Silver Connects the World: Europe, East Asia, and West Africa
Selection A "The effects of the global trade in silver were worldwide and linked the world in new and unprecedented ways. This segment explores some of those effects in Japan, West Africa, the Americas, China, and Europe.In Japan, the Tokugawa shoguns grew rich off the trade in silver, which they used to strengthen the state against warlords. In addition, the global silver trade encouraged the Japanese to produce other commodities for export, which then made their way to the Americas, Europe, and West Africa. In West Africa, Europeans involved in global trading networks brought a variety of commodities to coastal regions to trade for gold, local goods, and slaves. Eventually, this trade had profound effects on West African society: It reoriented trade routes toward the coast rather than across the Sahara, which led to the decline of interior states. It also led to an increasing traffic in humans to work, among other places, in the silver mines of the Americas. In the Americas, silver mining at Potosí led to the deaths of eight million Indians. Meanwhile, Mexican silver production — which exceeded Peruvian production by the eighteenth century — resulted in the minting of half a billion Mexican pesos that were then used for currency in China, India, and West Africa. In China, the demand for silver initially drove the global economy. Then, by 1750, silver glutted the Chinese market, bringing its price down and leading to inflation. The devaluation of silver in China had a devastating financial effect on Spain as well — a fact that allowed its European competitors to gain the upper hand in a new global trade focused on sugar, tobacco, gold, and slaves."
Selection B "China’s demand for silver remained at the center of the world economic system until about 1750. Finally, tens of thousands of tons of silver glutted China’s market. The value of silver fell, and China’s economy was rocked by inflation. Fluctuating values of silver caused the real salaries of Chinese officials to rise and fall, encouraging graft and corruption. For Spain, the declining value of silver meant disaster. So much so that the Spanish crown actually experienced bankruptcies during times of record silver production. But, just as the Pacific economy stumbled, the Atlantic economy picked up because of profits from the circular movements of slaves, sugar, tobacco, and gold. Europeans weaned themselves from deficit trading of silver, and eventually the balance of economic power shifted in their favor. One uniquely significant commodity was also traded between West Africans and Europeans, beginning in the sixteenth century: human beings. The presence of Europeans along African coasts ultimately led to the forced migrations of twelve million Africans. Trade in slaves to work the silver mines and plantations of the New World reached its peak during the seventeenth and eighteenth centuries. During the sixteenth through eighteenth centuries, European traders carried Japanese silks to West Africa on their return voyages from Asia. African merchants then sold them to local weavers, who unraveled the silks and rewove the threads into traditional patterns like the kente cloth of the Gold Coast of West Africa. The Portuguese found themselves needing to rely on local communities in order to establish trade. They established “El Mina” (“The Mine”) in the fifteenth century, which became a permanent base for Portuguese trading expeditions into the African interior and across the Atlantic Ocean. Once El Mina was established, it became a magnet of opportunity; it attracted trade from the interior; it reoriented the trade routes; and it brought goods south to the coast instead of north. Many societies declined in the African interior because of the growth of opportunity on the coast."
Selection C "It is important to also keep in mind that China’s importation of hundreds of millions, indeed billions, of pesos in silver during the past five centuries implied Chinese exports of an equivalent value of silks, ceramics, tea, and other products. Such massive exports forced additional restructuring of the Chinese economy. Marks has recently documented how long distance trade (both domestic and international) caused specialization of production by region throughout China. That is to say, the full story is much more complex than simply exporting silks and other products in exchange for Japanese/ Spanish-American silver imports. These global circuits of exchange interacted with circuits normally considered local or regional in scope. Augmented silk exports from Jiangnan, for instance, implied the devotion of more land there to mulberries, which means increased rice coming down river from Hunan to feed mulberry growers. The point is, global trade transforms local ecologies, a central message in the work of Marks and others. China was transformed as a result of interaction with a global network.It may be tempting to view a remote mining center like Potosí—at an altitude above 13,000 feet and a thousand miles (2.5 months by pack animal) distance from Lima on the Pacific—to have been relatively detached from other areas of South America. Helmer informs us, however, that around 1610 Tucuman in Argentina sent timber, 4,000 cattle, and 60,000 mules per year to Potosí (some 600 mountainous miles away) in support of that mining city of 160,000 people. The fact is that the economies of most of South America, Central America, and Mexico were deeply affected by the silver industry, an industry with economic tentacles penetrating into the social fabric of all populated continents. The intercontinental trade in monies—silver, gold, copper, and cowrie shells—involved people of all classes, not just the rich. The Single Whip tax reform in China during the 1570s, for example, replaced numerous taxes with a single tax, while also specifying that most Chinese (including peasants) must pay taxes annually in silver. Conversion to a silver system was also strong in relatively sparsely populated Southeast Asia: One way or another silver had become irresistible as the effective international currency of Southeast Asia by about 1630, whether in rials, as in most of the island world, or in weight. In spite of the status the royal gold coins had, the rulers themselves came to expect taxes and fines to be paid in silver. The triumph of silver undoubtedly furthered the integration of Southeast Asia into a world economy. Southeast Asia also imported volumes of Chinese copper cash as well as lead picis as local media of exchange; most of the silver gravitated to the giant Chinese marketplace. Our analysis is mostly compatible with the vision proposed in Andre Gunder Frank’s controversial ReORIENT (1998). Yet, we disagree with Frank’s contention that China was enriched as a result of its importation of silver. We argue (Flynn and Giráldez 2000) that China’s multicentury absorption of tens of thousands of tons of foreign silver involved an immense drain of wealth from Chinese society. 43 Our argument essentially states that the multicentury “silverization” of China involved substitution of a resource-using money (silver) in place of a money that had been nearly costless to produce (paper); China’s immense exports (of mainly nonmonetary items in exchange for silver imports) can be viewed as a measure of the social cost of maintaining a silver-based economy. Ironically, acceptance of our position that China’s silver imports involved immense social costs, rather than social benefits, actually supports Frank’s main emphasis on the global economic significance of China prior to the nineteenth century. China’s ability to absorb the immense cost of converting its monetary and fiscal systems from paper to silver—while nonetheless remaining the world’s dominant economy for centuries underscores the scale of the Chinese economy as global juggernaut." All above excerpts come from the following source:
