Most people know that in 1492 Columbus said the oceans blue and discovered the Caribbean for Europe. The first few years were relatively peaceful until ships starting bringing back gold and silver and then Spain sent in the Conquistadors to takeover Mexico and Peru and transfer wealth to Spain. This made Spain the wealthiest country in the Europe and for a number of generations Spain was the most important country in Europe both economically and given Spain was Catholic, it had a big impact on the Catholic Church in Rome. What most people never ask is why did it take until 1492 before Columbus sailed the ocean blue?
In watching a video of Knights Hospitaller and Siege of Malta, there was a good explanation. For generations, the trade route for spices and other goods from India and Southeast Asia came up the Red Sea through the Nile and ending at Venice where it was distributed by merchant fleets. Venice was the distribution city. If you think about Shakespeare’s Othello, this is the setting in Venice. For generations, the trade routes worked for both Christians and Muslims. Then something changed.
The Ottoman Empire expanded through north of Turkey to the Balkans and controlled the trade routes in the Mediterranean control was both by land and sea and thus the cost of goods increased and when prices increase, merchants and citizens want an alternative.
The alternative was at the other side of the Mediterranean Sea between Spain and Morocco is the Straits of Gibraltar. It had not been profitable or desirable to look to the Atlantic Ocean because no one really knew what was there besides ocean. There were many theories including the world was flat and people would fall off the edge. Was it true? how many came back? Ships were built to travel along the coast and in the Mediterranean Sea not the Atlantic Ocean and everyone knew there was and can be storms. There can also be clear sailing.
At some point, there was a decision that the Mediterranean was too hostile to continue the same routes and alternatives needed to be found. The old route was not worth fighting over because the rate of return on capital was falling to negative.
At the time of Columbus, Spain was not a rich country, but there was stories and growing evidence there were riches out there somewhere. In our time, we would say Venture Capitalists took a risk on Columbus’s journeys and won big. On subsequent journeys, the Incas gave the Spanish gold to go away, but when it reached Spain, Spanish dollars danced in the Treasuries counting houses and Spanish troops were sent to bring back the gold. The stories of privateers and capturing one ship from the Spanish and bringing it to England or the Netherlands allowed the captain and financiers of the journeys to be millionaires and set up the advances in the arts and business in the countries.
Linking to dividend paying stocks, the Europeans call the time Europe went into the Atlantic Ocean the Age of Discovery and similar to many ages, the reason why it started was to find alternatives or to find more wealth elsewhere. In our society we continually do this – think about the alternatives when the pandemic hit stay at home stocks similar to Zoom and software companies to do the things companies used to do in office buildings. Finding alternatives or trying to maintain healthy margins is a normal thing in business and why there is constant change.
There are more questions than answers, till the next time – to raising questions.