«The British and Dutch East India Companies, as we have seen, took over from the Portuguese, who had constructed a trading empire through carving out footholds in various corners of Asia. Reading contemporary accounts of just how decadent and corrupt the Portuguese colonial officers had become, it is painfully clear why the British and the Dutch could take over in Asia. Portugal had forged trading links with India towards the end of the fifteenth century through the explorer Vasco da Gama. By the m«iddle of the sixteenth century it had established Goa on the west coast as a fort and trading post. Goa was run by a viceroy who answered to the king in Lisbon, and most of the senior posts were held by fidalgos - the sons of the Portuguese nobility, who also made up the officer class of the military. This proved to be an arrangement highly unconducive to honest and efficient government.
The trading posts of Portuguese Asia were intended to finance themselves through rents charged to locals and levies charged on traders passing through the ports, with only the hefty profits from the actual trading of spices taken by the Crown back in Portugal. Thus the colonial outposts were largely left to their own devices. For a contemporary description of the results we have the highly disgruntled accounts of Diogo do Couto, who arrived in Goa in 1559 as a mid-ranking colonial official and became the official royal chronicler of Portuguese India. Apparently an honest man himself, he became increasingly appalled by the outright theft and abuse he encountered.
By the very nature of the Goan colony, the Portuguese king had a principal-agent issue of spectacular dimensions. Each term of colonial office lasted for just three years, and since it was over a year's sailing time from Portugal, it was dose to impossible to rein in a recalcitrant viceroy. On receiving an order from Lisbon, a viceroy could simply send a reply saying that the orders had been received and understood and of course he would like nothing more than loyally to implement the wishes of the Crown, but with the greatest respect, following whatever course of action was instructed would have an unfortunate side-effect detailed herein that he was sure the king's advisers had not intended and would wish to avoid, and how did they suggest that he proceed in light of this fact? By the time this had gone to Lisbon and a response come back, a new viceroy would be in place, who could set the clock back to the beginning by stating that he had not seen the original order, or claiming that the situation on the ground had now changed or that further details of the order had regrettably become necessary and could he be furnished with same by return of post?»
False Economy – A Surprising Economic History of the World, Alan Beattie, 2009
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