The company that never was
Second in a series on Portuguese companies and investors in Asia — what they built, what survived, and what is still being built today.
Informação da armação ou contrato da Companhia em que os moradores de Amacao mandão a sua çeda a Japão. Report concerning the armação, or corporate agreement, by which the residents of Macau send their silk to Japan. — Manuel Dias S.J., report to the Superior General of the Society of Jesus, 18 April 1610. Archivum Romanum Societatis Iesu, Japonica-Sinica 14 (II), ff. 341–342.
The last instalment began with something I could hold: a hundred-pataca note, still in circulation, issued by a bank founded in 1864. This one begins with an absence.
There is no known share certificate of the Companhia da Índia Oriental Portuguesa in any museum or archive today. The company existed for less than five years, and what it left behind is a charter, a set of accounts that historians have had to reconstruct, and a lesson that the rest of this series depends on.
The obvious question, if you accept that the Portuguese were 善行賈 — skilled in trade — is why there was never a Portuguese equivalent of the Dutch Vereenigde Oostindische Compagnie (VOC, meaning East India Company), or the English East India Company. The answer is not that Portugal never tried. It tried, in 1628, and the attempt collapsed.
The more interesting answer is that by 1628 Portuguese Asia had already solved the problem of pooling private capital, in a different way, and had been running that solution for half a century in the most profitable trade in the region. The chartered company was not an innovation Portugal failed to invent. It was an innovation Portugal did not need — until, quite suddenly, it did.
Eighteen years too late
The Companhia do Comércio da Índia — also called the Companhia da Índia Oriental— was chartered in August 1628 by Filipe III of Portugal, who was also Felipe IV of Spain, the two crowns having been joined since 1580 in what the Portuguese call the União Ibérica.
The company was to be run by a Câmara de Administração Geral: a president and six administrators elected by the investors, with full powers, though their judicial, administrative and financial acts were reviewable by a Conselho do Comércio at the king's court in Madrid.
Read that last clause again. The investors elected the board; a council in Madrid could overrule it. The VOC, chartered in 1602, had a board answerable to its shareholders and a monopoly it administered itself, including the right to make war and treaties. The Portuguese company was a subsidiary of a foreign court.
Perhaps not surprisingly, investors remained sceptical and the fundraising never reached the level needed. Anglo-Dutch attacks had already broken the old structure of Portuguese Asia, and margins on pepper and spices were thin. And — this is the one that perhaps matters most — Portuguese merchants already in Asia rejected the new company's authority outright. The Companhia lasted only until 1633 before being liquidated, and the India trade reverted to the Casa da Índia under the Conselho da Fazenda, the royal finance council.
Why the rejection?
Since at least the 1550s, the residents of Macau had been running an annual joint venture to Japan, and they were extremely good at it.
The mechanism was called the armação. Each year a single great ship — the nau do trato, the trade ship, which the English called the Great Ship from Amacon and the Japanese called 黒船 (kurofune), the black ship — sailed from Macau to Nagasaki carrying Chinese raw silk. China had banned direct trade with Japan, so the Portuguese held the middle of a market both sides wanted and neither could legally serve. It has been argued that this intra-Asian route was more profitable than the carreira da Índia, the Lisbon–Goa run that gets all the attention in history books.
The armação was the arrangement by which the whole town invested in that voyage. Merchants subscribed capital in exchange for a share of the proceeds; the cargo was capped — around 1,600 piculs of raw silk, a picul being roughly 60 kilograms, so something on the order of 95 tonnes — precisely so that the Nagasaki market would not be flooded and the price would hold. At the other end, silk was sold not by individual bargaining but through the pancada, a wholesale system under which all sales went through the Factor of the City of Macau. Prices were set collectively, once, for the entire cargo.
This is a cartel, run by a municipality, with a supply quota, a single sales channel, and pooled private subscription. It is not a primitive arrangement. In some respects it is more sophisticated than what the chartered companies were doing in the same decades.
And the capitão-mor who commanded the voyage held a royal grant — a right that could be awarded for service, or sold, or traded. Until 1623, the same man was also acting governor of Macau. The captaincy of the Japan voyage was an asset with a market price.
The Church as institutional investor
The most striking participant was the Society of Jesus.
The Jesuit mission in Japan was expensive and chronically short of money from Europe. Its solution was to invest in the silk. The practice is attested from the mission's earliest years: when the physician Luís de Almeida entered the Society in 1556, he left it his fortune of some 4,000 ducats, which was put straight into the silk trade to generate an annual income for Japan. The arrangement was later formalized on generous terms and put on contract with the Macau merchants. The Society took a guaranteed slice of the most profitable trade route in East Asia, and its Macau college and its Japanese seminaries ran on the proceeds.
