International Monetary Fund (IMF)

International Monetary Fund (IMF)

Since its foundation at the end of World War II, the International Monetary Fund (IMF, or Fund) has been one of the world’s most powerful and controversial multilateral economic institutions. Debates on the role of the IMF in the global economy have intensified in recent decades, especially from the 1990s.

Like its “sister institution,” the World Bank, the IMF was conceived at the Bretton Woods Conference of 1944 and formally established the following year, its official mandate “to promote international monetary cooperation ... to facilitate the expansion and balanced growth of international trade ... to promote exchange stability ... to assist in . . . the elimination of foreign exchange restrictions which hamper the growth of world trade ... to give confidence to members by making the general resources of the Fund temporarily available to them ... ” (Article I, Purposes, Articles of Agreement of the IMF).

Headquartered in Washington, D.C., since its foundation, in 2007 it had 184 member countries, with a staff of 2,716 in 165 countries. In pursuit of its mandate, the IMF purports to engage in three principal activities:

1. surveillance through the “monitoring of economic and financial developments”;
2. providing loans; and
3. providing technical assistance.

It is governed by its Board of Governors, one from each member country. The Executive Board, comprised of 24 directors, is responsible for its daily operation.

Eight of these 24 Executive Board members are appointed by the IMF’s largest “quota holders” (the United States, Japan, Germany, France, and the United Kingdom). A member’s quota “is broadly determined by its economic position relative to other members.”

Opposition to IMF policies

In 2007 the United States had the largest quota, based on “special drawing rights” (SDRs), with SDR 37.1 billion (equivalent to $55.1 billion). In essence, the IMF’s largest contributors wield the most power within the institution.

Critics charge that the IMF and the “neoliberal” economic paradigm that it promotes locks underdeveloped countries into positions of structural subordination within the global capitalist system.

Especially controversial are IMF policy prescriptions for “austerity measures” and “structural adjustment” that include privatization of state-run entities, reduced public expenditures, and radically curtailed intervention of national governments in their national economies.

Opposition to IMF policies and their underlying rationales has intensified in recent decades, as evidenced in part by the rise of left-leaning neo-populist regimes in Venezuela, Brazil, Argentina, Chile, Peru, and elsewhere in Latin America from the 1990s.

Denouncing IMF policies as unjust, immoral, corporate welfare, and a major contributor to poverty, unemployment, and human misery worldwide, critics characterize the IMF and associated multilateral institutions and treaties (the World Bank, the G-7, the World Trade Organization [WTO], NAFTA, and many others) as instruments of the wealthy and powerful and major obstacles to social justice, economic well-being, and political rights among the world’s poor. As economic globalization accelerates in the 21st century, debates on the role of the IMF are likely to intensify.

Piracy in the Atlantic World

Not long after the Spanish colonies in the Americas started to generate massive wealth, pirates started to attack the ships, taking the gold, silver, and other treasures from the Americas to Spain and later from Brazil to Portugal. In addition to attacking ships, some of the more daring buccaneers, such as Francis Drake, went as far as attacking ports.

While some of the early raiders were freelance pirates, the cost of maintaining a ship and the ability to find a friendly port meant that many were privateers. These were French, Dutch, and more particularly English sailors, who operated in the Caribbean and in the Atlantic on behalf of their government, who had issued them a “letter of marquee,” allowing them to attack enemy shipping in times of war.

Often the news of the end of a particular conflict took a long time to reach remote outposts and as a result attacks often still took place in peacetime. Some pirates also regularly exceeded their “letters of marquee” and attacked any ships they came across.

Although privateers could use the excuse of attacking enemy ships in time of war, many modern historians are more understanding of their actions given the appalling Spanish treatment of the indigenous population of the Americas, from which they gained much of their gold and silver.

The initial attacks on Spanish ships sailing across the Atlantic led the Spanish to establish a treasure fleet from the 1560s. This involved a large number of ships, including many men-of-war, sailing together taking manufactured goods to the Americas and returning with gold or more often silver. By this time, the English, French, and Dutch had established settlements in the Caribbean, which their privateers used as bases in their attacks on the Spanish.

The English buccaneer Francis Drake managed to capture some of the Spanish treasure fleet in 1580 and sacked the ports of Santo Domingo and Cartagena in the Caribbean in 1585, and later that year attacked and sacked the port of Cádiz in Spain.

This led to the Anglo-Spanish War of 1585–1604, which turned many of the English pirates into privateers, weakening the Spanish merchant navy and providing a large source of profit for English and Dutch traders.

