Portuguese East India Company
Encyclopedia
The Portuguese East India Company was a Portuguese
chartered company
.
since the Portuguese captain Vasco da Gama
opened the sea route to India in 1497-99. The monopoly had been managed by the Casa da Índia
, the royal trading house founded around 1500. The Casa was responsible for the yearly India armadas
. However, by 1560, the Casa's finances were in dire straits and in 1570, King Sebastian of Portugal
issued a decree opening up trade to India to any private Portuguese national. As few took up the offer, the free trade decree was replaced in 1578 by a new system of annual monopolies, where the Casa sold India trading contracts to a private Portuguese merchant consortium, granting them a monopoly for one year. This annual contract system was abandoned in 1597, and the royal monopoly resumed.
The Iberian Union
of 1580, which gave King Philip II of Spain
the crown of Portugal, changed little at first. But the vigorous Dutch VOC
and English EIC
encroachments on the Portuguese empire
and trade in Asia after 1598 forced the king to experiment with different arrangements to defend the Portuguese positions. In 1605, he created the Conselho da Índia, to bring affairs in Portuguese India under closer supervision of the Hapsburg crown. But this conflicted with older lines of Portuguese authority, and the council was eventually dissolved in 1614.
merchant and Mercantilist pamphleteer Duarte Gomes Solis who lived in Madrid, most notably in his Spanish language tract Discursos sobre los Comercios de las Indias" (published 1622, although circulated earlier). Solis argued that a private joint stock company could raise more capital, revive the Asian trade and compete more efficiently with the Anglo-Dutch in the Indian Ocean.
King Philip IV of Spain
(III of Portugal) put the idea in motion in 1624 and appointed D. Jorge Mascarenhas, mayor of Lisbon
and member of the Council of State, to head a committee to implement Solis proposal. Despite being supported by Olivares
, the proposal faced much skepticism and opposition, particularly by the Duke of Villahermosa (head of the Council of State for Portugal), and Mascarenhas had considerable trouble securing investment commitments.
. The charter envisaged a two-year transition period, during which the royal Conselho da Fazenda would continue to supervise the India fleets
, the Casa da Índia
and the Armazém da Índia, before passing them all over to the Companhia's administration. The Companhia would be in charge of running & collecting the customs dues payable at the Casa.
The Companhia was established with a joint-stock block of six years, renewable for another six with a minimum subscription of 100 cruzados. The Companhia was granted a monopoly on trade in coral, pepper, cinnamon, ebony and cowrie shells, and could be extended to other items upon request. It had full administrative & juridical privileges, including the right to keep all spoils from seizures of Dutch and English ships (after deducting the royal fifth
).
The crown was the largest investor, committing 1,500,000 cruzados for the first three years. Although some municipalities (esp. Lisbon) also invested, private individuals were less interested. To make it attractive, subscribers were guaranteed an annual return of 4% plus dividends and the subscriptions were laced with various privileges (e.g. title in king's household, protection from debt seizure, even the capital of New Christians convicted by the Holy Inquisition, had a measure of protection). Although there were provisions against allowing any other East Indies company to be formed in Hapsburg territories, investment in the Companhia was open to all subjects of Philip IV (III of Portugal) and his allies (thus Spaniards, Italians, Flemings, etc.) Nonetheless, none of this was enough to garner much enthusiasm from private individuals. The company was launched with only around half the capital it originally sought to raise.
Portugal
Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...
chartered company
Chartered company
A chartered company is an association formed by investors or shareholders for the purpose of trade, exploration and colonization.- History :...
.
Background
Portuguese trade with India had been a crown monopolyMonopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
since the Portuguese captain Vasco da Gama
Vasco da Gama
Vasco da Gama, 1st Count of Vidigueira was a Portuguese explorer, one of the most successful in the Age of Discovery and the commander of the first ships to sail directly from Europe to India...
opened the sea route to India in 1497-99. The monopoly had been managed by the Casa da Índia
Casa da Índia
Casa da Índia was the Portuguese organization that managed all overseas territories during the heyday of the Portuguese Empire in the 16th century. It was both the central authority for managing all aspects of overseas trade, the central shipment point and clearing house...
, the royal trading house founded around 1500. The Casa was responsible for the yearly India armadas
Portuguese India Armadas
The Portuguese India armadas were the fleets of ships, organized by the Portuguese crown and dispatched on an annual basis from Portugal to India, principally Goa...
. However, by 1560, the Casa's finances were in dire straits and in 1570, King Sebastian of Portugal
Sebastian of Portugal
Sebastian "the Desired" was the 16th king of Portugal and the Algarves. He was the son of Prince John of Portugal and his wife, Joan of Spain...
issued a decree opening up trade to India to any private Portuguese national. As few took up the offer, the free trade decree was replaced in 1578 by a new system of annual monopolies, where the Casa sold India trading contracts to a private Portuguese merchant consortium, granting them a monopoly for one year. This annual contract system was abandoned in 1597, and the royal monopoly resumed.
The Iberian Union
Iberian Union
The Iberian union was a political unit that governed all of the Iberian Peninsula south of the Pyrenees from 1580–1640, through a dynastic union between the monarchies of Portugal and Spain after the War of the Portuguese Succession...
of 1580, which gave King Philip II of Spain
Philip II of Spain
Philip II was King of Spain, Portugal, Naples, Sicily, and, while married to Mary I, King of England and Ireland. He was lord of the Seventeen Provinces from 1556 until 1581, holding various titles for the individual territories such as duke or count....
the crown of Portugal, changed little at first. But the vigorous Dutch VOC
Dutch East India Company
The Dutch East India Company was a chartered company established in 1602, when the States-General of the Netherlands granted it a 21-year monopoly to carry out colonial activities in Asia...
and English EIC
East India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...
encroachments on the Portuguese empire
Portuguese Empire
The Portuguese Empire , also known as the Portuguese Overseas Empire or the Portuguese Colonial Empire , was the first global empire in history...
and trade in Asia after 1598 forced the king to experiment with different arrangements to defend the Portuguese positions. In 1605, he created the Conselho da Índia, to bring affairs in Portuguese India under closer supervision of the Hapsburg crown. But this conflicted with older lines of Portuguese authority, and the council was eventually dissolved in 1614.
