "a way to extract
and make great quantities of pitch, tarr, and oyle out of a sort of stone." Heavy oil that could be
refined into petroleum was discovered by Edwin Laurentine
Drake in 1859 when a well-drilling technique he had developed gushed forth
heavy crude oil in Pennsylvania. Within half a century the internal combustion
engine was invented, and by the 1970’s giant oil tankers running on diesel fuel
began lowering the cost of carrying crude and the cost of all freight.
A further drop to transportation
costs was brought about by a North Carolina trucking entrepreneur named Malcolm
McLean. His plan to put cargoladen truck trailers on
steamships led to the creation of the world's first container ship. This
ushered in a new era in shipping that has continually lowered freight costs.
The biggest of the container ships, nicknamed "monster ships," carry
containers equivalent to twenty miles of trucks, and a car can be delivered
anywhere in the world for less than a five-hundred-dollar freight charge.
Although container ships barely achieve a speed of more than twenty knots, the large size of the load each ship carries and the speed with
which the containers can be loaded, unloaded, and seamlessly transferred from
ship to truck or train have sharply brought down freight costs. It often now
costs more to send a container by road one hundred miles from port to its final destination than it does to ship the container by sea
from Shanghai to Rotterdam.
The maximum gain in speed, of course,
came with the beginning of airfreight, the cost of which declined dramatically
between the 1950S and 19805. Especially significant was the introduction of the
wide-bodied Boeing 747 Jumbo Jet in 1970, a cargo version of which began flying
soon thereafter. The cost savings, however, were not just in freight but in the
contraction of time. The less time a ship spends in loading and unloading its
goods, the lower its port charges and demurrages and, eventually, the price of
imported goods. Economists calculate that cost savings stemming from rapid transport
between 1950 and 1998 were equivalent to reducing U.S. tariffs on manufacturing
goods from 32 to 9 percent.
Faster and larger ships and aircraft
were not the only factors in the gathering speed of delivery. The evolving
medium of exchange-from bartering to cowries and from precious metals and
letters promising gold and silver to plastic credit cards-has simplified and
standardized transactions and boosted trade. Although metal had been used as
money for more than two thousand years, not until the seventh century BCE did
gold coins issued by Mediterranean states become the currency commonly accepted
by traders all over the Mediterranean and Indian subcontinent. The silver
Athenian coin with the head of the goddess Athena on one side and the bird associated
with her-the owl-on the reverse were to traders then what Visa and MasterCard
are today. The gold and silver coins later issued by the Roman Empire had an
even greater reach, as traders traveled across the Indian Ocean to Southeast
Asia and China. The Asians wanted few goods from the Mediterranean and, later,
Europe in barter for their spices and textiles. They were willing to produce
textiles to Roman specifications but invariably preferred gold and silver as
payment.
Until the middle of the thirteenth
century, when Italian city-states began to mint their own gold coins, the ones
struck by the Byzantine Empire and Egypt continued to be an acceptable medium
of exchange.?o Nevertheless, the fall of the Roman
Empire and the consequent rarity of Roman coins had an adverse effect on global
trading, leading, for instance, to the decline of trade-reliant towns in
far-offIndia.71 Indian traders then turned their attentions to Southeast Asia,
seeking new markets for their textiles. Several centuries later, the growing
trade links with the spice-growing islands in Indonesia would allow Arab and
European traders to use Indian ports as relay stations for the import of
spices, exchanging them for Indian-made textiles. While glass beads and woolen
cloth paid for some of their imports from India, the Europeans still needed
precious metals to do business. The credit instrument by which the buyer
promised to pay later also developed in the Indian subcontinent and the Middle
East. The informal credit network, however, existed only between trading
families, whether Christians, Jews, or Hindus, rather than unconnected
individuals. The return to coinage, with Genoa, Florence, and Venice
introducing gold coins in the late thirteenth century, gave international trade
a new boost. Trade impetus was dimmed, however, by the disaster wrought by the
plague. As the ravages of the fourteenth-century Black Death faded,
long-distance trade began gaining a new momentum from the increased
availability of silver in Central Europe. Technological innovations involving
pumping of mine shafts and chemical processes to separate silver in the
mid-fifteenth century led to a silver mining boom. Silver mines in Japan also
provided the Dutch traders the precious metal to conduct their business in Asia.
Increasing amounts of
silver-especially from Germany-were spent by Venetian traders to purchase
Syrian cotton for the German mills and Asian spices for European consumption.
