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An alternative model for early modern long-distance trade finance: the capital markets of Manila, 1680-1838

Rivas Moreno, Juan José (2022) An alternative model for early modern long-distance trade finance: the capital markets of Manila, 1680-1838. PhD thesis, London School of Economics and Political Science.

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Identification Number: 10.21953/lse.00004588


This dissertation examines how the city of Manila financed the direct long-distance trade between Asia and America during the long Eighteenth century. For 250 years between 1571 and 1821, Manila provided a direct trade route that intermediated Asian demand for silver and Spanish American supply, completing the global silver trade network that developed during the Early Modern period. This demand for silver and Manila’s capacity to cater to Asia straight from the source led to Manila specialising as a provider of silver pesos within maritime Asia. The dissertation shows that Asian demand for silver specie skewed the bargaining power in the transpacific trade in favour of the Mexican merchants that controlled the production of coins in the American end of the exchange. The political economy of the Spanish empire enabled this by creating an equilibrium between all component parts of the empire that guaranteed each territorial unit’s control over their respective areas, while it mitigated coordination problems by granting access to the king’s arbitration in intra-imperial disputes. Barred from vertically integrating the Pacific exchange, Manileños adopted an alternative model of Horizontal Specialisation, through which they achieved a level of economies of scale in the mobilisation of working capital. From 1668, legacy funds emerged under the management of brotherhoods and religious orders that pooled liquidity and originated capital. This framework combined social reach and enforcement mechanisms to create an impersonal market through which outsiders to the trade could invest their savings on the Pacific exchange. The dissertation examines Manila’s alternative model through a reciprocal comparison to the model of the East India companies to contextualise how Manila managed to foster impersonal cooperation, mobilised working capital, and solved the Fundamental Problem of Exchange. The thesis argues that the abundance of liquidity in Manila determined the city’s alternative approach towards financing long-distance trade.

Item Type: Thesis (PhD)
Additional Information: © 2022 Juan José Rivas Moreno
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
Sets: Departments > Economic History
Supervisor: Irigoin, Alejandra and Deng, Kent

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