While Francis Drake operated ostensibly for patriotic reasons, the Spanish denounced him as a pirate, and by the early 17th century, there were large numbers of pirates operating in the Caribbean. Many used isolated European settlements around the West Indies, with a few operating from their own bases in isolated bays.

A few places, such as Port Royal in Jamaica, became famous haunts of the pirates, growing rich but also becoming exceedingly dangerous places, gaining the reputation of being one of the “richest and wickedest” cities in the world. Other places used by pirates included the islands of Antigua and Barbados.

The Thirty Years’ War, which lasted from 1618 until 1648, led to renewed Protestant-Catholic conflict in Europe, which led to fighting in the West Indies, and British as well as Dutch ships attacked those belonging to Spain and France. It was during this period that English privateers and pirates started to use the Mosquito Coast of Nicaragua to establish bases, which allowed them to attack Spanish ports and Spanish ships with ease.

From 1660 until 1720, the so-called golden age of piracy, pirates again operated as privateers. This period saw some sailing under the famous “Jolly Roger” flag, with attacks by English pirates on both Spanish and French ships. There were also English attacks on the Dutch; the island of Saint Eustatius, a Dutch sugar island, was attacked by pirates and British soldiers on many occasions, changing hands 10 times during the 1660s and early 1670s.

French pirates also started operating freely from their ports on the island of Hispaniola (modern-day Haiti and the Dominican Republic). Sir Henry Morgan, a Welsh buccaneer, sacked the Spanish town of Portobelo in Panama, which had been well garrisoned.

Morgan later destroyed Panama City in 1671 but was arrested by the British, as the attack violated a treaty between England and Spain. At his trial in London, Morgan was able to prove he had no prior knowledge of the treaty and was released, knighted, and appointed lieutenant governor of Jamaica.

Other pirates such as Edward Teach, “Blackbeard,” became infamous not only for his savagery but for his outlandish appearance. He was killed in combat in 1718. There were also female pirates such as Anne Bonny, originally from Ireland, and Mary Read from London, who were captured and tried in 1720 in Jamaica, with both escaping execution.

The career of these two female pirates, which started when the former joined the crew of “Calico Jack” Rackham, and the second a ship captured by him, was related in many published books of the period.

After 1720, stronger European garrisons throughout the Caribbean caused a massive decline in the number of pirates operating in the region. At the end of the War of the Spanish Succession, the 1714 Treaty of Utrecht allowed the British to sell African slaves in the Americas, and many of the former pirate crews found that they were able to operate legitimately as slave traders.

The nations involved in Caribbean trade decided to eliminate the pirate threat to their lucrative trade routes. In 1720, two famous pirates, Charles Vane and “Calico Jack” Rackham, were hanged at Port Royal, and two years later some 41 pirates were hanged there in a single month.

Without the ability to seek refuge in places such as Port Royal, although some pirates continued operating through to the 1750s, they had access to fewer and fewer ports. This coincided with the European powers’ massively strengthening their hold on their West Indian possessions, and it became far more likely that pirates would be caught.

As a result there was a decline in piracy, with the former pirates having to find work in the slave trade, legitimate shipping, or the lumber industry, cutting logwood and later mahogany in what became British Honduras (modern-day Belize).

The romantic image of the pirates was nurtured by many writers, such as Daniel Defoe, who wrote A General History of Pyrates (1724), which described the lives of many of the more famous individuals, and much later Robert Louis Stevenson in Treasure Island (1883); a small number of pirates published their own accounts. The subject of pirates and piracy remains popular in today’s novels, plays, and films.

Mercantilism

Mercantilism

The theory and practice of mercantilism in early modern Europe were densely entwined with both the emergence of capitalism and the formation of overseas empires. Briefly, capitalism can be defined as an economic system in which goods and services, produced by individuals and privately owned firms, are bought and sold in markets, thus benefiting individual owners of capital and private property.

In early modern Europe, mercantilism extended this notion regarding capitalist production and exchange to the level of the state. More specifically, it refers to the theory and practice of how the early modern European states and nation-states related to each other and to their respective colonies.

The basic theory behind mercantilist practice was fairly simple. The whole point of creating overseas colonies was to augment the economic, political, and military power of the colonizing state, often referred to as the “mother country,” though this locution is deceptive, since the unit of analysis is less a “country” than a specific state apparatus.


Colonies were to serve the colonizing state in two principal ways: as a market for manufactured goods produced in the home country, and as a source of raw materials from which the nation-state’s private producers would create manufactures.

