Universidad Autónoma de Nuevo León

Facultad de Contaduría Pública y Administración

Producto Integrador de Aprendizaje

Roberto Carlos Alvarado Martínez

2006295

Maestro Armando Salas Escamilla

Materia administración de produccion

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CONTENTS
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

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INTRODUCTION
The Manila Galleon was an extraordinary and influential trade route that connected
Asia and America across the vast expanse of the Pacific Ocean from 1565 to 1815.
This route was not only a conduit for the exchange of goods but also played a
crucial role in linking the economies of the Americas and Europe. From a European
perspective, the Manila Galleon was a phenomenon actively promoted by the
Spanish Crown, utilizing Spain's extensive imperial territories to acquire highly
sought-after goods from East Asia. This trade route enriched the Spanish Empire
and expanded its economic influence across the globe. However, it is essential to
understand that the Manila Galleon trade was not a centralized operation
controlled by a single entity. Instead, it was a decentralized enterprise involving
thousands of merchants from various regions, primarily from Mexico City and
Manila, each contributing to the complexity and dynamism of this trans-Pacific
trade.

The origins of the Manila Galleon trade can be traced back to the geopolitical and
economic conditions of the mid-16th century. At that time, ancient trade routes
through the Levant were heavily restricted due to hostilities between Christian
Europe and the Islamic, Ottoman, Safavid, and Mongol empires that dominated the
Middle East. Additionally, the rise of mercantilism in Europe created a highly
competitive economic environment where the control of trade routes and the
accumulation of wealth became paramount. The Spanish Empire, with its vast
territories in the Americas and strategic position in the global political landscape,
was ideally situated to establish a new trade route that would bypass the overland
routes dominated by their rivals and connect directly with Asia via the Pacific.

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The Manila Galleon was an extraordinary and influential trade route that connected
Asia and America across the vast expanse of the Pacific Ocean from 1565 to 1815.
This trade route not only facilitated the exchange of goods but also played a crucial
role in linking the economies of the Americas and Europe. The Manila Galleon,
from a European perspective, was a phenomenon actively promoted by the
Spanish Crown. This initiative involved leveraging the vast imperial territories of
Spain to acquire highly coveted goods from East Asia, enriching the Spanish
Empire and expanding its economic influence.
It is essential to understand that the Manila Galleon trade was not a centralized
operation managed by a single entity or agent. Instead, it was a decentralized
enterprise involving a multitude of merchants. Approximately 4,444 merchants,
primarily hailing from Mexico City and Manila, were instrumental in conducting the
Poniente Island Race, the term used to describe this extensive trade network. The
complexity of these commercial operations is best illustrated by focusing on the
connection between Acapulco and Manila, which formed the backbone of the
Manila Galleon trade.

In the initial stages of the trade, merchants had to recognize and handle goods of
various origins in both ports. European goods, for instance, arrived in Veracruz
from Seville and were then transported overland to Acapulco. The cargo
composition on this route remained relatively stable, with about 80% consisting of
American goods and 20% of European origin. In contrast, the cargoes arriving from
Manila were more diverse and volatile, reflecting the varied nature of goods
sourced from different parts of Asia and the relatively smaller size of the American
market.
Therefore, the Manila Galleon represented a unique form of international
exchange, primarily of an inter-industrial nature. Despite the administrative
separation of the Carrera de Indias (the Spanish transatlantic trade route) and the
Carrera de Islas Ponientes (the Manila Galleon trade), the Spanish royal family

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maintained significant influence over both. The Spanish Crown implemented strict
regulations governing commercial activities, including limiting the number of
participating merchants, determining travel schedules, and restricting trade routes.
These regulations were enforced to maintain control over the lucrative trade and
ensure that it benefited the Spanish Empire.
Upon the arrival of the galleons in Acapulco, a portion of the Asian cargo would
remain in America, with some goods staying in present-day Mexico while the rest
was re-exported to other parts of Spanish America. The Viceroyalty of Peru
emerged as a significant market for these Asian products, driven by the nobility's
demand for luxury items from the East. Some goods even reached distant markets
such as Buenos Aires. The remaining products were transported by mule to
Veracruz and then shipped across the Atlantic to the ports of Seville or Cádiz.

