Global silver trade from the 16th to 19th centuries

The global silver trade between the Americas, Europe, and China from the sixteenth to nineteenth centuries was a spillover of the Columbian exchange which had a profound effect on the world economy.

[3] In addition to the global economic changes the silver trade engendered, it also put into motion a wide array of political transformations in the early modern era.

The Spanish acquired the silver, minting it into the peso de ocho to then use it as a means of purchase; that currency was so widespread that even the United States accepted it as valid until the Coinage Act of 1857.

[8][failed verification][better source needed] From 1500 to 1800, Bolivia and Mexico produced about 80%[9] of the world's silver with 30% of it eventually ending up in China.

[11] The market value of silver in the Ming territory was double its value elsewhere, which provided great arbitrage profit for the Europeans and Japanese.

A major drive of the Spanish colonization of the Americas during the late 15th and 16th centuries was the discovery, production, and trading of precious metals at a time when there was a severe shortage of them.

Most silver was extracted in Mexico,[16] however, production of any single Mexican mine was far less than that of Potosí, until surpassed by Guanajuato also in the Bajío in the 18th century.

[21] From 960 to 1276, the Song dynasty in China's history, the importance of silver kept increasing as a currency in a long period of time.

During this time, China's population came into a boom because of the importation of hardy American crops, such as sweet potatoes, corn and peanuts.

[30] The city of Manila served as a primary outpost of the exchange of goods between the Americas, Japan, India, Indonesia and China.

[30] However, a large amount of silver was transported across the vast Pacific Ocean directly from the Americas as well, via the Manila Galleons.

[28] There are few records of the amount of silver which crossed the Pacific due to it being discouraged by the Spanish monarchy, so estimates vary greatly.

Even when this exchanged silver eventually ended up in Buenos Aires or another port city where it was exported, it facilitated numerous transactions within the Americas before it got there.

China had a high demand for silver due to its shift from paper money to coins in the early period of the Ming dynasty.

[33] The Ming paper currency eventually failed due to self-imposed inflation along with an inability to stop the production of counterfeit bills.

The bimetallic ratio of silver to gold was about two to one, which meant that European and Japanese merchants made a large amount of profit.

[12] The trade between China, Japan, and Southeast Asian nations in both expensive goods like silk products and inexpensive ones like sugar continues developing in the second half of the 16th century.

At the same time, European and Japanese traders profited from the price difference between Chinese silver and the rest of the world.

[28] The new population boom was a product of the introduction of New World crops into China, mainly sweet potatoes, which could be more easily grown.

[36][23] In 1540, Japanese ports became a hotspot for Chinese traders seeking to obtain silver, a precious commodity in China.

[37] In The Wealth of Nations, Adam Smith noted the sheer force and great reach of the global silver trade.

Historians posit Europeans would have been left out of world trade, and China may have fallen prey to conquest by settlers of the Americas, if not for Japanese silver mining.

[39] Under the Ming and Qing dynasties, China hoarded silver to boost its economy and increase its trading power.

[41] Scholars find the amount of silver traveling from Manila to China was approximately three million pesos or 94,000 kilograms in the early 1600s.

[citation needed] A large populace near the Lower Yangtze averaged hundreds of taels of silver per household in the late 16th century.

[43] Later on, the sudden ban on Spanish silver imports to China imposed by the Qing dynasty after defeating the Ming in 1644,[44] along with a long period of economic stagnation and recession due to famines and bad financial policies back in Spain, simultaneously combined with devastating losses sustained towards the end of the Thirty Years' War, all precipitated the significant decline of the Spanish Empire in the second half of the 17th century, and its eclipse by France, and, later, Great Britain.

His attempt involved imposing harsh limits on silver mining to stop its flow into the market and subsequently replaced it with baochao or paper money.

[51] In the late 18th century, British merchants from the East India Company began to introduce Indian opium to Chinese markets.

The British, offended by the seizure of their property in opium, sent a large naval expedition to China to end the restrictive conditions under which they had long traded with that country.

The Treaty of Nanking, which ended the war in 1842 largely on British terms, imposed numerous restrictions on Chinese sovereignty and opened five ports to European traders.