Monash-Warwick – Global History Teaching Unit 2 – Global Trade Week 3. American Silver and Global Trade

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

Banknotes and Silver in China - First banknote issued in China in Paper money as the only currency under the Mongol - crisis of the ‘paper’ system in the 14 th and 15 th c. Lead to inflation jiang = 1000 copper coins 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 1:61=6 India 1:81=8 Persia 1:101=10 Europe 1:121=12

EUROPECHINA 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 Silver tons

Trade in Silver and Other Commodities,

"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 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 The value of silver in China grew once again bimetallic ratio China1:10 Europe1:15