Silver and world trade


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Silver and world trade

  1. 1. Silver and World Trade Check Out the World’s Bling, Yo
  2. 2. First Things First <ul><li>Law of Supply and Demand </li></ul><ul><li>Chinese Dynasty Song </li></ul>
  3. 3. “ Born With a Silver Spoon” <ul><li>What is the thesis? </li></ul><ul><li>What evidence is provided to support the thesis? </li></ul><ul><li>What are Flynn and Giraldez revising? </li></ul>
  4. 4. World Trade <ul><li>World trade did not begin until all important populated continents began to exchange products continuously – both directly and indirectly </li></ul><ul><li>Flow of silver West to East </li></ul><ul><ul><li>Originally explained through a European trade </li></ul></ul><ul><ul><li>deficit </li></ul></ul>
  5. 5. Silver <ul><li>1571 – Manila was founded marking the beginning of a global trade network. This cities major products included silk and silver. </li></ul><ul><li>China became the prime causal actor in the silver trade </li></ul><ul><li>Europe was important as a middleman </li></ul><ul><ul><li>The East India Companies were NOT the one to inject life into the “backward Asian economies” </li></ul></ul>
  6. 6. Ming China <ul><li>Ming China became “the suction pump” for silver in the early modern world </li></ul><ul><li>Silver had an elevated value in China </li></ul><ul><ul><li>The value in China was double that in the rest of the world </li></ul></ul><ul><li>China had paper money from the 11 th Century, but by the mid 15 th Century Chinese were using silver </li></ul><ul><ul><li>Paper money caused high inflation </li></ul></ul><ul><li>China’s “One-Whip System” </li></ul><ul><ul><li>Silver only </li></ul></ul>
  7. 7. Ming China <ul><li>China and her Tributaries were 25% of the world’s population in the 16 th Century </li></ul><ul><li>This type of shift in product demand would ultimately affect the world economy </li></ul>
  8. 8. Ag ! <ul><li>“ Silver was the magnet, the engine, the driving passion, the dazzling reward.” </li></ul><ul><li>Sources of Silver in 16 th Century </li></ul><ul><ul><li>Spanish America at Potosi </li></ul></ul><ul><ul><li>Japan </li></ul></ul><ul><li>The Potosi silver mine was discovered in 1545 </li></ul>
  9. 9. Rich as Potosi <ul><li>I am rich Potosi, </li></ul><ul><li>Treasure of the world, </li></ul><ul><li>The king of all mountains, </li></ul><ul><li>And the envy of all kings. </li></ul><ul><li>Coat of Arms </li></ul><ul><li>from late 16 th </li></ul><ul><li> Century </li></ul>
  10. 10. Potosi
  11. 11. Potosi in the 16 th Century <ul><li>Physical appearance: </li></ul><ul><ul><li>classical elements of a boomtown combined with extravagant Baroque culture </li></ul></ul><ul><ul><li>A canal divided the city </li></ul></ul><ul><ul><li>A maze of byways and the Villa Imperial </li></ul></ul><ul><li>Climate </li></ul><ul><ul><li>Harsh </li></ul></ul><ul><ul><li>13,000 feet above sea level </li></ul></ul><ul><ul><ul><li>Two and a half day journey by pack animal </li></ul></ul></ul>
  12. 12. Potosi in the 16 th Century <ul><li>The Populous: </li></ul><ul><ul><li>Population in 1600 was 160,000 people (60 yrs.) </li></ul></ul><ul><ul><li>About the same as London and Paris </li></ul></ul><ul><ul><li>This is the modern day equivalent of 20 million people moving to a spot on Alaska’s North Slope </li></ul></ul><ul><li>In addition to mine workers, the populous was composed of artisans, grocers, jewelers, gamblers, prostitutes, and thieves </li></ul><ul><li>Machismo – encouraged dueling </li></ul>
  13. 18. Mining a Potosi <ul><li>Most spectacular mining boom in history. </li></ul><ul><li>New technologies of the Spanish miners </li></ul><ul><li>caused the cost of mining silver to be low. </li></ul><ul><li>Low cost + </li></ul><ul><li>Large Chinese Demand </li></ul><ul><li>= Enormous Profits! </li></ul>
  14. 19. Ag ! <ul><li>From 1500-1800 The Americas produced perhaps 80% of the world’s silver, while Japan produced much of the rest </li></ul><ul><li>Transportation technological changes (such as faster and better ships) help move the silver </li></ul><ul><li>The possibility of great profits created motives for smuggling </li></ul>
  15. 20. Global Economy <ul><li>China provide the demand for silver </li></ul><ul><li>The Spanish Americas, and also Japan, provided the supply of silver </li></ul><ul><li>The Portuguese traded vast numbers of slaves for the silver (the slaves worked in the mines to help the supply meet the demand) </li></ul><ul><li>Europe in general participated in a vast and sophisticated existing Asian commercial network. (Europe did not introduce modernization to “backward” Asia) </li></ul>
  16. 21. Global Ramifications <ul><li>Spain: </li></ul><ul><li>Silver supported the Spanish Empire and the Crown at Castile </li></ul><ul><ul><li>Once the Ag supply and demand costs had equalized the Ag profit diminished </li></ul></ul><ul><li>When we study this, the point isn’t the quantity of the Ag traded, but the profits of the Ag declined. </li></ul><ul><li>Spain vanished as a serious world power as the Ag profits declined </li></ul>
  17. 22. Global Ramifications <ul><li>China: </li></ul><ul><ul><li>Ming declined, in part, because China’s tax revenues declined in purchasing power </li></ul></ul><ul><ul><li>The One-Whip System was a fixed in Ag, creating later a fiscal crisis </li></ul></ul><ul><li>Americas and Japan: </li></ul><ul><ul><li>Rising merchant classes </li></ul></ul>