A History of the World in 100 Objects (68 page)

Japan was at this point being run by the Shoguns, who in 1639, to strengthen their control of the country closed off contact with the outside world. The Japanese kept open just a few carefully managed ‘gateways’, especially the port of Nagasaki, and there they allowed a few privileged states to conduct business. These states included Korea and China, and just one European partner – the Dutch East India Company. This exclusivity allowed the Company to transport Japanese porcelain to Europe in ever-growing quantities, and, as a monopoly supplier, they could charge high prices and make very large profits. The first substantial shipment from Japan, for example, arrived in Holland in 1659 and contained 65,000 items. Our elephants certainly came to Europe on a Dutch East India Company ship.

The British Museum’s Kakiemon elephants tell a story of the whole world in the seventeenth century. Japanese craftsmen, although cut off from the outside world, were using techniques borrowed from China and Korea to make images of animals from India, to suit the tastes of purchasers in England, mediated by the Dutch through the first trading company with a truly global reach. It is a fine example of how the continents of the world were for the first time being linked together by ships and by trade. This new world now needed a functioning means of exchange – an international currency. The next chapter describes what underpinned these early years of worldwide commercial activity: silver, mined in South America, minted into Spanish pieces of eight and exported to the world – the first global money.

Money, advertisers assure us, will let us buy our dreams. But some money, and especially coins, is already the stuff of dreams, with names that ring to the magic of history and legend – ducats and florins, groats, guineas and sovereigns. But none of those can compare with the most famous coins of all – pieces of eight. Familiar in books and films from
Treasure Island
to
Pirates of the Caribbean
, they carry with them a freight of associations – of armadas and treasure fleets, wrecks, battles and pirates, the high seas and the Spanish Main.

But it isn’t just thanks to Long John Silver’s parrot that pieces of eight are the supreme celebrity among world currencies. For the
peso de ocho reales
, the Spanish piece of eight, was the first truly global money. It was produced in huge numbers, and within twenty-five years of its first minting in the 1570s it had spread across Asia, Europe, Africa and the Americas, establishing a global dominance that it was to maintain until well into the nineteenth century.

By modern standards a piece of eight is a large coin. It is about 4 centimetres (1.5 inches) across and has a good weight – roughly the same as three £1 coins. This particular coin is a dullish silver colour, thanks to surface corrosion, but when it was freshly minted a piece of eight would have glittered and shone. Around 1600 this piece of eight would probably have bought, in modern terms, something like £50 worth of goods – and could have been spent practically anywhere in the world.

The Spaniards had been drawn to America by the lure of gold, but what made them rich there was silver. They quickly found and exploited silver mines in Aztec Mexico, but it was in Peru, in the 1540s, that they really hit the silver jackpot – at the southern end of the Inca
Empire at a mountainous place called Potosí, now in Bolivia, which quickly became known as the Silver Mountain. Within a few years of the discovery of the Potosí mines, silver from Spanish America began to pour across the Atlantic, growing from a modest 148 kilos a year in the 1520s to nearly three million kilos a year in the 1590s. In the economic history of the world, nothing on this colossal scale, or with such grave consequences, had ever happened before.

The isolated hill of Potosí sits 3,700 metres (12,000 feet) above sea level, on a high, arid and very cold plateau in the Andes – one of the most inaccessible parts of South America. Despite this remoteness, the silver mines required so much labour that by 1610 the population of this village had grown to 150,000, making it a major city by European standards of the day, and an unimaginably rich one. In 1640, a Spanish priest rhapsodized about the mine and what it was producing:

The abundance of silver ores … is so great that, if there were no other silver mines in the world, they alone would suffice to fill it with wealth. In their midst is the hill of Potosí, never sufficiently praised and admired, the treasures whereof have been distributed in generous measure to all the nations of the world.

Without Potosí, the history of sixteenth-century Europe would be very different. It was American silver that made the Spanish kings Europe’s most powerful rulers and paid for their armies and armadas. It was American
silver that allowed the Spanish monarchy to fight the French and the Dutch, the English and the Turks, establishing a pattern of expenditure that was ultimately to prove ruinous. Yet for decades the flow of silver provided rock-solid credit for Spain through the direst crises and bankruptcies: it was assumed that next year there would
always
be another treasure fleet, and there always was. ‘In silver lies the security and strength of my monarchy,’ said King Philip IV.

The production of this wealth came at a huge cost in human life. At Potosí young native American men were conscripted and forced to labour in the mines. Conditions were brutal, indeed lethal. In 1585 one eyewitness reported:

The only relief they have from their labours is to be told they are dogs, and to be beaten on the pretext of having brought up too little metal, or
taken too long, or that what they have brought is earth, or that they have stolen some metal. And less than four months ago, a mine-owner tried to chastise an Indian in this fashion, and the leader, fearful of the club with which the man wished to beat him, fled to hide in the mine, and so frightened was he that he fell and broke into a hundred thousand pieces.

