Byzantine Empire, Bosporus, Silk Road, Dutch East India Company, English East India Company, Tea Act and Opium Wars

Posted by PITHOCRATES - March 11th, 2014

History 101

(Originally published May 15th, 2012)

To encourage Risk Takers to Travel Halfway around the World Mercantile States granted Monopoly Charters

The modern world began because Europeans had a penchant for silk and spices.  Something they enjoyed during Roman times.  When the Romans ruled the world.  And the Mediterranean Sea was nothing more than a Roman lake.  But when the empire stopped conquering new lands and sending the spoils of war home they had to turn to other means to pay for the cost of empire.  Taxes.  To pay for the Roman government and their public spending.  And the Roman legions.  This excessive government spending led to the fall of the western half of the empire.  But the eastern half lived on for another 1,000 years or so.  Why?  Because the capital of the Byzantine Empire was Constantinople.  On the Bosporus.  Trade crossroads of the world.

This city was so rich everybody wanted to conquer it.  So they could have all those riches.  For everything that came along the Silk Road from China crossed into Europe at the Bosporus.  Soon Muslims fought Christians in the Holy lands.  Then more Christians came.  The Crusaders.  Those who didn’t die went back to Europe with some of those Chinese luxuries.  Spices.  Silk.  Porcelain.  Etc.  Sparking a renewed interest in these finer things in Europe.  Especially the spices.  For European cooking was horribly bland at the time.  The Ottoman Turks eventually took Constantinople.  Renamed it Istanbul.  And controlled that lucrative trade.  Making those much sought after Asian goods rather expensive in Europe.  Which they had no choice but to pay.  Because if you wanted those luxuries you had to go through Istanbul.  Until the Portuguese sailed around Africa and found a direct route to those cherished goods, that is.

It was the Commercial Revolution.  A new age of international trade.  A trade even more profitable than what the Ottoman Turks controlled.  Because big ocean-going vessels can carry more cargo than anything coming over land on the Silk Road.  And these new European maritime powers wanted that wealth.  And the power it would provide.  To encourage risk takers to get into those wooden ships and travel halfway around the world they granted monopoly charters.  The Dutch East India Company (VOC) was one of the largest.  And one of the wealthiest.  But this was not your typical company.  The VOC established overseas colonies.  It waged war.  Established treaties.  Even coined its own money.  Because of this thousands of VOC ships stuffed full of valuable cargoes sailed to Antwerp and Amsterdam, making the Dutch very wealthy.  And powerful.

The Tea Act allowed the Company to Ship their Tea Directly to America and exempted them from any Duties

Of course the Dutch weren’t the only ones doing this.  They had competition.  Portugal.  Spain.  France.  And England.  Who would bump into each other numerous times fighting for control of this trade.  And those colonies.  The English and the Dutch would fight 4 wars.  Which is how Dutch-founded Manhattan became part of the British Empire and, subsequently, one of America’s greatest cities.  The English East India Company gave the VOC a run for its money.  Parliament even passed legislation to give the English a monopoly on all trade with their American colonies.  The Navigation Acts.  Which stated that all trade to and from America had to be on English ships.  And all trade had to go through an English port.  Where the ships were unloaded and the cargoes inspected.  And taxed.  Then they could reload their cargoes and continue on their journey.  All tenets of mercantilism.  This kept the lower-priced Dutch goods out of America.  And prevented the Americans from selling to the Dutch directly for higher prices.  So it shut down the Dutch from all American trade (except for a prosperous black market). And brought in some lucrative tax revenue for England.  While extending shipping times and increasing prices for the Americans.  Which they were not happy about in the least.

The English East India Company (the Company) was similar in structure to the VOC.  And soon made the Indian subcontinent a wholly owned subsidiary of the Company.  But it wasn’t cheap.  Waging war was costly.  As was managing those conquered territories (something the Romans had also learned).  Then a famine in Bengal in 1770 claimed about one-third of the local population.  Making laborers more scarce.  And more expensive.  All at a time when the sales of their imported goods were falling in Europe.  There were warehouses full of unsold Chinese tea that they couldn’t sell.  Making for a bad time for the Company.

Higher costs and lower sales spelled trouble.  And that’s what the Company had a lot of.  Trouble.  So the Company turned to Parliament for help.  And Parliament helped.  By allowing the Company to ship their tea directly to America without having to unload it in a British port.  Or pay a duty on that tea.  Which would greatly reduce their costs.  And allow them to sell it in America cheaper than they did before.  So Parliament passed the Tea Act in 1773.  Making life better for all involved.  But the Tea Act left in place another tax in the previous Townshend Acts.  Which was a bigger problem than getting cheaper tea (which they could get on the black market from the Dutch).  These taxes on the British subjects in America were unconstitutional.  Because there were no Americans sitting in Parliament.  This was taxation without representation.  A much bigger issue than cheap tea.  So they threw that first ‘cheap’ tea into Boston Harbor.  The Boston Tea Party being a major step towards war with the mother country.  And American independence.

Britain became the Lone Superpower after Abandoning their Protectionist Mercantile Policies and Adopting Free Trade

The American Revolutionary War was not the only headache the British got from their mercantile policies.  Part of those policies required maintaining a positive balance of trade.  So there was always a net inflow of bullion into the mother country.  That’s why raw materials shipped into Britain from America.  And finished goods shipped out to America.  Finished goods are more valuable than raw materials.  So the Americans had to make up for this balance of trade in bullion.  Resulting in a net inflow of bullion into the mother country.  Very simple.  As long as you can manufacture higher valued goods that other people want to buy.