The global political landscape of the mid-16th century was particularly conducive to
the establishment of a trade route between Asia and Europe via Spain. Ancient
trade routes through the Levant were severely restricted due to political and
military conflicts. The Middle East was dominated by powerful Islamic empires
such as the Ottoman, Safavid, and Mughal empires. Hostilities between these
empires and Christian Europe, especially between the Ottoman Empire and the
Habsburgs, reached a climax during this period. The Italian city-states, which had
long played a crucial role in Mediterranean trade, were also affected by these
geopolitical tensions.

Mercantilism, the dominant economic system of the time, further complicated

international trade. Mercantilism was characterized by a belief in the benefits of
profitable trading and the accumulation of wealth through a favorable balance of
trade. This economic doctrine created significant barriers to international trade, as
nations sought to protect their markets and maximize their exports while minimizing

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imports. Consequently, good political relations became essential for successful
trade between nations.
The rise of mercantilism coincided with the initial stages of the Manila Galleon
trade. In this context, the massive expansion of the Spanish Empire, known as the
"Empire Where the Sun Never Sets," became a critical factor. Between 1535 and
1540, Spain came to control more than half of the population in the Western
Hemisphere, marking a period of rapid territorial and economic expansion. The
empire's expansion was driven not only by cultural and ideological forces but also
by significant advancements in maritime technology.

The Manila Galleon was at the forefront of these technological advancements. For
example, the Santa María, one of the ships used in these early voyages, measured
approximately 17 meters in length, weighed around 100 tons, and carried about 40
people. In contrast, La Concepción, a ship used in the 17th century, was 49 meters
long, had a cargo capacity of about 2,000 tons, and could accommodate between
300 and 500 people. These ships were marvels of their time, equipped with the
latest navigational and maritime technology, allowing them to undertake the
perilous journey across the Pacific.

The primary driver of the Manila Galleon trade was the enormous demand for
American silver in China. During the 15th and 16th centuries, China's monetary
system transitioned from being based on paper money to one based on silver. By

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the 1570s, silver had become the only accepted currency for paying taxes, further
solidifying its importance in the Chinese economy. Over time, silver became the
dominant medium of exchange even in non-tax-related transactions. China, with
about a quarter of the world's population and the largest tax system globally, had a
vast and growing demand for silver.

The price of silver in China was significantly higher than in other regions. For
example, the exchange ratio between silver and gold was 1:6 in China, compared
to 1:8 in India, 1:10 in Persia, and 1:12 in Europe. This disparity created lucrative
opportunities for merchants involved in the Manila Galleon trade, as they could
profit from the higher value of silver in China. This demand for silver drove much of
the trade between the Americas and Asia, making the Manila Galleon a vital
conduit for silver flowing from the New World to the Chinese market.

Merchants from Mexico City played a dominant role in the Manila Galleon trade.
These elite merchants had the financial power to influence prices and control trade
regulations. Each year, they transferred millions of pesos for purchases at trade
fairs, which allowed them to dominate the market and enforce favorable terms.
They were also heavily involved in supplying goods to the government in Manila,
coordinating much of the administration from New Spain.

However, these merchants faced limitations imposed by European interests. In

1593, under pressure from Seville's commercial elite, the Spanish king restricted
the value of galleon shipments to 250,000 pesos in Manila and 500,000 pesos in
Acapulco. This regulation aimed to control the flow of goods and ensure that the
trade remained profitable and manageable.

