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The Maritime Silk Road of the Manila Galleons
The commercial relationships under the trans-Pacific trade routes of the 16th to 18th centuries offer a paradigm for emerging dynamics in China's ties to the global economy
By Peter Gordon 03.07.2015 18:35
China has recently sought to organize its international, commercial and to some extent political relations with the countries to its West under a "Silk Road Economic Belt." This is underpinned in some practical sense by large investments in the physical infrastructure of trade, especially rail. However, by evoking the first-millennium "Silk Road" period, China is also establishing a paradigm for relationships whose reference pre-dates the current dominance of the West and what are perceived as Western ideas and institutions.
It was the disintegration of trade routes following the collapse of the pax mongolica and, ultimately, the Ottoman conquest of the Levant that drove the European powers to find new trade routes. One of these, and arguably the most transformative, was the route across the Pacific that brought Mexican silver to fuel the economies of East Asia starting in the second half of the 16th century.
The Silk Road, which as a concept is a modern invention, has had good propagandists and has been fixed in popular and political imagination. But the Pacific route, which we might call "La Ruta de la Plata," or the "Silver Way," also has both historical validity and potential for offering China a non-Anglo-Saxon paradigm for arranging its relations to the East.
The Manila Galleon: Trans-Pacific Trade Routes 1565-2015
This year marks the 200th anniversary of the last sailing of the "Manila Galleon" in 1815 – otherwise known as the "Nao de China" or "Nao de Acapulco." This was the name given to a trade route and the ships sailing it, that brought goods from China and wider Asia across the Pacific in exchange for silver from mines in "New Spain" – Nueva España, Spain's meso-American colonies – going the other way.
This may seem like an obscure or specialist anniversary, but this trade, which lasted for 250 years – the first such voyage was in 1565 – played a huge role in the global economy of the time. Indeed, it can be argued that this trade – through commerce spanning three continents and a standard currency – ushered in the global economy that remains with us today.
The trans-Pacific trade route connected Acapulco and Manila – both points serving as entrepots for their wider regions, Asia and Spanish America – connected across what is now Mexico to Veracruz on the Caribbean via the so-called Camino de China or "Road of China." At Veracruz, goods were shipped on the Flota de Indias, or West Indies Fleet, all the way to Seville or Cadiz in southern Spain, with Havana, Cuba, a stop along the way.
Chinese silk, ivory, porcelain and jade were joined in Manila by spices from the Moluccas, lacquerware from Japan, and cinnamon and cotton textiles from the Philippines for the journey east. In the other direction, Spanish wines, olive oil and manufactured goods were transported by land from the Caribbean to the Pacific for shipment to Asia, particularly the Philippines.
This combined route connected Asia via the Americas to Spain and Europe, making it not only the longest trade route in history up to that time, its 15,000 mile extent exceeding the length and scope of the Silk Road, but also the world's first truly global trade route, connecting both the New World and the Old World with Asia and with each other.
The ships that were built for this purpose were the largest ever constructed, reaching some 2,000 tons (although there is some dispute whether Zheng He's ships had the same displacement or perhaps a bit larger), when most large ships were only a quarter of the size. The Manila Galleons, built of Philippine hardwoods, were the super-container ships of their day.
The Peso: The World's First Global Currency
During this period, about 85 percent of the world's silver was produced in the Spanish colonies of the New World – notably Mexico and Peru – and one-third or perhaps more of it ended up in China as a result of this trade. The British, of course, came to know all about silver and the China trade; it was silver, or rather Britain's unwillingness to part with it, that led to the importation of opium, the subsequent eponymous wars, and a legacy that still roils Sino-Western relations.
