Spice Trade
The commerce in nutmeg, cloves, and pepper that was worth more than gold by weight, grew on a handful of islands, and drove Europeans to cross the world for it.
For most of recorded history, nutmeg and mace grew in exactly one place on earth: the Banda Islands, ten specks of volcanic rock in the eastern Indonesian archipelago with a combined area smaller than many cities. Cloves came from a similarly small cluster around Ternate and Tidore. Pepper was more widely grown but concentrated on India's Malabar coast.
This is the single most important fact about the spice trade. The supply was geographically pinned. Everything else, the Portuguese voyages, the Dutch atrocities, the founding of the first joint-stock companies, follows from the fact that a handful of islands held a monopoly on goods the entire Eurasian world wanted.
Why anyone cared this much
Modern readers reasonably wonder why people crossed oceans for seasoning. Several reasons compound.
Spices were medicine. In a system of humoral medicine that dominated Europe and much of Asia, spices were hot and dry substances used to treat conditions understood as cold and wet, and they were prescribed for plague, digestion, and much else. A physician's recommendation is a more inelastic demand than a cook's preference.
They were also status. Serving heavily spiced food announced that you could afford goods that had come from beyond the edge of the known world, which is what luxury goods are for.
And they were compact. A ship's hold of pepper was worth a fortune and did not spoil on a two-year voyage, which made spices the ideal cargo for very long-distance trade in a way that grain or cloth were not.
The old canard that spices were used to disguise rotten meat is wrong on its face: anyone who could afford nutmeg could afford fresh meat.
The chain and the markup
Before Europeans arrived by sea, the goods moved through a long, functioning system: Malay and Javanese shippers to Malacca, through the strait that still carries a quarter of the world's trade, Gujarati and Arab merchants across the Indian Ocean, Red Sea and Persian Gulf routes to Mamluk Egypt or the Levant, then Venetian galleys to Europe. Every stage added a margin. Nutmeg could multiply in price by a factor in the hundreds between Banda and Amsterdam.
That markup is what made the whole Age of Exploration financially rational. Portugal's entire strategy after Vasco da Gama was to cut the middlemen out by taking the sea route and then holding the narrows: Goa in 1510, Malacca in 1511, Hormuz in 1515.
The Dutch and the price of monopoly
The Dutch went further, and the Banda Islands are the darkest chapter in the whole story. The Bandanese would not grant the Dutch East India Company exclusive rights, since they had sold to whoever paid best for centuries. In 1621 the company's governor-general, Jan Pieterszoon Coen, resolved the negotiation by force: the population of roughly fifteen thousand was almost entirely killed, enslaved, or driven out, and the islands were replanted as company plantations worked by enslaved labor.
It was one of the first cases of a corporation depopulating a territory to secure a commodity, and it worked commercially for over a century. In 1667 the Dutch traded away the small island of Run, held by the English, in exchange for a New World holding the English had taken from them, called New Amsterdam. The English renamed it New York, and the trade looked like a bargain for the Dutch at the time.
The echo
The monopoly ended the way commodity monopolies usually do. In the 1770s a French official smuggled clove and nutmeg seedlings out and established them in Mauritius, and later plantings in Zanzibar and Grenada broke the Banda price forever. Nutmeg today costs a few dollars a jar.
The trade is worth remembering not for the spices but for the institutions it produced. The Dutch and English East India companies were invented to raise capital for these voyages and to spread their risk, and they became the model for the corporation itself: permanent capital, tradable shares, limited liability, and, for a while, the power to raise armies. The world's first modern companies were built to control the supply of a nut.