The Scandinavian East India Companies: company trade and private trade
Introduction
Eighteenth century Scandinavia was the base for two East India companiesThe Danish Companyresembled the English and the Dutch companies in so far that it was founded in the early 17th century (1616). Like the French and the English companies its main foothold in Asia was made up of a network of factories in South Asia, the most important being Tranquebar on the Coromandel Coast and Serampore close to Calcutta.When the company was reconstituted (as the Asiatisk Kompagni, AK) in 1730a regular trade with China was establish. A year later the Swedish East India Company (Svenska ostindiskakompaniet, SEIC) was founded. This company had strong links to the Ostend Company which,due to international pressure on the Hapsburg emperor, was force to cease with its trade in 1730. Like the Ostend company the Swedish traded almost exclusively with China, only six expeditions were sent to India between 1731 and 1806.[1]
In spite of their different histories the Scandinavian companies had a lot in common. Both of them were mainly providing markets outside the domestic realms of the country in which they were based. In the Danish case 77% of the Chinese goods imported between 1734 and 1752 were re-exported, increasing to 81% between 1753 and 1772.[2]In the Swedish case the domestic market only absorbed 10% of the goods from China, the rest was re-exported.[3]To both companies the trade with China and particularly with Chinese tea became increasingly important. The tea that arrived to Copenhagen and Gothenburg was sold on to wholesalers, many in the Low Countries, who provided tea to smugglers working on the British market.[4] Moreover, Scandinavian trade was in no small measure influenced by merchants located outside Scandinavia, in the Swedish case there was a strong Scottish presence and in the Danish case Dutch merchants were very active.[5]Finally both companies were based in small neutral states, something that gave the opportunities to trade free, and with less competition,during periods of conflict between the Dutch Republic, Britain, and France. The latter circumstance was as we shall see below particularly important when we discuss remittance trade in private and company form.
Regulated private trade
Private tradecould be conducted legally by staff belonging to the Scandinavian East India companies. In the Swedish case, and up until 1748,members of the crew were allotted a certain amount of cargo space (what was referred to as “fri förning”) on the ships for transport of private goods or pacotille. This space was available both for both the outward and the homeward journeys. How much space was allotted more precisely varied. Below is an example from the ship Adolph Fredrich, on route to China and back between 1746 and 1748.
Table 1. Space allocated for private trade on Adolph Friedrich 1746-1748[6]
Captain, 2nd Captain / 10 cases1st Mate / 6 cases
2nd Mate / 4
3rd Mate / 3
4th, 5th,6thMate, / 1 ½
Chaplain, Ship’s doctor / 2 cases
2nd Surgeon, Ships writer, Boatswain, Gunner, 1st Carpenter, Purser, Steward, Petty officer, Seamen / 1 case
The Danish company also had regulations for how much different members of the crew were allowed to bring home and how it was to be dispersed off (selling it at auctions).[7] One example from 1787 stipulates that the Captain of a ship going back from Chinaon behalf of the AC was allowed to bring “all sorts of goods that could fit into a chest 156 x 76 cm big, and 75 kilos of silk textiles. The size of the chests and the amount of silk allowed dropped further down the rank list.[8]
In Sweden the system of allotted spaces were abolished in favour of system of “privilege money” in 1748. Pending on rank, each member of the crew received sum of money. For a voyage to Canton this gave the Captain 8,000 silver dollars, the Ship’s doctor 1,500, and the seaman three monthly wages.[9]One of the reasons for this change was according to Koninckx that the monopoly of the company was regarded as threatened by the large amount of private trade taking place. Koninckx estimates also indicate that the value of the privately traded goods was great. Evidence from eight expeditions to China between 1743 and 1748 suggests that the value of the private goods ranged between 21.5% and 42.4% of the value of the total cargo, with an average of 28.5%![10]Included in these numbers are also the pacotille allowances of the supercargoes. On-going research into the trade involving supercargoes working for the Swedish company does also suggest they were responsible for anextensive private trade.[11]It is likely that the Swedish company and the level of private trade it generated (at least between 1731 and 1748) were quite unique.The Swedish company, maybe more than other companies, wascontrolled by a network of merchants with experience from the Ostend trade.[12] Several of them were of Scottish origin (e.g. Charles Irvine and Colin Campbell). They not only worked as supercargoes on the Swedish ships, they were also engaged in financing the expeditions, drawing on their own fortunes as well by securing funds abroad (utilising their contacts with Ostend financiers). Moreover, they were principal agent buying up goods at the company auctions in Gothenburg and re-exporting it to e.g. Amsterdam and Hamburg.[13]
Unregulated private trade
Next to the regulated private trade was the unregulated or illegal private trade. This often involved the company staff taking advantages of their access to resources and positions of powers, gained through their employment.Ole Feldbæk,in his studyIndian Trade under the Danish Flag 1772-1808lists many examples of irregularities. The Head Factor in Seraporum in Benal, J. L. Fix was for example in close contact with the British supplier John Benn (at Benares) who supplied piece goods for Fix’s private trade as well as on behalf of theAsiatic Company. Such close collaboration generated compliancy, like for example when Fix promised not to inspect Benn’s deliveries of piece goods for the Company. Fix also used bills on the Danish Board of Directors to pay Benn privately traded goods (with whom he also shared interests in opium trade and remitting Anglo India capital to Europe). Such irregularities did not prevent Fix moving up within the company, he ended up as one of the directors of the AC.[14]Selling the European cargoes the Danish ships brought to India could also be lucrative. The relative isolation of the Danish trading stations promoted abuse. Without much competition from the outside the staff of the AC could buy the European cargoes themselves or on behalf of someone else (for a commission). In both cases it was in the interest of the factors to keep the price low and needless to say it was the company who lost on these transactions.[15]
