Splendid Exchange, A

by Bernstein, William L

  Although the crown and its favored merchant elite made fabulous profits from the spice, silk, and silver trades, Portugal still went broke in the grand Iberian tradition: through court extravagance and the crushing expense of military adventurism. Even today, that one of Europe’s tiniest kingdoms could deploy a blue-water navy all the way from Brazil east to Macao defies the imagination; Portugal’s demand that Malabar commercial hubs such as Calicut, which was not under its control, expel all Muslim traders bordered on the surreal.

  Perhaps had Portugal thrown its resources into trade, instead of an expensive protection racket of cartazes, war fleets, and fortified harbors, it could have sent enough spices, silk, fine cotton, porcelain, and pearls around the Cape to make it Europe’s wealthiest nation. The royal family and its favored merchants and captains earned fabulous wealth from the spice trade, but the nation itself was bankrupted by the staggering military expenses of a global empire. Portugal became known as the “Indies of the Genoese,” chronically in debt and beholden to Italian merchants and German banks run by the Fugger family, the kingdom’s major creditors.77

  Even during the sixteenth century, Portugal was an impoverished nation of subsistence farmers with little excess capital or functioning credit markets with which to provision the expeditions with ships, sailors, silver, and trade goods. The Portuguese were so short of cash that often, having paid the inevitable price in men and ships, they lacked the silver and trade goods with which to purchase spices when their fleets finally arrived in the Indies. For example, on one occasion in 1523, several decades before other Europeans were able to challenge the Portuguese in Asia, the royal trading post on Ternate simply did not have the wherewithal, even at the low prices prevailing in the Moluccas, to purchase a large shipment of cloves.78 Instead, the cargo was bought by a private Portuguese merchant. When the Dutch appeared eighty years later with bales of fine Flemish fabric and chests of silver coins, local pepper and spice merchants flocked to them. It did not go unnoticed in Amsterdam, Madrid, and Lisbon that most of the silver coins carried by the Dutch had been minted in Mexico City and Lima by Spain.

  To make matters worse, even though a soldier in the Estado could rise through the ranks to wealth and power, as did Francisco Serrão, the path was long and hard, and the outcome capricious. Not only did the Estado discourage capable men like his cousin Magellan, but appointments to high office lasted just three years. Those ambitious, brave, and lucky enough to earn such positions (or rich enough in the first place to buy them) were compelled to make the best of their limited tenure, squeezing local traders, their own troops, and the crown itself in a thirty-six month frenzy of self-dealing.

  When Serrão came to Ternate in 1512 after his vessel sank, the sultan treated him almost as a deity, for the ruler had prophesized that “men of iron” would arrive from afar to aid Ternate in its struggle with other sultanates, particularly Tidore. A decade later, Tidore welcomed Magellan’s men for exactly the same reason. When the Spanish left, the Portuguese burned down the Tidoran royal palace as a punishment for cooperating with their Iberian brethren.

  Over the following decades, the Portuguese cursed the northern Moluccas with a series of increasingly brutal governors. One, Jorge de Menese, ordered his troops to pillage Ternate when a supply ship did not arrive. When the Ternatans, defending themselves, killed some of his men, he took a local official hostage, supposedly as security against further violence. Without provocation, Menese had the man’s hands cut off, his arms tied behind his back, then set upon with dogs. The victim somehow managed to escape into the water, where he grasped the canines one by one with his teeth and drowned them before slipping below the waves himself.

  Portuguese missionary zeal did not sit well with the Islamic sultans on the islands. They became increasingly alarmed at the Jesuits’ success in converting commoners, who were reported to be highly susceptible to both church ritual and the church’s protection from the rapacious Muslim Ternatan rulers.79 By the mid-1530s, the Portuguese had managed the impossible: Ternate and Tidore were now allied, along with neighboring kingdoms, in revolt against the European presence. The central character in this drama was Sultan Hairun of Ternate. Placed on the throne as a puppet by the Portuguese in 1546, he found himself in and out of power over the next quarter century at their whim, even spending several years in Goa as an involuntary guest of the Estado.80 Although Hairun had at first considered Christianity, he gradually turned against the cruelty of the Portuguese. This revulsion reinforced his Islamic identity, which in turn gained him the support of other Moluccan Muslims.

