1493_ Uncovering the New World Columbus Created - Charles C. Mann [93]
When the court had ordered citizens to pay their taxes in silver, it had set up the tax rolls in terms of the weight of silver people had to pay, not its value. As with Spain, the taxes were not indexed for inflation. As with Spain, the same amount of tax was worth less money when the price of silver dropped. The Ming dynasty had a revenue shortfall. Not having paper currency, the government couldn’t print more money—deficit spending was impossible. Suddenly it couldn’t pay for national defense. It was a bad time to run out of money for the military: China was then under assault by the belligerent northern groups now called Manchus. According to William Atwell, a historian at Hobart and William Smith Colleges, the Chinese government’s dependence on the silver trade helped push it over the edge. The takeover by the Manchus—they became the Qing dynasty—took decades and was bloody even by the tough standards of Chinese history. Nobody knows how many millions died.
Atwell’s contentions have been vigorously debated, yet there is little doubt that China’s entry had consequences of a sort rarely discussed in freshman economics textbooks. Flynn and Giráldez point out that China devoted a big fraction of its productive base to acquiring the silver needed for commerce and government. For hundreds of years, China produced silk, porcelain, and tea to acquire a commodity, silver, which was needed to replace the paper notes that the government had made valueless. It was as if to buy a newspaper for a dollar one first had to make and sell something else to get the dollar banknote. Actually, it was worse: the silver stocks had to be constantly replenished, incurring further costs, because the metal was constantly worn away as it passed from hand to hand. (Paper money wears out, too, but costs next to nothing to replace.)
Given the circumstances, acquiring the silver was entirely rational—it provided monetary stability. But it was also extremely costly. “Rather than pull silver out of their own ground (had China contained rich silver deposits, which it did not), the Chinese produced exports to buy silver that was pulled out of the ground somewhere else,” Flynn wrote in an e-mail to me. “Even scholars tend to impute mystical qualities to commodity monies like silver and gold, but we must recognize them as physical products that involve massive production costs. A significant hunk of the GDP of China—then the world’s biggest economy—was surrendered in order to secure a white metal that was produced mostly in Spanish America and Japan. Some people made enormous profits from doing this, but think about what else those resources could have been used for.”
There was a related, equally large consequence: the Columbian Exchange.
1 By convention emperors were referred to not by their personal names, but by the names of their reigns. For example, the usurping uncle, born Zhu Di, chose Yongle (“perpetual happiness”) as his title, and thus became the Yongle emperor: the ruler during the Yongle period.
2 The Ming dynasty’s predecessors, the Mongol-led Yuan, had tried to do exactly the same thing, forbidding private overseas trade in 1303, 1311, and 1320. In each case the law was soon repealed. The prospect of monopoly was tempting, but the Yuan always found it more profitable—and much less trouble—to tax private trade than to run the trade themselves.
3 “Families” is a misnomer. The traders were gongsi, which were clan-like groups of related families that often had hundreds of members. I’m reluctant to use the term gongsi, though, because it now means “company”—an indication of the familial roots of many Chinese businesses but a source of potential confusion to readers.
4 To those accustomed to metal coins, the idea of using shells for money may seem primitive. But they had a signal advantage: unlike the era’s coins,