A Splendid Exchange: How Trade Shaped the World

by William J. Bernstein

Rather, the city’s wealth and prominence can be credited to the institutional genius of Parameswara and his heirs. Alone among the many trading cities that lined the strait, Malacca had found the answer to the question of whether to trade, raid, or protect. The Malaccans levied import duties less onerous than those prescribed by traditional Islamic custom, the maximum being just 6 percent (instead of the usual 10 percent), payable on imports from “the West”—that is, those brought by Indians and Arabs. If a Westerner and his wife were both settled in the port, they paid only 3 percent. Easterners —local Malays, Indonesians (including the Moluccans with their precious spices), Siamese, and Chinese—paid no formal import duties at all. From all imports, even from “Easterners,” were subtracted “presents” to the sultan and his lieutenants, estimated by Pires at a cost of 1 or 2 percent of cargo value. No trader, Eastern, Western, or local, paid an export duty.