system was established, it was very well suited for sub-contracting thus
saving the king trouble and giving him an assured income.
    A comparison of the Portuguese budget in the years 1506 and 1518 shows
a striking change in the structure of state finance due to pepper monopoly.
The income from pepper monopoly rose from 1,35,000 cruzados (one
cruzado being equal to 3.6 grams of gold) in 1506 to 3,00,000 cruzados in
1518. Though there was an increase in other sources of income during the
period, the pepper monopoly certainly dwarfed all other sources. The
enormous profit derived from this monopoly made their annual investment of
50,000 cruzados in it appear rather moderate. Thus, the Portuguese got good
value for money in this respect.
    Another source of income which became as important to the Portuguese
king as the pepper monopoly was the sale of the offices of captains and
customs collectors in the Indian Ocean strongholds. The Portuguese collected
customs at Ormuz on the Persian Gulf and other places around the Indian
Ocean. The offices of those who collected these customs were auctioned by
the king at short intervals, usually three years. So this was another royal
money estate which yielded income without any risk. In this way the king
became a rent receiver rather than a royal entrepreneur.
The Dutch invaded the Indian Ocean with dramatic speed at the beginning of
the 17th century, just as the Portuguese had done a hundred years earlier.
Several favourable preconditions accounted for this Dutch success, such as a
good educational system, advancement in science and technology, their
ability to acquire nautical information from the Portuguese, existence of a
huge merchant marine and easy access to sufficient wood for shipbuilding.
    Unlike the situation in Portugal, the Dutch state had no hand in business,
and the monopoly which was granted to the Dutch East India Company
(VOC) referred to spices only. Furthermore, monopoly control stopped once
the shipments reached Amsterdam, where the goods were freely auctioned to
the highest bidder. These auctions provided a good idea of what the market
would take, and they also helped to introduce new commodities, such as
textiles, which were not covered by any monopoly.
    Throughout the 17th century the Dutch Company operated on a much