Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Working from the main event backwards, the inside edge that the European merchants have in the Asian carry trade is access to cheaper silver, which is to say cheaper finance, than local merchants.

So you need ships that can go back and forth between Europe and the Indian Ocean and/or the Seven Seas, bringing silver in, leveraging the silver into trading profits in the Asian carry trade, and skimming some profits as high value merchandise in Europe to go home and raise more silver.

You will lose ships in both long legs, which is a big reason why the active carry trade on both sides is important ~ you have to be able to keep generating profits in the European trading zone to be able to keep skimming profits as silver and sending it over, even if the last ship went down (or was taken out by Javanese pirates), and have to be able to do the same in the Asian trading to be able to keep skimming profits as high quality trade goods and sending it over.

They are complementary, so its hard to say how much strength in the European carry trade support building up strength in the Asian carry trade, and visa versa.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Apr 14th, 2011 at 11:37:16 PM EST
[ Parent ]
The organization and operation of the Dutch East India Company neatly divides into a pre-Jan Pieterszoon Coen era and post Jan Pieterszoon Coen era.  I'm going to 'locate' this comment by ignoring the first.

Coen was a nasty piece of work:

On 30 May 1619, Coen, backed by a force of nineteen ships, stormed Jayakarta driving out the Banten forces; and from the ashes established Batavia as the VOC headquarters. In the 1620s almost the entire native population of the Banda Islands was driven away, starved to death, or killed in an attempt to replace them with Dutch plantations.

but who solved:

A major problem in the European trade with Asia at the time was that the Europeans could offer few goods that Asian consumers wanted, except silver and gold. European traders therefore had to pay for spices with the precious metals, and this was in short supply in Europe, except for Spain and Portugal.

by [VOC = Dutch East India Company]:

... start[ing] an intra-Asiatic trade system, whose profits could be used to finance the spice trade with Europe. In the long run this obviated the need for exports of precious metals from Europe, though at first it required the formation of a large trading-capital fund in the Indies. The VOC reinvested a large share of its profits to this end in the period up to 1630. The VOC traded throughout Asia. Ships coming into Batavia from the Netherlands carried supplies for VOC settlements in Asia. Silver and copper from Japan were used to trade with India and China for silk, cotton, porcelain, and textiles. These products were either traded within Asia for the coveted spices or brought back to Europe.

Simultaneously, the invention of the fluyt lowered the costs of intra-European trade by increasing cargo capacity per-ship.  I know this ship was the backbone of the intra-European trade, I do not remember (it's been a while!) if it was used as a long distance carrier.  For the 'long haul' they used the specially designed Dutch East Indiaman for the 'retour' (there and back again) route.  IIRC, the Dutch used the Chinese Junk in Asia mostly from the fact it was designed for those waters.  How extensively the Junk was used I cannot say.

Anyway, the distribution of goods imported by the DEIC from Asia was wholesaled out to other Dutch merchants and companies - thus the multitude of warehouses in Amsterdam - who then distributed across Europe.  The "odd-job" merchants completed the European side of the trade cycle.  Two important "strangle-points" in this trade was the English Channel (piracy/interdiction) and the Danish Kattegat (transition fees) leading to a couple each of Dutch-English and Dutch-Danish wars.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Apr 15th, 2011 at 01:57:11 PM EST
[ Parent ]
Quite, and you can't do any of that at such a long remove from your home country without silver ~ investing silver into building their position in the Asian carry trade. The Dutch East India company and the British East India company could afford to hire more troops in pursuit of their commercial ends than local traders, because they were originally trading mercenary's pay for goods, rather than trading goods for goods.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Apr 16th, 2011 at 01:07:31 PM EST
[ Parent ]


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