Silver can be seen as the world’s first global commodity, and was a key part in the world’s first global trade network. Silver linked the two continents of North America, Asia, and Europe, acting as a major trade good in the first sustained trade between the three continents. The silver trade had many unique patterns, and these can be explained by the supply and demand of silver around the world. Conversion to a silver currency in Ming China, newly found deposits of silver in Japan and Spanish America, and European demand for luxury goods are all underlying forces that shaped the global silver trade between 1550 and 1800. The first key to unlocking the patterns of the global silver trade is uncovering why silver was traded, as this would only happen if there was a profit in selling silver. Originally, the Ming dynasty used paper currency, but rapid inflation soon caused it to be unusable, with silver gradually taking over as the currency of choice. This trend culminated in the Single-Whip tax reform, which consolidated taxes under a single tax to be paid in silver. Suddenly, every business in China was demanding silver, as illustrated in Xu Dunqiu Ming’s essay The Changing Times: “Now, when you have your cloth dyed, you receive a bill, which must be paid in silver.” Ming was most likely writing at the time of this reform, and being a writer, had a contemporary and accurate account of the trends going on at the time in China. This demand for silver caused large exports of silver to China, as exhibited by Tomás de Mercado, a Spanish scholar, who remarked at the amount of silver being shipped to China from Manila: “The streets of Manila… could be paved with granite cobblestones brought from China as ballast in Chinese ships coming to get silver for China.”
The converse side of this high demand for silver was the simultaneous discovery of large silver deposits in Spanish America and Japan. Large amounts of silver were mined and shipped to Europe and Manila for eventual trade in Asia. By far the largest silver deposit was Potosi, in Spanish America. The magnitude of the silver extraction can be demonstrated by Document 2, a painting depicting the mining and processing of silver. This was painted by an anonymous painted, so there is a chance that there is no criticism toward the Spanish exploitation of natives or praise of Spanish power. Also, the painting is done in a style such that there are no dramatic or emotion provoking depictions, suggesting that it could be an objective view of the Spanish operations at Potosi. All in all, the enormous amount of wealth extracted at Potosi exceeded “326 million silver coins… This does not count the great amount of silver taken secretly to Spain,” as Charles D’Antonio Vasquez de Espinosa, a Spanish priest, recorded.
The final piece in the puzzle of the patterns of the global silver trade was the European desire for Asian luxury goods. Europeans used silver, a commodity in its own right, to trade for these goods such as silk, tea, and porcelain. Silver wasn’t simply a currency to underwrite a European trade deficit, as gold, a supposed currency, flowed out of China at the same time. The Portuguese would use Japanese silver to buy Chinese luxury goods, as described by Ralph Fitch. Fitch was a British merchant at the time, so his account would most likely be an observation on the trade between China and Portugal from the perspective of a merchant who would want to get involved in this profitable trade as well. The British, too, bought Asian goods with nothing but silver and
sold them in Europe due to high demand, as recorded by Charles D’Avenant, an English political economist. D’Avenant was writing during a debate on restricting Asian imports, arguing that they shouldn’t be restricted. His credentials as a political economist, the scholarly audience he is writing for, make this account reliable of the trade balance in England at the time.
Silver had a varying impact on the various countries which were the most heavily involved in the silver trade. In Spain, silver was used to fund military expeditions in Europe, and Spanish authorities monopolized the production of silver, eliminating any traces of market capitalism. In Japan, silver profits were used to fund wars to unite the country under a single shogun, were invested in public works, and the government worked with merchants to create market capitalism. In China, silver was used more and more as an official currency. When silver prices crashed due to supply meeting demand, Spain lost most of its income, and thus power. Japan fared well, as its economy wasn’t reliant on silver. Its early market capitalism also set the stage for its industrial revolution in the 1800s. Finally, in China, high inflation caused prices to rise in silver, and this weakened the reigning Ming. he devaluement of silver set the stage for the takeover of China by the Qing.
Another example of a commodity driving trade patterns can be found in the salt within West Africa. Supply of salt and demand for gold in the Saharan desert and North Africa drove a trade in the Niger river area, where gold was mined. These factors
contributed to the vast caravan trade that took place across the Sahara, and the emergence of cosmopolitan trading cities such as Timbuktu. Also, the interactions with North African merchants caused the conversion of West African kings to Islam. All in all, pattern of global trade can be explained through the mechanics of supply and demand, as illustrated in the global silver trade between 1550 to 1800.
