The Mughal Empire was one of the three major Asian states of the early modern period—the other two being Safavid Persia and Ming/Qing China. It was one of the largest centralized states known in the early modern world, with political authority over a population numbering between 100 and 150 million in the late 1600s and lands covering most of the Indian subcontinent. The wealth of Hind was proverbial in the relatively less fertile and sparsely settled lands of the medieval Islamic world to the west. Overland, coastal and high-seas trade routes linked regional Mughal Indian economies with the wider world. The Indian population was long accustomed to a money economy using gold, silver, and copper coinage. Insufficient domestic production of gold and silver was augmented by large imports of these metals, paid for by India's substantial commodity trade surplus. Indeed, the port of Mocha in the Red Sea was often described as the "treasure chest" of the Mughal empire.

There was also a considerable amount of trade among the constituent parts of the empire, both overland and along the coast. The major regions with important trading links among themselves were Bengal and the Coromandel coast on the east coast and Gujarat on the west coast. Bengal rice was sent up the Ganges to Agra via Patna, to Coromandel, and round the Cape to Kerala and various port towns on the west coast. The Gujarat silk industry was almost entirely dependent on the import of raw silk from Bengal. Gujarat, in turn, provided large quantities of cotton for the Bengal textile industry. Surat was the premier commercial and financial center of the Mughal Empire. A document dating from 1661 records that the cotton piece goods annually exported by the Armenian and Mughal merchants to Persia through Surat came from as far as Benares and Patna, and their value was no less than 1 million rupees. The Gujarati trader was just as active in the coastal trade of India and in trade to Southeast Asia and East Africa as he was in the commerce with the Middle East. Both Tomé Pires and Duarte Barbosa (Portuguese authors of major accounts of early sixteenth-century Indian Ocean trade) mention the presence of Gujarati merchants in Bengal, Pegu, Malacca, Sumatra, and even China.

Mughal India had traditionally played a central role in the structure of Asian trade. In part, this was a function of the midway location of the subcontinent between western Asia on the one hand and Southeast and East Asia on the other. But perhaps even more important was the subcontinent's capacity to put on the market a wide range of tradable goods at highly competitive prices. These included food items such as rice, sugar, and oil as well as raw materials such as cotton and indigo. Although most of this trade was coastal, the high-seas trade component was by no means insignificant. The real strength of the subcontinent, however, lay in the provision of large quantities of manufactured goods, the most important of which were textiles of various kinds. These included high-value varieties such as the legendary Dhaka muslins and the Gujarat silk embroideries, but the most important component for the Asian market was the coarse cotton varieties manufactured primarily on the CoromandelPage 238  |  Top of Article coast and in Gujarat. There was great demand for these varieties both in the eastern markets of Indonesia, Malaya, Thailand, and Burma and in the markets of the Red Sea, the Persian Gulf, and East Africa. Although it is impossible to determine precisely what proportion of total demand for mass-consumption textiles in these societies was met by imports from India, the available evidence suggests that it was not insignificant. India's capacity to manufacture these textiles in large quantities and to put them on the market at highly competitive terms made it in some sense the "industrial" hub of the region surrounded by western Asia on one side and Southeast Asia on the other.

This circumstance also largely determined the nature of India's demand for imports from the rest of Asia. This demand consisted essentially either of consumption goods which were not produced domestically for soil, climatic, or other reasons, or of minerals and metals of various kinds whose domestic supply was either nil or substantially below the total demand. In the first category were items including fine spices such as cloves, nutmeg, and mace from Indonesia, and horses and rosewater from western Asia. The second category included rubies and other precious stones from Burma, as well as metals, both precious and nonprecious. By far the most important nonprecious metal imported was tin from Malaya. Precious metals, mainly silver, were imported overwhelmingly from western Asia. Trade satisfied different kinds of consumption needs for India as compared with her numerous trading partners in the Indian Ocean region. This by itself provided an excellent basis for a significant and growing level of trade.

From the vantage point of Mughal India, the two principal segments of maritime Asian trade were the Bay of Bengal and the western Indian Ocean. The Bay of Bengal littoral extended through the Straits of Malacca to the South China Sea all the way to Japan. Westward, however, the link with the Mediterranean through the Persian Gulf and the Red Sea channels involved the use of a certain amount of river-cum-land transportation, more so in the Persian Gulf route than in the Red Sea route. Asian goods brought to the Persian Gulf and the Red Sea ports, mainly by Indian merchants, were taken over at these ports by the merchants of the Middle East, who transported some of them to the southern coast of the Mediterranean, to which Italian and other European merchants had traveled to buy them and carry them back to Europe.

This pattern of trade between Mughal India and Europe, which had been in operation for centuries, underwent a structural modification following the discovery by the Portuguese at the end of the fifteenth century of the route to the East Indies via the Cape of Good Hope. The procurement of the Asian goods came to be organized by the Europeans themselves, who had arrived in the East in any number for the first time. Most of the goods had to be paid for in precious metals because Europe was unable to supply goods, which could be sold in Asia in reasonably large quantities at competitive terms. Spanish-American silver mines had tremendously expanded the European silver stock, a part of which was available for diversion to Asia for investment in Asian goods, so expansion in the volume and the value of the Euro-Asian trade continued.

