Published by EH.NET (February 2000)

Om Prakash, European Commercial Enterprise in Pre-Colonial India, New

York and Cambridge: Cambridge University Press, 1998. 396 pp. $59.95

(cloth), ISBN: 0-521-25758-1.

Reviewed for EH.NET by John Adams, Visiting Scholar, Center for South Asian

Studies, University of Virginia.

This is volume II.5 of The New Cambridge History of India which will

eventually comprise 31 separately authored titles. The New Cambridge History

contributions cover four overlapping temporal and thematic areas:

I. The Mughals and Their Contemporaries, II. Indian States and the Transition

to Colonialism, III. The Indian Empire and the Beginnings of Modern Society,

and IV. The Evolution of Contemporary South Asia. This stud by Om Prakash Om

Prakash (Professor of Economic History at the Delhi School of Economics) is the

fifth component of the second cluster. Each of the contributions to the New

Cambridge History that this reviewer has read speaks with the distinctive voice

of its author and represents an original and definitive work. There is no

requisition from the general editorship

(Gordon Johnson, C. A. Bayly, John F. Richards) to write to formula or format.

At the same time, there is the desire that the volumes connect to one another

and be firmly grounded in the best current knowledge and scholarly

interpretations. Over one-half

of these are now available and without exception fully realize the principles

of the publisher and the editorial team. If you are interested in the modern

history of the subcontinent this is the place to begin.

Two caveats are issued to the membership of EH.NET. First, the series and this

volume aim at treating economic affairs within the context of society,

culture, and politics. This diminution of the material realm to secondary

status fairly characterizes the state of human affairs in the Indian

subcontinent up to the recent present, but naturally affronts our presumed

professional preeminence. Forewarned is forearmed. Second, even the

contributions to the series that center on commerce, industry, and finance are

historical and descriptive and do not

attempt to use newly discovered or freshly catalogued evidence to advance or

debunk modernistic economic premises in the familiar mannerisms of cliometry.

Prakash, as the immediate example, re-creates historical economies for

inspection and does not strive to validate allegedly universal principles

derived distally from Lenin or Ricardo.

Those who know the bias of the present reviewer will now make the assured

prediction that he will strongly side with Prakash and forthwith utilize the

review to argue with incisiveness and wit against overly formalized economic

history, particularly in the Indian timescape where he has for so long labored.

This would be wrong. He in fact thinks that the most useful thing he can do for

that tiny group of readers that has

gotten this far into what has been a most esoteric introduction to a book

review about a most obscure subject, and are willing to continue further, is to

identify the substantial merits of Prakash’s book and to suggest where it

points towards arenas where the focused application of economic investigation

could yield big dividends. The reviewer further admits that ploughing through

factual avoirdupois in search of a bone structure at times tried his Jobian


Three fields of inquiry will adequately illustrate how Prakash’s masterly and

comprehensive volume can be approached by the intrepid economic historian.

After 1498, the Portuguese, the Dutch, the French, and the English vied

sequentially for domination of the trade between South Asia

and Europe.

Importantly, India was a geographical link to East Asia: Japan, China, and the

East Indies. Their India goods trade and balances of payments were managed by

the Europeans with an eye towards to the Europe-East Asia trade and payments


Broadly, from the European side, merchant groups; the newly formed trading

companies such as the Dutch East India Company, the French East India Company,

and the British East India Company, and others of less salience; and traders on

private account, frequently but inconstantly affiliated with the trading

companies, were the key players.

Prakash’s central accomplishment is to provide a rich account of the formation

and operations of each of these organizational instrumentalities of commerce.

He provides vibrant details about key individuals and of the ebb and flow of

on-going operations in the novel trading enterprises. No one has done it better

or more comprehensively or with superior command of the comparative motives,

structures, and results of these harbingers of the modern corporation.

What does the modest and overwhelmed reviewer hope for? A dash of Coase and

Williamson, please. Can we stand back a bit and ask exactly why these new

formations emerged, why they were a timely creation, why their boundaries were

drawn as they were vis-a-vis the melange of external contractual and customary

arrangements that guided Asian commerce? Were they indeed essential before the

Europeans could successfully engage well-established and often politically


indigenous Asian business clans and transactional networks along which goods

and finance moved? Why did the Asians not create countervailing private


Prakash provides a good deal of data on the “triangular” trade among centers in

Europe, South Asia, and East Asia. Exports of textiles from Coromandel and

Gujarat enabled the Dutch East India Company to recruit spices in Indonesia,

while raw silk was the chief export to Japan, for example. Later, opium was

important in the British Company

‘s China trade.

