The Mughal Empire was based in the interior of a large land mass and derived the vast majority of its revenues from agriculture. Due to this, it is said, the Mughal Emperors seem to have lacked interest in coastal territories and their flourishing maritime trade. Not until the conquest of Gujarat in 1572 did the Empire reach the ocean. But over time both the royal family and the high nobles became involved with the trade that was taking place over the seas, first in Gujarat and later in Bengal.
The Portuguese had arrived in India in 1498 when Vasco Da Gama crossed the Cape of Good Hope; and by 1550 they had established Estado da India. In 1600 the Dutch arrived and by 1604, the English East India Company also arrived at the Mughal Court. By the second half of the 16th and the first half of the 17th Century, Gujarat emerged as the trading hub of India. During the 17th Century, Surat was not only the premier port of the Mughal Empire but also the largest coastal city along the entire western Indian Ocean. In 1660, it probably had a population of 100, 000 and may have doubled in size by 1700. Being situated at the end of the major trade route which connected it with Delhi and Agra, it was the site in which trading posts were established by the first Europeans other than the Portuguese.
It was the desire for their bullion and for revenues arising from trade that led the Mughals and the local rulers to permit and even encourage European traders to settle within their realm.
Fuelling this growth of European trading companies was a new demand for Indian products within Europe. The large quantities of textiles purchased earlier by the Dutch and English (VOC & EIC) would be sent to Southeast Asia to be exchanged for spices; if sent to Africa, they would be used widely to purchase slaves. By the middle of the 17th Century Europe discovered a taste for Indian Chintz. By 1680’s the Indian cotton had become largely fashionable in Europe. This rapidly growing market in Europe led to a very quick rise in the volume of textile imports from India. According to KN Chaudhuri, there was a ten-fold increase in textile export from India. For the EI Co the most successful trading posts in India were Madras and the western coast – Bombay, a Portuguese possession acquired by the British crown and given to the EIC in 1668.
The third region which was important in this trade was Bengal. However, here the English position was weaker as compared to Coromandel (southeastern coast of India between the mouth of Krishna delta and the Cape Comorin) and western India. Since the 16th Century Bengal’s premier port had been Hugli. However in 1632 the Mughals expelled the Portuguese from here. By 17th Century the business of the EIC started growing in Bengal, yet, till the last decades of 17th C it was still half that of the Dutch.
Being situated within the Mughal territory, the EIC believed that the local imperial officers were constantly putting obstacles in the way of its trade. In an effort to force better terms of trade, the company sent a well-armed fleet of ten ships to India in 1686 and in effect declared war on the Mughal Empire. Numerous Indian ships were seized off the west coast and the Port of Surat was blockaded. The Mughals retaliated by launching an attack against Bombay.
In the Bay of Bengal, the English objective was
(a) to capture the port of Chittagong,
(b) advance to Dacca and
(c) negotiate a new trade agreement.
The war ended in an English failure. A Peace Treaty was signed in 1690 and according to which the English had to pay a hefty indemnity to the Mughals.
In 1692, the EIC issued a half-rupee coin which resembled the Mughal coin on both both sides which carried names of the British King William III and queen Mary, written in Persian. Aurangzeb took the issuance of this coin as a direct challenge to his authority and forced it to be withdrawn. The EIC was also forced to assume the responsibility of the safety of the Indian ships in the western seas.
One of the direct results of this Anglo-Mughal war of 1686-90 was the founding of Calcutta by the English. After their defeat, the English regrouped at a distance from Hugli, from where they had been made to flee earlier. Due to the silting, Calcutta was a more convenient location. However due to its marshy lands and the resultant mosquitoes, Calcutta was an unhealthy place.
Thus by 1700 the EIC acquired three sites – Madras, Bombay and Calcutta which were later to emerge as the nerve centres of the British trade and administration.
Influx of Bullion & Its Consequences:
The European trade could not have been sustained on a large scale with India or Asia but for the discovery of American silver mines.
