• Follow the Money — Silk, Silver, and 16th Century-Style Globalization

    By Peter Gordon and Juan José Morales

    Lost travelers, when asking for directions at a country store in the backwoods of northern New England, are likely to be told — or, at least, so goes the myth — “You can’t get there from here.” We can’t get to an understanding of China and its place in the world of the 21st century if the understanding of where we are today is determined by a historical narrative that starts in mid-18th century with the rise of Anglo-American dominance.

    It is better to start two centuries earlier when globalization actually began. The key date is 1565. Ships had crossed the Pacific before then, but only in one direction. No ship had succeeded in sailing east from Asia back across the Pacific to the Americas until Andrés de Urdaneta, a navigator and friar who had come over from Mexico with Miguel López de Legazpi, worked out the right winds and currents to cross back from the Philippines. His discovery was called the tornaviaje, or “return trip.”

    The importance of this achievement was well understood at the time: his arrival in Mexico was cause for celebration. A letter of the time said that “those of Mexico are mighty proud of their discovery, which gives them to believe that they will be the heart of the world.”

    They were arguably correct in this belief. The trading route that resulted from Urdaneta’s discovery — that of the Manila galleons — supplied China with the American silver that underpinned its money supply and transformed the global economy. This “Ruta de la plata” — or “Silver Way” — characterized a period when commerce between China and Spanish America formed the lynchpin of trade routes spanning four continents. It also marked the first time the entire world had been knitted together with the global trade and financial networks that form the basis of our modern globalized world. The Spanish milled dollar became the world’s first global currency; the US dollar, yuan, yen and Hong Kong are its descendants.

    Of direct relevance to current developments, this realization indicates that since globalization predates the key elements of the traditional Anglo-American narrative, i.e. liberal economics and politics and the post-War international institutions, globalization neither derives from nor is concomitant with these.

    Urdaneta’s discovery and its lasting significance is largely forgotten, at least in the English-speaking world. Yet today’s tightly-linked, globalized world derives its origins not so much from the eighteenth and nineteenth centuries as from this earlier period. The pivotal role of Spanish America and China in these previous 250 years of global integration has been obscured and superseded by the prevailing narrative of Anglo-American predominance in everything from the economy to technology to military power.


    In 2015, Chinese President Xi Jinping announced the “One Belt, One Road” initiative. This hugely ambitious roadmap, called “the most significant and far-reaching initiative that China has ever put forward” by Wu Jianmin, former President of China Foreign Affairs University and a member of the Foreign Policy Advisory Committee of Chinese Foreign Ministry, consolidated the more evocatively-named “Silk Road Economic Belt” and “Maritime Silk Road” programs and defined a long-term program to redraw China’s trade — and by extension, political — relationships in Asia and into Europe.

    Somewhat ironically under the circumstances, the term “Silk Road” is a Western coinage dating from 1877 by German geographer Ferdinand von Richthofen. Nevertheless, it captures the essence of relationships that spanned Eurasia for centuries.

    It was not just nostalgia or a good sense of branding that led President Xi to evoke a new Silk Road. The term conjures up a period well before a modern age dominated by the West and U.S.-based multinational institutions. Xi made a direct appeal to history in his announcement at the Boao Forum for Asia Annual Conference:

    History, over the past millennia, has witnessed ancient civilizations appear and thrive along the Yellow and Yangtze Rivers, the Indus, the Ganges, the Euphrates, and the Tigris River as well as in Southeast Asia, each adding its own splendor to the progress of human civilization. Today, Asia has proudly maintained its distinct diversity and still nurtures all the civilizations, ethnic groups and religions in this big Asian family.

    When The Silk Road, which flourished for roughly two millennia, entered its final decline with the end of pax mongolica and the conquest of Constantinople by the Turks, the resulting closing off of trade routes between Europe and Asia were one of the causes precipitating the voyages of discovery that led to direct European involvement in Asian affairs. Thus the “Ruta de la plata”, the maritime route to China’s east connecting Asia to the Americas across the Pacific and thence to Europe, can be seen as a successor to the Silk Road. Although less celebrated, this later Silver Way delineated a period when Mexico City was a “world city”; when the silver peso was the global currency and the world’s main shipping line was a Spanish one between Acapulco and Manila; and — perhaps significantly for our world today — when globalization was balanced, albeit precariously, between East and West, with neither dominating.

    It is important to bring early-modern Asia back into the prevailing historical narrative, to update our maps by making them older. Once we do, many of the trends we now consider inevitable seem not to be trends at all. The link between the narrative of the “Ruta de la plata” and the later Anglo-American narrative is silver; or rather, the monetization and integration of the world’s economies via currency and financial markets. The link remains today in the form of the US dollar and the Chinese yuan, both of which are descended from the Spanish peso.

    If the Sino-American relationship really is the world’s most important of the 21st century, then Americans need a conceptual structure that doesn’t measure China’s rise against an ill-fitting historical yardstick. And if American-led globalization is indeed on the wane, then what replaces it may well be something akin to the globalization at the turn of the 17th century: an East and West that have neither converged nor descended into uncomprehending enmity, but rather in precarious balance, simultaneously cooperating and seeking advantage.


    Peter Gordon is editor of the Asian Review of Books, to which Juan José Morales is a contributor.  They are coauthors of The Silver Way: China, Spanish America and the Birth of Globalisation, 1565–1815, which was published earlier this year by Penguin China.