The primacy of German-minted silver coins of that era is still being felt centuries
later. The u.s. currency, the dollar, received its
name from the vulgarization of the German silver coin Joachimstaler-in
short, "thaler." Although Columbus died a disappointed soul, having
failed to find the golden-roofed houses of Cipangu in
Japan, as described by Marco Polo, huge quantities of precious metal were soon
found in Mexico and Peru. As one historian has put it, it was "almost free
money. " Silver bullion from Mexico and Peru, mined by slave labor, soon
began flowing to Asia as European merchants bought luxuries in quantities that
they could not have imagined earlier. Throughout the first half of the
seventeenth century, some 268 tons of silver were shipped to Europe every year,
much of which was then shipped to the Baltic, the Levant, and Asia to buy
goods. A century later, annual shipments of silver from the New World to Europe
rose to five hundred tons, more than half of which was spent on importing
spices, silk, porcelain, and other luxuries. In 1621 a Portuguese merchant's
account notes: "Silver wanders throughout all the world in its
peregrinations before flocking to China, where it remains as if at its natural
center.''
Gold mined by the Portuguese in
Africa and, later, Brazil added to the world's trading. Between 1712 and 1755,
some ten tons of gold were shipped to Lisbon every year and sent on their way
to Asia to pay for exotic imports. European traders who reached the Spice
Islands found-to their surprise-that the natives who could supply them cloves,
cardamom, nutmeg, and cinnamon cared little about silver but wanted cotton
cloth. Soon a triangular trade emerged in which the Dutch and the British paid
Indians in bullion for their hand loom woven cloth and bartered that cloth in
Southeast Asia for spices for the home market. Europeans now linked the silver
and gold mines of Mexico and Peru with the distant spice gardens and aromatic
forests of Southeast Asia, via the markets of the Mediterranean and Atlantic
seaboard.
Venice's contribution to the growing
international trade went beyond its nautical innovations. Institutional
innovations that undergird successful trading-from the development of banking
to accountancy, foreign exchange, and credit markets-gave Venice its
preeminence. The fifteenth-century development of such credit instruments as
bills of exchange, transferable bills, and the legalization of interest
collection in England and Holland accelerated trade transactions. The English
and Dutch East India Companies, for instance, began to work like banks, taking
deposits in gold and silver from their employees abroad, who were independently
wealthy from their private business, and promising to
payout the value of deposits back in the home country with interest. This ready
availability of cash meant that companies could buy and ship goods without
waiting for silver bullion to arrive from London, Lisbon, or Amsterdam after a
perilous year at sea. However, with dwindling supplies of silver and
mercantilist concerns about reserves of precious metal by the late eighteenth
and early nineteenth centuries, paper money issued by sovereign governments and
bank notes became more common. The paper currencies further simplified business
transactions. Problems arose only when wars broke out. During the war between
Napoleonic France and Europe in the late eighteenth and early nineteenth
centuries, for example, the French government stopped honoring bank notes
promising gold.
A second round of impetus to
international trade, however, came from the New World-specifically from
California-with the discovery of significant gold deposits. Australia and its
gold mines joined California soon after, and enough precious metal to
facilitate trade was pumped into the global market. Because gold backed all
paper money in the world-for instance, one U.S. dollar was equivalent to 23.22
grains of pure gold-there was, in fact, a single global currency. It is not
surprising, then, that the years leading up to World War 1, during which the
gold standard ended, are considered the "golden" age of globalization
in more than one sense. The outbreak of World War I saw governments suspending
payment in gold, while hostilities across Europe and in the Atlantic Ocean
disrupted trade. The gold standard returned briefly in the 1920S, only to be
discarded in the Great Depression years following the stock market crash of
1929. By then, the world had become so interconnected with trade and financial
links that the misery that began on Wall Street quickly spread to all of
Americas economic partners. When the world later emerged from the horrors of
World War II in 1945, a new economic order was taking root. Resurgent Americas
dollar, pegged to gold, became the new global currency. World trade was now
denominated in U.S. dollars, with all countries linking their currencies to the
dollar. The credit card, invented in the 1920S to encourage customers with
accounts to shop, fill their cars at gas stations, and check into hotels
without cash in hand, got a fresh lease on life. The booming American economy
certainly encouraged this easy consumerism. The idea of a universal card that
could be used for all purchases dawned on banker Frank McNamara in a moment of
embarrassment during a business dinner at a trendy New York restaurant. When it
came time to pay the bill, he realized he had forgotten his wallet.