And this is the problem they ran into with the Chinese.  For though the British wanted those Chinese spices, silk and porcelain the Chinese didn’t want anything the British manufactured.  Which meant Britain had to pay for those luxuries with bullion.  Including all that Chinese tea they craved.  Which resulted in a net outflow of bullion to the Chinese.  The British fixed this problem by finding the one thing that the Chinese people wanted.  Indian opium.  Grown in Bengal.  Of course, this turned a lot of Chinese into opium addicts.  The addiction problem was so bad that the Chinese banned opium.  But the British were able to smuggle it in.  They sold so much of it that they used the proceeds to buy their tea.  Thus reversing the bullion flow.

Not the finest hour in the British Empire.  The Chinese and the British would go on to fight a couple of wars over this opium trade.  The Opium Wars.  Which the British did all right in.  Even gaining Hong Kong in the bargain.  They didn’t build any long-lasting love with the Chinese people.  But Hong Kong turned out pretty nice under the British.  Especially after they abandoned their protectionist mercantile policies and adopted free trade.  Which made the British the lone superpower for about a century as they modernized the world by leading the way in the Industrial Revolution.  And the Chinese in Hong Kong were very happy indeed to be there when the communists took over the mainland.  And caused a famine or two.  For they lived comfortably.  In a state founded on mercantilism.  That achieved its greatest prosperity during the free trade of capitalism that followed Britain’s mercantile ways.

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Trade, Colonization, South Africa and Apartheid

Posted by PITHOCRATES - December 10th, 2013

History 101

Alexander Spread the Advanced Greek Civilization from the Mediterranean to the Indus River Valley

The first civilizations grew up on the great rivers.  The Nile.  The Tigris and Euphrates.  The Indus.  And the Yangtze.  For the river was the source of life.  The flooding of its banks produced the rich black earth that gave us farming.  They helped us irrigate land further from the banks.  And they allowed the spread of civilizations.  For these rivers provided our first means of transporting people and cargo.  Allowing food and goods to travel between settlements.  This cross-pollination of settlements of different people and resources flowered into the great civilizations of the world.

The Chinese civilizations along the Yangtze grew in isolation from the rest of the world due to the geography at first.  Then, later, by choice.  The other three great civilizations came into contact with each other.  The Egyptians on the Nile spread east and made contact with the Sumerians of the Tigris and Euphrates.  Who were in contact with the Harappan of the Indus River valley.  These civilizations traded with each other.  And fought with each other.  As their civilizations flourished they attracted the attention of envious neighbors.  Who wanted what they had.  And conquered them.

Wars pushed boundaries back and forth.  Civilizations rose and fell.  One of the last great empires of the ancient world, the Persian Empire, bumped into a new rising power.  Athens.  Which was conquered by a Greek-trained king from the north in Macedonia.  Whose son, Alexander, went on to conquer the known world.  Spreading the advanced Greek civilization from the Mediterranean world to the Indus River valley.  Creating a Greek-speaking world steeped in science and philosophy.  Creating a greater Hellenistic civilization out of the lands Alexander conquered.  The shared Greek culture allowing an explosion of trade and commerce.

In Time the English and the Dutch would Bump Heads in South Africa

The Romans adopted Greek knowledge and used it for great engineering projects.  Roads, aqueducts, ships, weapons of war, etc.  Soon the Roman Empire displaced the Hellenistic civilization and spread even further.  Ironically, it was the cost of empire that began the fall of the Roman Empire.  High taxes to fund a huge army on the frontier and to pay for a massive bureaucratic state.  Including welfare programs.  The empire first collapsed in the West.  It lasted another 1,000 years in the East as the Byzantine Empire.  With its capital in Constantinople (modern day Istanbul, Turkey).  Named by the Roman Empire Constantine the Great.  Who helped turned the Roman Empire Christian.

Constantinople was the center of the world.  It was where East met West.  Where Europe met Asia.  All trade from the East went through Constantinople on its way to the West.  For the Silk Road passed through Constantinople.  Making it a very rich city.  As it controlled trade.  After the fall of the Western Roman Empire the great Italian city-states rose.  Venice, Milan, Florence, Genoa, Pisa, Siena, Lucca and Cremona.  With their merchant banking they controlled the Mediterranean trade.  Until the Muslims conquered Constantinople.  Which is when the center of economic power moved north to Europe.  Thanks to advances in navigation that allowed ships to sail around Africa to the East.  Bypassing the Muslim-held Constantinople.

It was the Age of Discovery.  And the great European powers discovered new lands full of valuable resources.  The Portuguese and the Spanish lead the way.  And were soon followed by the Dutch.  And the English.  These nations established colonies around the world.  And, in time, the English and the Dutch would bump heads in South Africa.  Where they discovered gold.  Leading to a century of conflict between the British Empire and the Dutch settlers.  Known as Boers.  During the Napoleonic Wars the British defeated the Boers in Cape Colony in 1806.  And officially took possession of the colony in 1814.  Then it was Britain’s turn to send settlers to the region.  As a prosperous colony at the southern tip of Africa would come in handy for the empire that controlled the trade routes with the most powerful navy in the world.