Very generally, the European companies sought a profit when annual accounts

were cleared. There was the irrefragable need for the British to effect

transfers of wealth to London on the Company’s accounts as well as those of

private agents,

who were often Company employees. For most of the pre-colonial period Indians

were quite successful in sending commodities and handicraft manufactures east

and west, while absorbing large net influxes of precious metals, preeminently

silver. Prakash does

an exceptionally able job of delineating these complicated flows and balances

and depicting how they changed over time as opportunities and imperatives


The abashed reviewer wants to know more about the macroeconomic and financial

implications of

these flows. It is almost certainly wrong to argue as Prakash does in his

conclusion that the “bullion for goods”

character of India’s trade, contrasted with a “goods for goods” pattern,

“implied that the positive implications of the growth in trade for

the level of income, output, and employment in the economy were considerably

more substantial . . . .” (p. 350). This represents a peculiar affection for

simple Mercantilism as opposed to endorsing a Smithian pursuit of the wealth of

nations. One may reasonably ask about this, and other dimensions of Prakash’s

arguments (ch. 8), if India was so well-poised in the

“triangular” system of trade and payments, and the beneficiary of such positive

income, employment, and price benefits, why then was the subsequ ent income

divergence of India and Britain not the reverse of that which precipitated?

European Commercial Enterprise contains many well-designed tables,

figures, and maps. The text is replete with bounties of numbers gleaned from

company records

and other sources. Table 6.1, for instance, gives us the composition of Dutch

exports from Bengal in percentages, 1675-1785, for five benchmark years of the

111 in question. Table 3.6 shows the English East India Company’s total exports

by value to Asia,

1601-1760, and the percentage of treasure. Many of the series go up but some

go down. The profusion of numbers is impressive but less clear is their overall

pattern or meaning.

The bemused reviewer has the sense of being confronted with a 2,000 piece

jigsaw puzzle. What is impossible to find out (and this is not Prakash’s fault


responsibility) is how largely trade affected economic activities and people’s

lives. We know that from the middle point of the eighteenth century on, up

until the present, In dia’s trade has never amounted to more than about ten

percent of total product, and was more likely six percent or less for the past

400 years, which is what one would expect in a large,

inward-looking nation. We know that household and village subsistence

economies were predominant in India until at least the early years of the

independence era. It is very hard to sort out, and Prakash certainly

overdramatizes rather than understates, the scope and scale of commercial and

trading-sector activities in the

total picture. There is the risk of erring on the side of making the Indian

subcontinent seem altogether non-commercial and unready for encounter with the

agencies of European commerce, but it is equally misleading to exaggerate the

importance of selected commercial crops relative to the major subsistence food

grains, or to extol the small coastal enclaves and their merchant families and

castes at the expense of the much more numerous interior villages and the

multitudes of farmers and agrarian workers who had little or no contact with

the world “out there.”

These days we are correctly aware of the

fallacy of overstating the role of

Europe in the post-Columbus era of exploration, commercialization, and may one

dare say, post-Seattle, globalization. At the same time, may not the pendulum

swing too far in the other direction? Vide Prakash asserting that India was,

circa-1498, the “. . . ‘industrial hub’ of the region surrounded by west Asia

on one side and southeast Asia on the other” (p. 154). Did India

at that moment (actually India didn’t exist at that moment) possess a

“sophisticated infrastructure” whose ingredients were ” . . . a high degree of

labor mobility and the existence of a labor market, merchant groups capable of

collective defense and good

organization, development of accountancy skills, highly developed and

price-responsive marketing systems, and a sophisticated monetary and credit

structure (ibid.)?” The unprepossessing reviewer would assert that the

subcontinent did not exhibit these features but to avoid confusion would

evenhandedly aver that no other place did either.

On the whole: this is an amazingly erudite and encompassing book, which ably

serves its primary function of offering a survey of the first three centuries

of Indo-European commerce, as defined within the ambit of the New Cambridge

History program, but it does not cope effectively with topics of keen interest

to modern economic historians of any sort: the microeconomics of incentives and

agents, the macroeconomic and developmental effects of trade and financial

flows, and the nature of proto-corporate structures looked at through the

eyeglasses of transactions costs and organizational theory.

Now retired, John Adams is Visiting Scholar at the Center for South Asian

Studies, University of Virginia. He is affiliated with the Center for Middle

Eastern Studies at Harvard University; Professor Emeritus,

Northeastern University; and, President and Chief Economist, Sawhill

Associates, Chancellor, Virginia. His chief current activity is composing

financial sector reforms for Nepal under the aegis of the Asian Development

Bank and the IRIS Center, University of Maryland, College Park. He may be found