In Manila, much of the trade was controlled by the Chinese community, which had
established itself there long before the arrival of the Spanish. Chinese merchants
were well-connected to the region's major trade networks and played a crucial role
in the Manila Galleon trade. The promise of lucrative trade opportunities led to
significant immigration from China, particularly from the province of Fujian. By
1603, the Chinese population in Manila had grown to 30,000 from just 150 in 1564.
However, tensions and conflicts between the Spanish authorities and the Chinese
community led to periodic destruction of Chinese settlements and expulsions.

From a European standpoint, the primary motivation for engaging in trade with Asia
through America was the restrictive nature of more direct routes in the 16th

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century. By the 19th century, many of these limitations had disappeared. European
empires, particularly the British Empire, controlled key strategic locations that
ensured a steady flow of trade from Asia to Europe. The British Empire, with its
extensive global reach, had a clear comparative advantage in meeting the global
demand for goods once traded through the Manila Galleon.

Despite the official end of the trade monopoly in 1750, similar commercial activities
continued through illicit means, reaching significant levels by the early 19th
century. The liberal economic policies of the 19th century further promoted free
trade, diminishing the significance of the Manila Galleon. For many in Spain, the
profits from the Manila Galleon trade remained concentrated in the hands of
Mexico City's elite, leading to calls for reform.

In response, the Royal Company of the Philippines was established in 1785,

aiming to centralize trade with the Philippines in Spain. This company sought to
negotiate goods in Asian ports and sell them within American territories, while also
establishing a direct maritime route between Manila and Seville around Cape Horn.
Despite initial successes, the Royal Philippine Company ultimately failed due to
changing economic conditions and increasing competition from other European
powers.
By the late 17th century, China's demand for silver had decreased, leading to a
decline in American silver exports. Political upheavals and revolutions in the
American colonies further disrupted the Manila Galleon trade. The valuable
connections that Mexico City merchants had with the government of New Spain to
supply the Manila government dissolved. Additionally, Mexico's new Republican
government viewed the Manila Galleon as a form of colonial exploitation, further
diminishing its role.
New Granada, which included modern-day Colombia, Ecuador, and parts of
Central America, played a minimal role in the Manila Galleon trade despite its
strategic location. The challenging geography, limited purchasing power, and
insufficient silver production hindered its participation. The Pacific coast of New
Granada was isolated by dense rainforests and mountainous terrain, making it
difficult to develop infrastructure to support the Manila Galleon trade. Furthermore,
New Granada's economy was relatively poor, with a GDP per capita of only $27 in
1800, limiting its market for Asian goods. Lastly, New Granada's silver production
was minimal compared to Peru or New Spain, further reducing its involvement in
the trade.

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Overall, the Manila Galleon was a remarkable and complex trade network that
played a significant role in global commerce for over two centuries. It was shaped
by a multitude of geopolitical, economic,

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CONCLUSION

In conclusion, the Manila Galleon was a remarkable and complex trade network
that played a significant role in global commerce for over two centuries. This trade
route was shaped by a myriad of geopolitical, economic, and technological factors,
including the expansion of the Spanish Empire, advances in maritime technology,
and the insatiable demand for silver in China. The decentralization of the Manila
Galleon trade, involving merchants from different regions and backgrounds, added
layers of complexity to its operations but also facilitated a dynamic exchange of
goods and cultural influences.

Despite its eventual decline due to changing economic and political conditions, the
impact of the Manila Galleon on connecting continents and cultures is undeniable.
This trade route not only facilitated the flow of goods between Asia and the
Americas but also influenced economic and political relationships between Europe,
Asia, and the Americas. The legacy of the Manila Galleon endures in the annals of
international trade history, illustrating the profound interconnectedness of global
economies long before the advent of modern globalization. As we reflect on the
history of the Manila Galleon, we gain a deeper understanding of the early forces
that shaped global trade and the enduring impact of these historical connections on
contemporary economic and cultural exchanges.

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BIBLIOGRAPHY
https://nyuad.nyu.edu/content/dam/nyuad/academics/divisions/social-
science/working-papers/2019/0023.pdf

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