Entertaining business clients was one of the principal expenses for which one
had to carry cash, so in 1950 McNamara launched the first universal credit
card-the Diner's Club card which was followed eight years later by American
Express. The electronic network that emerged in the 1970S has since made
transcontinental commerce a snap. Gold and silver have long since disappeared
as currencies, but plastic cards bearing those same metallic colors have taken
their place to lubricate global transactions.
One major problem in buying and
selling goods over long distances was the difficulty of communications. How
could traders stay in touch with their trading partners and keep track of what
is being bought and sold? In 5000 BCE the Sumerians, who lived in what is now
Iraq, found a solution by inventing writing. A trader would use a small clay
tablet and a cleft stick to write down the numbers of cattle being sold. The
partner at the other end would break the clay container to read the tablet and
verify the number of animals that had been delivered. Our Assyrian trader Pusu-ken communicated with his financier and his wife by
using such clay tablets. Since then our ancestors have used papyrus, leather
parchment, engraved bamboo, and paper to conduct business transactions. During
the height of Mongol rule over China and Central Asia, postal stations were set
up along the Silk Road to allow for the transcontinental delivery of
information and business contracts. By the end of the twelfth century, Genghis Khan
had set up a system of messenger posts extending from Europe to his capital of
Ulaanbaatar, using homing pigeons as messengers. The trading diasporas such as
the Jewish traders in Cairo or on India's Malabar Coast used their goods
carriers to carry mail, remaining copies of which have been found in the Geniza in Cairo. In the eighteenth century, the French had
developed a visual signaling system across long distances, using tall towers
and movable arms.
From Roman times to Genghis Khan and
Napoleon Bonaparte, however, long-distance messaging was generally for the
exclusive use of the sovereign for maintaining control over far-flung
territories and for conducting military operations. For nearly seven thousand
years until the eventual invention of the telegraph, business information
traveled only as fast as the speediest available transport could carry
passengers and goods. Isaac Ergas, our
eighteenth-century coral and diamond trader in Livorno, wrote numerous letters
to his business partners in Lisbon, London, and Goa but had to wait a year or
more to find out what price his coral shipments had fetched in those markets.
All that waiting ended in r844 with
the completion of the first telegraph line (telegraph literally means
"writing over distance"). In his first test message over a wire from
Baltimore to Washington, DC, painter-turned-inventor Samuel Morse aptly wrote,
"What hath God wrought?" The small contraption of an electromagnet
and copper wire and the messaging through dots and dashes of Morse code ushered
in an information revolution that continues to bring the world ever closer
together. "Since the discovery of Columbus," the Times of London
wrote, "nothing has been done in any degree comparable to the vast
enlargement which has thus been given to the sphere of human activity [by the
telegraph]." A telegraphic cable, wrote the brother of Atlantic cable
pioneer Cyrus Field, "is a living, fleshy bond between severed portions of
the human family."
Like so many other inventions, the
telegraph was quickly deployed in the service of commerce. European
entrepreneur Paul Julius von Reuter was already operating a news operation for
businessmen in the 1840’s, disseminating closing stock prices collated from
information flown in by homing pigeons from different cities. Once the
commercial telegraph became available, the vast majority
of cables sent pertained to business, especially stock and commodity prices.
For the first time, commodities prices-from minerals to corn and cotton-were
available in real time. Information, combined with easy transportation via
trains and steamships, enabled the emergence of a truly global market. The
Chicago Board of Trade was founded as the wire reached the city in 1848. In
1867, a further boost in trade information took place with the invention of the
stock ticker. A telegraph operator in New York, E. A. Callahan, devised a
telegraph machine that automatically recorded changing stock prices on a
continuous strip of paper. Five years later, the Western Union cable company
had begun a system of telegraphic money orders, bringing consumers and traders
even closer.
Steamships, which had been used
primarily to ferry passengers between the United States and Europe, now had a
different task. In what science fiction writer Arthur C. Clarke described as
the Victorian equivalent of the Apollo space project, huge rolls of copper wire
sheathed in water-resistant gutta-percha for maintaining control over
far-flung territories and for conducting military operations. For nearly seven
thousand years until the eventual invention of the telegraph, business
information traveled only as fast as the speediest available transport could
carry passengers and goods. Isaac Ergas, our
eighteenth-century coral and diamond trader in Livorno, wrote numerous letters
to his business partners in Lisbon, London, and Goa but had to wait a year or
more to find out what price his coral shipments had fetched in those markets.
