Southeast Asia During the Spice Trade

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  • 0:01 The Spice Islands
  • 1:05 Portugal, Then Holland
  • 3:05 European Impact on Malay Areas
  • 4:43 Lesson Summary
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Lesson Transcript
Instructor: Kevin Newton

Kevin has edited encyclopedias, taught history, and has an MA in Islamic law/finance. He has since founded his own financial advice firm, Newton Analytical.

Pirates, gold, and spicy food. The story of European involvement in Southeast Asia shows how the Portuguese inability to adapt, combined with the joint-stock companies of the Dutch, were able to change the face of Southeast Asia.

The Spice Islands

For hundreds of years, the islands of modern Indonesia and Malaysia were centers of one of the richest trades in the world. The equivalent of billions of dollars of trade took place over an area comprised of countless city-states, with waters plied by pirates, whose activities merchants regarded simply as a cost of business. In short, it was a merchant's dream, with relatively little in the way of restriction on commerce beyond taxes. Europeans would exchange bags of them for equivalent weights in gold and silver. In fact, the goods being traded by these Southeast Asian merchants are today found in practically every recipe imaginable, from cloves in holiday cookies to pepper in just about everything.

Even today, many of the world's spices come from these islands, which made the many small kingdoms that ruled those city-states surprisingly wealthy during their heyday. While in Java, one of the most important of the Spice Island kingdoms, and on assignment for the extremely wealthy Kublai Khan, Marco Polo remarked that Java was the richest country in the world.

Portugal, Then Holland

Needless to say, all this wealth was hard to avoid and helped to spur European exploration during the late 15th century. After the Spanish found a route sailing west to the islands that were rumored to be the East Indies, the Portuguese began to explore new ways to grow their own fortunes. With the 1494 Treaty of Tordesillas, by which the Pope guaranteed all new lands east of Spanish claims to Portugal, Portugal saw it as a legal obligation to sail west. As a side note, other Europeans, especially the French and English, saw this as reason to ignore the Pope's treaty. By 1498, Vasco da Gama had sailed around the southernmost tip of Africa and entered the Indian Ocean. Within a few short years, the Portuguese had established trading posts throughout Asia.

It would seem that Portugal was well prepared to dominate trade in this part of this world, if not for a number of external factors. First, Portugal would be incorporated into a royal union with Spain, and the Spanish were more keen on furthering their own colonial domains than those of the Portuguese. However, the advent of the joint-stock corporation would be the real cause of downfall for the Portuguese merchants in Southeast Asia. Portuguese missions were sponsored by the government, which saw expeditions halfway around the world as profitable but could not very well prioritize them above national defense.

Conversely, a joint-stock company, which was owned by individuals and managed with the expectation of returning profits, could have no other priority than that expedition halfway around the world. The Dutch were among the first to bring this concept to colonies in Southeast Asia, and as a result of greater motivation for profit, soon competed the Portuguese out of Southeast Asia. The Dutch East India Company would have a lasting impact on the region, as more Dutch merchants moved to the region. The islands of Indonesia would eventually become a Dutch colony.

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