Diasporas and Companies

Organization of Trade

Early modern long distance trade faced several significant challenges, all related to the obstacle of geographic distance:

To deal with these problems, three main (and overlapping) forms of organization emerged.

State Trade such as monopolies and tribute trade. This can be financed, organized or sometimes merely protected by the state. States often collaborated with foreign merchants who had wide connections. In return, the state offered protection against competition and bandits that encouraged the merchant to engage in large scale ventures.
Ethnic/Trade Diasporas. Ethnic and family bonds help maintain strong links of communication and trust, as well as maintaining a kind of "brand" identity in relation to local peoples. Most major trade entrepots allowed trading groups to rule themselves under their own headmen. But traders also got involved in local politics through marriage and official positions, thus overlapping with state sponored trade.
Joint Stock Companies. Probably specific to Europe after the 17th century, states gave charters and property protection that allow strangers to pool money as stocks. These companies were usually given power to raise armies and rule territory. This reduced the risk of long distance voyages, although the expenses of violence and administration also demanded that the companies monopolize their trade as much as possible to maintain superprofits.