00:10:20 · Ty Morse, Ryan Petersen
[00:10:20] S0: for And [00:10:23] S1: I forget the exact coordinating mechanism, a bunch of these merchants got together and they pooled their ships and said, Hey, we're gonna create this stock company and allocate shares to everybody, and it'll have this monopoly on trade in the East Indies. And and and then it got listed. It was the first listed public company where you could buy... These shares that you put in became tradable. And, yeah, it was a couple hundred years of, domination. Of course, the British eventually came and and took it over with the... And the the British East India Company took over the took over the business. But, but, yeah, that's that's kind of the origins of it was, some kind of early form of getting together and creating a monopoly, which now would be illegal under antitrust laws. [00:11:09] S0: I think it was a de facto government in effect. It was like a tradable government. [00:11:13] S1: Yeah. Especially the British East India Company. It was absolutely the government that ruled India for a couple hundred years. [00:11:20] S0: Do you want to go through kind of the history of the, like, major superpowers from Dutch to
00:11:25 · Ryan Petersen
[00:11:25] S1: Oh, you start there. I mean, you go way further back in time. And if you go all the way to the beach, trade is as old as... It's older than art. There's evidence for long distance trade going back, like, 40,000 years. The first cave paintings, they think, are like 25,000 years old. You can go way, way back, and most empires are built on trade. Roman legions marched on Egyptian grain, and it was a big part of that trade of bringing grain from around Mediterranean. I would say the Venetians trading throughout the Mediterranean were the dominant power from, like, it 1100 till they conquered Constantinople in twelve hundred, twelve oh four. So, and a lot of the, actually the crusades were as much about trade as they were about religion, being able to trade with the East and fighting for control over trade because the modern Israel is before the Suez Canal was an incredibly important trade nexus to reach between Asia and the Mediterranean. So the Venetians had rivals, the Genoese, and even Florence, which is not even on the water, but became really active in banking and trading through all these merchant fairs that they would have. So moving goods, moving, moving money was at in the, in the old days, hundreds of years ago, was physical. Like you had to actually be a logistics company to be a bank. Until not that long ago, mean, Wells Fargo and American Express both started as freight forwarding companies because you had to move the gold. Here in the American West, you had to get the gold on stage. That's why Wells Fargo has a stagecoach, a little bit their logo. Right? So you had Venice trading with the Muslims, and I think the the discovery by the Portuguese, the invention of the caravel, a lot of other early technologies, trade has largely been driven by these development of new technology. The quadrant, the sextant, some of these, the clock, the, the clock is incredibly important for positioning yourself. You can't do, can't do longitude without a clock. You need to know where you are in the world. You need to know what time it is when that's how you determine where you are in the world. And so these technologies, especially Henry the Navigator in the Portuguese, sort of like the original venture capital was funding this exploration down the coast of Africa. They didn't know where they were going to go.
00:13:54 · Ryan Petersen, Ty Morse
Don't know that they actually expected in the early days of Henry the Navigator to make it around Africa. They just realized that it was quite profitable, trading in slaves, discovering new lands. They discovered Madeira. Madeira is an island. Now it's most famously known as Cristiano Ronaldo's birthplace, but Madeira was this uninhabited island that... Madeira means wood. It was heavily forested. Now there's no trees there. They chopped them all down. Became very, very profitable. They set up vineyards there. I mean, land was, like, unheard of at that time. They hadn't discovered the Americas yet. So they realized it was profitable. They kept reinvesting those profits. And eventually, Vasco de Gama rounded the, the cape a few years after Columbus discovered the Americas, around 1498. 1498 is when they made it to around the, Cape Of Good Hope and made it to India. In the Islamic world, put down the set of iron curtain. You could trade, and they were very open to trade with the Venetians who were essentially allied with the Muslim caliphates and the Ottomans, but they could trade, but they couldn't go beyond. And the main things they wanted from the East were spices. Spices are really good for long distance trade in that time because they're very small and very, very valuable. [00:15:16] S0: You could just like dry them out and they wouldn't go bad. [00:15:18] S1: Yeah, they weren't that perishable and the value to weight density ratio is just so high. And so the markup, I think it was at least 1000x, it might have been 10000x from if you bought the spices...
00:15:18 · Ryan Petersen, Ty Morse
[00:15:18] S1: Yeah, they weren't that perishable and the value to weight density ratio is just so high. And so the markup, I think it was at least 1000x, it might have been 10000x from if you bought the spices... [00:15:31] S0: In India? [00:15:32] S1: No. The spices really originate in Indonesia in the spice islands called the Malukas. By the time they got to India, they were probably already marked up like 20 x or something, and then another 20 x, you you pretty quickly get to a thousand x or more once you reach Venice. And so there was this huge... People didn't know that, but they knew for sure, you know, you wanna get to the source, of these things. And you didn't even know where they were from. Really had no... It was like a lot of mythology. You didn't know. [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
00:16:01 · 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