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