00:16:01 · Ty Morse, Ryan Petersen
[00:16:01] S0: Oh, so the people in, you know, England might've been buying cayenne pepper or something, and they were like, we don't know. They They know companies are [00:16:08] S1: the shore. Yeah. Magical, mythical East, full of wealth and Aladdin genies or whatever. But... So that was driving a lot of the early exploration, to try to get to the source of these spices and other goods. So Vasco da Gama kind of makes this end around the iron curtain of Islam and being able to go. That really opens up the Portuguese empire. And and then, as I said earlier, the Dutch eventually take over and then and then the British and and Venice goes into decline. It took about a hundred years. Actually, it's one of the things that people miss with these new technologies, new trade routes. There's a there's a there's a relatively gradual... It's not instant. You know? People think, oh, we, we invented AI, now tomorrow the whole world changes. Like, actually, takes a [00:16:59] S0: huge amount of inertia. [00:17:00] S1: Yeah. There's some inertia, there's adoption cycles, there's getting people to actually go that way. Mean, Venice continued to prosper. The golden age of Venice, I mean, lasted well, another hundred years after that. It took a while because in the beginning, you're like, okay. I sent one ship over there. Came back with a bunch of spices, but, like, it's 0.1% of the market or something. Like, it takes time even with an exponential curve for it to have that kind of an impact. [00:17:26] S0: And at the time, like how long did it take a ship to get from Indonesia to Britain?
00:17:31 · Ryan Petersen
[00:17:31] S1: It might be a year or more. I mean, just, I think just to India was about a year and probably another six months from there. And you could only go once a year because of the monsoon winds crossing the Indian Ocean. So it's sort of an annual out and back, maybe three years journey or something like this. Wasn't, the Suez Canal was hugely important for this. Would cut off, and that was already in the age of steam. It cut off massive amounts of, travel time. Now, when corporations start to take over from governments, I mean, it's gone back and forth, right? You had the mention that the Dutch East India Company, the English East India Company came in effectively. Think they were sort of reluctant. I'm probably going to get in trouble in India for this. I've I've... It's one way to make our podcast go viral, by the way, is to say something that offends Indians, and they'll go they'll go totally crazy. I don't mean to offend. I may I may be... May have learned my history differently or might be wrong, but I think the East India Company was somewhat... The British East India Company were somewhat reluctant conquerors. They they came to trade. They were doing a lot of trade. And in some of what they did really kind of created a lot of breakdowns in Indian society. Some of that was through power force protection, through taking sides in local armies. Some of it was trade networks that were developed, displaced current economic powers and political dynamics. But India largely devolved into chaos during this time. And I don't think they're unrelated. I think it was probably caused by the English East India Company. And then they realized, hey, this chaos is bad for business. Like, there's civil wars everywhere. It's like the anarchy is... Has formed across the subcontinent. And they ended up feeling that they had... They felt compelled to one way or the other conquer India and become the government of India, which they were for for a long time before the British government effectively took it over and made it truly a colony. For a long time, it was just run by a corporation, which is one of the more
00:19:31 · Ty Morse, Ryan Petersen
[00:19:31] S0: It's a wild thing to think about. [00:19:32] S1: Screwed up forms of government you could ever have as an actual corporation running it for profit for profit of people who don't even live there, back in England. Actually, one of the interesting things is how do these corporations become monopolies in the first place? How do they get the government to agree to that? It was large... I think it was largely through bribery. Where Just [00:19:50] S0: paying off the right politicians?
00:19:50 · Ty Morse, Ryan Petersen
[00:19:50] S0: paying off the right politicians? [00:19:51] S1: Yeah. They gave the politicians big shares in the company, and created these monopolies so that only the British East India Company was allowed to sail on behalf of Britain. Then the British Navy made sure that the French and others couldn't trade. The French were there in a big way. In fact, it was only with the Napoleonic Wars... Some of the Napoleonic Wars were fought in India. Was a very global war, but the French had big settlement in what's now Chennai, Madras. It was Pondicherry, as it was called at the time, but it was Eastern Side of India. There was French colony there that the British took over during the Napoleonic Wars. The British Navy did their best to box out other competitors and made sure it was only the East India Company or later the Raj that could trade. But over time, the networks changed. So the the British had a really hard time finding anything. This was especially true in China, but also in India. Was a hard time to find things that these people wanted to buy from from Britain. Mhmm. The balance of payments wasn't looking very good in the beginning. [00:20:54] S0: So was it kind of like The US and China today where lots of goods flow to The US but then the empty ship flows back to China? [00:20:59] S1: It was a bit like that except that they weren't accepting the British pound in money printing like we have now. [00:21:06] S0: So there was a lack of trust in currency?
00:21:06 · Ty Morse, Ryan Petersen
[00:21:06] S0: So there was a lack of trust in currency? [00:21:07] S1: It was a lack of... Well, they had to use hard metal. It wasn't fiat. It was traded with silver and bullion, and it became a huge drain, especially China. Like the Chinese produced lots of things that the British wanted, tea, silk, porcelain, probably some other stuff. But those are the big ones. And the British didn't have anything at scale that they wanted. They had mechanical clocks that people thought were interesting and stuff, but basically the Chinese were pretty self sufficient, and these guys would show up with British textiles that weren't very quality compared to the local stuff, and there was nothing to trade. So what they did want was silver. So it was really draining the silver reserves of of the Europeans doing this trade. It had... And where you get silver from, of course, mostly from The Americas, from Peru, from Potosi, the the mine in, in Peru, in Bolivia, excuse me. And actually about 25% of all the silver mined in The Americas went across the Pacific, not across the Atlantic, which sailed via this Manila galleon, sailed to Manila. And Manila... The Philippines became a trading hub because the the Chinese were banned from trade, externally. And so they had to sneak out to The Philippines and do their trade with the Europeans there. [00:22:31] S0: Why were they banned from trade? [00:22:33] S1: The Ming dynasty had banned trade. That's considered a huge tactical blunder. Stopped allowing overseas trade. [00:22:41] S0: What was the logic behind that decision?
00:22:43 · Ryan Petersen
[00:22:43] S1: I think it was mostly government run operation up until then. Naval going, and it was really draining their funds. They weren't seeing a return from it. They weren't looking at overseas commerce as a commercial adventure. It was largely diplomatic. It was power projection. It was symbolic. They would build these treasure fleets and go sail the world to show how great China was and get people to kind of bend the knee and do some diplomacy. But it wasn't profitable at all. And there was a new emperor and he said, enough of this. We got our own problems here domestically. We're going to stop that, stop funding it. And they actually banned overseas trade during the Ming dynasty about sixty years or something, fifty years before Vasco da Gama rounded the Cape. I mean, it's a great alternative history of what would have happened if the Chinese had been there in force with their their much larger, more powerful ships than what the Europeans had. So anyways, the Chinese were banned, they would have to come down to Manila to get to get trade... To get, to do trade. And so the Spanish sent this galleon every year. Actually, it would come by here in California, sail up the coast and then cross over. I forget where they would head out to sea, but, but in California somewhere and head out to see, trade the silver in Manila, but it was... It's not good for the... You don't want to just give up all your silver. And so eventually the British figured out that the Chinese did want opium, which came from India, from Afghanistan, and that became the main business of the British East India Company, that most of the profits... I don't think the other stuff they were doing was that profitable.