Monash-Warwick – Global History

Teaching

Unit 2 – Global Trade

Week 3. American Silver and Global

Trade

1. The nature of silvera. Silver was a currencyb. But it had different values in different places.

2. The story of silver had two distinct phases:a. first phase, the Potosi/Japan cycle: 1540s to 1640sb. second phase, Mexican cycle, c.1700-1750

Banknotes and Silver in China

- First banknote issued in China in 1024- Paper money as the only currency under the Mongol- crisis of the ‘paper’ system in the 14th and 15th c.

Lead to inflation1375 1 jiang = 1000 copper coins1445 1 jiang = 1 copper coin

- demand for silver for currency;but also

- for taxesesp. ‘single-whip system’

- indirectly – silver tribute

Arbitrage

Bimetallic ratios, or gold/silver ratio in the 16th century

China 1:6 1 = 6

India 1:8 1 = 8

Persia 1:10 1 = 10

Europe 1:12 1 = 12

EUROPE CHINA

1 OUNCE OF GOLD

12 OUNCES OF SILVER

2 OUNCES OF GOLD

24 OUNCES OF SILVER

View of Potosi by Bernard Lens, in Map of South America, London c.1715

Natives working in a money mine of Potosí (16th century)

Total Production of American Silver1571-75 41 tons1576-80 1241581-85 1871586-90 2021591-95 218

Trade in Silver and Other Commodities, 1650 - 1750

"Manila had no purpose other than the trade in silver and silk"

"When the Portuguese go from Macao in China to Japan, they carry much withe silk, gold, musk, and porcelain; and they bring from thence nothing but silver. They have a great carrack which goes there every year and she brings from thence every year above six hundred thousand cruzados [approximately 17,000 kilograms]. And all this silver ... they employ to their great advantage in China".

6. THE END OF THE FIRST PHASE

High value of silver in China caused influx of silver from other parts of the world:

-The process continued until the value of silver in China became equal to other parts of the world

- A growing amount of gold was brought to Europe and America, lowering its value there (in terms of silver)

6. THE END OF THE FIRST PHASE

Consequences

- For Global Trade: Disruption in the trade network with Europe

- Dutch and English attacks on Manila galleons

- Expulsion of the Portuguese from Japan in 1639

- For China- growing taxation but less silver in

circulation to pay taxes- The Ming find difficult to pay and equip

their military forces.  

7. THE SECOND PHASE OF THE GLOBAL SILVER MARKET

1700-1750 The value of silver in China grew once again

bimetallic ratioChina 1:10Europe 1:15