An ideal mercantile relationship was thus conceived as hierarchical, reciprocal, and exclusive; the colonizing power was to be dominant, the colony subordinate. Manufactures were to flow in one direction, raw materials in the other. At the same time, rival colonizing states were to be excluded from this relationship.

It would not serve the English state’s mercantile interests, for instance, for its rivals (e.g., Spain or France) to trade with its colonies. From the perspective of any given colonizing state, the whole point of creating overseas colonies was to enhance its own power vis-à-vis competing states.

It would therefore be counterproductive for a colonizing state to permit its rivals to benefit by trading with its colonies by either exporting manufactures to them or receiving raw materials from them. The exclusionary nature of the ideal mercantilist relationship was thus just as important as its hierarchical and reciprocal qualities.

Finally, mercantilism also called for low wages and minimal consumption in the home country and for maximizing of exports, thus encouraging industrial development and permitting the greatest percentage of money and resources to be kept in the hands of the state.

Mercantilist practice often deviated from mercantilist theory, however, depending on time, place, and circumstance. Spain, the New World’s first colonizing power, endeavored relentlessly to forge an exclusive mercantile relationship with its colonies, with decidedly mixed success.

Despite an abundance of laws and decrees intended to ensure an exclusive relationship, smuggling, contraband, and other forms of illicit trade made Spain’s mercantile system, hermetically sealed in theory, exceedingly leaky in practice. In addition, Spain did not have the industrial base with which to meet its own or its colonies’ demands for manufactured goods.

As a result, much of the silver and gold plundered from its New World colonies slipped through the fingers of the Spanish state on its way to Dutch, Flemish, and English merchants, who were able to provide the industrial manufactures that Spanish merchants were not.

The English were more successful in achieving the mercantilist ideal, principally through a series of Navigation Acts (most notably in 1651 and 1660) that required England’s colonies to trade exclusively with the mother country. But here, too, smuggling and contraband poked many holes in the system, rendering mercantilist practice a far cry from the ideal.

The Dutch state, committed to free trade and frequently encouraging its capitalist class to invest in its rivals’ colonies, rarely adhered to mercantilist theory, yet Dutch merchants and the Dutch state succeeded in amassing vast quantities of capital during the colonial period.

Principally because their domestic economies had undergone the most extensive transition to capitalism, by the end of the colonial period the English and French states had become the most successful in employing mercantilist theory and practice to augment their own economic, political, and military power, and, by extension, the power and prestige of their respective nation-states.

Ferdinand Magellan - Portuguese Explorer

Ferdinand Magellan - Portuguese Explorer

Ferdinand Magellan’s exact date of birth is unknown but is believed to be in 1480. His parents were petty nobles. After the return of Vasco da Gama’s expedition from India, Portugal launched subsequent expeditions there.

When Francisco de Almeida, who would become the first Portuguese Indian viceroy, set out for India in 1505, Magellan joined his expedition. Magellan spent eight years there in a number of different positions. He was also involved with Diogo Lopes de Sequeira’s expedition to Malacca in 1508–09. Magellan returned to Portugal in 1513.

Magellan then served in Morocco, where he was involved in a number of battles and skirmishes. He also served as quartermaster in charge of the spoils of war. Upon his return to Portugal, he requested an increase in pay from King Manuel, but the request was denied because of rumors that he sold cattle to Portugal’s enemies in Morocco.

Magellan returned to Morocco to clear his name so the king would consider his request for more pay. King Manuel still denied the increase. This was apparently one of the main motivations behind Magellan’s decision to approach the Spanish with his idea of finding a passage from Europe to India sailing west, either around or through the Americas.


Magellan convinced the Spanish to back the expedition in 1517. The expedition set out in September 1519 with five ships. They sailed to the South American coast of Brazil.

From there Magellan explored the bay at Rio de Janeiro and the Rio de la Plata before halting for the winter in Patagonia from March through August 1520. It was during this time that Magellan faced a mutiny and saw one of his ships desert the expedition. With winter over, Magellan continued south along the coast of South America.

Upon reaching the southern tip of South America, Magellan took 38 days to find a passage to the Pacific through the strait that now bears his name, the Strait of Magellan. Having found the way through to the Pacific, the expedition started up the western coast of South America on November 28, 1520.

Magellan took 98 days to cross the Pacific with hopes of reaching China but instead made landfall at Guam. From there, the expedition continued on a western course that brought them to Cebu on April 7, 1521. There Magellan made an alliance with the local leader and agreed to help them attack a neighboring island.

It was during this attack that Magellan was killed on April 27, 1521. The expedition continued west and eventually made its way back to Spain, having rounded the Cape of Good Hope in September 1522, three years after having left.

