A Splendid Exchange Summary By William J. Bernstein

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A Splendid Exchange (2008) is an incredibly well-researched book that looks into the events and inventions that gave rise to free trade on a global level.

It delves into how this fight between isolationism or protectionism versus liberalized trade has been going on for years, even before the term “globalization” was ever coined.

It demonstrates how natural and beneficial trading can be between nations but at the same time reveals its dark side as well.

This book is a must-read if you want to gain a better understanding of international trading systems and their impacts on our lives.

A Splendid Exchange

Book Name: A Splendid Exchange (How Trade Shaped the World)

Author(s): William J. Bernstein

Rating: 4.5/5

Reading Time: 22 Minutes

Categories: Economics

Author Bio

William J. Bernstein is an esteemed author who specializes in financial history and modern investment strategies.

He is a retired neurologist and has written some of the most popular books including The Birth of Plenty: How the Prosperity of the Modern World Was Created and The Four Pillars of Investing.

His book, A Splendid Exchange, offers an insightful look into the world of global trade and exploration from early times to the present day - providing an excellent resource for historians, investors, and others curious about our economic past.

Explore the History and Impact of Global Trade: From Ancient Times to Modern Day

Global Trade

Throughout the ages, global trade has had its fair share of ups and downs.

For centuries, long travel times and primitive technology have made it difficult for people to expand their international markets.

Then after World War II, free trade began to bloom as technological advances made it easier for people to trade with each other.

While this newfound freedom of trade has provided many benefits over the past millennia, such as speeding up communication between cultures, it has also caused some issues as well, such as producing both winners and losers who were affected by free trading agreements.

In these sections you’ll learn the history of global trade and how it has transformed over time.

We’ll explore how a desire to speed up trade led to the discovery of the Americas and why protectionism exacerbated the Great Depression.

Get ready to find out more about global trade in these sections!

The Origin of Global Trade: How We Got to Where We Are Today

Trade began in the fertile lands of Mesopotamia, one of the earliest centers of civilization.

Starting around 3000 BC, the people of Sumeria, Assyria and Babylonia used their surplus goods to trade with other nearby countries such as Oman and Persia for valuable resources like metals, marble and timber.

The development of early agriculture allowed them to create simple tools using materials sourced from far away places.

The Persian Gulf became a center for early trade as they traded their surplus goods for necessary items they couldn’t get at home.

This included things like grains, wine and oils – items they needed but didn’t have access to otherwise in Mesopotamia.

When civilization spread westward to Egypt and Greece, new trade routes formed in the Red Sea and Mediterranean which further opened up global trading possibilities for early civilizations.

The Introduction of Camels Revolutionized Ancient Trade Systems, Allowing Arab and Chinese Merchants to Exchange Luxury Goods Across Land and Sea


With the advent of the Pleistocene, or ‘Ice Age’, a bridge of ice was formed connecting East Siberia to America.

This provided new pathways for both humans and animals alike.

Specifically, horses traveled from North America to Asia and evolved into camels which had a unique ability to preserve water and become perfect adaptive species in Asia’s driest regions, most notably Arabia.

This adaptation would prove to be revolutionary in trade with the 1500s BC came an introduction of camels as transport animals instead of donkeys.

It was quickly realized that the huge padded hooves these creatures had made them suitable for carrying twice as much weight than donkeys, and just as importantly, their speed increased by twofold when traversing over desert terrain.

These characteristics meant a surge in commerce throughout the Arab peninsula and even The Mediterranean Sea with goods such as frankincense myrrh and precious aromatics being exchanged through trading systems thanks to camels’ revolutionary transportation capabilities.

The opening of trade with China occurred during the midieval era due largely to one man — Prophet Muhammad who had been raised by a trading uncle called Abu Talib who dealt between leather, raisins, textiles and frankincense.

Chinese sources suggest that Muslim traders entered China around 620 AD with goods such as copper, ivory incense and turtle shells.

Upon their return these traders brought back products back like gold pearls silk brocade etc despite these journeys filled with peril perilous waters treacherous terrain many traders were drawn in at the promise of immense wealth.

The High Price of the Spice Trade: Europe’s Love for Spices Led to Disease, Slavery, and Massive Death

Spices held a special attraction for wealthy Europeans during medieval times, driving up demand and allowing merchants to charge high prices.

Physicians and pharmacists added them to their remedies, suggesting that they held mysterious curative powers.

Little did they know, however, that their insatiable appetite was contributing to the slave trade.

In Arab markets like Cairo or Alexandria, European merchants paid for the highly sought-after spices with slaves mostly from the Balkan region who were often turned into Muslim soldier slaves.

Unbeknownst to the Europeans, these spices would typically come from China in exchange for ivory and incense.

But this booming spice trade came with a tragic cost: disease.

Ships carrying infected rats spread plague all over Europe, decimating many port cities that were hubs of international trade such as Venice, Genoa and Bruges.

Even worse, it is believed that the virus may have originated in the Himalayan region of China before finding its way onto ships headed westward across the planet.

Exploring the World Through Maritime Innovation: From Portugal to the Philippines and Every Point in Between

Maritime Innovation

In the 15th century, Portugal and Spain were two of the major players in the world of trade.

With their improved caravels, Portuguese merchants were able to set up ports along the east coast of Africa and successfully traverse all the way around South Africa and back into the Indian Ocean.

Meanwhile, Spanish oceanographers began forming an alliance with Portugal that would see a major advancement in westerly routes across the Atlantic.

Christopher Columbus even pitched his plan to explore these waters in search of a quicker route to India or China – though at this time, no one knew what length this journey would be.