Proposal
It was around this time (1614) that the idea for a chartered private Portuguese East Indies company, organized along the lines of Dutch and English companies, was first broached. This was promoted by Portuguese New ChristianNew Christian
New Christian was a term used to refer to Iberian Jews and Muslims who converted to Roman Catholicism, and their known baptized descendants. The term was introduced by the Old Christians of Iberia who wanted to distinguish themselves from the conversos...
merchant and Mercantilist pamphleteer Duarte Gomes Solis who lived in Madrid, most notably in his Spanish language tract Discursos sobre los Comercios de las Indias" (published 1622, although circulated earlier). Solis argued that a private joint stock company could raise more capital, revive the Asian trade and compete more efficiently with the Anglo-Dutch in the Indian Ocean.
King Philip IV of Spain
Philip IV of Spain
Philip IV was King of Spain between 1621 and 1665, sovereign of the Spanish Netherlands, and King of Portugal until 1640...
(III of Portugal) put the idea in motion in 1624 and appointed D. Jorge Mascarenhas, mayor of Lisbon
Lisbon
Lisbon is the capital city and largest city of Portugal with a population of 545,245 within its administrative limits on a land area of . The urban area of Lisbon extends beyond the administrative city limits with a population of 3 million on an area of , making it the 9th most populous urban...
and member of the Council of State, to head a committee to implement Solis proposal. Despite being supported by Olivares
Gaspar de Guzmán, Count-Duke of Olivares
Don Gaspar de Guzmán y Pimentel Ribera y Velasco de Tovar, Count-Duke of Olivares and Duke of San Lúcar la Mayor , was a Spanish royal favourite of Philip IV and minister. As prime minister from 1621 to 1643, he over-exerted Spain in foreign affairs and unsuccessfully attempted domestic reform...
, the proposal faced much skepticism and opposition, particularly by the Duke of Villahermosa (head of the Council of State for Portugal), and Mascarenhas had considerable trouble securing investment commitments.
The Company
The Companhia do commércio da Índia (or Companhia da Índia Oriental) finally came into existence in August 1628, when it was granted a charter by King Philip IV (III of Portugal). The Companhia was to be governed by a Câmara de Administração Geral, composed of a president (Jorge Mascarenhas) and six administrators, elected by the investors, with full powers, although is judicial acts, administrative practices and finances were subject to review by an advisory Conselho do Comércio (Board of Trade) in the king's court in MadridMadrid
Madrid is the capital and largest city of Spain. The population of the city is roughly 3.3 million and the entire population of the Madrid metropolitan area is calculated to be 6.271 million. It is the third largest city in the European Union, after London and Berlin, and its metropolitan...
. The charter envisaged a two-year transition period, during which the royal Conselho da Fazenda would continue to supervise the India fleets
Portuguese India Armadas
The Portuguese India armadas were the fleets of ships, organized by the Portuguese crown and dispatched on an annual basis from Portugal to India, principally Goa...
, the Casa da Índia
Casa da Índia
Casa da Índia was the Portuguese organization that managed all overseas territories during the heyday of the Portuguese Empire in the 16th century. It was both the central authority for managing all aspects of overseas trade, the central shipment point and clearing house...
and the Armazém da Índia, before passing them all over to the Companhia's administration. The Companhia would be in charge of running & collecting the customs dues payable at the Casa.
The Companhia was established with a joint-stock block of six years, renewable for another six with a minimum subscription of 100 cruzados. The Companhia was granted a monopoly on trade in coral, pepper, cinnamon, ebony and cowrie shells, and could be extended to other items upon request. It had full administrative & juridical privileges, including the right to keep all spoils from seizures of Dutch and English ships (after deducting the royal fifth
Royal fifth
The royal fifth is an old royal tax that reserves to the monarch 20% of all precious metals and other commodities acquired by his subjects as war loot, found as treasure or extracted by mining...
).
The crown was the largest investor, committing 1,500,000 cruzados for the first three years. Although some municipalities (esp. Lisbon) also invested, private individuals were less interested. To make it attractive, subscribers were guaranteed an annual return of 4% plus dividends and the subscriptions were laced with various privileges (e.g. title in king's household, protection from debt seizure, even the capital of New Christians convicted by the Holy Inquisition, had a measure of protection). Although there were provisions against allowing any other East Indies company to be formed in Hapsburg territories, investment in the Companhia was open to all subjects of Philip IV (III of Portugal) and his allies (thus Spaniards, Italians, Flemings, etc.) Nonetheless, none of this was enough to garner much enthusiasm from private individuals. The company was launched with only around half the capital it originally sought to raise.
The End
The Companhia proved unsuccessful. Investors remained skeptical, overseas Portuguese merchants rejected the new Companhia's authority, and the Anglo-Dutch breach of the old Portuguese empire in Asia had become irreparable, squeezing margins on the spice trade. The Companhia proved unprofitable, and soon ceased operating and was liquidated in April, 1633. The Casa da Índia and the India trade was brought back under the supervision of the Conselho da Fazenda (royal finance council).See also
- Disney, A.R. (1977) "The First Portuguese India Company, 1628-33", Economic History Review, Vol. 30 (2), p. 242-58.