While Magellan did not actually live to complete the circumnavigation of the globe, the journey was the product of his ambition and determination. More important was his discovery of a way to travel from the Atlantic Ocean to the Pacific Ocean going west rather than around Africa.

Francis Drake - English Explorer

Francis Drake - English Explorer

Sir Francis Drake was an English mariner-adventurer, and sometime privateer, who circumnavigated the globe. Drake was born near Tavistock, Devon, England, not far from the important port of Plymouth. He came from a well-connected Protestant farming family, one of 12 children born to Edmund Drake.

At approximately age 13, Francis went to sea on a cargo bark and eventually became the master of the ship at age 20. These early seafaring years spent in the North Sea built his experience as a skillful sailor and navigator and gave him a sense of command. When he was 23 he joined his cousin Sir John Hawkins and for the first time voyaged to the New World. In association with Hawkins, he undertook the initial English slave-trading expeditions to the New World.

Drake discovered the lure of the Spanish Main with all its riches in silver, gold, and slaves. He disliked the Spanish from the onset, no doubt in part for their Catholicism, and in the 1560s, began his campaign against Spanish interests, appearing a pirate to some and a privateer to others. His raids demonstrated his bravado and determination, but almost cost him his life.

Drake’s most famous attack came in 1573 when he took the Spanish Silver Train at the port of Nombre de Dios. Finding the silver too heavy to carry, he took all the gold he could and returned to Plymouth on August 9, 1573, with 30 survivors. Unfortunately, Queen Elizabeth I had undertaken a temporary truce with Philip II of Spain, and Drake’s exploits were not officially celebrated.


In 1577, Queen Elizabeth, facing new Spanish hostilities, sent Drake with 150 men and five ships on an expedition against the Spanish interests on the Pacific coast of the Americas. Two ships had to be abandoned at Río de la Plata and the remaining three navigated the Straits of Magellan, making Drake the first Englishman to do so.

The voyage continued to be difficult; another ship was destroyed, and still another separated and returned to England. Drake sailed along the coast of South America alone in the Golden Hind, attacking Spanish interests, plundering Valparaíso, and seizing cargo as he moved. He continued along the coast of North America looking for a passage to the Atlantic, possibly as far north as the present state of Washington.

He stopped for supplies and repairs in San Francisco Bay and named the area New Albion. Drake now made the decision to cross the Pacific. He rounded the Cape of Good Hope and eventually returned on September 26, 1580, to Plymouth, laden with treasure. His exploits could not be denied even in the face of Spanish fury, and Queen Elizabeth knighted him.

War with Spain

Another war with Spain in 1585 put Drake back in his element. He took command of a fleet and launched assaults against Vigo in Spain, São Tiago in the Cape Verde Islands, and the New World ports of Santo Domingo and Cartagena, as well as St. Augustine in Florida.

In 1587, he “singed the King of Spain’s beard” with a preemptive and destructive raid on Cádiz, burning 31 ships and holding the town for three days in the process. This attack delayed the Spanish Armada sailing by a year.

Statue of Francis Drake

By the time the Spanish Armada sailed to England to invade in 1588, Drake was vice admiral in command of the English fleet. It was at this time that the famous Drake myth first appeared that had Drake enjoying a game of bowls on Plymouth Hoe as the Spanish fleet approached. Here he supposedly stated that he had plenty of time to finish the game before the Spanish arrived.

The English fleet pursued the Spanish through the channel. Drake caught the rich galleon Rosario and Admiral Pedro de Vales in the process. On July 29, 1588, Drake and Lord Howard of Effingham organized the fire ships that broke the Spanish formation, causing damage that forced the Spaniards into the open sea toward Calais. The following day, Drake and the rest of the English fleet defeated the Spanish at the Battle of Gravelines.

Drake’s tamat expedition against the Spanish occurred in 1595, supported by Hawkins. On this occasion, the Spanish inflicted defeat, particularly against Drake’s raids on San Juan, Puerto Rico. Hawkins died off Puerto Rico and Drake became ill from dysentery and died on January 28, 1596, while in the process of mounting a further attack on San Juan. Placed in a lead coffin, Drake was buried at sea with his crew burning the town of Puerto Bello as a dedication to his passing.

Drake’s life was one of adventure and determination, which helped enrich England with his plunder. He established claims to the New World and made England a recognized naval power.

Bull of Demarcation

Christopher Columbus’s first voyage to the Americas threatened to intensify the rivalry between the Catholic kingdoms of Spain (Castile) and Portugal into open warfare. Both kingdoms wanted to claim all newly discovered lands that were not Christian, that is, not Catholic.

