The Spice Trade

The five major civilizations from the 4th to the 1st millenniums BC were the Indus Valley Civilization in India, the Sumerians in modern Iraq, the Egyptians, the Greeks on the isle of Crete, and the Chinese in the land north of the Himalayas. The use of spices in food, medicine, and cosmetics began as settlements organized in the Indus Valley and across Mesopotamia from Judea to the Nile Valley in Egypt around 9000 BC. Around the same time, livestock domestication took place in the Middle East, Hindu Kush, and western Indian plains. By 3000 BC, turmeric, cardamom, pepper, and mustard were in cultivation.

These goods and their trade were essential to the economies and cultures of these regions. The three major transcontinental trade routes included the Incense Route, the Spice Route, and the Silk Road. The Spice Road connected India and southeaster
Asia to the Mediterranean and thus also connected Rome, Greece, Egypt, and Africa. These regions were major producers and consumers of spices and other luxury goods from 2500 BC to 400 BC. The following Bible verses describe this active trade economy: “The merchants of the earth will weep and mou
over her because no one buys their cargoes anymore — 12 cargoes of gold, silver, precious stones and pearls; fine linen, purple, silk and scarlet cloth; every sort of citron wood, and articles of every kind made of ivory, costly wood, bronze, iron and marble; 13 cargoes of cinnamon and spice, of incense, myrrh and frankincense, of wine and olive oil, of fine flour and wheat; cattle and sheep; horses and carriages; and human beings sold as slaves” (Revelatio
18:11–13).

Prior to 400 BC, Egypt and Mesopotamia were the major powers in the region. The Incense Route, which connected the Mediterranean to the legendary Land of Punt and Arabia, was used extensively from about 700 BC to 200 AD. From the Horn of Africa and eastern Africa came wood, feathers, animal skins, and gold. Arabia produced frankincense and myrrh. Because of their locations on the trade routes, Middle Eastern tribes acquired prosperity. Later, as Greece’s political and economic power increased, so did its appetite for luxury goods. The Romans then dominated the region from about 200 BC to 400 AD, overwhelming all major powers in the region and occupying large parts of northern Africa and Europe.

The lure of profit from the spice trade attracted European powers, who initiated exploratory expeditions. Portuguese navigator Vasco da Gama reached the western coast of India via the Cape of Good Hope in 1498. He returned with pepper and other spices, which fetched six times the cost of the expedition. This windfall led to a spurt of maritime trade betwee
India and Europe and intense competition among European powers for control of this trade. Vasco da Gama’s journey also led to the rediscovery of the prolific spice-producing region of the East, namely the Maluku (Malacca) Islands. By 1511, the Portuguese controlled the spice business of the Malabar region along the western coast of India and Sri Lanka. The revenues from spices, along with West African gold, accounted for more than half of the total revenues of the Portuguese state.

The Dutch soon challenged Portuguese control over the Spice Islands (Maluku Islands), sparking a war that lasted from the 15th to the 17th centuries and ended with Dutch seizing control. The Dutch replaced the Portuguese and forced the local island populations to shift from agriculture to spice production. The local populace of Maluku Islands suffered hugely. Massacres were frequent. The ecology of the Maluku Islands, a rich volcanic region, also suffered, as plantations of cloves and mace replaced native evergreen forests. The colonial powers of Europe sought to further expand the spice cultivation area into newly acquired territories in Africa and Brazil. Excess production eventually led to a supply glut and a drop in prices. The Dutch then attempted to drive up demand by reducing spice cultivation. It was in this atmosphere that the Dutch traded with the English for a small nutmeg-producing island called Run in the Malacca archipelago. In exchange, the English received a small territory in what is now the island of Manhattan in New York.

By this time, Spain had acquired the area that now includes Chile and other neighboring lands, so it had access to silver and other minerals. Large-scale mining of silver led to a dramatic rise in the availability of bullion currency in Spain. Much of this bullion was diverted to Asia as payment for spices. Silver became the primary export from Europe, comprising nearly 75 percent of its total exports.

In addition to the long and perilous jou
eys that were common until the 18th century, limited spice production was also a primary causes for high prices. At each stage of the journey, intermediaries took a profit, thus driving up the price for the end consumer. Higher production and supply changed the supply-demand balance. The introduction of organized corporate trading with large companies and exchanges led to a decline in the number of intermediaries. Improved storage, packaging, logistic efficiency led to lower storage costs and thus reduced risk premium. Eventually, the discovery of chemical-based alte
atives for medicine and cosmetics decreased the demand for herbs. Thus, as cheaper alte
atives became available, herbs and spices were no longer exclusive to the rich.