Foundation for Empire (2)
The economics of the East India trade
An obvious aspect of mercantile activity, but one which will bear reiteration, is that the faster a merchant's capital is turned over, the smaller the amounts of money capital the merchant must employ. Conversely, the more slowly it is turned over, the larger this portion. The problems of the long-distance overseas trade were different from those in the domestic and European trades. The merchant's capital invested in his activities was employed for a much greater length of time, which increased the farther afield his ventures went. Furthermore, the greater distances put the investments at greater risk. The distances over which mercantile capital was employed thus became the material basis in the period of circulation.Watson 1980, p. 13
Watson defines primary costs
as the direct payments made to purchase goods in Asia and bring them
to market in London, and secondary costs
as …