All that waiting ended in 1844 with
the completion of the first telegraph line (telegraph literally means
"writing over distance"). In his first test message over a wire from
Baltimore to Washington, DC, painter-tumed-inventor
Samuel Morse aptly wrote, "What hath God wrought?" The small
contraption of an electromagnet and copper wire and the messaging through dots
and dashes of Morse code ushered in an information revolution that continues to
bring the world ever closer together. "Since the discovery of
Columbus," the Times of London wrote, "nothing has been done in any
degree comparable to the vast enlargement which has thus been given to the
sphere of human activity [by the telegraph]." A telegraphic cable, wrote
the brother of Atlantic cable pioneer Cyrus Field, "is a living, fleshy
bond between severed portions of the human family."
Like so many other inventions, the
telegraph was quickly deployed in the service of commerce. European
entrepreneur Paul Julius von Reuter was already operating a news operation for
businessmen in the 1840s, disseminating closing stock prices collated from
information flown in by homing pigeons from different cities. Once the
commercial telegraph became available, the vast majority
of cables sent pertained to business, especially stock and commodity prices.
For the first time, commodities prices-from minerals to corn and cotton-were
available in real time. Information, combined with easy transportation via
trains and steamships, enabled the emergence of a truly global market. The
Chicago Board of Trade was founded as the wire reached the city in 1848. In
1867, a further boost in trade information took place with the invention of the
stock ticker. A telegraph operator in New York, E. A. Callahan, devised a
telegraph machine that automatically recorded changing stock prices on a
continuous strip of paper. Five years later, the Western Union cable company
had begun a system of telegraphic money orders, bringing consumers and traders
even closer.
Gutta-percha rubber came from the
British colony of Malaya. The introduction of the trans-Atlantic cable in 1866
accelerated business deals and sharply drove down prices. The would-be
arbitrageurs in these markets previously had to place orders based on
ten-day-old information that had arrived by steamboat, and their orders took
another ten days to be executed. Now armed with real-time prices, transatlantic
traders could execute buy-and-sell orders in a day. "The result,"
says Kevin O'Rourke, "was an immediate 69 per cent decline in mean
absolute price differentials for identical assets between the two cities."
Telegraphic links soon extended across the Middle East to India, and to the far
corners of Asia. In 1870, the British Indian Submarine Telegraph Company
installed the first telegraph link between London and Bombay. Within a year,
the same line extended to far-off Hong Kong. By the time World War I broke out, nine lines connected Europe to the Far
East, some of which were disabled as they ran through hostile territory.
The telecommunications and
transportation revolutions would give trading a huge boost as the traditional
tariff barriers began coming down. With the repeal of the British Corn Law in
1846 and the Navigation Acts in 1849 that restricted foreign shipping, an age
of free trade was ushered in that lasted until the 1870’s. In 1860 Britain
signed treaties for freer trade with France and other European countries, and
because they had "most-favored nation" clauses all countries could
benefit from bilateral liberalization. However, facing competition from
American grain producers, Europe began to raise tariff barriers. Trade protectionism
grew steadily until World War I and the Great Depression ended
nineteenth-century globalization.
The telegraphic revolution was
followed in 1876 by Alexander Graham Bell's funnel-like device called the
telephone-literally "sound over distance." Unlike the telegraph,
however, undersea telephone lines would not be laid for another eighty years.
Radio telephones were available to call London from New York, but a
three-minute call would have cost $458 in today's money. The American Telephone
and Telegraph Company (AT&T) set up the first transatlantic telephone
system in 1956; a transpacific cable to Japan and Hong Kong followed a year
later. In 1989, another transatlantic cable was laid to connect North America
with South Africa-linking the New World to the continent from which humans
began their journey fifty thousand years earlier.
The most dramatic transformation in
trade since the birth of the telegraph of course came with the electronics
revolution-particularly the personal computer and the World Wide Web. In 1976,
a brilliant twenty-one-year-old college dropout named Steve Jobs who dreamed of
becoming a millionaire assembled the first personal computer from a kit. A year
later Apple Computer was founded, launching the PC (Personal Computer)
revolution. In the 1980s, IBM (International Business Machines) picked up the
flag, turning what once was an electronic toy for hobbyists into a powerful
tool of productivity for individuals. And by the 1990’s the Internet emerged to
link the PCs worldwide, ushering in the closest connections between human
communities since before the ancestors left Africa and dispersed.
For
an overview of modern roots Globalised Economics go
to the centre of P.4 of our Turkeyanalysis as intended as an
addition to our overview of the history of Globalization, the newer part can be
best understood if read together with Case Study P.3: in
Globalization P.1
A concise History
of the Past and Future of Globalization P.1