IV.

The Early Modern Period

The development of ocean-going warships and efficient merchant carriers in the 15th and 16th centuries led to a rapid expansion of commerce. As the cost of transporting bulky cargoes over long distances fell, grain was imported on a large scale from the Baltic to the Netherlands and other parts of Europe. New ocean routes between Europe and the East allowed imports from Asia at lower prices and in greater volume than had been possible by overland caravan. The discovery of the Americas created trade in such new commodities as tobacco and logwood.

Spanish exploitation of the rich gold and silver deposits in Mexico and Peru transformed the character of international commerce. Europe finally possessed a commodity—precious metal—for which ample demand existed in East Asia. In return for Asian imports, Europe exchanged silver coin minted in Mexico, Spain, Italy, and Holland. Using technology and skills developed in transoceanic navigation, the Europeans captured the Asian shipping trade. European vessels transported Japanese copper to China and India, Indian cotton textiles to southern Asia, and Persian carpets to India. Trade in certain staple commodities grew with incredible speed. Imports of tobacco into England from Virginia and Maryland, for example, increased more than a thousandfold in the 17th century.

As long-distance trade continued to grow, new forms of commercial organizations appeared. At first, informal associations gave way to legal partnership. In Holland, for example, it was not uncommon after 1500 that shareholders, rather than captains, be the proprietors of ships. Shareholding broke down the social barriers among different classes of merchants and enabled individuals to divide their goods among ships destined for different ports. No longer was international trade limited to those who could afford to travel. After the 16th century, the chartered company replaced the temporary partnership as the customary way for merchants to organize their affairs. These great companies, created by the state but privately owned and managed, held national monopolies over trade with certain regions.