Trading with Asia Without a Colonial Empire in Asia: Swedish Merchant Networks and Chartered Company Trade, 1760–1790

chapter 9 Trading with Asia without a Colonial Empire in Asia: Swedish Merchant Networks and Chartered Company Trade, 1760–1790

Leos Müller

Merchants, …yet as they form a kind of separate Republic of themselves, independent of the several Governments under which they live, their Connections in one Relation often jar with their Duties in another, since they make a Link of that Chain in which the Enemies of their Country are not the less united. james marriott, A Letter to the Dutch Merchants in England (London: M. Cooper, 1759), 15–16

Introduction

Modern studies of long-distance trade in the early modern period follow two clearly distinct paths, which also correspond with two perceptions of seventeenth and eighteenth-century international trade. On the one hand, the history of global trade is presented as a story of the removal of barriers to trade and the decline in transaction and transport costs. This story reflects the idea of the free market economy as the most efficient device for distributing goods, both necessities and luxuries alike. The most influential description of this concept is embodied in the work and in modern readings of Adam Smith. Past and pres- ent trade regimes are evaluated as more or as less free, in line with this story. From this perspective, the eighteenth-century mercantilist trade regimes have often been perceived as backward and as obstacles to economic development.1 On the other hand, however, there is the eighteenth-century economic real- ity, which is much more complicated than the first story suggests. These two views of trade, firstly as regulated and state-controlled ‘un-free’ trade, and sec- ondly as trade ‘free’ from the state and allowing for independent economic

1 Kevin H. O’Rourke and Jeffrey G. Williamson, Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy. Cambridge, Mass.: Harvard University Press, 1999. In Sweden an illustration of this story can be found in the work of Eli F. Heckscher, the leading figure in 20th-century Swedish economics and economic history.

TRADING WITH ASIA WITHOUT A COLONIAL EMPIRE IN ASIA 237 activity, were in fact able to co-exist side by side. As the quote by James Marriott from the war year of 1759 indicates, merchants could perceive themselves as free and as “a kind of separate Republic of themselves”. They mediated connections between different parts of the world, even between enemy states, and, in this way, made the world a better, more civilized place to live in. This connection between trade and the rise of civilization is clearly discernible in eighteenth- century political and economic thought.2 Using our modern terminology we may identify the merchants’ “republic of themselves” as a self-organizing net- work or a number of self-organizing networks. This eighteenth-century view is also close to the modern concept of a market economy and free global trade. Mercantilism then, of course, represents the second concept of trade rela- tions, where international trade was seen as a competition between states for gold and silver, raw materials, goods, trade profits and so on. In mercantilist thought there was a similarity in trade between states and warfare between states. Commercial losses in one part of a business were comparable to the loss of territory in war, while profits (benefits) in the other part were comparable to the conquered territory. Trade was ultimately a zero-sum game, in which one person’s profit was another’s loss. Mercantilist thinkers produced a huge volume of works containing guide- lines and recommendations on how to structure international trade for the benefit of the state. Behind the state’s interest in international trade was the rising awareness of trade’s importance as a source of state revenue. Duties on foreign trade in the seventeenth and eighteenth centuries, along with sales taxes, profits from monopoly trade and fines imposed on luxuries, became a crucial and, this is important to stress, dynamic source of income for the state.3 The dynamic development of international trade encouraged mercantile states to invest in trade, shipping and colonial empires and, not least, to par- ticipate in wars for the sake of trade and colonies.4 The mercantilist policies of the leading Western European states shaped the arena of international and colonial trade. There were policies regulating duties on imports and exports and on raw materials and luxury goods, as well, of course, as prohibitions on imports and exports. Such overarching trade regulations

2 Koen Stapelbroek, Love, self-deceit, and money: commerce and morality in the early Neapolitan enlightenment. Toronto: University of Toronto Press, 2008. 3 Patrick K. O’Brien, “The political economy of British taxation, 1660–1815”. Economic History Review, 41 (1988): 1–32. 4 For the relationship between mercantilism and economic development, see Ronald Findlay and Kevin O’Rourke, Power and Plenty. Trade War and the World Economy in the Second Millennium. Princeton, nj: Princeton University Press, 2007: 227–310.