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Tingxiang

Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Cloves were a prized Moluccan spice whose trade connected island communities to markets across Asia and drew European powers into the region. Their history in the account marks a contrast between commerce as a source of local economic activity and monopoly as an instrument of colonial control: the Dutch East India Company secured exclusive rights to the clove trade in Ambon, then used its military power to enforce its commercial claims and extract more labor and produce.

A Moluccan commodity

In the early seventeenth century, the Moluccas comprised three island groups. Independent kingdoms including Tidore, Ternate, and Bacan occupied the northern islands; the island kingdom of Ambon lay in the middle; and the Banda Islands in the south were not yet politically unified. Cloves were among the valuable spices produced in the archipelago. Nutmeg and mace, by contrast, grew only in the Banda Islands, where inhabitants exchanged the rare spices for food and manufactured goods from Java, Melaka, India, China, and Arabia.

This trade made the Moluccas central to wider commercial routes, despite their apparent remoteness in later times. Europeans sought direct access to the spice trade rather than relying on routes through the Middle East controlled by the Ottoman Empire. After the Portuguese opened a route around Africa and reached India by sea, they began trying to control key points in the trade, including Melaka, which they captured in 1511.

The Dutch monopoly in Ambon

European commercial power grew with the arrival of the Dutch. In 1600, the Dutch persuaded Ambon’s ruler to sign an exclusive agreement granting them the monopoly on the island’s clove trade. The founding of the Dutch East India Company in 1602 gave this effort a powerful corporate vehicle: like the English East India Company before it, the Dutch company had its own army and authority to wage war and colonize foreign lands.

The company used that force to enforce its agreements and remove competitors. In 1605 it captured a Portuguese-held fort and forcibly removed other traders. It then expanded into the northern Moluccas, requiring the rulers of Tidore, Ternate, and Bacan to agree that cloves could neither be grown nor traded in their territories. The treaty imposed on Ternate went further, permitting the Dutch to destroy clove trees found there. These measures turned a valuable crop into a lever for restricting trade and production.

Labor, institutions, and consequences

Before the Dutch takeover, Ambonese households paid tribute in cloves to local elites, while citizens owed tribute to the ruler and performed forced labor. The Dutch intensified these arrangements to obtain more labor and cloves. They required each household to remain tied to the soil, cultivate a set number of clove trees, and provide forced labor to the company.

The book places this intervention within a wider reversal of development. Before Dutch expansion, Southeast Asian city-states had grown through trade in spices and other goods, alongside changing political institutions. The Dutch effort to monopolize the Moluccan spice supply did not merely redirect profits; it strengthened extractive arrangements and, across the region, helped drive communities away from commerce. The account presents cloves as both a source of commercial opportunity and a means through which foreign monopoly curtailed local economic and political development.