  Events came to a head when the Portuguese assassinated Hairun in 1570. He was succeeded by his son Babullah, who swore to avenge his father’s death. He soon became a rallying point for Muslim leaders throughout, and even beyond, the Moluccas. The insurrection acquired an increasingly Islamic flavor. Alarmed Jesuits reported that imams from as far away as Aceh and Turkey were exhorting the faithful to seek their heavenly reward through jihad in the archipelago. The Moluccans proved themselves every bit as vicious as the Europeans, ripping babies from the wombs of local Christian women, then chopping both mother and child to bits. The revolt swept the Portuguese from much of the area. Babullah’s forces overran the Estado’s fort in 1575 and converted it into a royal palace. At the time of his death in 1583, Babullah ruled over much of the Spice Islands, becoming hugely wealthy in the process.

  It is easy to draw the obvious modern connection—a jihadist uprising uniting traditional enemies against a distant Christian power attempting to control a strategic commodity—but the situation in the Moluccas during the late sixteenth century was more complex. Most strikingly, the Moluccas warmly greeted other Europeans as potential allies against the Portuguese. The first was Francis Drake, who in the course of his circumnavigation conferred extensively with Babullah in 1579. Drake gave a detailed description of his extensive kingdom, which leaves no doubt that the sultan, with a love of luxury and over a hundred wives and concubines, was not the most devout of Muslims. Twenty years later, the first expeditions from Holland arrived, and Babullah and his successors also courted these newcomers as a counterweight to the hated Portuguese.81 Alas, the Dutch would soon prove even more brutal.

  Portugal exploited not only Asians but also its own citizens. So miserable was the life of the common soldier that soon after arriving in India, thousands fled the ranks for monasteries. Portuguese recruits often went without shelter and during the monsoon season could be seen begging naked by the roadside.82 The tens of thousands who died of tropical diseases and malnutrition in the Royal Hospital at Goa may well have been the lucky ones.

  Ultimately, events in northern Europe sealed the fate of the Portuguese spice empire. The early seventeenth century would see a struggle for wealth and power among three nations—Portugal, Spain, and the Netherlands—whose newly acquired mastery of the earth’s wind systems allowed them to compete both commercially and militarily over a planet completely encircled by trade routes.

  8

  A WORLD ENCOMPASSED

  In June 1635, the Spanish barbers (that is, bloodletters) of Mexico City protested to the viceroy about the presence of Chinese barbers there. The viceroy referred the matter to the city council, which in its turn recommended to the viceroy that he limit the number of Asian barbershops to twelve, and that they be restricted to the suburbs, as was the practice with foreign merchants in Spain. Exactly what the viceroy eventually decided is not known.1

  Less than a generation later, in 1654, twenty-three Portuguese-speaking Dutch Jews arrived in New Amsterdam—supposedly the first of their religion to come to North America. The Dutch governor of the city, Peter Stuyvesant, tried to deport them, but his bosses—in the West India Company, not in the Dutch government—allowed them to stay. The Company’s decision carried restrictions: the Jews could not engage in business on their own, and “The poor among them should not become a burden to the Company or the community but be supported by their own nation.”2
That they arrived from Brazil on a French ship attracted no particular notice.

  Nearly three centuries later, in 1931, an eleven-year-old Australian boy took an afternoon walk along sand dunes near the beach about sixty miles north of Perth. He came across forty silver Spanish coins dating to the same era as the Chinese barbers and Dutch-Portuguese Jewish immigrants. Not until 1963 would spearfishers several miles offshore come across the mother lode of this booty—the shipwreck of the Vergulde Draek (“Gilt Dragon”), a ship of the Dutch East India Company containing thousands of coins, which had sailed from Holland in 1655.

  How, in the middle of the seventeenth century, had Chinese barbers gotten to Mexico City? What, less than two decades later, were a shipload of Jewish Portuguese-speakers from Holland doing in Brazil? Why was the West India Company, a privately held concern, making government policy decisions in New Amsterdam? And how, nearly a century before Australia was “discovered” by Captain James Cook, did a Dutch ship full of Spanish silver coins come to rest on the seabed off its far western edge?