Another example, this time from China, of how private and company business was merged, is the case of Jean Abraham Grill, (1736-92) who between 1761 and 1768was stationed in Canton and Macau. Although Grill came to work for the Swedish Company his official position arriving in the Far East was initially not spelled out. As Leos Müller has pointed out, the move to China and the ease with which Grill established himself on the Macau/Canton scene,in spite of just having arrived, suggeststhat credits and contacts could be transferred from Europe to Asia with relative ease. Grill was part of an active merchant family, with strong holds in Sweden, the Dutch Republic and Britain. Once in China Grill made a fortune on the lending money to Chinese merchants trading with Batavia and the Philippines. In this respect he was not breaking the regulations of the Swedish company which in contrast to several of the bigger companies allowed for its staff to invest in country trade.[16]
The private trades of others – the remittance trade
To Grill and the other Swedish representatives in China the problem was remitting their Asian made fortunes back to Europe, such a process could take several years even decades. How to bring back privately made fortunes, often in conflict with company regulations, from Asia was in fact a problem for European staff stationed in Asia, particularly those of the EIC, the dominating European company in eighteenthth century Asia. English regulations made it hard and very expensive to remit money back home the legal way. This circumstance did however also create opportunities, particularly for the Danish company. Anglo-Indian money (as well as Dutch and French private capital)[17] left India in the form of Indian piece goods and saltpetre on Danish ships.[18]Once sold at public sales in Copenhagen, the money could be transferred to London, Amsterdam and Paris, ready for the return home of the Nabobs.
For the ACthe access to the relatively cheap money the Anglo-Indian community offered was of central importance for their trade with India. As diagram 1 illustrates, between 1772 and 1792
Source: Ole Feldbæk, India Trade under the Danish Flag, 1772–1808: European Enterprise and Anglo-Indian Remittance and Trade (Copenhagen: Studentlitteratur) 1969, “Appendix II, The Asiatic Company’s Financing”, pp. 244-245 (Average conversion rate Danish rdl. to Sterling 1772-1778: 10.66 rdl. to £1; 1779-1783: 11.11 rdl. to £1; 1784-1792: 12.33 rdl. to £1; 1793-1801: 11.62 rdl. to £1; 1802-1807: 12.34 rdl. to £ 1, < accessed 22 of March 2013)
more than half of the funds used in procuring Indian goods were Anglo-Indian capital.In the Danish case a further circumstance helped promote remittance trade. In 1772, in response to demands from prominent merchants in Copenhagen, the new charter allowed private merchant to participate in the trade with India (while the AC kept the monopoly trading with China).
The trade with India took two forms, return expeditions (originating in Europe) and direct expeditions, (originating in India). All in allFeldbæk records 145 return expeditions and 133 direct expeditions between 1772 and 1808, in addition to the 63 expeditions organised by the AC. The conditions for these expeditions varied over time. Initially the return expeditions set out from Copenhagen with a cargo to sell in India. The proceeds from the European cargo together with borrowed Anglo-Indian capital paid for an India cargo which could then be sent back to Copenhagen. Later on the Danish government allowed for return expedition to set out from London and Ostend. This allowed the return expedition more flexibility in assembling cargos in Europe for export to Indian.[19] The one condition the Danish government did not negotiate on was that the Indian cargo of the return and direct expeditions had to be sold in Copenhagen. The intention was to protect Copenhagen’s status as a market for East India goods.[20]In this they were supported by prominent merchants in Copenhagen who benefitted greatly from this trade, re-exporting the goods to other European markets.[21]
The Danish private trade on India had to be Danish in so far that the ships had to be registered as belonging to a Danish subject, and the crew had include Danish members, particularly those belonging to the crews’ top ranks. A Dane also needed to formally own the cargo. In reality, and as Feldbæk has shown, the Anglo-Indians owned and controlled many of the cargoes and ships trafficking Denmark and India. The often very thin Danish veneer illustrates the extent to which Danish and British authorities (in India) looked away. John Macpherson, interim Governor-General for the EIC, even suggested the trade was advantageous to the Company’s Indian possessions.[22] The formal Danish connection/statusseems only to have really mattered in periods when Danish ships risked ending up in French Prize courts.[23]During periods of conflict Insurances rates for the direct expeditions also increased substantially, something which reflected how nominal the formal Danish status of many of these expeditions really was.[24]
Together the AC and the private direct and return expedition is estimated to have remitted Anglo-Indian capital the value of 55 million current rupees or 36 million Danish rixdollar between 1772 and 1808. Based on an average exchange rate 11.61 rixdollar to £1 this was the equivalent of more than 3 million pound sterling moving from India to Copenhagen, and onwards.[25] Less than a third of this (£786 934) was remitted by the AC.[26] In other words the private trade under Danish flag was the most important channel for remitting Anglo-Indian capital.