In the freezing high altitude of the mountains, pneumonia was a constant danger, and mercury poisoning frequently killed those involved in the refining process. From around 1600, as the death rate soared among the local Indian communities, tens of thousands of African slaves were brought to Potosí to replace them. They proved more resilient than the local population, but they, too, died in large numbers. Forced labour in the silver mines of Potosí remains the historic symbol of Spanish colonial oppression.

Disturbingly, and to the dismay of many Bolivians, the Potosí silver mine is still a tough and unhealthy place to work. The Bolivian former head of a Potosí UNESCO project, Tuti Prado, tells us about it:

Potosí, for today’s population, is one of the poorest places in the country. Of course, the technology is different, but the poorness, the health, is as bad as 400 years ago. We have a lot of children working in the mines, and many of the miners don’t live more than 40–45 years – even 35 years of age – because of silicosis of the lungs and because of the dust.

The Potosí mines produced the raw material that made Spain rich, but it was the Potosí mint, fashioning the silver pieces of eight, which laid the foundations of a global currency. From Potosí the coins were loaded on to llamas for the two-month trek over the Andes to Lima and the Pacific coast
.
There, Spanish treasure fleets took the silver from Peru up to Panama, where it was carried by land over the isthmus and then across the Atlantic in convoys.

But this silver trade was not centred only on Europe – Spain also had an Asian empire, based in Manila in the Philippines, and pieces of eight were soon crossing the Pacific in huge numbers. In Manila, pieces of eight were exchanged, usually with Chinese merchants, for silks and spices, ivory, lacquer and, above all, porcelain. The arrival of Spanish-American silver destabilized the East Asian economies and caused financial chaos in Ming China. Indeed there was hardly any part of the world that remained unaffected by these ubiquitous coins.

In the coin collection of the British Museum there is a display that gives a wonderfully clear idea of the global role of pieces of eight made in the Spanish-American mints. One coin has been counter-stamped by a local sultan in Indonesia, while others were stamped by the Spanish themselves for use in their province of Brabant, now in modern Belgium. Other coins here have been inscribed with Chinese merchants’ stamps, and a coin from Potosí was found near Tobermory in the Hebridean islands off the west coast of Scotland; it comes from a ship that was once part of the Spanish Armada, wrecked in 1588. Pieces of eight even reached Australia in the nineteenth century. When the British authorities ran out of currency there, they bought Spanish pieces of eight, cut out the Spanish king’s face and re-engraved them to read five shillings, new south wales. The presence of these coins from the Hebrides to New South Wales shows that, both as a commodity and as a coin, pieces of eight engendered a fundamental shift in world commerce, as the financial historian William Bernstein describes:

This was a godsend, this Peruvian and Mexican silver, and very quickly hundreds of millions and perhaps even billions of these coins got minted, and they became the global monetary system. They were the Visa and the MasterCard and the American Express of the sixteenth through to the nineteenth centuries. They are pervasive enough that when you, for example, read about the tea trade in the eighteenth and nineteenth centuries in China, which was a vast trade, you see prices accounted for in dollars, with dollar signs; and of course what they were talking about were Spanish dollars – these pieces of eight.

Across Europe, Spanish-American treasure inaugurated an age of silver, ‘the wealth which walketh about all the countries of Europe’.

But the very abundance of silver brought a new set of problems. It increased the money supply – much like governments printing money in modern terms. The consequence was inflation. In Spain there was bemusement, as the wealth of empire in both political and economic terms often seemed more apparent than real. Ironically, silver coin became a rarity within Spain itself, as it haemorrhaged out to pay for foreign goods while local economic activity declined.

When the British authorities in Australia wanted to create a local currency, they converted Spanish pieces of eight into five -shilling coins

As gold and silver vanished from Spain, its intellectuals grappled
with the gulf between the illusion and the reality of wealth, and the moral consequences of the country’s unexpected economic troubles. One writer in 1600 describes it like this:

The cause of the ruin of Spain is that riches ride on the wind, and have always so ridden in the form of contract deeds, of bills of exchange, of silver and gold, instead of goods that bear fruit and which, because of their greater worth, attract to themselves riches from foreign parts, and so our inhabitants are ruined. We therefore see that the reason for the lack of gold and silver money in Spain is that there is too much of it and Spain is poor because she is rich.

More than four centuries later we are still struggling to understand world financial markets and to control inflation.

Potosí remains proverbial for its wealth. Spaniards today still say something is ‘
vale un Potosí
– ‘worth a fortune’ – and the Spanish piece of eight lives on as a romantic prop in fantasy pirate stories. But it was in fact one of the foundation stones of the modern world, underpinning the first world empire, both prefiguring and making possible the modern global economy.