How was the Portuguese trade in India financed?

 How was the Portuguese trade in India financed?

A.  There are different ways by which Portuguese trade in India was financed -

European Merchant Financers -

As the Portuguese king couldn’t finance the whole trade on his own, he encouraged and readily allowed to let European financiers and merchants participate and finance the trade. Most of the European financiers and merchants (Italian, German, etc.) concluded contracts with the Portuguese king. They supplied cash or materials to the king in Lisbon. The king used them to purchase pepper and other commodities which were in great demand in Europe from India. These commodities were given to these financiers at Lisbon in view of the contracts signed. However, some of the financiers also sent their own factors to India. Cash or commodities were always sent under the supervision of the Portuguese authorities to the East. Sometimes, the financiers could fit out their vessels, entrust cash and commodities to the India House in Lisbon to be taken to India under the Portuguese flag and buy the commodities from Lisbon according to the terms and conditions of the contracts signed with Portuguese.

Indian merchants And Rulers - 

Sometimes, Indian traders and some rulers also facilitated Portuguese trade and supplied commodities to the Portuguese on credit when the latter did not have cash or commodities to furnish in exchange. Some of the local rulers stood surety for the Portuguese when they did not have money to pay to the merchants for the commodities bought by them. For example, the king of Cochin came forward to help the Portuguese several times making the required volume of commodities available to them on credit. Also, some Indian traders provided assistance to Portuguese by supplying them with goods on credit. Defeated rulers were compelled to pay tributes to the Portuguese, either in cash or kind. This source was also exploited by the Portuguese several times for investment.

Monopoly -

Right from the time Portuguese arrived at Calicut they had demanded that other merchants, Indian as well as foreign, should be ousted and a complete monopoly over trade be granted to them. Portuguese ships equipped with arms and ammunition threatened other merchants and confiscated their merchandise and Vessels in order to thrust their demand. The Portuguese had armed vessels plying in the Indian Ocean and the Arabian sea. Ships carrying commodities that were not given passes (cartaz) by the Portuguese officials were confiscated by them. The booty thus obtained yielded a sizeable source of income to Portuguese which was again invested in trade. The persons interested in sending their ships to other parts of India or to Asian countries were required to take passes (cartaz) from the Portuguese for which a fees was charged. Such ships were obliged to visit any of the ports in India where the Portuguese had customs houses, and to pay taxes. This was another source of income for the Portuguese. Indian merchants, rulers and all those engaged in maritime trade, had to take cartaz from the Portuguese. While issuing such passes, it was specifically mentioned that certain items like pepper, horses, ginger, coir, ship pitch, sulphur, lead, saltpeter, cinnamon, etc. were not to be loaded on their ships. All these were monopoly items of the Portuguese routes and destinations of such ships were also sought to be controlled. Rulers like Akbar and his successors, Nilam Shah of Ahmednagar, Adil Shah of Bijapur, kings of Cochin, the Zamorins of Calicut and the rulers of Cannanore purchased passes from the Portuguese to send their ships to various places.  Indian Kings were pressurized to forbid other merchants from trading with their ports. Similarly, certain commodities were declared forbidden to be traded by others. Thus, the Portuguese demanded a monopoly of trade. The treaties concluded with the Indian rulers specifically mentioned this. The setting up of Portuguese fortresses at strategic places, surveillance by their patrolling vessels, and the insistence on passes for other ships were the attempts made to establish a monopoly of trade in Asian waters. 

Spice trade -

The Portuguese established themselves on the coastal regions of India and constructed fortresses and factories in these regions that were necessary for monitoring sea trade and also facilitate trade. It reaped large profits by conducting trade in spices. For the first time in the history of international trade, commercial treaties with Indian rulers were concluded. The production of cash crops, especially spices, kept its stride with the increasing demand overseas, thus helping Portuguese in financing trade.