The expansion in money supply enabled the trading nations to finance the heavily adverse balance of trade with Asia. Even at the period, it was realized that in the absence of bullion, commodities as well as wages would be much cheaper in India and thus Indian markets would not be having a demand for the European goods. It would be precious metals which would be exchanged against the Indian products.
Thus there was a bullion influx in India which is attested to by the contemporary records.
This had two major effects:
(a) resentment in Europe; and
(b) Price rise in India.
This silver / bullion was coming through the Levant (eastern part of the Mediterranean) and the Cape of Good Hope. The American silver was also coming from other channels – over the Pacific via Manila, as well as Japan.
Much resentment in Europe was provoked due to this influx of silver in India between the latter half of the sixteenth and the seventeenth Centuries. This reaction was due to the fact that it was against the current mercantilist sentiments which measured a country’s wealth in the amount of gold and silver it possessed.
Between 1500 and 1650, India received according to an estimate, 6000 metric tons of silver. Much of it was absorbed by and expansion in the Mughal silver coinage, which was replacing the copper money. But then after 1615, as the influx continued, it resulted in a price rise.
According to Shireen Moosvi [“Silver Influx, Money Supply, Prices and Revenue Extraction in Mughal India”, Journal of the Economic and Social History of the Orient, vol. 30, 1987, pp. 47-94] between 1615 and 1705, the silver price of gold rose by 33 %, and that of copper by 110.4 %.
But then, according to Moosvi, the theory of the extension of ‘Price Revolution’ to India may in fact be an exaggeration. For according to her, for around 90 years such increase as cited by her, seems moderate, especially since when there was a rising demand of copper for the manufacture of canons. This demand may explain the marked ascent in its prices.
It has also been argued that the actual effect of the influx of silver would also have been neutralized by the hoarding as well as the Indian taste for ornaments.
Irfan Habib in his Agrarian System (pp. 445-49) has also put forward his reservations. He also believes that the view of ‘Price Revolution’ may have probably been overstated. However, according to him, this influx might have resulted in fall in interest rates, as it was partly fuelled by transfer of usury capital.
Tapan Raychaudhury, on the other hand, believes that the doubling of prices during the first 60 years of the 17th Century ( as well as the doubling during the first 50 years of the 18th C), although actually not much: over a span of 150 years, it came to only 1.93 % increase annually – it still was much for the pre-capitalist economies. Thus one cannot therefore assume that the ‘Price Revolution’ in India left its economy unaffected!
Thesis of Companies vs. Peddlers:
The term Pedlar means an itinerant trader in small goods.
IN 1955 Van Leur wrote Indonesian Trade and Society. Essays in Asian Social and Economic History which yielded a picture of Asian trade that contrasted sharply with the trade of Europe. In his view the international trade of Asia before the coming of the Europeans was a trade in high value products by a numerous body of pedlars whose transactions were small.. Van Leur was basically dealing with Indonesia.
Neil Steensgaard extended this thesis to India. According to him there was an absence of large commercial firms in India: all the trade instead, was carried out exclusively by the small and petty merchants and traders. These petty merchants comprised the majority of the passengers on the merchant’ ships. They travelled with one or two bales of textiles every year. They had no great firms to back them and were thus only pedlars. Indian trade was thus merely a peddling trade.
Proceeding from this hypothesis, it has been suggested by Steensgaard that European oceanic trade, especially when organized under large scale national monopolistic companies, was conducted more efficiently and with smaller risk as compared to the traditional commerce of the Asian pedlars.
But then other historians like Irfan Habib, Tapan Raychaudhuri, Ashin Dasgupta and others have shown that this hypothesis may not actually be true. Indian merchants within them had men with large capital stock and efficient information networks which helped them cut costs in ways European companies could not. Examples can be given of merchant princes like Mulla Abdul Ghafur and Virji Vora who could even finance the EIC.
• Syed Ali Nadeem Rezavi