The remittance of Anglo-Indian fortunes took several forms. In advance of the trading season Danish staff in Seraporum and Tranquebar secured funds against bills of exchange drawn on the Asiatic Company. With this capital they could procure goods to send to Copenhagen. Once sold the money could be remitted to London, against a commission. From 1776 and onwards, and in response from Anglo India buyers protesting against the delay and extra expense this rendered, it became possible to draw directly on London.[27]Anglo-Indian merchants also offered bills to the DA and to private Danish traders in India which were issued as payment or part payment for goods.This restricted the selection of traders with whom the Danish could do business, often resulting in the purchase of more expensive textiles of lower quality.[28]Another option was bottomry bonds but until a change in the legislation 1787 (and in response to a general dip in Anglo-Indian confidence in Danish ability to pay back) Danish law did not protect such bonds as well as other European country’s jurisdictions.[29]
It is worth highlighting that the Danes were competing with the Dutch and French companies over the Anglo-Indian fortunes.[30] When the latter were out of business in Asia due to warfare in Europe the Danes together with Portuguese traders, and later American, could take over market shares.[31] It is in this respect the Danes India trade benefitted from the neutral status of the Denmark, giving its trade with India “a rare continuity”.[32]
The other side of the coin was that the Danes became increasingly dependent on Anglo India capital and hence also more vulnerable to changing conditions, over which they had no or little control. Competing investment schemes, such as for example when the Madras government needed to raise loans on the Indian market with the help of lucrative bonds, seriously threatened to undermine the Danish trade.[33] Another example is when in 1795 the EIC changed its policies, allowing for the chartering of private ships for its homebound traffic. This was the result of the British government’s requisition of seven of the company’s ship for war purpose. Moreover, the treat of famine in England called for larger amounts of wheat and rise to be imported from India. The end result for the Danes was a decline in capital to borrow, as Anglo-Indian invested their fortune building ships and buying stock for export to Britain.[34]
The most important factor, explaining the vulnerability of the Danish, was of course that remitting money via Denmark was costly. The following diagram is based on Feldbæk’s statistics over the profit and losses of the India trade.[35]
Source: Ole Feldbæk, India Trade under the Danish Flag, 1772–1808: European Enterprise and Anglo-Indian Remittance and Trade (Copenhagen: Studentlitteratur) 1969, “Appendix III The Asiatic Companie’s return cargoes and their sale in Copenhagen”, pp. 246-248, and “Appendix IV Private ships under the Danish flag: cargoes of piece goods, value of Cargoes and profitableness of the India cargoes”, pp. 263-266.
As the diagram suggests bringing home fortunes in the form of cotton textiles and saltpetre, and toward 18th century, sugar and indigo, were often associated with substantial losses. It was most lucrative during periods of war like the American war of Independence, and for periods of the French Revolutionary wars. Not only was there less competition from other traders willing to take on board Anglo-Indian capital. The piece goods that could be had were often of a better quality. During other periods the losses could however be substantial, the Danish remittance trade could hence only be a viable alternative as long as no other more profitable option existed.
Summary
The histories of the Scandinavian companies almost cease to make sense without taking into account private trade. The role of private trade in the Swedish company remains to be more fully explored (and the lack of primary sources might make it impossible to map it out in any more systematic way) but there are strong indications that a third of the companies trade, up until at least 1748, could be labelled private.
In the case of the Danish company, it is unlikely the Danish Company’s trade with India would have been as extensive as it was without access to Anglo-Indian capital in South Asia. This capital was to a large extent generated by the private trade of the EIC’sstaff. Of course Anglo-Indian fortunes were also available in Canton/Macau where they could be converted into tea and silk for the European market.[36] And it is not unlikely that this capital inflow, together with a growing demand for tea in Europe, explain why the trade with China’s trade became the most lucrative part of the AC’s trade with Asia.[37]