When China wanted silver from the rest of the world
- China accepting silver for commodities would eventually result in the world’s first common currency
- The institution of the Spanish dollar – or pieces of eight – was arguably globalisation’s first chapter
A route across the Pacific in the 16th century was a catalyst for the integration of the planet. The Silver Way: China, Spanish America and the Birth of Globalisation, 1565-1815 reveals how the Ruta de la Plata connected China with Spanish America, furthering economic and cultural exchange and building the foundations for the first global currency.
It can be argued that when Spain instituted a common currency in the form of the real de a ocho, also known as pieces of eight or the Spanish dollar, globalisation’s first chapter had been written. The acceptance of the dollar coins for commercial transactions throughout Asia, the Americas and much of Europe resulted in a cultural exchange between nations, as well as the relatively free movement of people and goods between the three continents.
The main objective behind the sea route plied by Spanish galleons was to establish trade with China. These European vessels became known as China Ships. They transported silver from the Americas to exchange for goods in Asia, mostly commodities of Chinese origin.
China had an appetite for silver, while the West hungered for goods from China.
When the Spanish tried to establish commercial ties with China, they found little taste for goods from the outside world. However, the Chinese had a voracious appetite for silver. During the latter part of the 16th century, during the Ming dynasty, Beijing ruled that taxes should be paid in silver, and without domestic recourse to the precious metal, the demand for imported silver soared.
Spain’s colonies in the Americas could mine enormous quantities of silver and the Spanish began to export the commodity to China via their Manila connection.
The colonial mine was located in the Bolivian city, Potosí, for several centuries. At an altitude of 4,000m, Potosí lies at the foot of the Cerro de Potosi, a mountain popularly thought of as being made of silver ore. China’s insatiable demand for silver led to increased production in the Bolivian highlands and by the late 16th century, Cerro de Potosi alone produced an estimated 60 per cent of all silver mined in the world.
Many of the products imported into New Spain were highly coveted luxury goods. Silk was popular, both in its raw form and finely embroidered, as was porcelain, diamonds, pearls, ivory and wooden furniture. Cotton from the Philippines and other parts of Asia became highly profitable due to the high quality. Other products in demand were spices, tea, Indian linen, amber, swords, knives, potassium nitrate for gunpowder, and mercury, for industrial use to mine silver.
Manila as central hub of Asia
Over the years, Chinese commercial vessels began to arrive in Manila with increasing regularity.
Manila was ideally located as a major trading port for Chinese goods which were highly coveted in Europe and America. The Chinese community in Manila grew exponentially to keep pace with the booming trade. Manila also provided sailors with respite before their long and arduous journey to Acapulco, the Spanish base where galleons would unload and trade their goods for silver ingots and, later, coins.
The Chinese who left their ships to settle in Manila often set up shop as traders.
Many of the Chinese merchants in Manila took residence in an area adjacent to the Intramuros – a walled city hosting most of the Spanish colonial and administrative buildings. Known as Parián, this area quickly became the commercial centre of Manila.
There were over a hundred shops prospering, and it was here that products arriving by junk from China were traded. Chinese who converted to Christianity (called sangleyes by the Spanish) were able to expand their business interests to other provinces in the Philippine Islands.
Over the years Manila’s population became one of the most diverse in the world, with people settling there from Spain, France, England, Italy, Flanders, Germany, Denmark, Sweden, Poland, Russia, Turkey, Greece, Persia, Africa, as well as Tartars, Chinese, Japanese and others from across Asia.
Acapulco and Mexico City
New Spain, especially Acapulco and Mexico City, began to depend on the China Ships for the open trade route. When galleons arrived in Acapulco they were greeted with many festivities. There were joyful celebrations starting with Mass and followed by parties and market fairs.
Most of the goods arriving in the China Ships were transported from Acapulco to Mexico City. From there, the merchandise would be distributed to Veracruz, where it would become part of the Indian fleet bound for Seville, and consequently the rest of Spain and the Spanish crown’s European possessions.
Travellers and writers from the 16th and 17th centuries describe Mexico as home to some of the most luxurious cities in the world. Tales abound of wealthy men ostentatiously decorating the bands of their hats with pearls and gems, and of ladies splendidly decked out in rich silks and fine jewellery. Even among the disadvantaged, it was common for people to wear silk clothes.
As soon as the trade route took off, many Asians began to settle in Mexico, particularly Chinese and Filipinos. Many were sailors from the galleons, others were servants or arrived as slaves. There were probably well over 100,000 people from East Asia who started new lives by relocating to New Spain during this period.
The birth of Parián: the world’s first Chinatown
The world’s first Chinatown outside Asia was established in the Mexican city of Plaza Mayor as a copy of Manila’s Parián. It had a thriving marketplace with many stalls and kiosks where Chinese vendors sold Asian goods, at competitive prices. Customers could discover fine Chinese porcelain, diamonds, ivory, fabrics from China and other Asian countries, rubies, emeralds, spices from the Moluccas and many other exotic Asian goods.
The first global currency
Manila became the central hub for trade routes linking Asia to the rest of the world, stimulating rapid international economic growth. China’s acceptance of silver in exchange for commodities such as tea, silks and ceramics would eventually result in the Spanish dollar – silver minted coins – evolving into the world’s first common currency.
At first the Chinese insisted on trading with bullion and would not accept payment for their goods in foreign currencies. It wasn’t until later that they started using the pieces of eight.
Pieces of eight
In 1728, new laws and regulations standardised the coinage of the real de a ocho, also known as the eight royals coin, pieces of eight, or the Spanish dollar. The weight was reduced and the quality improved, making the dollar ideal as a common currency. One of the improvements was the addition of a striated pattern around the edge of the coin. Any chipping, a common practice at the time, was easy to identify and the coins became harder to forge.
Countries began creating their own currencies based on the Spanish pieces of eight.
This is an excerpt from The China Ship: How silver changed the world , a multimedia infographic