Four years after the Longqing Opening, the Spanish established colonial rule in Manila, Philippines, providing the crucial link for a globalized economic system. With immense wealth in silver from their American colonies and a pressing demand for luxury items, the Spanish turned to merchants from Yuegang. This partnership launched the Manila-Acapulco Galleon Trade, the world’s first and one of the longest-lasting trans-Pacific routes.
Its global span was unprecedented. Yuegang junks would arrive in Manila, where goods were transferred to Spanish trading ships known as Manila Galleons. These massive ships then embarked on a perilous four-month voyage across the Pacific, riding the Kuroshio Current to Acapulco on Mexico’s west coast. From there, cargo was hauled overland to Veracruz, before sailing on to Seville, Spain and finally reaching European markets.
Yuegang was the essential linchpin in this exchange, connecting Chinese production to global markets. Chinese exports, primarily silk and porcelain, defined luxury from the Americas to Europe. In return, a mighty river of silver in the form of Spanish pesos flowed back to China through Yuegang.
The torrent of silver through Yuegang did more than enrich merchants. It recalibrated the Ming’s entire financial structure.
In the dynasty’s early years, the imperial court introduced paper currency due to a copper shortage for minting coins, and prohibited private trade in gold and silver. However, unchecked over-issuance swiftly eroded its value. Lacking convertibility and fiscal discipline, the paper currency depreciated by approximately 1,000-fold over a century.
The failure of the paper currency drove the expansion of silver use in private commerce, forcing the court to gradually recognize it as a de facto transaction medium. This market-driven trend was institutionalized later, particularly following the reforms of Zhang Juzheng (1525-1582), who served as Ming grand secretary. He implemented the Single Whip Law, which mandated the payment of most taxes in silver. This law decisively established silver as the official settlement currency of the Ming empire.
During this period, historians estimate that up to one-third of the world’s silver supply found its way to China, which not only established China’s silver-based monetary standard, but also helped transform silver into a global currency. In this manner, Yuegang, a once peripheral harbor, assumed a pivotal role in the narrative of global monetary history.
Managing this explosive trade volume required new institutions. Previously, the imperial court had established a coastal defense office at Yuegang, focusing on maintaining security. As trade tax revenues soared to reach an astonishing 35,000 taels of silver (equal to around 1,305 kilograms) in 1613, accounting for roughly half Fujian’s total provincial revenue, the office was renamed the Tariffs Collection Office and shifted to tax collection.
Staffed by officials rotated from across the province, the office was an early form of customs. It developed a monetized tax regime that broke from the old tributary system and the simple model of percentage levies on goods.
The tariffs system at Yuegang included three kinds of core taxes: a permit tax paid per trade voyage based on the declared goods and destination, a water tax calculated on the tonnage of the ship, and a land tax levied on the value of imported cargo. An additional levy was imposed specifically on ships returning from Manila.
This system, implemented in the 1570s, was a groundbreaking experiment in that it replaced arbitrary exactions with a transparent, rules-based monetary customs system over a century before the Qing Dynasty (1644- 1911) established four official customs offices in 1684.
Li Haiyong, deputy director of China Customs Museum, told NewsChina that the Tariffs Collection Office at Yuegang represents the earliest prototype of a modern customs authority. Its roles in inspecting import and export vessels, levying taxes and combating smuggling were all inherited by later customs administrations. “Its most revolutionary contribution was replacing taxation in goods with taxation in currency, a change of profound historical importance,” he said.
Old Version