Mandela Languished in Jail in part because of his Being a Communist

The Boers resented British rule.  And they didn’t like their abolishing slavery.  So they moved north.  Establishing two Boer independent republics.  The discovery of diamonds and more gold would make the region the richest and most powerful in southern Africa.  There was only one problem.  They didn’t have the manpower.  Or an industrial base.  Which led to another wave of immigration.  Mostly from Britain.  Which soon outnumbered the Boers.  Tensions led to the two Boer Wars.  The second one being the longest, costliest and bloodiest war the British fought in the century following the Napoleonic Wars.  With the British ultimately winning the African territories from the Boers in 1902.

The contested areas were all absorbed into the British Empire in 1910 as the Union of South Africa.  And became independent of the British Empire in 1931.  As the foreign powers fought over the African lands they pushed aside the native blacks.  And segregated them.  In 1948 the National Party rose to power.  And began to make segregation law.  The official beginning of apartheid.  Where the whites lived in a first-world nation (which they built with their capital along with black labor).  While the blacks lived in third-world conditions.  The African National Congress (ANC) fought apartheid.  Which was good.  But the ANC was a communist organization during the height of the Cold War.  Which did not make it a friend of the Western World.  Nor was Nelson Mandela.  Who was a communist.  Mandela co-founded the militant wing of the ANC in 1961.  Umkhonto we Sizwe (MK).  Which planned a campaign of sabotage against the apartheid government.  Landing Mandela in jail for 27 years.

Mandela languished in jail in part because of his being a communist.  For they didn’t want what happened in Southern Rhodesia to happen in South Africa.  Alignment with the Soviet Union.  And bloody civil war.  This is what they feared if the ANC/MK rose to power under the charismatic Mandela.  Civil war in South Africa fueled by the Soviet Union to aid in their war with the West.  As it turned out, though, Mandela was more like Abraham Lincoln when he emerged from jail.  Who told his generals that once the American Civil War was over there was to be no reprisals or retaliation against the South.  For once the war was over they would move on together as Americans.  Both North and South.  Which made the peace that followed much easier on the South.  Allowing the nation to heal her wounds more quickly than if there had been a period of bloody purges and reprisals.  And this is the gift Mandela gave to South Africa.  Allowing the nation to move forward after apartheid without bloody purges or reprisals.  Which is why South Africa went on to become one of the BRICS (Brazil, Russia, India, China and South Africa) economies.  While another former member of the British Empire in Africa, Southern Rhodesia (today’s Zimbabwe), suffers corruption, poverty, human rights abuses and one of the lowest life expectancy in the world.  Because Mandela spoke of peace and reconciliation when released from prison.  Not vengeance.  Like they did in Zimbabwe.

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Yorktown, North, Rockingham, Shelburne, Franco-Spanish Alliance, Vergennes, Adams, Franklin, Jay and the Treaty of Paris

Posted by PITHOCRATES - July 5th, 2012

Politics 101

For the British to Maintain the Balance of Power in Europe an Independent America actually Helped Them

The war wasn’t over with Cornwallis’ surrender at Yorktown.  But his surrender changed everything.  The continuing war was becoming more and more unpopular in Britain.  And costly.  Britain was fighting four wars.   One with the Americans.  One with the French.  One with the Spanish.  And one with the Dutch.  The debt was growing so great that there were discussions about suspending some interest payments.  The British wanted out of these wars.  The opposition blamed Lord North for the latest debacle at Yorktown.  The Prime Minister resigned.  His government fell.  And the opposition took power.

The new Prime Minister, Lord Rockingham, had favored American independence.  His foreign secretary, Charles James Fox, had favored American independence.  In fact, those who had favored American independence filled all cabinet positions.  Except for one.  The Secretary of Colonial Affairs.  Lord Shelburne.  Fox and Shelburne did not much care for each other.  They quarreled.  Each having their own idea of how they should conduct the peace.  Fox sent Thomas Green to France to begin negotiations with the French.  Shelburne sent Richard Oswald to France to begin negotiations with the Americans (Benjamin Franklin was in Paris).

The French had a debt problem of their own.  And they, too, were anxious for the war to end.  But on favorable terms.  They were looking to change the balance of power with their eternal enemy.  The British.  And therefore wanted to negotiate the peace for the Americans.  Get back some of their lost North American territories.  And elsewhere.  Meanwhile the Spanish were laying siege to the British in Gibraltar.  Anxious to retrieve that from the British.  They were greatly interested in blocking American westward expansion.  And they also wanted to keep them off the Mississippi River.  Which flowed to the Gulf of Mexico through their Louisiana Territory.  So the politics were quite complex in negotiating the peace.  For the British to maintain the balance of power they enjoyed an independent America actually helped them.  While an independent America actually harmed the French and the Spanish.

Shelburne negotiated Directly with the Americans to use them to gain Favorable Terms with their European Enemies

The original peace commission in Paris was just John Adams.  Few could be found that were more adamant on American independence than he.  And this was a problem for the French foreign minister.  Charles Gravier, comte de Vergennes.  He didn’t like Adams.  Who was not willing to compromise.  Vergennes wanted to end the war.  And stop the financial hemorrhaging.   And he was willing to compromise with the British to make that happen.  Willing to compromise away American independence.  American navigation of the Mississippi River.  American territorial ambitions beyond the Appalachians (leaving Maine, New York City, portions of the Northwest territories, Charleston and Savannah British).  And the American fishing rights off Newfoundland.  He was willing to give all that up to end the war with Britain.  He had only one problem.  John Adams.  Who refused to give up what the Americans were actually fighting for in the first place.

