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Long before London and New York rose to international prominence, a trading route was discovered between Spanish America and China that ushered in a new era of globalisation. The ‘Ruta de la Plata’ or ‘Silver Way’ catalysed economic and cultural exchange, built the foundations for the first global currency and led to the rise of the first ‘world city’, Mexico. And yet, for all its importance, the Silver Way is too often neglected in conventional narratives on the birth of globalisation.

By the sixteenth century, the Chinese money supply, serving more than a quarter of the world’s population, had — for a variety of policy and technical reasons — been standardised on silver. China, however, had limited available silver of its own. Spain’s colonies in America did, however and the influx of silver from the Manila galleon provided financial liquidity to the Chinese economy — and also opened the world to the first instances of global exchange rate arbitrage taking advantage of the differing valuations of silver vs gold in China and Europe.

In the 1730s, Spain introduced ‘milled’ dollars in the Mexican mint. As a result of their regularity and security features, these coins became the most widely accepted currency in the world and, indeed, the first to approach universal acceptance. Not only does the US dollar derive directly from these coins, but the Yuan, Yen, HK dollar, Ringgit and other Asian coins and currencies are, via the later Mexican dollar, also direct descendants.

Peter Gordon & Juan José Morales are co-authors of “The Silver Way:
China, Spanish America and the Birth of Globalisation, 1565–1815”
(Penguin, 2017). Gordon is editor of the Asian Review of Books, while Morales is a lawyer, consultant and former president of the Spanish Chamber of Commerce in Hong Kong. Both are long-time residents of Hong Kong.