Throughout the sixteenth and the first half of the seventeenth century the Euro-Asian trade carried on by the Portuguese was centered on southwestern India. The Portuguese were followed by the British and the Dutch East India Companies, which were established in 1600 and 1602, respectively. But because both the Dutch and the English procured their pepper and other spices mainly in Indonesia, the Asian loci of the Euro-Asian seaborne trade shifted at the beginning of the seventeenth century from southwestern India to the Indonesian archipelago. It was nearly three-quarters of a century before the Asian loci shifted decisively to Mughal India. This was a consequence of the change in European fashions that assigned an increasingly important role to Mughal Indian textiles and raw silk in the Asian imports into Europe. Mughal India also played a key role in the extensive Dutch intra-Asian trade. Indeed, it was the long-established pattern of the Indonesian spice growers asking for Coromandel textiles in exchange for their wares, which had set the Dutch East India Company on the path of participation in intra-Asian trade in the first place. Later in the seventeenth century Bengal raw silk and opium played an extremely important role in the successful functioning of the Dutch network of intra-Asian trade. The largest group of the private European traders engaged in this trade, the English private traders, also operated overwhelmingly from Mughal India.

PROCUREMENT AND TRADE The organizational structure of procurement and trade that the European trading companies and private traders encountered in Mughal India was both efficient and sophisticated. The production for the market was organized mainly on the basis of contracts between merchants and producers that specified the quantity to be supplied, the price, and the date of delivery. A highly developed credit organization contributed to the efficient working of the system. Merchants could raise short-term loans at remarkably low rates of interest. The institution of the respondentia loans (a loan on a ship's cargo payable only upon safe arrival) was also quite widespread. Funds could be transferred from onePage 239  |  Top of Article place to another relatively cheaply by using the hundi (bill of exchange). The sarrafs (dealers in money) who ran the credit and the banking structure were also indispensable to the working of the currency and the monetary system. The Mughal coinage system, with its uniform imperial standards of weights and measures, was imposed throughout the empire over dozens of local monetary systems. Centrally appointed functionaries of the imperial mints accepted bullion or coin from local sarrafs or other private individuals. The system of free minting ensured that the Mughal coins retained their high degree of fineness without any known debasement for nearly two centuries. Overall, a sophisticated infrastructure of institutions and services, which rendered the system of production and exchange highly efficient, dynamic, and fully market responsive, was available in Mughal India. The principal constituent elements of this infrastructure were a high degree of labor mobility and the existence of a labor market, merchant groups capable of collective defense and good organization, the development of accountancy skills, and highly developed and price-responsive marketing systems.

PROFILE OF THE EUROPEAN COMPANIES' TRADE From a modest figure of less than f.3 million (1 florin = 0.66 rupees) over the three-year period 1619 to 1621, the total Dutch imports from Asia had crossed the f.10 million mark by 1668 to 1670 and stood at f.15 million from 1698 to 1700. The figure in 1738 to 1740 was in excess of f.19 million, and nearly f.21 million in 1778 to 1780. Pepper and spices together came down from an imposing 74 percent of the total imports in 1619 to 1621 to a mere 12 percent during 1778 to 1780. On the other hand, textiles and raw silk went up from 16 percent in 1619 to 1621 to an incredible 55 percent at the end of the seventeenth century. There was a decline thereafter, but in 1778 to 1780 textiles and raw silk again accounted for half of the total imports. Because Bengal alone accounted for more than 50 percent of the total of textiles and around 80 percent of the total of raw silk imported from Asia, the share of this region in the total Asian imports at the end of the seventeenth century was approximately 40 percent. This proportion was much higher for Mughal India as a whole.

The story of the British East India Company was broadly similar. Starting out very much behind its Dutch rival, the British Company had almost caught up with it by the end of the seventeenth century and actually forged ahead of it by 1738 to 1740. By the end of the 1770s the three-year total British figure stood at f.69 million, against the Dutch figure of f.21 million. Between the periods 1668 to 1670 and 1738 to 1740, the share of textiles in total British imports had become as much as 70 percent. India was central to the British Company trade throughout, accounting for 95 percent and 84 percent of total Asian imports during the periods 1698 to 1700 and 1738 to 1740, respectively, when the textile trade was at its peak.

TRADE AS AN INSTRUMENT OF GROWTH The substantial amount of trade carried on from Indian ports by the Europeans, both with Europe as well as with other parts of Asia, served to strengthen Mughal India's status considerably as a premier trading and manufacturing nation in Asia. At the turn of the eighteenth century India was probably the largest and the most cost-competitive textile-manufacturing country in the world. The "bullion for goods" character of the European trade considerably enhanced its positive implications and indeed turned it into an important instrument of growth in the Mughal Indian economy. The gold and silver the Europeans imported from Europe and Asian countries such as Japan led to a substantial increase in the supply of money in the country. The growing level of monetization in the economy in turn facilitated reform measures such as the growing conversion of the land-revenue demand from kind into cash, which led to a further increase in market exchange and trade.

Because the "bullion for goods" European trade did not produce a decline in the domestic output of import-competing goods, the positive implications of the growth in trade for the level of income, output, and employment in the economy were considerably greater than they would have been if the trade had been of the ordinary "goods for goods" variety. The increase in output and employment in the manufacturing sector was clearly significant. In addition, the fact that, on average, the rate of growth of the European demand for Mughal Indian goods such as textiles and raw silk was greater than the rate of growth of their supply increasingly turned the market into a sellers' market.

This scenario, however, underwent a drastic change in the second half of the eighteenth century when the British East India Company managed to acquire diwani revenue collection rights in Bengal. Insofar as the relationship between the British East India Company and the Indian intermediary merchants and producers was no longer governed by the market but by the company, the company appropriated a good part of the legitimate share of the producers and the merchants in the total output. Also, by siphoning off a part of the province's revenues for the procurement of the export goods, the British Company was increasingly able to manage without importing much bullion from home.