Spain, Portugal, and the creation of a global economy

- [Instructor] In this video I wanna look at how the actions of Spain and Portugal in the 16th century helped to create a global economy. And when I say a global economy, I mean that this was the first time in history that so much of the world was linked together by trade. And before we dive into exactly how Spain and Portugal's actions contributed to the creation of a global economy, I wanna start at the end of our timeline in the year 1598 with a story that should help to illustrate how interconnected the world had become at the end of the 16th century. So in 1598 a fleet of ships left the Netherlands to trade. So these are Dutch ships. And one of the sailors on this fleet of ships is an Englishman named William Adams. This fleet of ships sails down the coast of Africa. They stop off West Africa here, they trade as many European ships would do at this time. Then they sailed around South America and ended up off the coast of Peru. And at this point William Adams started keeping a journal, and he tells us, it was agreed that we should leave the coast of Peru and direct our course for Japan. Having understood that cloth was good merchandise there and also how upon that coast of Peru the king's ships were out seeking us. And the king that Adams was referring to here is the king of Spain. Peru is a Spanish colony at this time, and the fleet which again is from the Netherlands is worried about this because the Netherlands are at war with Spain. The Netherlands are rebelling against Spanish rule at this time. And this is evidence for a couple of points that illustrate again how interconnected the world economy was. First, they know about Japan, and they know how to get there. Second, they also have some idea of what kind of merchandise might be valuable to try and trade in Japan. So they do sail to Japan, they make it there, and they end up as prisoners of the Japanese emperor. And while they're prisoners in Japan, there are Portuguese priests also living in Japan who are trying to convince the Japanese emperor that he should execute these Dutch and English sailors as pirates. The emperor decides that he's not going to execute them. If they wanna trade and he wants what they have to trade, they can trade, and then he forces William Adams, the Englishman, to stay and help his navy build ships. And this is how Adams ends up in a position where he can help the English open up trade with Japan a few years later. And I mentioned early on that Portugal was one of the major contributors to this new global economy, and we see in Adams' story that there are Portuguese priests in Japan in the year 1600. So that raises the question of, how did these Portuguese priests end up in Japan? Well to understand that, we actually jump back to the beginning of our timeline when in 1498 a Portuguese sailor named Vasco da Gama made it around the south coast of Africa and sailed to the Indian city of Calicut, and this was the beginning of the Portuguese Empire in the Indian Ocean and the East Indies. And historians who study the Portuguese Empire oftentimes will call it a trading post empire, and what they mean by that is that the Portuguese did not try to actively conquer large chunks of territory. Instead they would find existing trading centers and try to insert themselves into those trade networks. So they would set up trading posts or factories, and there's a drawing here from the late 1500s from the city of Calicut showing the Portuguese factory. It's the building here that looks like a castle sitting in the existing city. And these aren't factories like we think of in the Industrial Revolution where they're making things in them. These factories are really more like warehouses where they store goods until the ships can come and pick them up. So the Portuguese are expanding their trading post empire in the Indian Ocean and the East Indies, and in 1542, the government of China grants them the right to trade from the island of Macau. And one of the things that China really wants is silver, and they want silver because they have paper money and they want silver to back up the paper currency so that it maintains its value. And Japan produces silver. So the Portuguese end up trading Chinese porcelain and silk with Japan in exchange for silver that they then bring back to China. And another thing the Portuguese bring along with trade goods is religion in the form of priests and missionaries. And hopefully at this point you see how Portuguese priests might have ultimately ended up in Japan by the time that William Adams and his crew landed there. And while all this is going on in the Eastern Hemisphere, Spain is building a huge colonial empire in the Americas. And when we see a colonial empire, we mean that they are sending Spanish colonists to live in these conquered territories and expand Spanish influence. And it becomes large enough and populous enough that Spain has to set up colonial governments, and in 1535 they create The Viceroyalty of New Spain in this area. It's named for a Viceroy, literally a vice king or someone who is in place of the king, to rule over that colony on his behalf. And then in 1542, they create the Viceroyalty of Peru in this area, which is the same Peru that William Adams was referring to in his diary from 1600. And in these Spanish viceroyalties, plantations are one major source of wealth. And a plantation is essentially a large farm that produces crops that are very valuable that can be exported and sold for high profits. The other major source of wealth in the Americas was mining, and especially silver mining. Because in the mid 1540s at Zacatecas in modern day Mexico and at Potosi in modern day Bolivia, the Spanish find giant deposits of silver, some of the largest silver deposits in the world. And this has two major impacts on this global economy that is starting to form. So the first impact we wanna highlight is is that on labor in the Americas. So maintaining and operating plantations and mines is really brutal hard work, to the point where people will die doing this kind of work. And the Spanish who are colonizing the area were not doing this work on their own. And on top of this they're increasing production in plantations and in mines so they just need more and more labor. So they start to turn to enslaved African workers. So in terms of our globally connected economy that's developing, what we see now is West Africa is brought even more into these trading networks and relationships with the Spanish and the Portuguese. Prior to this point, West Africa was a trading area for the Portuguese and for the Spanish, especially for things like gold and ivory and certain spices, but now West Africa also became a place where the Spanish and the Portuguese would buy enslaved workers. And this had some major effects on West African economies. Not only were there more and more European goods coming into these places, there were also some West African societies that restructured their economies around capturing and selling slaves as the demand for enslaved workers grew. The other major impact of these silver discoveries in terms of creating this global economy had to do with that silver trade that the Portuguese were carrying out between Japan and Ming China. At this point and time Ming China was the largest state, the largest empire, in terms of population in the world, so despite the distance and the risks involved, Spain was now looking for a way to get to China to trade this silver. In 1521, Ferdinand Magellan had claimed the Philippines for Spain. Spain didn't colonize them at the time, but in 1565 the Spanish sent a group of colonists to settle in the Philippines and from this venture, part of this group ends up figuring out how they can sail across the Pacific Ocean from the Philippines to New Spain, modern day Mexico. And this opens up what becomes the galleon trade in the Pacific. A galleon is a large sailing ship, and it's really useful for long distance trade because it's big and it can hold a lot of cargo, and it also carries guns to defend itself. So from the 1570s forward, you now have a regular trade going on where silver from the Americas is being shipped to Manila in the Philippines where it's traded on to Chinese traders for things like porcelain and silk, and then those goods are shipped back to the Americas to the port of Acapulco where they're transported across land, loaded onto ships along with other silver that's been mined and sent back to Spain. So the final piece of this global economy really falls into place in 1580 with the Iberian Union. And the Iberian Union refers to a time when the king of Spain also became the king of Portugal, and Spain and Portugal are on the Iberian Peninsula so that's where we get Iberian Union. At this point we know that Portugal had a really large global empire with lots of trade, Spain had a large global empire with lots of trade, and now both of those empires are ruled by the same king. So all of these trade networks become essentially part of the same empire. Now we have this situation where demand for silver in Europe and in China is having impacts on labor systems in the Americas, which in turn is having impacts on populations in West Africa. And to go back to the beginning of our story, this deeply interconnected global trade network is also the reason that by the year 1600, we can see an Englishman sail to Japan with a Dutch fleet and run into a group of Portuguese priests while he's there. Another way to think about this is that William Adams' story was only possible because of what Spain and Portugal did throughout the 16th century to create these long distance trade networks.