HI169- Galleons and Caravans Week 10. Wednesday 6 December 2017 SILVER IN WORLD HISTORY

Old tales about silver

Old tales about silver Earl J. Hamilton, American Treasure and the Price Revolution in Spain, 1501-1650 (Cambridge MA: Harvard University Press, 1934)

A global currency

1. The nature of silver a. Silver was a currency b 1. The nature of silver a. Silver was a currency b. 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 1640s b. 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 inflation 1375 1 jiang = 1000 copper coins 1445 1 jiang = 1 copper coin - demand for silver for currency; but also - for taxes esp. ‘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 8 Persia 1:10 10 Europe 1:12 12

EUROPE CHINA 6 COINS OF SILVER 1 COIN OF GOLD 12 COINS OF SILVER 2 COINS OF GOLD

View of Joachimstahl silver mines (1548)

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

Slaves working in amalgamation Patio system (16th century) Natives working in a money mine of Potosí (16th century)

Cerro Rico (Rich Mountain) Total Production of American Silver 1571-75 41 tons 1576-80 124 1581-85 187 1586-90 202 1591-95 218

Trade in Silver and Other Commodities, 1650 - 1750

Already in Europe Used to pay for manufactured goods of other European countries Through the Dutch via Baltic= 50 tons/year in the XVII c. Mediterranean and Ottoman Empire, land and sea routes.

"Manila had no purpose other than the trade in silver and silk” Dennis O. Flynn and Arturo Giraldez (1995)

Manila: A Nodal City View of Manila and the Parian (ca. 1720) (Oil on wooden chest; XVII C. Museo de Arte Jose Luis Bello, Puebla, Mexico) View of Manila and the Parian (ca. 1720)

Japanese Silver Andre Teixeira’s map of Japan (1595) including “argenti fodinae” (Iwami silver mines museum ) Iwami Ginze Silver Mine

"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". Ralph Fitch, The Voyage of M. Ralph Fitch 1583-1591 in Richard Hakluyt The Principal Navigations, Voyages and Discoveries of the English Nation 1903- 1905 [1598-1600], vol. I, p. 498.

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 - Spanish massacre of Chinese in the Philippines (1639-1640) - 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. - Manchu Invasion and end of the dynasty (1644)  

7. THE SECOND PHASE OF THE GLOBAL SILVER MARKET 1700-1750 The value of silver in China grew once again bimetallic ratio China 1:10 Europe 1:15

Conclusion Global Trade Silver exchanged for other products: Chinese exports of raw and woven silk, porcelain, tea… which command a higher price compared with China’s domestic market Bi-directional arbitrage: European and ASIAN merchants were making a high rate of profit Chinese silver-based economy lead to massive exports of non-monetary products. Restructuring of the Chinese economy: specialisation of production in some regions