The Spice Trade

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July 2013
Ivan Obolensky

One of the most coveted and desired occupations for the budding entrepreneur of the 15th and 16th century was to be an explorer. This was not due to potential explorers wanting to fulfill an overly developed desire for adventure, but because they dreamed of riches.

How was it possible to gain great wealth from exploration?

Although conquest, outright theft, and colonization became preferred methods once it was discovered how easily indigenous peoples could be taken advantage of militarily, the original impetus for exploration was not conquest. It was trade; particularly, the trade for spices.

The most beguiling and intriguing idea in early exploration was to find an alternate trade route to India and the Far East.

During this time, the fabled Silk Road from the Orient passed by means of its northern route from China through what is now Kazakhstan, Uzbekistan, and Afghanistan into the Middle East and then to Europe. The alternate was through the southern route along the Karakoram highway through what is now northern Pakistan through Afghanistan.

Arab traders also carried goods by ship from the Indian Ocean to the Gulf of Hormuz.

These routes carried spices, silks, gold, and gemstones from the East to the West. Trade moved along in both directions and has since the beginnings of civilization.

For example, images of Alexander the Great have been discovered on silver coins in Afghanistan and Northern India while antique Roman glassware has been found in China. Roman women were reported to have worn sheer silks from Serica, the name for China that was used by Ancient Greeks and Romans to name the land where silks came from.1

Europe, even as far back as the Roman Empire, has had a taste for luxuries–particularly spices such as ginger, cloves, saffron, pepper, and cinnamon, to name a few. Those who controlled this trade grew wealthy. The Middle East prospered for thousands of years long before there was a use for oil because of the spice trade. As the middleman they were able to buy spice cheaply in India and beyond and sell it to those who would distribute it to consumers throughout Europe. The trade was strictly controlled and how much markup the goods received when passed onto the consumer was closely guarded.

Early European explorers were flabbergasted at the profit margins once they discovered what the prices were on the other side of the world.

As an example, the local price of pepper in India during the 15<sup>th</sup> century was 3 ducats per quintal.

A ducat was a gold coin and weighed about an ounce. It was issued by several countries such as Hungary, but was used mostly in Venice, the trading capital of Europe during those times.

A quintal was a unit of weight that fluctuated depending on the location. In Portugal, a quintal was approximately 125 pounds. Using modern gold equivalents, 125 pounds of pepper could be bought for $3,000 to $4,000 dollars in Goa or Calcutta during the period. This same 125 pounds of pepper in Venice fetched $100,000 to $120,000 dollars for a markup of some 2,700% or 27 times.

Trade in nutmeg was even more lucrative. One quintal of nutmeg purchased for the same $3,000 to $4,000 dollars from the Banda Islands in the Indian Ocean 2,000 miles east of Java would fetch an astonishing $2,100,000 in London, or Paris. It sold at 600 times its cost to produce. Cinnamon from Ceylon, again weighing one quintal (125 pounds), would be worth a staggering three million dollars.2

To put this in a modern perspective, if one took the same amount of cocaine (one quintal, 125 lb) which might be had today for $125,000 at the source and sold at wholesale in New York, it would fetch 1.7 million dollars. This represents a markup of only thirteen times. The lowly pepper in its heyday fetched wholesale in Venice three times more profit than today’s cocaine. Compared to the profit potential of nutmeg at the time, the modern drug trafficker is not even in the same league. Spice, it seems, was the drug of choice during the Middle Ages and the Renaissance and was even more expensive.3

Given this pricing perspective and the lengths those involved in the illegal drug trade go to, imagine the lengths European traders or explorers went to secure such extraordinary profits.

Put another way, suppose one could put one’s entire life savings into an investment that increased not just ten times the initial investment in three to five years, but potentially by a factor of 100 during that time? Would you be tempted? This puts a whole new spin on Christopher Columbus and the popular phrase “I’m waiting for my ship to come in.”

When one conjures up images of Francis Drake, Walter Raleigh, Henry Hudson, and Vasco da Gama perhaps one can appreciate what drove these men to endure the hardships, privations, and the unknowns they had to face. Part of the necessary skill set included the salesmanship and influence to convince one’s monarch to make “just a small investment in the form of a ship” in order to gain this extraordinary potential.

The Italians, particularly the Duchy of Venice, thrived off the trade that moved overland from the Far East and India. Goods passed through the hands of Venetian traders before being distributed to the rest of Europe. Banking, accounting, and mathematics flourished in this trading environment. The wealth of this Italian city-state during the 15th century was legendary.

Many were envious. Spain and Portugal, try as they might, could not get a foot in the door because the Italians had the market locked down and would tolerate no encroachment.

