Page 103 - Encyclopedia Of World History Vol V

1880 berkshire encyclopedia of world history

No nation was ever ruined by
trade. • Benjamin Franklin
(1706–1790)

Middle East during the early fifteenth century. Lack of in the 1540s.Vanishing profits caused a worldwide trade
subsequent European-style trade developments, how- crisis, and effects reverberated globally for centuries.
ever, has prompted scholars to blame Chinese state inter- Aside from carrying vast volumes of silver and silks,
ference for China’s failure to modernize during the early the Manila galleons served as a vector through which
modern era. Historical facts do not coincide with this American crops were introduced into Asia. New plants
conventional hypothesis. The Chinese economy “silver- such as the sweet potato and peanut were particularly sig-
ized” during the sixteenth century because its paper- nificant because they grew in colder, rocky, and hilly envi-
money system collapsed, whereupon silver was adopted ronments like those found in sparsely populated areas of
by merchants for monetary purposes. Subsequent China. Large regions to the north and west could now
changes in the taxation system reinforced the central role support relatively dense populations for the first time.
of silver in the Chinese economy. Importation of silver Han China’s population more than doubled during the
therefore formed the basis of an immense commercial eighteenth century and China’s territorial size doubled as
expansion. Despite a lack of official Chinese sponsorship well, leading to drastic restructuring. Expansion of the
of foreign commerce along European lines, extremely suc- Chinese economy implied dramatic increase in the
cessful Chinese commercial networks emerged through- domestic demand for silver one more time. As a conse-
out Asia during the early modern period nonetheless. quence, the price of silver in China again rose above that
China was the primary demand-side force operating in of the rest of the world by 1700 (50 percent higher this
the global silver market. Silver poured into China via all time). Reminiscent of the 1540s–1640 silver boom,
maritime and land-based trade routes simply because the merchants worldwide once again bought silver where it
white metal’s price in China was double that of the rest was cheap and transported it to lucrative Chinese mar-
of the world by the late sixteenth century. On the supply kets. American silver again flooded into China, causing
side, tremendously rich concentrations of silver were dis- China’s silver price to sink to the world silver price level
covered in Japan, Peru, and Mexico beginning in the by the 1750s. This time, abnormally high silver-trade
1540s, and technological innovation further reduced profits vanished in fifty years (1700–1750) rather than
mining costs. It was this combination—high silver prices a century (1540s–1640).The bulk of the silver entering
in end-market China and cheap production costs in China during this 1700–1750 cycle came from Mexican
Japan and the Americas—that led to the greatest global mines. Not only were the Mexican silver mines the rich-
mining boom the world had ever seen. Acting as inter- est in world history—prior to the Nevada discoveries in
mediaries between the Chinese marketplace and Japanese the 1860s—but the Mexican peso in particular domi-
mines, the Portuguese engaged in highly profitable trade nated all silver-money rivals throughout the Pacific
until a 1639 shogunal edict expelled them in favor of Islands, along the Asian coast, from Siberia to Bombay,
Dutch intermediaries (confined to Deshima, a minute and indeed throughout North America as well. In 1785
islet within Nagasaki Bay). Profits from Japanese silver the U.S. Congress declared the Mexican peso (called the
mines financed Japan’s unification under the Tokugawa “dollar” in Anglo-Saxon countries) an ideal monetary unit
shogunate by 1600; similarly,American silver-mine prof- for its new nation.
its financed resource-poor Spain’s emergence as a premier
European power. Both phenomena depended upon high Early Integration
silver prices in the Chinese marketplace. But a century of of the Pacific
unprecedented silver imports eventually managed to glut Notwithstanding the conquest of Guam (1662) and the
even the giant Chinese marketplace; the price of silver fell Marianas in the last decades of the seventeenth century,
and equalized throughout the world by 1640, ending a the Manila galleons did not break the Pacific Islands’ iso-
century-long “Japan and Peru Cycle of Silver” that began lation from the continental Rim. Further integration of