China’s Silver Bullet

Beginning in the 12th century, people around the world, on every continent, began to benefit from a process of global warming. The result was population growth, more extensive empire building — and new levels of cultural vitality.

In the 14th century, the Empire of Mali was at its height, recognized for its wealth and power throughout the Mediterranean world.

Across the Atlantic, the Aztec Empire consolidated its power, ruling over a vast region of client states with a capital, Tenochtitlán, that in 1325 had perhaps a quarter-million residents. It was the world's largest city when Cortes arrived early in the 16th century.

But the 14th century was not kind to Europe or China. These two parts of the island world suffered devastating losses of life from famine and the plague.

If the Mongol conquests had established safe trading routes that brought new levels of prosperity, the great caravans following them across central Asia spread the terrible Black Death. More than 60 million Chinese died — and Europe lost one-third of its population.

No one knows exactly how it began. It seems likely, however, that social disruptions following the roaming conquests of the Mongols made many societies susceptible to this devastating contagious disease.

It is certain that their trade routes became channels for its worldwide distribution. It was carried from Southeast Asia, where it probably began, to China, and across central Asia to Europe. The plague disrupted regular trade, and the caravan routes became identified as conduits of the Black Death.

The spread of the plague was one reason that Europeans began looking in the 15th century for alternatives to the land routes to the East. Perhaps the sea would be safer.

In the 15th century, Europe's new energy was revealed in its commitments to exploration and increases in long-distance trade, and also in artistic, scientific and technological innovation.

Such developments can rarely be explained, but perhaps the innovations were a response to the challenge of Islam as well as to the disruptions of established social practices and cultural assumptions that the plague had caused.

Yet, this striking new social energy was evident not only in Europe. There were indications of it from China to Portugal, from the Aztec Empire to the Ottoman, Safavid and Mughal empires in central Asia, to the Songhai Empire in West Africa.

While Europe brought its new energy to the ocean, the house of Osman consolidated its massive Ottoman land empire — and the Muscovy Empire began its expansion to the east, reaching the Pacific in 1639.

Looking for the most likely leader of the move onto the ocean in the early 15th century, one would not have focused on Europe. The Chinese — not the Portuguese — might have seemed to be the most likely to encompass the globe by sea and establish a global trading empire.

The great Chinese fleets then had ships far larger than those of Columbus (400 feet long compared to the mere 85 feet of the Santa Maria) that were exploring the coasts of Southeast Asia, South Asia, and East Africa.

It has been proposed that Zheng He, a Muslim eunuch who was a powerful Chinese admiral, circumnavigated the globe between 1421 and 1423 — almost exactly a century before Ferdinand Magellan's voyage.

Whatever the full extent of this early Chinese move onto the ocean and of the client-state trading partners Zheng He established, Chinese policy shifted in 1433.

As the result of internal political and fiscal changes, government subsidies for such maritime activities ended. And without government support, which was essential for the very large ships, private traders turned to regional trading in smaller ships.

Even with this reduction of maritime activity, China remained the economic engine of Asia. Its robust economy — and, to a lesser extent, the economies of other Asian empires — prepared the Asian foundation that made the ocean actually work as a field for global commerce.

The Ming dynasty (1368-1644) had witnessed a transition to a "silver economy" by the end of the fifteenth century. The reason for this development was partly government policy (making silver legal for paying taxes in the 1430s), but silver was also needed for China's growing economy and seems to have had significant value as an economic "good" as well as a medium of exchange.

As a result, silver came to have a much higher value (compared with gold or any other measure) in China than anywhere else in the world. Between 1540 and 1640, its value was 100% higher than in Europe.

Japan had supplied China with silver, but China — with about a quarter of the world's population and perhaps 40% of its economy — had an enormous demand for it. The demand was eventually supplied by the silver mines of America, which between 1500 and 1800 produced roughly 85% of the world's silver. Between 1527 and 1821, as much as half of the output went to China.

This animated not only the Chinese economy — but global commerce as well. When the Chinese relaxed restrictions on maritime trade in 1567, the Asian demand for silver and the global flow of bullion increased dramatically, perhaps doubling almost instantly.

As a result, an apparently inexhaustible market emerged for the seemingly limitless production of the silver mines of Mexico and Peru. The movement of silver from Acapulco to Mania — founded in 1571 precisely to manage this trade — created a global economy built on Pacific as well as Atlantic sea-lanes.

Without silver from the Spanish colonies in South America and the Ming dynasty's policy that gave it trade value in exchange for the sophisticated manufactured goods from China (and, to a lesser extent, India), it is unlikely that Europeans could have become such successful global traders.

But silver now became the currency of the global trading system — and Europeans the well-rewarded intermediaries.

Without these Asian developments, the prospects for settlement and development in the Americas would have been less promising. Public or private investments there would not have been made.

Spain's success in the New World therefore depended not only on its securing control of the mines of Peru and Mexico from the disease-weakened Native Americans — but also on the expanding economies of Asia.

Ironically, the flow of silver into China caused rapid urbanization and speculation there, and inflation made China ever more dependent on the constant flow of silver — which meant that the Ming dynasty became vulnerable to the inevitable interruptions in the global movement of bullion. The resulting economic and social instability seems to have contributed to its collapse in 1644.

Excerpted from “A Nation Among Nations: America’s Place in World History” by Thomas Bender, published by Hill and Wang, a division of Farrar, Straus and Giroux, LLC. Copyright (c) 2006 by Thomas Bender. All rights reserved.