  Answering these four questions tells us a great deal about the remarkable worldwide expansion of the global economy that began in the wake of the voyages of discovery. In doing so, we shall expose the roots of today’s globalization and its discontents. But first, we must understand five things.

  First, within a few decades of Columbus’s second voyage in 1493, the exchange of crop species such as corn, wheat, coffee, tea, and sugar between continents had revolutionized the world’s agricultural and labor markets. The changes did not always improve the human condition.

  Second, by the early seventeenth century, Spanish and Dutch mariners had decoded the last great secrets of the planetary wind machine, allowing them to cross the vast expanses of the world’s oceans with relative ease. By 1650, goods of all kinds and people of all nations ranged over most of the globe.

  Third, the discovery of huge silver deposits in Peru and Mexico produced a new global monetary system (along with a fearsome inflation caused by the coining of too much silver money). The most common piece of currency, the Spanish eight-real coin, was as ubiquitous as the American hundred-dollar bill and the Visa card are today.

  Fourth, the seventeenth century saw the rise of a completely new trading order—the publicly held joint-stock corporation. These organizations had considerable advantages over what had preceded them: individual peddlers, their families, and royal monopolies. Large corporations soon came to dominate global commerce, a position they have not since relinquished.

  Finally, change always makes some people unhappy. In the new global economy of the sixteenth and seventeenth centuries, textile manufacturers, farmers, and service workers were all hurt by cheaper and better products from abroad. They were just as vociferous then as French farmers and American autoworkers are today.

  To untangle the mystery of the Chinese barbers in Mexico, we must delve a little more deeply into the history of silk. Sometime around 3000 BC, the first woven fragments, red-dyed ribbons and threads, appear in the Chinese archaeological record. Chinese myth credits Lady His-Ling, who lived around 2650 BC and was the chief wife of the emperor, with discovering the fabric when she rescued a cocoon that had accidentally dropped from a mulberry tree into a cup of hot tea.

  Unlike nutmeg and clove trees, which grow in only a few habitats and climates, the silkworm and the mulberry tree thrive in many locales. Sooner or later, the Chinese were bound to lose their monopoly on silk production. Amazingly, this did not happen until the Han-Roman trade explosion of 200 BC to AD 200, when the blind and almost immobile worms were transplanted to Korea and Japan. They then traveled west toward central Asia, the Middle East, and Europe along both the overland and the maritime routes.

  In the sixth century after Christ, the Byzantine emperor Justinian gave two monks the task of procuring the treasured worms from China. (It was not necessary to purloin mulberry trees, since various species already grew throughout Eurasia.) At great peril, they eventually succeeded, and their feat gave rise to a vigorous silk industry in Spain and Italy.3 Not all the European efforts at sericulture did as well; a nascent silk industry in England fizzled in its cold, wet climate. Nor did silkworms thrive in England’s American colonies. The Spanish had only slightly better luck in Mexico, where almost from the time of Cortés, Eurasian silkworms produced a coarse, inferior fabric.

  By the late sixteenth century, Spain had given up on its attempt to eject the Portuguese from the Spice Islands and retreated north to the Philippines. When the Spanish founded Manila in 1579, within relatively easy sailing range of south China, they eclipsed these meager European and American efforts at sericulture. Almost instantly, an immensely profitable trade in New World silver and oriental silk exploded over the unimaginable expanse of the Pacific Ocean. This semicircular route, shown in the map on page 201, pushed the limits of the era’s maritime technology.

  In order to understand how Spanish ships made this twenty thousand-mile round-trip, the earth’s prevailing wind patterns must be understood. Mariners had for centuries harnessed the Indian Ocean monsoons, but away from Asia these seasonal phenomena play only bit roles, overshadowed by two main wind systems, both of which blow constantly throughout the year. The first system, taken advantage of by Columbus, and even more spectacularly by Magellan, blows from east to west in the tropical latitudes (or, more accurately, from the northeast above the equator, and from the southeast below it). The second system blows in the opposite direction—from west to east—in the temperate latitudes, most strongly between forty and fifty degrees latitude in both the northern and southern hemispheres (roughly even with Venice and the southern tip of New Zealand, respectively).4

