The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor (W W Norton & Company; 1998)

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silk (from Bengal), indigo, and saltpeter;* also pepper, while conced­
ing the cosdier, rarer spices to the Dutch. But pepper, once the lode-
stone of European exploration and expansion, was in decline. New
areas of cultivation had opened up; supply exceeded demand. The price
of pepper sank so far that this once noble spice had to earn its way to
Europe as ballast on certain routes.**
India led to China. When Europeans entered the Indian Ocean,
they found a flourishing network of trade linking Asia from east to
west, from China, Japan, and the Philippines to the caravan stations
and ports of the Levant and East Africa. The intruders forced their way
in. In the eighteenth century, European appetite for Chinese goods
grew rapidly: porcelains, which Europe did not learn to manufacture
until the 1720s; raw silk; and tea, an addictive substance complemen­
tary to West Indian sugar.
These purchases posed a payments problem. The Europeans would
have liked to pay with their own manufactures, but the Chinese wanted
almost nothing they made (clocks and watches were a great excep­
tion). So the Europeans paid in bullion and specie, but that only shifted
the problem: what could they sell for Spanish silver, Japanese or Brazil­
ian gold? Not easy.
The answer, of course, was to find something the Chinese wanted.
This turned out to be opium, grown in Bengal and market-making as
well as habit-forming. Here the British had a big advantage over the
Dutch. In principle the traders of both nations had the right to com­
pete for this commodity, but the British used their growing political
power in the region to squeeze the Dutch out—a major blow.
The English, then, after starting with the Dutch, now moved well



  • Saltpeter (potassium nitrate, KN0 3 ) was an essential ingredient of gunpowder,
    hence a raw material of unusual political as well as economic potency. The nitrogen was
    recovered from soil deposits of urine, which contains urea (CO(NH 2 ) 2 ); and India,
    with a population as large as that of western Europe, produced a lot of urine while pos­
    sessing singularly favorable soil conditions. Compounds of nitrogen are an essential in­
    gredient of all manner of explosives (thus nitrocellulose and nitroglycerine), and as
    early as the fifteenth century, Henry V ordered that gunpowder not be exported from
    England without a license. Such countries as France and Germany tried to give nature
    a helping hand by creating saltpeter farms or nitriaries. The opening of a large Indian
    supply provided an important strategic advantage.
    ** As ballast, it made some East India ships smell better than most vessels on the long
    oceanic reaches, but it had one inconvenience. Its overpowering odor altered the fla­
    vor of goods in transport, in particular coffee. The English had to reconcile themselves
    to lower prices for coffee moved on pepper. But they needed that ballast. It made all
    the difference to stability in stormy waters—Chaudhuri, Trading World of Asia, p. 313.

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