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Global silver trade from the 16th to 19th centuries

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The global silver trade between the Americas and Europe from the sixteenth to nineteenth centuries was a spillover of the Columbian Exchange which had a profound effect on the world economy. In fact, many scholars consider the silver trade to mark the beginning of a genuinely global economy, with one historian noting that silver "went round the world and made the world go round."[1] Although global, much of that silver ended up in the hands of the Chinese, as they accepted it as a form of currency.[2] In addition to the global economic changes the silver trade engendered, it also put into motion a wide array of political transformations in the early modern era. "New World mines," concluded several prominent historians "supported the Spanish empire," acting as a linchpin of the Spanish economy.[3]

Spaniards traveling west during the Age of Exploration discovered vast amounts of silver, much of which was from the Potosí silver mines, to fuel their trade economy. Potosí's deposits were rich and Spanish American silver mines were the world's cheapest sources of it. The Spanish acquired the silver, minting it into the peso de ocho (a currency) to then use it as a means of purchase; that currency was so widespread that even the United States accepted it as valid until the Coinage Act of 1857.[4] As the Spanish need for silver increased, new innovations for more efficient extraction of silver were developed, such as the amalgamation method of using mercury to extract silver from ore. Still, extracting silver from the New World had a human toll: tens of thousands of workers were forced to extract silver under horrendous conditions. A Spanish priest observed:

Once inside, they spend the whole week in there without emerging, working with tallow candles. They are in great danger inside there, for one very small stone that falls injures or kills anyone it strikes. If 20 healthy Indians enter on Monday, half may emerge crippled on Saturday.[5]

In the two centuries that followed the discovery of Potosí, the Spanish silver mines in the Americas produced 40,000 tons of silver.[6] Altogether, more than 150,000 tons of silver were shipped from Potosí by the end of the 18th century.[7] From 1500 to 1800, Mexico and Peru produced about 80%[8] of the world's silver with 30% of it eventually ending up in China (largely because of British merchants who used it to purchase exotic Chinese commodities). In the late 16th and early 17th century, Japan was also exporting heavily into China and the foreign trade at large.[8]

As has been demonstrated, 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.[8] The abundance of silver in China made it easy for the country to mint it into coinage. That process was so widespread that local Chinese government officials would demand taxes to be paid in silver to the point that silver eventually backed all of China's economy. As the increasing supply of silver from the Spanish and other European powers caused the price of silver to inflate, however, China's over-reliance on that precious metal eventually fueled the Ming Dynasty's collapse.

First paper money

The world's first paper money ("flying money") was invented by the Chinese[9] and they needed some commodity to back it. Traditional coins were useful, but the amount of coins needed for large purchases could be bulky and dangerous to transport. That problem was solved when the Chinese created small pieces of paper with pictures of the coin printed on them.[10] 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.[11]

Opium Wars

Main article: Opium Wars

Despite some restrictions, silver continued to drive trade through its popularity in Europe. This, combined with a high British demand for Chinese tea, created chronic trade deficits for European governments, which were forced to risk silver deficits to supply merchants in Asia.[12] As supplies of silver decreased in Europe, Europeans had less ability to purchase highly-coveted Chinese goods. Merchants were no longer able to sustain the China trade through profits made by selling Chinese goods in the West and were forced to take bullion out of circulation in Europe to buy goods in China.[13]

In the 19th century, American merchants began to introduce opium to Chinese markets. The demand for opium rose rapidly and was so profitable that Chinese opium dealers began to seek out more suppliers of the drug, thus inaugurating the opium trade; one merchant declared that Opium "is like gold. It can sell any time."[12] From 1804 to 1820, a period when the Qing Dynasty needed to finance the suppression of the White Lotus Rebellion, Chinese merchants were soon exporting silver to pay for opium rather than Europeans paying for Chinese goods with the precious metal.[14]

The Qing imperial court debated whether and how to end the opium trade, eventually settling on regulations on consumption. That measure, however, resulted in an increase in drug smuggling by Europeans and Chinese traders. In 1810, the Daoguang Emperor issued an edict concerning the matter, declaring, "Opium has a harm. Opium is a poison, undermining our good customs and morality. Its use is prohibited by law."[15] Following a debate at court in 1836 on whether to legalize the drug or crack down on its use, the emperor decided on the latter. An upright official, Commissioner Lin Zexu led the campaign against opium as a kind of "drug czar." The British, offended by the seizure of their property in opium, sent a large naval expedition to China to end the restrictive conditions under which they had long traded with that country. Thus began the first Opium War, in which Britain's industrialized military might was proven in China's rout. The Treaty of Nanking, which ended the war in 1842 largely on British terms, imposed numerous restrictions on Chinese sovereignty and opened five ports to European traders.[16]

See also

References

  1. ^ Frank, Andre G. (1998). ReOrient: Global Economy in the Asian Age. Berkeley: University of California Press. p. 131.
  2. ^ von Glahn, Richard (1996). "Myth and Reality of China's Seventeenth Century Monetary Crisis". Journal of Economic History. 2: 132. ... silver wanders throughout all the world... before flocking to China, where it remains as if at its natural center.
  3. ^ Flynn, Dennis O.; Giraldez, Arturo (1995). "Born with a 'Silver Spoon'". Journal of World History. 2: 210.
  4. ^ "A Century of Lawmaking". Library of Congress. Retrieved May 23, 2018. {{cite web}}: Cite has empty unknown parameter: |dead-url= (help)
  5. ^ Hemming, John (1970). The Conquest of the Incas. New York: Harcourt. p. 372.
  6. ^ Stein, Stanley J.; Stein, Barbara H. (2000). Silver, Trade, and War: Spain and America in the Making of Early Modern Europe. Johns Hopkins University Press. p. 21.
  7. ^ "Potosí Silver Mines". Atlas Obscura. Retrieved 2016-05-08.
  8. ^ a b c 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.
  9. ^ Moshenskyi, Sergii (2008). History of the Weksel: Bill of Exchange and Promissory Note. Xlibris. p. 50.
  10. ^ Weatherford, Jack (1997). The History of Money. Crown Business. pp. 125–6.
  11. ^ "China and Europe, 1500–2000 and Beyond: What is Modern?". Afe.easia.columbia.edu. Retrieved 2015-03-30.
  12. ^ a b Peyrefitte, Alain (1992). The Immobile Empire—The first great collision of East and West—the astonishing history of Britain's grand, ill-fated expedition to open China to Western Trade, 1792–94. Alfred A. Knopf.
  13. ^ Gray, Jack (2002). Rebellions and Revolutions: China from the 1800s to 2000. New York: Oxford University Press. pp. 22–3.
  14. ^ Layton, Thomas N. (1997). The Voyage of the 'Frolic': New England Merchants and the Opium Trade. Stanford University Press. p. 28.
  15. ^ Fu, Lo-shu (1966). A Documentary Chronicle of Sino-Western relations. Vol. 1. p. 380.
  16. ^ Hoe, Susanna; Roebuck, Derek (1999). The Taking of Hong Kong: Charles and Clara Elliot in China Waters. Routledge. p. 203.
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