Vergennes instructed the French minister in America, the Chevalier de la Luzerne, to lobby the Continental Congress.  To have them order Adams to be less belligerent.  To be more willing to compromise.  And to accept the wise counsel of the King of France.  The most generous sovereign who made it possible for the Americans to bring the British to the negotiating table.  Luzerne was successful.  Perhaps with a little bribery.  The Congress sent Benjamin Franklin, John Jay and Henry Laurens to join Adams.  With the instructions to follow the advice of the French in the peace negotiations. 

Fox still favored granting American independence.  And he wanted to do it quickly.  To split the allies apart.  And make separate peace treaties to limit the damage.  For the French, Spanish and Dutch could hold out for a grander bargain.  Especially if the fortunes of war turned their way.  As the Spanish were hoping would soon happen at Gibraltar.  So the British warned that their allies could force the Americans to continue the war not for their own interests but that of these Europeans.  He told Green to tell Franklin that Britain was prepared to recognize American independence.  And that it was in America’s best interests to negotiate a separate peace.  Franklin suggested early that Britain may want to throw Canada into the deal.  To help pay for all the damage the British did to American property.  Shelburne wasn’t about to negotiate away Canada.  His answer was to bring up the debt owed to British creditors.  And reimbursing the Loyalists who lost their property in America.  Things that weren’t high on the American list of demands.  Then Rockingham died.  Shelburne became prime minister.  And Fox quit.  Pro-American independence ministers no longer filled the government.  Still, Shelburne continued to negotiate directly with the Americans.  So he could use them to gain favorable terms with their European enemies.

The American Negotiators were being Played by the Best of European Intrigue

In Franklin’s talks with Oswald he made it clear that independence was a prerequisite for peace.  Officially that was a problem for Oswald.  For his original commission from Shelburne directed him to negotiate with a commissioner from the colonies or plantations.  Not a commissioner from the United States of America.  Which, of course, would recognize American independence.  Vergennes urged Franklin and Jay to proceed anyway.  That official recognition could follow in the final peace treaty.  Jay suspected that the French were stalling.  He knew of the siege of Gibraltar.  And didn’t trust the Franco-Spanish alliance.  So he ignored Congress’ order.  And did not listen to the wise French counsel.  Joining Franklin and Adams in stating that independence was a prerequisite for peace.

The American commission had good reason to not trust their European allies.  The French wanted the British to agree to keep the Americans out of the fisheries along Newfoundland.  So they could fish these waters.  A bitter pill for a New Englander like Adams to swallow.  The French were also opposed to the Americans annexing Canada.  What they once called New France.  Before it became British.  While the Spanish were working hard behind the scenes to keep the Mississippi River away from the Americans.  Had they gotten their way the Mississippi south of the Ohio River would have been in Spanish hands.  As well as the states of Kentucky, Tennessee, Mississippi, Alabama and parts of Louisiana. 

The American negotiators were being played by the best of European intrigue.  But thanks to the principled men America sent to negotiate the peace the Americans bested the Europeans at their own game.  John Adams.  Benjamin Franklin.  And John Jay.  For the Americas got their independence.  Territory that stretched to the Mississippi River.  And navigation on the Mississippi to the Gulf of Mexico.  Even their fishing rights off of Newfoundland (though they would revisit that issue later).  It would be America’s greatest achievement in diplomacy.  The Treaty of Paris (1783).  And they made this treaty without consulting the French.  Who were miffed.  But thanks to Franklin America and France remained friends.  So the Americans won the Revolutionary War.  And the peace.  While avoiding any entangling alliances with the old European powers.  Not bad for a brand new nation on the world’s stage.

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Benjamin Franklin, John Adams, Silas Deane, Arthur Lee, John Jay, Mississippi River and Dutch Treaty of Commerce and Friendship

Posted by PITHOCRATES - May 17th, 2012

Politics 101

Franklin spent a Great Deal of Time in France during the Revolution enjoying Social Gatherings and Social Drinking

People are disgusted by politics today.  Negative campaigns.  Personal attacks.  Special interests.  People using their public office for personal gain.  Scandals.  Intrigue.  It’s enough to turn anyone off of politics.  Forever.  For it seems like no matter what the politicians say nothing ever changes.  And you know what?  They haven’t changed.  For even before there was a United States of America this stuff was going on.  Even threatening the success of the American Revolutionary War.

George Washington is criticized for many things.  For owning slaves (which he released and trained to enter the workforce as free men in his will).  That he wasn’t a great general.  For he did lose more battles than he won.  But even his critics have to give him this at least.  He was a man of honor.  With impeccable integrity.  His men respected him.  His officers respected him.  His enemies respected him.  One of Britain’s last attempts of treachery was to try and bribe Washington to defect to the British side.  Where he could live out his life very comfortably.  Knowing the Americans would give up without him.  But he did not waiver.  Resolute to the end.  The indispensable one.  The Father of our Country. 

Sadly, though, there weren’t many indispensable ones.  And few that matched Washington’s stature.  Perhaps the one coming closest was Benjamin Franklin.  Our most respected diplomat.  Who played a large part in gaining French support for the American cause.  Franklin spent a great deal of time in France during the Revolution.  The French loved him.  And he loved his time there.  Perhaps a little too much.  Staying up late.  Getting up late.  Enjoying social gatherings.  And social drinking.  Something that John Adams couldn’t stand.  Who was very religious.  And all-business.  About as different from Franklin as you could get.  But the French liked Franklin.  And did not like Adams.  Because he was all-business.  And a bit insufferable.

