Weekly Part 1: The Chinese Silver Standard's Historical Journey
China has unfinished business with silver
This analysis while being about Silver as a monetary standard, is a lesson in history underscoring the interplay between global trade dynamics, monetary systems, and political events. ( Sourced here)
History Repeating Itself: Exploring the Chinese Silver Standard
Columbus Started It
China Prefers Silver over Gold
The Opium Wars and the Decline of China's Sovereignty
Development of the Chinese Silver Standard
Chinese Private Banks
End of an Era
What Made Western Fiat Work?
Impact on China: Depression and the Rise of Mao
History Rhyming Now?
***Early Draft, footnotes
1- History Repeating Itself: Exploring the Chinese Silver Standard
Mark Twain's famous words about history rhyming and not repeating itself echo the common sentiment that humans learn nothing from history. Nevertheless, it is always valuable to delve into the annals of the past.
This is particularly true in the case of the Chinese silver standard, which not only endured as one of the longest-existing coin standards but also successfully unfolded with minimal intervention from the Chinese government.
Its origins can be traced to a development on the opposite side of the world: Christopher Columbus' (re)discovery of America in 1492, paving the way for Spain to rise as the first truly global power.
2- Columbus Started It
By the mid-16th century, the Spanish Empire had established the first global trade network. They brought silver from Mexico, Peru, and Chile across the Pacific to China, purchasing tea, porcelain, silk, and spices in return. The Manila Galleon served as the pivotal transshipment port, ferrying Chinese goods back to the east.
The treasures were then unloaded in Acapulco and transported overland to Vera Cruz on Mexico's east coast. From there, alongside other precious metals and New World commodities, the goods made their way to Spain through the Spanish treasure fleet.
The profitability of this trade system during the 17th and 18th centuries was astronomical, with returns on investment reaching 200-300% per trip. However, the emergence of new players like the United States and the British Empire, coupled with changing trade routes, led to a decline in Spain’s profits by the end of the 18th century.
Despite the Spanish trade system's demise in 1821 with Mexico's independence, its effects persisted through the establishment of the silver standard that endured well into the 20th century.