Most significantly, however, although it was such goods as silk, porcelain and spices that were, much as in the previous millennium during the heyday of the Silk Road, the foreign traders' objectives, this latter-day trade was defined not so much by silk as by silver. One consequence was that the coin known variously in English as the Spanish or Mexican dollar or peso became, insofar as there was one, the standard currency in Asia. This coin emerged as a global currency, arguably the world's first, predating the similar role of the U.S. dollar (which is, in fact, derived from it) by several centuries. The word "dollar" comes from the names of coins that began to be minted in 16th century central Europe knowns as "thalers," hence our word. But it was the Spanish version –"real de a ocho" –worth 8 reales, that became common in the New World and Asia. This coin, also known as the "peso de ocho (reales)," whence "piece of eight," was the basis for the later U.S. dollar. Indeed, the slang term "two bits" for 25 cents, comes from the practice of cutting Spanish dollars into quarters to make change.
Although China invented paper money, rampant overprinting in previous centuries had led to a decline in confidence; by this period, the huge Chinese economy ran on metal coinage, silver and copper. Although imports of New World silver began slowly, demand exploded in the second-half of the 18th century as the Chinese economy boomed on the back of exports. By the three-quarter point in the century, it seems that Latin America was supplying essentially all of China's money demand.
The silver coins circulating in China came largely from mints in Spanish Mexico. These coins, standardized in weight and purity, were accepted if not preferred and required worldwide, much as the U.S. dollar is today. Known colloquially as "Buddha Head" coins (fotou) due to some apparent resemblance with the Spanish monarchs portrayed on the obverse, they became so popular that the Dutch minted (or, more exactly, counterfeited) them long after any given king's death. Contracts in local or some other currency often had annotations with the amounts in these silver coins. Silver mined and minted in Spain's American colonies was critical to the Chinese economy because it formed the basis of the monetary supply.
The effects are still with us: the Japanese yen and Hong Kong dollar were both derived from, and set equivalent to, what was by then the Mexican dollar. More important still, the Chinese yuan was in 1889 set at par to the Mexican dollar. If the yuan develops into a global reserve currency accepted worldwide, it will to some extent merely be restoring the status quo ante of the 16th to 18th centuries.
More->The Maritime Silk Road of the Manila Galleons -
The commercial relationships under the trans-Pacific trade routes of the 16th to 18th centuries offer a paradigm for emerging dynamics in China's ties to the global economy
By Peter Gordon 03.07.2015 18:35
China has recently sought to organize its international, commercial and to some extent political relations with the countries to its West under a "Silk Road Economic Belt." This is underpinned in some practical sense by large investments in the physical infrastructure of trade, especially rail. However, by evoking the first-millennium "Silk Road" period, China is also establishing a paradigm for relationships whose reference pre-dates the current dominance of the West and what are perceived as Western ideas and institutions.
It was the disintegration of trade routes following the collapse of the pax mongolica and, ultimately, the Ottoman conquest of the Levant that drove the European powers to find new trade routes. One of these, and arguably the most transformative, was the route across the Pacific that brought Mexican silver to fuel the economies of East Asia starting in the second half of the 16th century.
The Silk Road, which as a concept is a modern invention, has had good propagandists and has been fixed in popular and political imagination. But the Pacific route, which we might call "La Ruta de la Plata," or the "Silver Way," also has both historical validity and potential for offering China a non-Anglo-Saxon paradigm for arranging its relations to the East.
The Manila Galleon: Trans-Pacific Trade Routes 1565-2015
This year marks the 200th anniversary of the last sailing of the "Manila Galleon" in 1815 – otherwise known as the "Nao de China" or "Nao de Acapulco." This was the name given to a trade route and the ships sailing it, that brought goods from China and wider Asia across the Pacific in exchange for silver from mines in "New Spain" – Nueva España, Spain's meso-American colonies – going the other way.
This may seem like an obscure or specialist anniversary, but this trade, which lasted for 250 years – the first such voyage was in 1565 – played a huge role in the global economy of the time. Indeed, it can be argued that this trade – through commerce spanning three continents and a standard currency – ushered in the global economy that remains with us today.