back The video tells you about the impact the silver of the New World on good old Europe, and why this silver made England a nation of tea drinkers. Hello. My name is Ursula Kampmann, and I am a numismatist. Today, I would like to tell you about the impact the silver of the New World had on good old Europe, and why this silver made England a nation of tea drinkers. To do that, we have to travel back in time to the first third of the 16th century, when Hernan Cortez wiped out the Aztec Empire and Francisco Pizarro superseded the Inca Empire. That provided the King of Spain with two new vast territories: The Viceroyalty of New Spain and Viceroyalty of Peru. Naturally, the conquistadores brought with them huge quantities of looted gold and silver. But loot is just loot, and it’s a general rule that at a certain point there is nothing left to loot anymore. If the Spanish intended to further yield profit from their colonies, they had to mine for themselves. And so they did ... with enormous success. In 1545, the Potosi mines were discovered in the highlands of present-day Bolivia that contained silver in an abundance never imagined before. One year later similarly rich mines were discovered near Zacatecas, roughly 800 kilometers to the northwest of Mexico City. At the very same period, clever miners developed a new method of silver mining. Thanks to the use of mercury the production costs were reduced and the yield increased. Fortunately, Spain possessed enough mercury so that Philipp II and his successors had silver at their disposal in such great quantities as Europe had never seen before. One can only make a guess about the amount of silver gained from the New World. At the beginning of the previous century, economic historian Earl J. Hamilton evaluated the record of the Spanish tax authorities to get concrete numbers. He proved that the silver yield increased markedly in the 1560s until it reached its peak with 2,700 tons of silver in 1600. Since the middle of the 17th century, the import began to go down. According to Hamilton, a total of 16,887 tons of silver were imported from the colonies into Spain. These numbers, however, have been called into question in the past years because they don’t consider human nature. People always have shirked customs duties. As a matter of fact, everybody coming from the colonies smuggled. Spanish and foreign people, merchants, captains and ordinary sailors – even churchmen weren’t beyond temptation. Thus, when Father Juan Pérez Espinosa died in 1622, not too long after he had returned from a missionary journey to the colonies, he left 414,700 silver reales as well as 62 gold bars and numerous other items made of gold, of which every single piece had been imported untaxed. So, it is safe to assume that the 16,887 tons calculated by Hamilton are faced with the same sum of smuggled goods. Nevertheless, the total amount of imported and smuggled silver is roughly the same as the amount that is mined today, worldwide over the course of one and a half years. Hence, it seems like something of a surprise that this small amount of silver could have changed the world so radically. And yet, it did. It turned insignificant Spain, located at the edge of Europe, into the most powerful country of the entire world. The American silver helped the Spanish king to finance his wars that were to assure the hegemony of Catholicism. In terms of economy, this expensive policy didn’t make a sense. Despite of the huge amount of silver that flowed into Spain every year, Philipp was forced to declare national bankruptcy three times during his reign: in 1557, in 1575, and in 1596. The reason was the simple fact that Philipp spent more than he collected and was therefore in constant need of loans to pay the wages of his soldiers on time. He didn’t spend much effort on the improvement of the Spanish infrastructure. The king bought all weapons and armaments from foreign countries where the Spanish nobility bought their luxury goods likewise, while the Spanish people remained poor. The Venetian ambassador Vendramin described the situation in the late 16th century as follows: “Spain obtains almost all necessities that can be produced thanks to human diligence and effort from foreign countries. The Spaniards state with quite good reason that the treasure which comes from the West Indies to Spain produces the same effect as rain on the roof. If there is heavy rain, the water will pour down and the first to be hit won’t be able to profit.” Hence, Spain was a mere channel for the silver to flow into the enterprising trading nations of Europe. The only thing Spain did was giving a special form to the silver. Coins were manufactured out of it which were officially called ‘real de a ocho’, meaning eight-real coin, or peso for short. These coins were nothing special. They were neither beautiful nor particularly stable. They varied in terms of weight and fineness. But they had one great advantage: they circulated in great quantities literally everywhere. Be it northern, southern or eastern Europe – the peso reached every corner of the continent. In 1551, the first specimens appeared in Milan, in 1554 in England, in 1570 in Algeria, and in 1579 in Estonia. In the early 17th century the real de a ocho became an official means of payment in Russia, and that was only the beginning. It was thanks to its ubiquity that the peso turned into the ideal trading coin, used in the Orient, in India and, most of all, in China. There, it came in small silver ingots that were assayed by official silver wholesale buyers and stamped with little chop marks before it was used as means of barter. … which takes us back to the cup of tea here on my desk. For centuries, the European tradesmen had faced a real problem when it came to China: China didn’t want any of the European goods. They simply didn’t meet the Chinese taste. Silver had been the only commodity accepted in barter, but Europe didn’t have a great amount of silver at hands. Therefore for centuries no extensive trade had been possible between East and West. The mines of Potosi and Zacatecas changed that. Now, Europe possessed enough silver – the silver that Spain got from its colonies and spent on warfare. That was the start signal for a truly international trade. Sought-after items came to places where money was. And so England, being the most important trading partner of China, became a nation of tea drinkers. That international trade was based on the real de a ocho, until England replaced Spain as the most influential global power at the end of the 18th century, and its money, the British pound, became a currency of worldwide recognition. |
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