issue 204 - February 1990
A HISTORY OF WORLD TRADE
This is a story of discovery and destruction, the rise and fall of great empires,
religions and civilizations. Trade has played a part in all of it. Curiosity and greed,
a sense of adventure and the search for El Dorado: both the best and the
worst aspects of humanity have driven people to trade.
1. THE SILK ROAD
Before 6OO AD Two thousand years ago a web of complex, advanced societies stretched across the southern half of Europe and Asia. China traded silk along the 'Silk Road' that stretched 2,500 miles across Asia. India exported textiles, the Roman Empire gold, silver, wine and glass. Once the monsoon winds were discovered, small sailing ships could leave the coastlines and travel across the Arabian Sea from India to Arabia in the winter months, and back again in the summer.
2. FOLLOWING THE QU'RAN
600 to 1500 For hundreds of years Arab civilization based on trade, dominated large areas of Africa, Asia and Europe. After the death of the Prophet Muhammad in 632, trade followed the spread of the Muslim faith to the borders of China in the east, Spain in the west, Mongolia in the north and the great African kingdoms of Mali and Songhay in the south. Trade in textiles and carpets, ivory, gold, spices and ceramics covered vast distances, linked by the Arabic language and an educated culture. Sugar growing and refining; mangoes and plantains; chess and algebra: all of these followed the Qu'ran.
3. BARRIERS BREACHED
1500 to 1800 By 1500 much of the rest of the world was more advanced, culturally and economically, than Europe. In Italy, trade with the Levant through Venice played a part in stimulating the Renaissance of European culture and art. The European voyages of 'discovery' - intended to get round Arab domination of trade with the East - found civilizations that astonished them. The riches they returned with were plundered, not created. Conquest and domination were their objectives, together with the spread of the Christian faith. But the barrier of the oceans had been breached.
4. SLAUGHTER AND SLAVERY
1500 to 1800 By far the most valuable trade during this period was in slave labour. Slavery was common in earlier societies, but nothing on this scale had ever taken place before. The slaughter by the Europeans of the peoples of the 'New World' depopulated the American continent. To replace them as a labour force between 10 and 12 million slaves were shipped from Africa to Brazil, the Caribbean and North America, thus depopulating another continent. Conditions on board the ships were so appalling that at least two million of these people died before reaching their destination. Those who survived laboured on the farms of colonists to produce the sugar and tobacco for which Europeans were now developing a taste.
5. MARKET MAKERS
1800 to 1914 The wars of independence in the Americas broke up some of the old European empires, particularly those of Spain and Portugal. In Britain, the 'loss of the United States roughly coincided with a new kind of imperialism, based on trade as well as military conquest. It aimed to open up markets for the products of new manufacturing industries - and to secure supplies of the raw materials needed to produce them, including food for rapidly growing industrial cities. The division of the world into metropolitan centres and colonial dependencies was established. Technical advances in transport and communications hugely increased the volume and speed of trade. Other European countries followed Britain's lead in the rush to establish capitalist empires.
6. WAR AND DEPRESSION
1914 to 1945 The competing European empires fell into open conflict. They pulled much of the rest of the world with them into a catastrophic sequence of two wars separated by the Great Depression of the 1930s, when millions of people around the world were impoverished. Nation states put up trade barriers to try to insulate themselves from the effects of the Depression. This only made things worse, and trade almost ground to a halt. The rise of the US as the most powerful economy in the world - and as a decisive influence on the outcome of both World Wars - swept away the dominance of Europe.
7. RICH WORLD CLUB
1945 to 1970 After 1945, with the world apparently divided between two superpowers, the US convened a conference at Bretton Woods to establish a new international economic order. Trade was seen as a key component in recovering from the War and competing with 'communism'. The General Agreement on Tariffs and Trade (GATT) was established to fix trading ground rules and try to avoid a recurrence of the disastrous protectionism of the 1930s. It was a 'rich man's club' which excluded most of the world, now slowly divesting itself of its colonial past and establishing independent nation states. Japan and West Germany shook off the devastation of defeat in war to become highly successful trading economies. But the old economic order, in the shape of the division between rich 'developed' countries and poor 'underdeveloped' countries exporting raw materials to the rich, remained largely untouched. So did the Communist states of Eastern Europe, the Soviet Union and China, frozen in the Cold War.
8. THIS SHRINKING GLOBE
1970 to 1990 The oil crisis of the early 1970s threw the Bretton Woods settlement into confusion and raised fears that the 1930s would return again. Further rapid advances in transport and communications 'shrank' the world and increased the potential of world trade to generate wealth. The lessons from Japan and West Germany were not lost on many poorer countries who began often painful and authoritarian attempts to follow suit. Towards the end of the 1980s, the Soviet empire began to break up and the US fell heavily into debt with the Japanese.
World trade has become an active partner in the destruction of the environment and, particularly since the economic recession of the early 1980s, has left the poorest countries even further behind the rich. Trade is certainly shrinking the world - but is it sinking it too?