The trans-Pacific trade route connected Acapulco and Manila – both points serving as entrepots for their wider regions, Asia and Spanish America – connected across what is now Mexico to Veracruz on the Caribbean via the so-called Camino de China or "Road of China." At Veracruz, goods were shipped on the Flota de Indias, or West Indies Fleet, all the way to Seville or Cadiz in southern Spain, with Havana, Cuba, a stop along the way.
Chinese silk, ivory, porcelain and jade were joined in Manila by spices from the Moluccas, lacquerware from Japan, and cinnamon and cotton textiles from the Philippines for the journey east. In the other direction, Spanish wines, olive oil and manufactured goods were transported by land from the Caribbean to the Pacific for shipment to Asia, particularly the Philippines.
This combined route connected Asia via the Americas to Spain and Europe, making it not only the longest trade route in history up to that time, its 15,000 mile extent exceeding the length and scope of the Silk Road, but also the world's first truly global trade route, connecting both the New World and the Old World with Asia and with each other.
The ships that were built for this purpose were the largest ever constructed, reaching some 2,000 tons (although there is some dispute whether Zheng He's ships had the same displacement or perhaps a bit larger), when most large ships were only a quarter of the size. The Manila Galleons, built of Philippine hardwoods, were the super-container ships of their day.
The Peso: The World's First Global Currency
During this period, about 85 percent of the world's silver was produced in the Spanish colonies of the New World – notably Mexico and Peru – and one-third or perhaps more of it ended up in China as a result of this trade. The British, of course, came to know all about silver and the China trade; it was silver, or rather Britain's unwillingness to part with it, that led to the importation of opium, the subsequent eponymous wars, and a legacy that still roils Sino-Western relations.
Most significantly, however, although it was such goods as silk, porcelain and spices that were, much as in the previous millennium during the heyday of the Silk Road, the foreign traders' objectives, this latter-day trade was defined not so much by silk as by silver. One consequence was that the coin known variously in English as the Spanish or Mexican dollar or peso became, insofar as there was one, the standard currency in Asia. This coin emerged as a global currency, arguably the world's first, predating the similar role of the U.S. dollar (which is, in fact, derived from it) by several centuries. The word "dollar" comes from the names of coins that began to be minted in 16th century central Europe knowns as "thalers," hence our word. But it was the Spanish version –"real de a ocho" –worth 8 reales, that became common in the New World and Asia. This coin, also known as the "peso de ocho (reales)," whence "piece of eight," was the basis for the later U.S. dollar. Indeed, the slang term "two bits" for 25 cents, comes from the practice of cutting Spanish dollars into quarters to make change.
Although China invented paper money, rampant overprinting in previous centuries had led to a decline in confidence; by this period, the huge Chinese economy ran on metal coinage, silver and copper. Although imports of New World silver began slowly, demand exploded in the second-half of the 18th century as the Chinese economy boomed on the back of exports. By the three-quarter point in the century, it seems that Latin America was supplying essentially all of China's money demand.
The silver coins circulating in China came largely from mints in Spanish Mexico. These coins, standardized in weight and purity, were accepted if not preferred and required worldwide, much as the U.S. dollar is today. Known colloquially as "Buddha Head" coins (fotou) due to some apparent resemblance with the Spanish monarchs portrayed on the obverse, they became so popular that the Dutch minted (or, more exactly, counterfeited) them long after any given king's death. Contracts in local or some other currency often had annotations with the amounts in these silver coins. Silver mined and minted in Spain's American colonies was critical to the Chinese economy because it formed the basis of the monetary supply.
The effects are still with us: the Japanese yen and Hong Kong dollar were both derived from, and set equivalent to, what was by then the Mexican dollar. More important still, the Chinese yuan was in 1889 set at par to the Mexican dollar. If the yuan develops into a global reserve currency accepted worldwide, it will to some extent merely be restoring the status quo ante of the 16th to 18th centuries.
More->The Maritime Silk Road of the Manila Galleons -
