Global silver trade from the 16th to 18th centuries

The silver trade between the Americas and Europe and onward to China from the sixteenth to eighteenth centuries (1500–1800) had a profound effect on the world economy. The silver trade could also be considered the beginning of a global economy.

Spaniards traveling west discovered vast amounts of silver which fueled their trade economy. One of their greatest findings was the Potosí silver mines. Potosí's deposits were rich and Spanish American silver mines were the world's cheapest sources of silver. By the end of the 18th century, more than 40,000 tons of silver would be shipped from Potosí alone.[1] From 1500 to 1800 Mexico and Peru produced about 80%[2] of the world's silver with 30% of it eventually ending up in China. In the late 16th and early 17th century, Japan was also exporting heavily into China and the foreign trade.[2] The Spanish acquired the silver, using it as a means of purchase which landed it mainly in the hands of the British, who then used it to purchase the exotic commodities of China.

The silver trade marked the era of commercial capitalism and became the bridge between late medieval and modern times. Despite their best efforts, by 1759, and because of the changing Atlantic trade highway(seaway), Spain could no longer compete successfully with England and France in the international economy. Between a medieval management style and the expanding global economy, mostly through England's commercial and industrializing economy that was in a phase of rapid expansion and competition on a global scale, Spain found its empire in various stages of demise and most of the silver that came out of the Americas went to Europe via trade.[3]

China dominated silver imports. The market value of silver in the Ming territory was double its value elsewhere, which provided great arbitrage profit for the Europeans and Japanese.[2] While the Chinese imported silver, they exported gold. Silver later became used as coinage. (Copper was also considered but there was one difference: silver could be assayed for purity while copper could not. In order to assay a copper coin, one would have to destroy it.) Local Chinese government officials would demand taxes to be paid in silver and eventually silver backed all of China's economy. The increasing supply of silver from the Spanish and other Europeans caused the price of silver to inflate, which eventually affected the deflation of values of all commodities. Because the Chinese economy was based on silver, this soon led to the collapse of the Ming dynasty.

First paper money

The world's first paper money was invented by the Chinese and they needed some commodity to back it. Paper was easier to transport and this necessitated its invention. By the nature of their geography, China had no real amount of precious metals of their own to back the paper money they invented. Because the Spaniards didn't find gold but did find copious amounts of silver, the Spaniards and the rest of Europe used this silver to purchase the commodities of choice from China, solving both of their problems.[4]

The silver trade brought the world together in a way it never had been unified to date. Even the Silk Road could not match its impact. The desire for luxury goods like silver and silk was the motivation for the expense of a trip so one could recoup the investment. And while they shipped these luxury items, they then could also trade for other things like potatoes, corn, chili peppers, peanuts and other exotic commodities that were exclusively South American goods influencing European and Asian cuisine.

Opium wars

Eventually, because of the many wars and revolutions during the 18th century that needed funding, Europeans backed off of using their silver to pay for goods from China and as a result, China had less of it to use. They printed more paper money even though they didn't have the silver or any other physical commodity to back its value. Eventually, this paper money became worthless and untrustworthy which eventually led to the Opium Wars. Instead of using silver to trade with China, England (through the East India Company) began to trade for Chinese products with opium.

Imperial trade monopolies

By the 18th century, due to the Canton constraints that forbade contact between European and Chinese civilians, Europeans were forced to trade with imperial trade monopolies. These constraints not only forbade the close contact between Europeans and the Chinese civilians, but also forbade any women or European families from living in China. England tried to build an embassy in China in order to gain special treatment. China considered all outsiders as “barbarians” and trade partners only. In the mind of the Chinese aristocracy, Europeans were considered “vassals” of the Emperor and had to pay tribute and acknowledge subordinate position to the Emperor and the Chinese. Because he considered the Europeans to be barbarians, he didn't want them to influence Chinese society and culture, keeping them to specific ports. This was a turning point in the Anglo-Sino relationship.[4][5]

See also

References

  1. ↑ "Potosí Silver Mines". Atlas Obscura. Retrieved 2016-05-08.
  2. 1 2 3 Flynn, Dennis O. (1995). "Born with a "Silver Spoon": The Origin of World Trade in 1571" (PDF). Journal of World History. University of Hawaii Press.
  3. ↑ Stein, Barbara H.; Stein, Stanley J. (2009). Edge of crisis : war and trade in the Spanish Atlantic, 1789-1808. Baltimore, Md.: Johns Hopkins University Press. pp. X–XI. ISBN 9780801890468.
  4. 1 2 "China and Europe, 1500–2000 and Beyond: What is Modern?". Afe.easia.columbia.edu. Retrieved 2015-03-30.
  5. ↑ Stein, Stanley J. Stein, Barbara H. (2003). Silver, trade, and war : Spain and America in the Making of Early Modern Europe. Baltimore: Johns Hopkins Univ Press. ISBN 9780801877551.
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