  The Global Wind Machine

  The Trinidad, from Magellan’s expedition, was the first to sail this high-latitude wind system across the Pacific during its ill-fated attempt to flee eastward in 1522. In 1565, two ships from another Spanish expedition—one under the command of Alonso de Arellano, and another, two months later, under Friar Andrés de Urdaneta—became the first to ride the west-to-east system completely across the northern Pacific in the course of their twelve-thousand-mile journeys from Manila to Acapulco. They covered the distance in just four months.5

  These two ships were the forerunners of the annual “Manila galleons.” Once a year, a treasure flotilla from Mexico, usually consisting of two large merchantmen, weighed down with silver and guarded by a heavily armed galleon, ventured westward along the equatorial route, pioneered by Magellan, to Manila. The silver was exchanged for oriental luxury goods, mainly high-quality Chinese silk, which had been brought in junks from the southern coast of the Ming Empire to the Philippines, and then shipped on the Manila galleon east to Acapulco.

  In this manner, the Spanish wealth of Croesus was exchanged for the sublime luxuries of the East. In 1677 an Irish friar, Thomas Gage, wrote of Mexico City, “Both men and women are excessive in their apparel, using more silks than stuffs and cloths.” He was amazed at the thousands of coaches cruising back and forth across the colonial city’s fabled main street, the Alameda, which were “full of gallants, ladies, and citizens, to see and be seen, to court and to be courted.” In the jewelry district, “A man’s eyes may behold in less than an hour many millions worth of gold, silver, pearls, and jewels.”6

  The discovery of the “silver mountain” at Potosí in the colony of Peru (now in modern-day Bolivia) occurred nearly simultaneously with that of the ground-level Mexican silver veins at Guanajuato (in 1547 and 1548, respectively). The same excesses played out in Lima as in Mexico City. In the Calle de Mercaderes (“Street of Merchants”) in Lima, luxuries could be purchased in dozens of grand shops, some of which were said to contain goods worth over one million silver pesos. In 1602, the viceroy of Peru wrote to Philip III:

  All these people live most luxuriously. All wear silk, and of the most fine and costly quality. The gala dresses and clothes of the women are so many and so excessive that in no other kingdom of the worl
d are found such.7

  This vast redistribution of wealth jolted an already turbulent global economy. As always, there were losers as well as winners. Who was hurt? The Spanish barbers of Mexico City saw themselves as victims, exposed to a seventeenth-century version of unfair competition from cheap immigrant labor. They assured the viceroy that their desire to exclude the Chinese bloodletters was based only on the national interest. They sought merely to protect the public health from the inferior ethics and ability of their Chinese counterparts, noting that whereas the Europeans had “with so much diligence . . . cared for the prevalent sicknesses,” many having died in the process, “the supposition is that these Chinese are of no benefit.”8

  Far larger interests were being hurt, of course, than a few Spanish barbers. Foremost among them were the Spanish and Mexican silk industries, which could not compete in either price or quality with the bales of Chinese fabric conveyed by the Manila galleon to Acapulco.

  In 1581 direct voyages between Manila and Peru commenced; the very next year the Spanish crown, at the behest of Spain’s silk growers, forbade such shipments. But merchants and bureaucrats alike in Lima and Mexico City routinely ignored crown edicts, and this one was no exception. In a futile effort to stop the trade between Manila and Peru, the edict was repeated in 1593, 1595, and 1604.

  In 1611, the viceroy in Mexico City, under pressure from producers in and around Puebla, just southeast of the capital, argued unsuccessfully that the Manila galleon trade should be forbidden entirely. Spanish and Mexican silk producers even saw the coastal commerce between Peru and Mexico as a threat, fearing that Chinese silk, once unloaded in Mexico from the East, might be transshipped to Peru, or if smuggled into Peru from Manila, reshipped to Mexico. At their behest, the crown, amazingly, prohibited trade between its two biggest New World colonies: “Therefore, we order and command the viceroys of Peru and New Spain [Mexico] to prohibit and suppress, without fail, this commerce and trade between both kingdoms.”9 As with the ban on Manila-Peru traffic, this unenforceable edict was reissued, in this case no fewer than five times after its original proclamation in 1604.