It attracted exactly the criticism you would expect. Spanish Franciscans in Manila complained to the Crown repeatedly about priests in commerce. The complaints went nowhere: the King understood that if the Jesuits did not fund themselves, he would have to fund them.
There is a small irony in the vocabulary. In the Portuguese of the period, a Companhia meant the Society of Jesus, but in contemporary documents it also means the trading partnership. Portuguese Asia had a word for a company. It simply attached it to a religious order and to a per-voyage syndicate, and not to a permanent joint-stock corporation.
The difference that actually mattered
If Macau could pool capital, price collectively, cap supply and control a sales channel, what did the VOC have that the armação did not?
Permanence, and transferability.
The armação was constituted for one voyage and dissolved when the ship came home and the accounts were settled. Next year, a new subscription. Your stake was a claim on one cargo; you could not sell it to a stranger in Lisbon, and it did not survive the voyage. The VOC's capital, by contrast, stayed in the company. Its shares were transferable, and by the 1610s were being traded in Amsterdam by people who had never been to Asia and never would be. The company outlived its ships, its directors and its subscribers, and could therefore borrow against a future it expected to have.
That is the innovation. Not the pooling of money — Macau pooled money beautifully — but the invention of an entity that does not die at the end of the season.
So when the Companhia da Índia Oriental appeared in 1628 and asked the merchants of Goa and Macau to submit to its authority, it was not offering them an innovation that promised greater prosperity. It was asking them to give up arrangements that worked, that they controlled, and that were embedded in their own families and their own municipal institutions, in favour of a body governed from Madrid. They declined. Given the terms, it is hard to say they were wrong.
A market in rights, not in shares
Here is the key point: Portuguese Asia did have a capital market. It was a market in rights: the captaincy of a voyage, the farm of a customs house, the cartaz system that sold safe conduct to Asian shipping, a Crown office with an income attached, a monopoly on a route, a lease on a peninsula. These things were granted, inherited, mortgaged and sold. A Portuguese investor in Asia did not buy equity in a firm. He bought a licence, and then worked it.
That habit did not end with the empire. It is why the survivors in this series look the way they do. A right to issue banknotes. A gaming concession. A mining concession in Goa. A utility franchise in Macau. A lease on a territory, paid for annually in silver to a magistrate in Xiāngshān (香山). Portugal's most durable commercial assets in Asia have almost all been licences rather than corporations — which is a weakness when you need to raise capital fast, and a strength when the sovereign changes and the new one still needs the thing done.
This is not a deficiency or strategic error. It is a different way of organizing commerce, and it produced the longest continuous European commercial presence in Asia. Portugal tried the joint-stock model once more, in 1753, when the Marquis of Pombal chartered the Companhia do Comércio da Ásia Portuguesa to work the trade between Portuguese India and Qing China, after six merchants obtained a ten-year concession. Note the shape of it even then: a concession, granted to named merchants, converted into a company. The instinct held.
O que sobrou — what is still there
The Ruins of St Paul's in Macau, 大三巴牌坊 (Dàsānbā Páifang), the most photographed object in the territory. The church behind that façade was built in the first decades of the seventeenth century, funded substantially out of the Japan silk trade and worked on by Japanese Christian exiles who had fled the persecutions. What survives of the armação is a wall.
The word 南蛮 (nanban) in Japanese — "southern barbarian" — still the standard term for the Portuguese-contact period, its art, its folding screens, and by extension a whole vocabulary of things that arrived on those ships. And 黒船, the black ship: the term attached itself to Perry's squadron in 1853, three centuries after it was coined for a Portuguese carrack out of Macau.
Nagasaki itself, which was a fishing settlement until the Portuguese ship needed a harbour. Ōmura Sumitada — 大村純忠, baptized Bartolomeu — ceded jurisdiction over it to the Society of Jesus in 1580, and the Jesuits administered it until 1587. Whatever else the Portuguese built in Asia, they built a Japanese city.
The documents. The armação contract is legible today because a Jesuit in Macau wrote it up for his superiors in Rome, where it remains. Institutional record-keeping is why we know more about a per-voyage syndicate from 1610 than about a chartered company from 1628.
Next
The company failed because the families would not join it. So the obvious question is what happened to those families — the merchant households of Macau, Goa, Malacca and Nagasaki whose capital the Crown could not capture.
They did not disappear. Some of them are still trading. But the flags above their offices changed, and to follow the money you have to look for Portuguese names in British ports.
Next in the series: the Macanese and Goan business families who built other empires' cities — and the printing house in Hong Kong that produced the colony's official gazette for a century.
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