It didn’t take a Genius to know that the Americans Planned on Moving West to the Mississippi River and Beyond

France was America’s most important ally during the war.  And technically speaking their only ally.  There were many foreigners who sought a commission in the American army.  But that was more for glory and fame than support of the cause.  France, though, entered into treaty with the independent United States.  And supplied a large part of the war effort in both money and arms.  Granted this was more to get back at their archenemy, the British, than it was to help the Americans.  But the love and respect for Franklin was real.

Franklin was a self-made man living his third life.  He was a small business owner and writer.  He was a scientist.  And now he was a diplomat.  He had little to prove.  And needed no money.  All he wanted was to enjoy what life he had left.  And champion the American cause.  Not so with his co-emissary Arthur Lee.  Whose interests centered more on Arthur Lee than the American cause.  He didn’t like Franklin because the French liked and respected him more.  And he didn’t like America’s other emissary, Silas Deane, who was in France before Franklin and Lee joined him.  And who the French liked and respected, too.  Which really annoyed him because the French didn’t like him at all.  In fact they thought Lee liked England just a little too much.  For he had a brother in England.  Which didn’t go over well with the French.  Despite his having two brothers in the Continental Congress you just didn’t know where his allegiance lay.  Lee aggressively tried to disgrace both Deane and Franklin to make his star shine brighter.  Franklin’s character was impeccable, though.  No one believed anything he said about Franklin.  But, alas, they did about poor Deane.  At least enough to recall him to Congress.  The French, though, respected Deane enough to give him safe passage back on a French warship with the new French minister to America.  This whole episode did little to impress upon the French the professional stature of American diplomacy.   Nor did it impress the other European courts.  America just wasn’t being taken seriously in Europe.

Except, perhaps, in Spain.  John Jay went to Madrid to get Spanish recognition.  And Spanish aid.  Getting little of either.  Spain entered the conflict.  As an ally to France, though.  Because they, too, hated the British.  And they used this opportunity to get Gibraltar back from the British.  (They didn’t.)  Other than that they had little interest in helping the Americans.  For they didn’t trust the Americans.  France may have lost all of their North American possessions to the British but they hadn’t.  They still had the Louisiana Territory.  Western Florida.  The land from the Texas Gulf coast to California.  As well as the port of New Orleans.  And control of the lower Mississippi River.  Which the Americans wanted navigation rights on.  And god knows what else.  For it was no secret that the Americans wanted to expand west.  That’s why they wanted the Ohio country.  And the Ohio River flowed into the Mississippi River.  It didn’t take a genius to know what that meant.  The Americans planned on moving west to the Mississippi River.  And beyond.  Using the Mississippi to ship all of their goods from the interior of the country to the Port of New Orleans.  And on to the world.  All they needed to do was to remove one last obstacle.  The Spanish.  And the Spanish grew weary of John Jay.  Who only wanted two things.  To get Spain to recognize their independence.  And for Spain to give them money.  Suffice it to say the Spanish did not enter into an alliance with the United States.  And gave little money.

Catherine the Great’s League of Armed Neutrality isolated Britain and helped Adams in the Netherlands

Meanwhile John Adams, having annoyed the French, headed to the Netherlands.  And was more successful.  Not so much because they supported the American cause but because of their commerce.  The Dutch and the British had been bitter rivals.  The Dutch East (and West) India Company.  The English East India Company.  They both wanted what the other had.  Commerce.  They would actually go to war over this trade.  Some 4 times.  And now the British were interfering with their trade once again.  Interfering with their lucrative black market trade from the Dutch West Indies to the United States.  Through the British blockade.  Which may have broken a treaty they had with the British.  So Adams found commercial incentive for Dutch support.  But what he didn’t find was Dutch respect for the American cause.  And a general ignorance of the American cause.  There was just little information about the United States in the Netherlands.

They did see a rising commercial power in the U.S.  That would have a lot of food and materials to ship.  And being good businessmen they wanted a piece of that action.  And they certainly didn’t want to see the French and Spanish monopolize that trade.  Which could happen based on the treaty between France and America.  And the treaty between France and Spain.  Of course if they backed the wrong horse that could hurt them in post-war relations with Britain.  Should Britain win.  But neither was it in their best interests for Britain to win.  For that would only make their greatest rival stronger.  But what if the Americans won with the help of the Franco-Spanish alliance?  Would the Americans keep their independence?  Or would they get absorbed into France and/or Spain?  That wouldn’t be good.  For it wasn’t that long ago that they won their independence from Spain.  So making Spain stronger and/or richer wasn’t high in their to-do list. 

Catherine the Great of Russia finally helped push the issue.  Indirectly.  To keep the seas free and to protect neutral nations she organized a League of Armed Neutrality of which the Netherlands was signatory.  Neutral nations wanted no part of Britain’s war with America.  And they didn’t want it to interfere with their trade on the high seas.  Even if that trade favored the Americans somehow more than the British.  So if the British fired upon a neutral engaging in trade the British did not approve of these neutrals would fire back.  Thus isolating Britain.  And shortly thereafter Adams negotiated a couple of loans.  Got recognition as the minister representing the United States of America.  And as one of his first duties in that capacity he signed a treaty of commerce and friendship.  He may not have had the stature of a Washington or a Franklin but he had the same dedication to the cause.  And refused to quit.  He was successful.  But few other American diplomatic missions were.  And they probably caused more harm than good.  The antics of a few bringing ridicule to the new nation.  Franklin in fact did not approve of this ‘cold calling’ on countries for recognition and aid.  Perhaps explaining his laid back ways in France that so irritated Adams.  “A virgin state,” Franklin said, “should preserve its virgin character, and not go about suitoring for alliances, but wait with decent virgin dignity for the application of others.”  It seemed to do wonders for him.  And the nation.