Christopher Columbus tried to get financial backing from the Portuguese as well as the Italians for his attempt to find an alternate route to the fabled Indies (India). The Portuguese turned him down because they were onto something on their own that would eventually change the entire European balance of power and sink the fortunes of many an Italian banking house.

Henry the Navigator and King Joao II of Portugal invested heavily in shipping and in moving step-by-step around the coast of Africa. Eventually Bartolomeu Dias from Portugal was swept around the Cape of Good Hope by a storm and the fabulous East lay before him.4 When Dias returned to Lisbon in 1488 with the portentous news that Portugal was about to capture the spice trade at its source, it is possible such news reached the halls of Castile because Isabel and Ferdinand shortly thereafter reconsidered the Columbus proposal.

Consider their decision: at the time the Italians and their banking elements controlled the flow of spice through the Middle East and into Europe while the Portuguese were about to make an inroad into that trade by moving ships around Africa which they would defend by force. That left only one more potential avenue to break into spice trade: sailing West on the Atlantic Ocean. Strategically the decision to back Columbus made sense. Columbus as well had softened his original request and offered to undertake the voyage on the basis of a 10% contingency fee payable to himself and his heirs, but only upon success of the venture. The Head of the Privy Purse of Ferdinand, Luis de Santangel, offered to be responsible for raising the funds, which were minor compared to the war chests required to oust the Moors from Spain.5

One of the areas most affected by this shift of power was European cuisine.

It did not take long for Portugal to capitalize on its breaking of the Italian spice trade monopoly. Vasco da Gama, another Portuguese, soon worked out trade concessions in Calcutta. The Muslims considered the Portuguese trading rivals and fought back. They too knew the amount of wealth at stake, but they were soundly defeated by Francisco de Almeida in 1509. In 1510, Alfonso de Albuquerque secured the Indian Ocean for Portugal and took Malaka in Malaysia, which gave him control of most of the Spice Islands. Portugal now had command of every link in the spice chain from cultivation to sale in Lisbon.

Prices of all spices dropped like a rock. Pepper, once an Italian and Venetian monopoly was no longer theirs. Italian banks and trading houses failed as money flooded Portugal. By 1588 the profits from this trade alone accounted for half the Portuguese government income. Just as the Venetians had squeezed their Christian brethren by demanding exorbitant prices for spices so did the Portuguese.

This did not sit well with Italy.

The Italians had since Roman times created spicy food. Roman matrons would brag that no one could tell the type of meat being served because of the amount of spice added to their sauces.

Renaissance cuisine amongst those at the top was in the same way not simple rustic fare but dishes steeped in sauces and marinades that were hot and piquant. They after all ruled the spice trade. After 1503 the Italians (in a remarkable about-face) embarked on a completely new style of cuisine that was at once light and simple. They decided to redo the idea of food preparation by letting the natural flavors of the food appear in subtle ways by abstaining from the heavy use of spices that would tend to overshadow and mask the flavors inherent in the foods themselves. This idea caught on gradually and gained ground throughout Europe. It transformed how we eat even to this day.6

During this time, the rest of Europe (particularly in the North) was profoundly jealous of the Portuguese spice trade and the Spanish discoveries in the Americas. They too wanted a stake in this wealth in what could only be considered to be the drug traffic of the Renaissance. To do so, they needed to understand the world in which they were living and to find out what else was out there. The result was an extraordinary rejuvenation in the whole idea of discovery that affected all areas of life but in particular the sciences, engineering, and general knowledge of the world.

Perhaps it might be worth mentioning the possibilities that might present themselves if a commodity of similar magnitude to spices back then was discovered today on some remote moon of Jupiter. Imagine the vigor the world would begin to instill in space exploration. He who dares wins.


1. Millward, J. A. (2013). The Silk Road, A Very Short Introduction. Oxford, Great Britain: Oxford University Press
2. Kealey, T. (2008). Sex, Science and Profits, How People Evolved To Make Money. London, UK: Vintage Books
3. Vulliamy, E. (2013). “Medellin, Colombia: reinventing the world’s dangerous city”, The Observer, June 9th, 2013. Retrieved July 24, 2013 from http://www.psfk.com/2013/06/medellin-colombia-most-dangerous-city.html.
4. Kealey, op. cit.
5.
Bueno de Mesquita, B. (2003). Principles of International Politics, People’s Power, Preferences and Perceptions. Second Edition. Washington, D.C.: CQ Press
6. Kealey, op. cit.


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© 2013 Ivan Obolensky. All rights reserved. No part of this publication can be reproduced without the written permission from the author.

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