Fortunately, Columbus was successful in his endeavor of reaching the Caribbean – thus establishing that a new but unknown part of the world existed – while Ferdinand Magellan would later become instrumental in proving that this New World stretched all the way around from Europe with his complete voyage around the globe beginning from Spain.

Thanks to these Spanish and Portuguese explorers, extensive knowledge about international trade routes greatly expanded during this period and helped usher in a new era for European exploration like never seen before.

The Rise of Global Trade: A Look at How the 17th Century Fueled Today’s Market Economy

The seventeenth century marked the start of a worldwide shift to global trade, with Holland playing host to an expansive commercial hub.

This newfound focus on international commerce was first propelled by the sea voyages of Columbus and Magellan in the sixteenth century, providing humanity’s ever-increasing understanding of the world with new opportunities for business exchange.

The most influential traders in this period were from Spain, Portugal, and Holland.

Their navigators had skilled knowledge and expertise in maneuvering the oceanic winds, granting their trading ships superior advantages over competitors when crossing oceans that previously seemed too far to traverse.

It wasn’t long before goods and products from disparate corners of the earth made their way through bustling marketplaces by 1650.

Food items such as corn, wheat, coffee, tea and sugar were commonplace throughout continents not native to these resources.

Furthermore, Spanish sugar cane production commenced after Columbus’ voyages brought them to the Canary Islands in order to satiate demand from European merchants at home.

How the Theory of Free Trade Brought an End to Mercantilist Policies in England


In the 1600s, England was a major contributor to the European economy, however as the years went on, other countries were gaining more control.

By the eighteenth century, The English East India Company had become a major monopoly dominating the cotton trade between Britain and India.

At this point in time, many people opposed free-trade as they followed the belief that international commerce was basically a zero-sum game so if one country prospered, everyone else had to suffer.

As a result of this belief, measures like not allowing imports or charging high fines for them were enforced by England.

Despite this strong push against free-trade advocates like economist Adam Smith and Henry Martyn argued that it was actually consumption over possession that should defined a nation’s wealth.

In time these theories began to take hold and lead to what we now call freer trade.

How Nineteenth Century Technologies Transformed Global Manufacturing

The nineteenth century saw a major revolution in global and transcontinental trade due to the invention of several groundbreaking technologies.

Most significantly, steamships and refrigeration enabled shipments of goods over long distances, allowing for worldwide trade of an unprecedented scale.

Prior to these developments, sailing was the primary means of transporting goods across oceans.

With the creation of steamships, however, this form of transportation rapidly became obsolete as it became possible to send materials at a fraction of the time.

Moreover, ships could be made more efficient by steam-powered locomotives on land.

This not only allowed for faster transport but also enabled items such as perishables like beef to be transported further without spoiling during its journey.

Refrigeration in particular proved invaluable for products that had to be kept fresh on longer trips from one coast towards another.

Overall, steamships and refrigeration paved the way for widespread global and transcontinental manufacturing industry where pieces from around the world were combined together into one product.

The result was cheap shipping costs which not only facilitated economic growth but improved lives by providing people with diverse access to previously unavailable commodities such as fruits and vegetables year-round or foreign grains competing with domestic ones in price.

The Great Depression: How Tariffs Led to a Decade of Despair


At the beginning of the twentieth century, free trade seemed like a viable option for countries looking to increase their wealth and ensure economic stability.

Unfortunately, that all changed with the implementation of protectionist policies in the 1920s.

The most notable example was the Fordney-McCumber Tariff enacted by President Harding in 1922, which set import tariffs at over 40 percent.

This resulted in a booming economy in America, known as the Roaring Twenties.

However, this prosperity was short lived.

The 1930s saw an abrupt shift when protective measures escalated with the Smoot-Hawley Tariff Act.

This raised import tariffs to an average of 60 percent while simultaneously leading to Europe retaliating with their own equally punitive trade restrictions on US goods.

The cause of this shocking U-turn can be traced back to developments in shipping costs that led to prices for imported goods converging with local ones; a situation local producers were unable or unwilling to compete with.

As such, they lobbied for protectionism from governments worldwide – including America’s – leading us into one of the darkest periods of our history: The Great Depression, largely caused by limitations on free trade through protectionist acts enacted around the world.

The Benefits of Free Trade Need to Be Shared More Equitably for All to Reap the Rewards

The United States embraced free trade in the post-war years, paving the way for economic growth and opportunity.

Advances in transportation technology such as combustion engines and improved airplanes, as well as new shipping containers, greatly furthered this effort.

These moves allowed access to foreign markets which sparked an influx of wealth back into the U.S.

Unfortunately, with this newfound globalization came dangerous inequality across wage levels.

Low skilled-laborers found no rewards from free trade while those in higher positions saw booming salaries leap ahead lightyears away from the rest of the population.

This income disparity created global instability that threatened investment and further development of global economies alike.

It is therefore a priority to close wage gaps to ensure everyone gets their fair share of the benefits of free trade – it’s beneficial now and for the future of world economies moving forward.

Wrap Up

In A Splendid Exchange, it is clear that the message of the book is that free trade has had a history of success and prosperity for many nations, but also presents certain disparities and inequality which can be destructive.

In order for trading to really benefit all nations involved, we must recognize these issues and develop strategies to avoid them.

The final summary of this book is that trading has been a part of our world’s history since ancient times, but if we want it to truly reach its fullest potential, we must work together with utmost caution.

Arturo Miller

Hi, I am Arturo Miller, the Chief Editor of this blog. I'm a passionate reader, learner and blogger. Motivated by the desire to help others reach their fullest potential, I draw from my own experiences and insights to curate blogs.

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