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Byzantine Empire, Bosporus, Silk Road, Dutch East India Company, English East India Company, Tea Act and Opium Wars

Posted by PITHOCRATES - May 15th, 2012

History 101

To encourage Risk Takers to Travel Halfway around the World Mercantile States granted Monopoly Charters

The modern world began because Europeans had a penchant for silk and spices.  Something they enjoyed during Roman times.  When the Romans ruled the world.  And the Mediterranean Sea was nothing more than a Roman lake.  But when the empire stopped conquering new lands and sending the spoils of war home they had to turn to other means to pay for the cost of empire.  Taxes.  To pay for the Roman government and their public spending.  And the Roman legions.  This excessive government spending led to the fall of the western half of the empire.  But the eastern half lived on for another 1,000 years or so.  Why?  Because the capital of the Byzantine Empire was Constantinople.  On the Bosporus.  Trade crossroads of the world.

This city was so rich everybody wanted to conquer it.  So they could have all those riches.  For everything that came along the Silk Road from China crossed into Europe at the Bosporus.  Soon Muslims fought Christians in the Holy lands.  Then more Christians came.  The Crusaders.  Those who didn’t die went back to Europe with some of those Chinese luxuries.  Spices.  Silk.  Porcelain.  Etc.  Sparking a renewed interest in these finer things in Europe.  Especially the spices.  For European cooking was horribly bland at the time.  The Ottoman Turks eventually took Constantinople.  Renamed it Istanbul.  And controlled that lucrative trade.  Making those much sought after Asian goods rather expensive in Europe.  Which they had no choice but to pay.  Because if you wanted those luxuries you had to go through Istanbul.  Until the Portuguese sailed around Africa and found a direct route to those cherished goods, that is.

It was the Commercial Revolution.  A new age of international trade.  A trade even more profitable than what the Ottoman Turks controlled.  Because big ocean-going vessels can carry more cargo than anything coming over land on the Silk Road.  And these new European maritime powers wanted that wealth.  And the power it would provide.  To encourage risk takers to get into those wooden ships and travel halfway around the world they granted monopoly charters.  The Dutch East India Company (VOC) was one of the largest.  And one of the wealthiest.  But this was not your typical company.  The VOC established overseas colonies.  It waged war.  Established treaties.  Even coined its own money.  Because of this thousands of VOC ships stuffed full of valuable cargoes sailed to Antwerp and Amsterdam, making the Dutch very wealthy.  And powerful.

The Tea Act allowed the Company to Ship their Tea Directly to America and exempted them from any Duties

Of course the Dutch weren’t the only ones doing this.  They had competition.  Portugal.  Spain.  France.  And England.  Who would bump into each other numerous times fighting for control of this trade.  And those colonies.  The English and the Dutch would fight 4 wars.  Which is how Dutch-founded Manhattan became part of the British Empire and, subsequently, one of America’s greatest cities.  The English East India Company gave the VOC a run for its money.  Parliament even passed legislation to give the English a monopoly on all trade with their American colonies.  The Navigation Acts.  Which stated that all trade to and from America had to be on English ships.  And all trade had to go through an English port.  Where the ships were unloaded and the cargoes inspected.  And taxed.  Then they could reload their cargoes and continue on their journey.  All tenets of mercantilism.  This kept the lower-priced Dutch goods out of America.  And prevented the Americans from selling to the Dutch directly for higher prices.  So it shut down the Dutch from all American trade (except for a prosperous black market). And brought in some lucrative tax revenue for England.  While extending shipping times and increasing prices for the Americans.  Which they were not happy about in the least.

The English East India Company (the Company) was similar in structure to the VOC.  And soon made the Indian subcontinent a wholly owned subsidiary of the Company.  But it wasn’t cheap.  Waging war was costly.  As was managing those conquered territories (something the Romans had also learned).  Then a famine in Bengal in 1770 claimed about one-third of the local population.  Making laborers more scarce.  And more expensive.  All at a time when the sales of their imported goods were falling in Europe.  There were warehouses full of unsold Chinese tea that they couldn’t sell.  Making for a bad time for the Company.

Higher costs and lower sales spelled trouble.  And that’s what the Company had a lot of.  Trouble.  So the Company turned to Parliament for help.  And Parliament helped.  By allowing the Company to ship their tea directly to America without having to unload it in a British port.  Or pay a duty on that tea.  Which would greatly reduce their costs.  And allow them to sell it in America cheaper than they did before.  So Parliament passed the Tea Act in 1773.  Making life better for all involved.  But the Tea Act left in place another tax in the previous Townshend Acts.  Which was a bigger problem than getting cheaper tea (which they could get on the black market from the Dutch).  These taxes on the British subjects in America were unconstitutional.  Because there were no Americans sitting in Parliament.  This was taxation without representation.  A much bigger issue than cheap tea.  So they threw that first ‘cheap’ tea into Boston Harbor.  The Boston Tea Party being a major step towards war with the mother country.  And American independence.

