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6. Economic Transformations

Silver and global commerce

silver trade gave birth to global network of exchange (more than spice trade)

silver “went round the world and made the world go round”

mid-16th discovery of enormously rich silver deposits in Bolivia and Japan

provided vastly increased supply

Spanish America alone produced 85% of world’s silver during early modern era

Spanish’s Philippines (their sole Asian colony) was critical link in network of commerce

Malina (colonial capital: destination of annual Spanish shipments of silver

drawn from Bolivia

transported to Acapulco in Mexico

shipped across Pacific to Philippines

first direct and sustained link between Americas and Asia

initiated web of Pacific commerce that grew steadily

China and silver

economy was heart of Pacific web and of early modern global commerce generally

growing demand for silver

1570s: Chinese authorities consolidated variety of tax levies into single tax

now required to pay in silver

caused value to skyrocket

foreigners with silver could now purchase more of China’s silks and porcelains than ever before

set silver in motion around the world

bulk of world’s silver supply wound up in China, rest mostly elsewhere in Asia

“silver drain” routes were numerous

Chinese, Portuguese, Dutch went to Malina to sell Chinese goods in exchange for silver

European ships carried Japanese silver to China

much of silver shipped across Atlantic to Spain spent in Europe generally, used to pay for Asian goods

paid for some African slaves and for spices

Spanish silver coin (piece of eight) used by merchants in North America, Europe, India, Russia, West Africa as medium of exchange

by 1600: circulated widely in southern China

silver “wanders all throughout the world...before flocking to China, where it remains as if at its natural center” (Portuguese merchant, 1621)

Potosí

world’s largest salt mine, present-day Bolivia (South America)

barren landscape high in Andes

ten-weeks’ journey by mule from Lima

became largest city in Americas (equivalent in size to London, Amsterdam, Seville with 160,000 people)

European elite lived in luxury

all goods of Europe and Asia at their disposal

Native American miners worked in horrendous conditions

some families held funeral services for men drafted to work in mines

“If 20 healthy Indians enter on Monday, half may emerge crippled on Saturday” (Spanish priest)

environment also suffered

highly intensive mining techniques caused deforestation, soil erosion, flooding

opportunity for women

Spanish women

rent out buildings they owned for commercial purposes

send their slaves into the streets as small-scale traders (earn some pesos)

lower-class: ran stores, pawnshops, bakeries, taverns

Indian and mestiza women opened businesses that provided beverages, food, clothing, credit

Spain

initial destination for much of Latin America’s silver

silver vastly enriched the Crown

made Spain envy of its European rivals

Spanish rulers could now pursue military, political ambitions in Europe and Americas beyond its own resource base

“New World mines supported the Spanish empire” (several prominent historians)

vast infusion of wealth did not fundamentally transform Spanish economy

generated inflation more than real economic growth

prevented from using silver windfall productively

rigid economy laced with monopolies and regulations

aristocratic class that preferred leisure to enterprise

crusading insistence on religious uniformity

when value of silver dropped (early 17th): Spain lost position as dominant Western European power

flood of American silver in Europe

drove prices higher

further impoverished many

stimulated uprising across the continent

contributed to General Crisis of upheaval and instability in 17th (along with Little Ice Age)

Japan

another major source of silver production

military rulers (Tokugawa shoguns) used silver-generated profits to defeat hundreds of rival feudal lords, unify country

allied with vigorous domestic merchant class

developed market-based economy

invested heavily in agricultural and industrial enterprises

state and local authorities both acted vigorously to protect and renew dwindling forests

millions of families in 18th took steps to have fewer children

late marriages

contraception

abortion

infanticide

outcome

dramatic slowing of Japan’s population growth

easing of impending ecological crisis

flourishing and highly commercialized economy

foundations for Japan’s 19th-century Industrial Revolution

China (again)

deepened already-substantial commercialization of economy

more and more people had to sell something to obtain silver to pay taxes

sold either labor or products

economy became more regionally specialized

communities that devoted themselves to growing mulberry trees (for silkworms) had to buy their rice from other regions

southern China: economic growth resulted in loss of about half of area’s forest as more land devoted to cash crops

no Japanese-style conservation program

Overall

China’s role in silver trade of useful reminder of Asian centrality in world economy of early modern area

large and prosperous population fueled global commerce

vastly increased quantity of goods exchanged and geographic range of world trade

economically speaking, Europeans were essentially middlemen

despite obvious physical presence in Americas, Africa, Asia

funneled American silver to Asia, competed with each other for place in rich markets of East

productivity of Chinese economy evident in Spanish America

cheap, well-made Chinese goods outsold hose of Spain

Indian cotton textiles outsold European woolen, linen textiles in 17th

to such an extent that French laws in 1717 prohibited wearing of Indian cotton or Chinese silk clothing to protect French industry

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