Spending a Windfall: American Precious Metals and Euro-Asian Trade 1531-1810

Palma, Nuno; Silva, André C.

doi:10.2139/ssrn.2877128

Cited by 19 publications

(15 citation statements)

References 95 publications

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“…demand for new goods; de Vries 1994, 2008) by pointing out that there was a complementary monetary element. Indeed, many of the new goods which led to an increased labor supply depended on the availability of precious metals imported from Asia (Palma and Silva 2016).…”

mentioning

confidence: 99%

Money and modernization in early modern England

Palma

2018

Financial History Review

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Classic accounts of the English industrial revolution present a long period of stagnation followed by a fast take-off. However, recent findings of slow but steady per capita economic growth suggest that this is a historically inaccurate portrait of early modern England. This growth pattern was in part driven by specialization and structural change accompanied by an increase in market participation at both the intensive and extensive levels. These, I argue, were supported by the gradual increase in money supply made possible by the importation of precious metals from America. They enabled a substantial increase in the monetization and liquidity levels of the economy, hence decreasing transaction costs, increasing market thickness, changing the relative incentive for participating in the market and allowing agglomeration economies to arise. By making trade with Asia possible, precious metals also induced demand for new desirable goods, which in turn encouraged market participation. Finally, the increased monetization and market participation made tax collection easier. This helped the government to build up fiscal capacity and as a consequence to provide for public goods. The structural change and increased market participation that ensued paved the way for modernization.

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confidence: 99%

Money and modernization in early modern England

Palma

2018

Financial History Review

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“…During the early modern period, intercontinental trade had a counterpart in a steady flow of precious metals travelling from West to East. Between 1500 and 1800, nearly 85 per cent of the world's silver and more than 70 per cent of the world's gold was produced in America and large amounts were systematically transferred from America to Asia (Barret 1990;TePaske 2010;Palma and Silva 2017;Freire Costa et al forthcoming). There were several routes to transfer American precious metals to Asia, with Europe being the major transshipment region.…”

Section: Overseas Silver Flows West-east Balance-of-tradementioning

confidence: 99%

“…Arbitrage between Europe and Asia (China) had two phases, that is, one from the 1540s to the 1640s, by which time gold-silver bimetallic ratios had converged around the world, and a second phase, from around 1700 until the 1750s, when global silver prices had converged a second time. Similarly, Palma and Silva (2017) argue that the gold-silver price ratio was 6:1 in China and it was between 11:1 and 12:1 in Europe when the silver from America began to be available in Europe, which suggests large arbitrage gains, even under the prevailing transport technology and institutional settings.…”

Section: Overseas Silver Flows West-east Balance-of-tradementioning

confidence: 99%

Monetary Systems and the Global Balance of Payments Adjustment in the Pre-Gold Standard Period, 1700–1870

Esteves¹,

Noguès-Marco²

2021

The Cambridge Economic History of the Modern World

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“…By making trade with Asia possible, precious metals induced demand for new desirable goods which could be imported, such as silver, porcelain, and tea. Without American precious metals, early modern Euro-Asian trade would have been much smaller (Palma and Silva 2016).…”

Section: Consequences For Second-order Receiver Economiesmentioning

confidence: 99%

American Precious Metals and Their Consequences for Early Modern Europe

Palma

2020

Handbook of the History of Money and Currency

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Over the early modern period and beyond, massive amounts of silver and gold were found and mined in the Americas. In this paper, I review the consequences for the European economies. Some second-order receiver countries such as England benefited in both the short and long run. First-order receivers such as Spain and Portugal also benefited in the short-run, but their continued exposure to the arrival of massive quantities of precious metals eventually led to loss of competitiveness and an institutional resource curse.

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Spending a Windfall: American Precious Metals and Euro-Asian Trade 1531-1810

Cited by 19 publications

References 95 publications

Money and modernization in early modern England

Money and modernization in early modern England

Monetary Systems and the Global Balance of Payments Adjustment in the Pre-Gold Standard Period, 1700–1870

American Precious Metals and Their Consequences for Early Modern Europe

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