Britain became the Lone Superpower after Abandoning their Protectionist Mercantile Policies and Adopting Free Trade

The American Revolutionary War was not the only headache the British got from their mercantile policies.  Part of those policies required maintaining a positive balance of trade.  So there was always a net inflow of bullion into the mother country.  That’s why raw materials shipped into Britain from America.  And finished goods shipped out to America.  Finished goods are more valuable than raw materials.  So the Americans had to make up for this balance of trade in bullion.  Resulting in a net inflow of bullion into the mother country.  Very simple.  As long as you can manufacture higher valued goods that other people want to buy.

And this is the problem they ran into with the Chinese.  For though the British wanted those Chinese spices, silk and porcelain the Chinese didn’t want anything the British manufactured.  Which meant Britain had to pay for those luxuries with bullion.  Including all that Chinese tea they craved.  Which resulted in a net outflow of bullion to the Chinese.  The British fixed this problem by finding the one thing that the Chinese people wanted.  Indian opium.  Grown in Bengal.  Of course, this turned a lot of Chinese into opium addicts.  The addiction problem was so bad that the Chinese banned opium.  But the British were able to smuggle it in.  They sold so much of it that they used the proceeds to buy their tea.  Thus reversing the bullion flow.

Not the finest hour in the British Empire.  The Chinese and the British would go on to fight a couple of wars over this opium trade.  The Opium Wars.  Which the British did all right in.  Even gaining Hong Kong in the bargain.  They didn’t build any long-lasting love with the Chinese people.  But Hong Kong turned out pretty nice under the British.  Especially after they abandoned their protectionist mercantile policies and adopted free trade.  Which made the British the lone superpower for about a century as they modernized the world by leading the way in the Industrial Revolution.  And the Chinese in Hong Kong were very happy indeed to be there when the communists took over the mainland.  And caused a famine or two.  For they lived comfortably.  In a state founded on mercantilism.  That achieved its greatest prosperity during the free trade of capitalism that followed Britain’s mercantile ways.

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Spice Trade, Arab Traders, Italian City-States, European Colonialism, Dutch East India Company and Dutch Banking

Posted by PITHOCRATES - January 10th, 2012

History 101

Venice and Genoa became the Ultimate Middlemen for those Delicious Asian Spices

The next time you cook a meal don’t use any spices.  Note how less delicious your meal is.  How much less you enjoy eating it.  And how little you eat.  Keep doing this and you’ll probably lose a lot of weight.  And be healthier.  Because your food will taste so terrible that you’ll eat less.  Which can be a good thing.  As eating less can cure cardiovascular disease and diabetes in many people.  But your food will be so bland that life itself will become bland.  And less enjoyable.  Then go out with some friends and eat some buffalo wings and nachos.  Note the difference.  Then go pay homage to the spice aisle at your grocery store.

Variety is the spice of life.  And a variety of spices to make your food taste better makes that life even better.  The ancient Egyptians knew this.  And they developed some of the earliest trade routes to Indian spice markets.  The Greeks and Romans knew it, too.  Who continued this spice trade.  Buying the spices that travelled along the Silk Road from China and the Spice Islands.  Into Constantinople.  Capital of the Eastern Roman Empire.  Which became the great Byzantine Empire.  Until this overland trade was interrupted by the Arabs.  Who took over the spice trade.  Especially those coveted spices from the Spice Islands.

Meanwhile in the West the Roman Empire fell.  And ushered in the European Dark Ages.  Where life became rather bland.  Until the Italian Renaissance.  Sparked by the rise of the great Italian city-states.  Such as Venice.  And Genoa.  Who developed international banking.  And merchant trade in the Mediterranean.  Based largely on that lucrative spice trade.  Where the mighty trade empires of Venice and Genoa became the ultimate middlemen for those delicious Asian spices.  A trade now dominated by the Arabs.  Who brought it to Mediterranean ports.  Where it boarded ships bound for the great Italian city-states.  The gateway to Europe.

The Quest for Asian Spices ushered in the Era of European Colonialism

Europeans tasted their food spiced with pepper.  Nutmeg.  And other spices.  They discovered a new word.  Delicious.  There was no going back to the bland days of the Middle Ages.  They wanted more.  And did not like the stranglehold the Arabs and the Italian city-states had on this trade.  They decided to do something about it.  And set their minds to finding the source of these great spices themselves.  And find a sea route directly to that source.

The Portuguese were first.  Vasco da Gama sailed around Africa and into the Indian Ocean in 1497.  Opening the first direct sea route from Europe to India for the Portuguese Crown.  While trying to find a western sea route for the Spanish Crown Christopher Columbus discovered The Bahamas in 1492.  In 1500, Portuguese Pedro Álvares Cabral accidentally discovered Brazil trying to follow the Vasco da Gama route.  He sailed a little too far west.  Which is why they speak Portuguese in Brazil today.  Ferdinand Magellan succeeded for the Spanish where Columbus failed.  He found that western route to the Spice Islands after sailing around that new continent that Columbus and Cabral bumped into.  South America.  Through the Straits of Magellan.  And back to Spain in 1522.  Well, not Magellan.  Or 4 of his 5 ships that originally sailed.  But one ship survived this voyage.  And it was full of spices.

The quest for Asian spices ushered in the era of European colonialism.  For there was big money in this spice trade.  So much that others wanted in, too.  Two of which came up with novel ways to fund this trade.  By selling stock in trading companies.  The two big ones were the British East India Company.  And the Dutch East India Company.  And it was the Dutch who showed the world what real banking was all about.  They blew away those great Italian city-states.  They were able to put greater fleets to sea.  And finance far greater trade than the Genoese or the Venetians ever dreamed.

