Abstract
Little is known about the structural patterns and dynamics of the first global trading market (FGTM), which emerged during the sixteenth century as a result of the Iberian expansion, let alone how it compares to today's global financial markets. Here we build a representative network of the FGTM using information contained in 8725 (handwritten) Bills of Exchange from that time—which were (human) interpreted and digitalized into an online database. We show that the resulting temporal network exhibits a hierarchical, highly clustered and disassortative structure, with a power-law dependence on the connectivity that remains remarkably robust throughout the entire period investigated. Temporal analysis shows that, despite major turnovers in the number and nature of the links—suggesting fast adaptation in response to the geopolitical and financial turmoil experienced at the time—the overall characteristics of the FGTM remain robust and virtually unchanged. The methodology developed here demonstrates the possibility of building and analysing complex trading and finance networks originating from pre-statistical eras, enabling us to highlight the striking similarities between the structural patterns of financial networks separated by centuries in time.
Highlights
The navigating routes established by the Portuguese and Spaniards during the sixteenth century linked all continents& 2018 The Authors
There are no similar topological studies of other early modern financial networks, historians have already underlined the use of similar strategies during the seventeenth and the eighteenth centuries
We show how a combination of historical analysis and a quantitative analysis of the complexity of historical financial patterns—through modern network science and other methods—may provide a means to circumvent the natural lack of consistent data, enabling a comparison across distinct periods
Summary
The navigating routes established by the Portuguese and Spaniards during the sixteenth century linked all continents& 2018 The Authors. Merchants employed Bills of Exchange (BoEs) as the most common payment instruments for transactions and as an efficient tool of financial credit, allowing merchants to execute commercial exchanges in situations in which they were no longer able to receive their payment directly from the hands of the buyer. Too, employed BoEs to enable money transfers capable of sustaining longdistance transactions. BoEs provide crucial information regarding the paths and characteristic times that accrue to the money transfers associated with most financial transactions. Similar to the global financial market (GFM) of today, following the money transfers in the sixteenth century allows us to characterize the FGTM, the overall structure of which remains essentially unknown to date
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