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The first great European merchant empires to establish global commercial networks during the early modern era were those of Spain and Portugal, on the Iberian Peninsula, during the fifteenth and sixteenth centuries. But their trading companies appeared later than, and in response to, those of their European rivals, especially the Dutch and the English.
Those commercial trading networks of Spain and Portugal on the Iberian Peninsula provided substantial revenue for both countries and galvanized rival European powers to tap into lucrative markets in the Americas, Asia, and Africa, where, for instance, they traded in European horses, leather, textiles, pepper, Sudanese ivory, metal products for luxury goods such as gold, and slaves. Because the Iberian powers had the advantage in first establishing these economic structures with few other European rivals in these global markets, Iberian companies were not necessary, at least initially. Spanish and Portuguese trading companies patterned along lines similar to the companies of their Dutch and English rivals appeared during the seventeenth and eighteenth centuries.
Exploration and Trade Expansion
The chance to profit from commercial opportunities drove both the Portuguese and the Spanish in their exploratory voyages, which were outgrowths of those conducted during the Middle Ages. Two such voyages were the rediscovery of the Canary Islands in the mid- 1300s by Genoese sailors in service to Portugal and the 1291 voyage of Ugolino and Vadino di Vivaldi, who disappeared near Safi, Morocco, due to their attempt to circumnavigate Africa.
Beginning in the early fifteenth century, the Portuguese extended their influence in the Atlantic Ocean through a series of journeys down the West African coast. In exchange for Iberian agricultural products, the Portuguese received gold, fish, and slaves from North Africa. Establishing colonies and sugar plantations in places such as the Azores and Madeira islands permitted the Portuguese to obtain a geographic advantage in their further exploration of economic opportunities in Africa.
The foundation of fortified trading posts was significant for the development of Portugal’s economic empire. Sao Jorge de Mina, located in modern Ghana, was one such post, where the Portuguese traded European horses, leather, textiles, pepper, Sudanese ivory, metal products for luxury goods such as gold, and slaves. Profits received from this trade helped the Portuguese to fund further explorations down the coast. These posts, established soon after the first Portuguese incursions were made into new areas, were designed to control trading routes. Through the supposed military superiority of their ships and cannons, the Portuguese sought to force other merchant vessels to dock at these posts and pay duties. By the middle of the sixteenth century the Portuguese had more than fifty such fortified entrepots, extending from West Africa to East Asia. But thanks to the strength of Muslim, Indian, and Malay merchants, combined with the dearth of Portuguese vessels, Portuguese dominance of the Indian Ocean shipping lanes was never a foregone conclusion.
Spain, though it maintained a distinct economic presence in the Far East, focused its mercantile attentions largely toward the Americas. Spain founded an empire based on land rather than setting up a string of trading ports as did the Portuguese. The 1545 discovery of enormous deposits of silver in Potosi, located in modern Bolivia, was a watershed event for Spain’s imperial history. Mining became a singularly important industry within Spanish American territories, and the silver galleons that sailed the seas from Acapulco to Manila were crucial to Spain’s political and mercantile empire. Demand for silver, the principal currency of the Chinese economy, was very high within Asian markets. Between 1570 and 1780 CE anywhere from 4,000 to 5,000 tons of silver crossed the Pacific Ocean. Because the Spanish crown received a fifth of the bullion, the trade in gold and silver across both oceans was quite lucrative.
Trading Companies
Though Portuguese and Spanish trading companies are not as well known as their English or Dutch counterparts, such as the English East India Company or the Dutch United East India Company (Vereenigde Oost-Indische Compagnie), privileged Iberian trading companies nonetheless played a substantial role in the early modern era. In 1685, the Portuguese founded a company for the purchase of slaves, one of the more profitable aspects of their transatlantic trade. It was not until the eighteenth century that the Spanish formally chartered several companies for their trade in the Indies. The 1728 founding of the Royal Guipuzocan Company of Caracas linked Venezuela with the Basque country in Spain and monopolized the cacao market until 1780. Additional Spanish companies included the Royal Company of Havana, founded in 1749 and designed to spur interest in Cuban agriculture and trade; the 1747 Royal Company of San Fernando of Seville, which focused on parts of the South American trade that were not covered by other companies; and the Royal Company of Barcelona, founded in 1765, which covered trade with the islands of Santo Domingo, Puerto Rico, and Margarita. These companies, designed to revive Spanish fleets and drive out foreign merchants, did not monopolize trade in the Caribbean for long. The Seven Years’ War (1756–1763) saw the Spanish government open trade to Spanish ports left out of official companies’ trading partnerships. In 1778, the government allowed partial foreign shipping into the Indies and restrictions on free trade were lifted completely in 1789.
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