Dutch Banking helped the Americans gain Legitimacy in the World of Nations

These trading companies did more than trade.  They settled colonies.  Negotiated international treaties.  Coined money.  Even waged war.  The Dutch and the British went to war in many places over their new colonies and the wealthy trade they produced.  In the Spice Islands.  China.  India.  Africa.  Even in the New World.  Where the Dutch traded Manhattan to the British for Run, another of the Spice Islands so the Dutch could corner the nutmeg market.

An interesting turn of events goes back to that Dutch banking.  After the United States won their independence from Britain one of the first loans the Americans secured to help pay their massive war debt was the one John Adams negotiated with the Dutch.  So Manhattan went from the Dutch to the British to the Americans.  And thanks to the Dutch it would stay American.  As the Americans were able to get their finances in order.  And gain legitimacy in the world of nations.  Not to mention becoming home of some of the finest restaurants in the world.  Serving some of the tastiest foods ever to grace a palate.

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The Line of Diocletian, the Byzantine Empire, Italian City-States, Banking, Usury and the Protestant Reformation

Posted by PITHOCRATES - January 3rd, 2012

History 101

Europe began to Awake from its Slumber of the Dark Ages in about 1300 Italy

Once upon a time the only lending was to help someone in need.  Such as someone with a poor harvest to survive the winter.  We did it out of the goodness of our hearts to help others in need.  So to charge interest for a loan like this would have been cruel.  Taking advantage of someone’s misfortune wasn’t the Christian thing to do.  Or the Jewish.  Or the Muslim.  That’s why no one then charged interest for loaning money.  You just didn’t kick a person when he or she was down.  And if you did you could expect some swift justice from the religious authorities.  As well as the state.

Rome was once the center of the civilized world.  All roads led to Rome, after all.  Then Diocletian split the Empire into two in 285.  Along the Line of Diocletian.  Into East (Greek) and West (Latin). The West included Rome and fell around 486, ushering in the European Dark Ages.  Meanwhile the Eastern half, the Byzantine Empire, carried on.  And skipped the Dark Ages.  Its capital was Constantinople (named in 330) .  Formerly Byzantium.  Modern day Istanbul.  Where all Asian overland trade routes led to.  This city of Emperor Constantine.  His city.  Who reunited East and West.  And adopted Christianity as the Empire’s new religion (381).  Located at the crossroads between Europe and Asia, trade flourished and made the Byzantine Empire rich.  And long lasting.  Until weakened by the Venetian-financed Fourth Crusade (1202–1204).  (The Latin Christians’ attack on the Greek Christians was fallout from the Great Schism of 1054 where Christianity split between Latin Catholic and Greek Orthodox).  And then falling to the Ottomans in 1453.

Europe began to awake from its slumber in about 1300 Italy.  Great city-states arose.  Genoa.  Pisa.  And Venice.  Like those early Greek city-states.  Great ports of international trade.  Rising into trade empires with the decline of the Byzantine Empire.  Where these Italian merchants bought and sold all of those Asian goods.  Putting great commercial fleets to sea to bring those Asian goods into Genoa, Pisa and Venice.  Getting rich.  But to make money they had to have money.  Because in the international trade game you had to first buy what you sold.  Which included the cost of those great merchant fleets.  And how did they pay for all of this?  They borrowed money from a new institution called banking.

That Europe that Slumbered during the Dark Ages Arose to Rule International Trade

Modern finance was born in Italy.  Everything that makes the commercial economy work today goes back to these Italian city-states.  From international banking and foreign exchange markets to insurance to the very bookkeeping that kept track of profits and losses.  It is here we see the first joint-stock company to finance and diversify the risk of commercial shipping.  London would use the joint-stock company to later finance the British East India Company.  And Amsterdam the Dutch East India company.  Where the Dutch and the English sent ships across oceans in search of trade.  Thanks to their mastery of celestial navigation.  And brought back a fortune in trade.  Putting the great Italian city-states out of business.  For their direct sea routes were far more profitable than the overland routes.  Because the holds of their ships could hold far more than any overland caravan could.

The Catholic opposition to usury (charging interest to borrow money) opened the new banking industry to the oppressed Jews in the European/Christian cities.  For it was one of the few things the Christian rulers let the Jews do.  Which they did.  Even though it was technically against their religion.  And they did it well.  For they had an early monopoly.  Thanks to that same Catholic Church.  Then came another schism in the Christian church.  The Protestant Reformation.  Where, among other things, Protestants said the Old Testament did not bind them to all rules that the Jews had to follow.  Then John Calvin took it a step further and said commercial loans could charge interest.  And, well, the rest is banking history.

Europe was then the dominant region of the world.  That region that slumbered during the Dark Ages arose to rule international trade.  Thanks to their navigational abilities.  And their banking centers.  Which financed their trade.  And the great things to come.

The Enlightenment led to the Modern World, Limited Government, the Industrial Revolution and Beyond

With the fall of the Byzantine Empire and the rise of the Italian city-states, Greek thinkers left the Byzantine Empire and went West.  To those rich Italian city-states.  Bringing with them great books of Greek knowledge.  The intellectual remnants of the Roman Empire.  Translated them.  And massed produced them on the new printing press.  And kicked off the Enlightenment.  Which then spread throughout Europe.

The Enlightenment led to the modern world.  From limited government.  To the Industrial Revolution.  And beyond.  All thanks to those Italian city-states.  International trade.  And banking.

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