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Podcast Transcript

When you think of international trade and globalization, you probably think it is a relatively modern phenomenon.

However, the roots of globalization actually go back thousands of years. 

While there were many products that were originally traded, there was one particular category of goods that drove trade like no other: spices. 

Spices are common and ubiquitous today, but centuries ago they were extremely prized and valuable.

Learn more about the spice trade and how it shaped the world we live in today, on this episode of Everything Everywhere Daily.

It is hard for modern people to understand just how important and valuable spices once were. 

Today, spices are affordable and can be purchased at any grocery store. The idea that spices might have driven the global economy makes about as much sense to most people as apples or paper plates driving the global economy. 

Yet, spices were important. Extremely important. 

Spice is just a catch-all term for any plant part which can be used to flavor food. A spice could come from the bark of a tree, like cinnamon,  from a fruit, like black pepper, from part of a flower, like saffron, from a seed, like nutmeg, or a from a root, like ginger. 

Spices were used in the preparation of food, as well as in food preservation, and even for medical use. In some places, they were also just used as status symbols amongst the rich.
The fact about spices that drive this story is that most spices can only be grown in tropical climates. In particular, most of them going back to antiquity were grown in the region around the Indian Ocean.

Black pepper originally came from Southern India. Nutmeg originated in Indonesia as did cloves. 

The Maluku Islands located in the eastern end of Indonesia have historically been known as the Spice Islands because of the abundance of spice plants. 

While many people think of the European importation of spices as the spice trade, it actually goes back much farther than that. 

There was a fully developed regional trade in spices that centered around South and Southeast Asia going back three to four thousand years. 

The Austronesian people who lived in the islands of Southeast Asia drove much of the spice trade, and these were some of the earliest seafaring people in the world. It was the descendants of these people who ended up sailing and settling from Micronesia to Madagascar.

People in India, China, Persia, East Africa, Arabia, and Southeast Asia were all trading and consuming spices in trading networks that were mostly connected by sea. 

While spices were an important part of this trade, they weren’t necessarily the hyper valuable commodities they became later. I’ll explain more on the economics of this in a bit. 

Many of these spices were known to the ancient Greeks and Romans in Europe. However, the way they had to be transported to Europe was, at least in some amount, overland. Even if they were sent by ship up the Red Sea, they would still have to make part of the journey over land which was much slower and most costly.

Europeans had no clue where spices came from, and quite frankly, most of the people they traded with had no clue either. 

Spices were traded from merchant to merchant to merchant over long distances. The merchants downstream didn’t necessarily know the source and many merchants who did know concocted stories about their source to hide their trade secrets. 

For example, one fable told about the source of cinnamon was a bird that built its nest out of cinnamon, and the only way to collect it was to feed the bird a heavy piece of meat which the bird would take up and collapse the nest. 

Europe was at the far end of the spice routes, and the trades routes connecting Europe to Asia were not by sea. 

This was the fundamental reason why spices were so expensive in Europe and why they weren’t as expensive in Asia. 

Shipping by sea is far cheaper and easier than shipping over land. Moreover, the more middlemen a product has to pass through, the greater the markup that gets added along the way. It wasn’t uncommon for spices to pass through the hands of one or two dozen merchants before landing in the final hands of a consumer in Europe. 

Although Europeans didn’t know it, their final markup on many spices could have been as high as 3,200% at its peak.

Just to put this into perspective, modern-day illicit drugs like heroin or cocaine might only have a markup of 1,200% when calculated from raw plant production to final street price.

The metaphor of a drug cartel actually isn’t a bad one to explain how the spice trade worked.

In the middle ages, Islamic Arab traders developed a dominance in the spice trading market. Their trading network spread along the coast of East Africa, Arabia, India, Indonesia, and China. 

When I said earlier that the spice trade has shaped the modern world, it was these Arab traders which brought Islam to countries like Indonesia and Malaysia, as well as to much of East Africa. 

Within Europe, the distribution of spices was dominated by the Venetians. They developed ties with the Arab traders who brought the product to the Mediterranean. 
It was a very lucrative business for everyone.

The thing which really changed the spice trade occurred after the fall of Constantinople in 1453. With the Byzantines out of the picture, the Ottomans had a monopoly on all the spices coming into Europe. 

The Ottoman Emperor, Mehmet II, doubled to tripled the prices of spices to help fund his empire and military campaigns.

 This decision by Mehmet to raise spice prices was one of those moments in history that had momentous yet unforeseen consequences that no one could have possibly predicted.
Needless to say, Europeans didn’t like paying outrageously high prices for spices.

 If you know a bit of history, you probably know the old explanation that the Portuguese, Spanish, and other European powers began the age of exploration in search of trade routes. 
This is true. However, the reason why they were looking for trade routes was to get around the monopoly the Ottomans had on the spice routes to Europe. 

This was the reason why Columbus sailed west and wound up accidentally discovering the Americas.

This was the reason why Vasco da Gama sailed around Africa and traveled to India in 1498. 
Remember when I said that the Europeans had no clue where spices came from? That was basically still true when their ships started to arrive in Asia for the first time. The general belief amongst Europeans was that spices were expensive because they were rare, similar to why gold was expensive.

 When they arrived in India, they were shocked to find out just how cheap spices actually were.

 In the 15th century, the local price of black pepper in India was 3 ducats per quintal. As I’m pretty sure you aren’t familiar with these units, a quintal was the equivalent of 125 pounds or 56.5 kilograms.

3 gold ducats was worth about $4,000 back then. The street price of the pepper back in Europe would have been around $125,000.

There was a lot of money to be made.

 ..and a lot of money was made. Portugal had a monopoly on the Cape Horn route, at least for a while, and it made them spectacularly wealthy.

Other European nations wanted to get on the action.

Other countries begin to open their own trade routes to Asia. The Dutch established trade routes directly to Indonesia and the Spice Isles. The British opened up ports in India. 
Once trade routes to Asia became regular, the next logical step was vertical integration. This meant controlling as much of the process as possible. To do that, meant owning spice plantations, which meant setting up full-blown colonies.

 It also turned out that many of the islands in the Caribbean had very similar climates to the locations in Asia where spices were grown. Many spice plants were transported to the Caribbean where they were much closer to European markets and under much more direct control of European companies.

The island of Grenada is still known today as the Spice Island.

In the Americans, they found new spices like paprika which were made out of peppers, as well as other foodstuffs which became very valuable such as cacao, tobacco, and sugar.

 Eventually, the production of spices increased, and the price of spices invariably went down. Spice plantations were created in more countries beyond where the plants originated. 
Today spices are cheap and ubiquitous. You can buy jars of 40 different spices to fill your spice rack for under $100 on Amazon.

 The spice trade never really ended. It is just that everything else in the economy grew up around it making it smaller.

It is amazing how much of the world today was directly or indirectly the result of the pursuit of spices. The discovery of the New World, the spread of Islam, the establishment of European colonies, can all be linked to the spice trade.