The Line of Demarcation was Pope Alexander IV’s solution to this problem. He issued the Bull of Demarcation to prevent Spain and Portugal from battling over new territories with resources such as gold. The bull successfully prevented a war between Spain and Portugal in the 16th century.

Neither the pope nor the Spanish or Portuguese actually knew what this line was dividing. The knowledge of the lands west of Europe was sketchy, and most people thought that the land Columbus had reached was part of Asia.

The pope may have believed that the Spanish would reach the same lands sailing west over the Atlantic that the Portuguese would reach sailing east around Africa. Previously in 1455, 1456, and 1481, popes had issued bulls about newly discovered land, although they had no knowledge of the actual geography of the earth.

The Roman Catholic nations left out of these bulls, including the French and Dutch, paid no attention to the papal decrees. The power of the Catholic Church in the Middle Ages had guided all international affairs in Europe up to the 15th century. France and Holland ignored the document, showing that the temporal power of the church was waning.

When Columbus returned from the Americas, he stopped in Portugal before going to back to the court of Ferdinand V and Isabella I of Spain. King João II of Portugal claimed the lands Columbus told him about even though the explorer had sailed for the Spanish monarchs.

Ferdinand and Isabella appealed to Pope Alexander VI, a Spaniard, for a solution. He issued the Inter caetera, the papal Bull of Demarcation, which was very biased toward Spain.

This document conferred all non-Christian lands found west of the designated line to Spain to explore and convert to Christianity. Portugal was to have all non-Christian lands east of the line. This decree in principle shut the Portuguese out of the Americas.

Dissatisfied, the Portuguese appealed to both the pope and Spain. Two more papal bulls followed—Examinae devotionis and another Inter caetera. These documents drew a line 100 leagues west of Cape Verde Islands.

Discoveries east of the line were to belong to Portugal, and discoveries west of the line were to belong to Spain. This resulted in Spain’s domination of all of South and Central America except Brazil, which the Portuguese claimed. The Treaty of Tordesillas modified the papal bull in 1494.

The Bull of Demarcation and later decrees gave the rights to colonize, exploit, and convert all non-Christian territory to Catholicism. These decrees treated all newly discovered nations and people as property and disregarded all non-Christian governments the Catholic explorers found.

Later the church realized these bulls were the cause of the enslavement and brutalization of native peoples and tried to emphasize peaceful, noncoerced conversion to Christianity. But it was too late; the system of Europeans’ forcibly taking control of non-Christian lands was already entrenched in the Americas, Africa, and Asia.

There have been modern movements for the revocation of these papal bulls. Indigenous peoples feel they were used for the subjugation of non-Christian indigenous peoples and should be rescinded to reflect modern thinking.

Certainly, the leaders in Rome could not have foreseen the horrendous decimation of native peoples that the conquest by the European powers caused. The Falkland War of the 1980s was in part justified by Argentina’s claim that the Falkland Islands is based on the Inter caetera. However, the Treaty of Madrid in 1750 annulled the boundary line.

Afonso de Albuquerque - Portuguese Explorer

Afonso de Albuquerque - Portuguese Explorer

One of the great sea captains in Portuguese history, Afonso de Albuquerque captured the cities of Goa, Malacca, and Hormuz and founded the Portuguese empire in Asia. He was born in Alhandra, near Lisbon. Both his paternal grandfather and great-grandfather had been confidential secretaries to King João I and King Edward (Duarte), and his maternal grandfather had been an admiral in the Portuguese navy.

He grew up at the court of his godfather King Afonso V, and when he was 20 he sailed in the Portuguese fleet to Venice and was involved in the defeat of the Turks at the Battle of Taranto. He then spent 10 years in the Portuguese army in Morocco gaining military experience.

Albuquerque was present when the Portuguese under King Afonso V captured Arzila and Tangier in 1471, and Afonso’s son, King João II, made him a bodyguard and then his master of the horse. He returned to Morocco in 1489 and fought at the siege of Graciosa. When John’s brother Manuel I became king in 1495, Albuquerque returned again to Morocco.


It was during this time that Albuquerque became interested in Asia. The possibility of opening up a trade route was tantalizing to Albuquerque and in 1503 he joined his cousin Francisco to Cochin on the southwest coast of India, where they built the first Portuguese fortress in Asia.

King Manuel appointed Dom Francisco de Almeida as the first viceroy of India with the aim of increasing trade and establishing a permanent presence on the Indian subcontinent. In April 1506, Albuquerque set out on his second (and final) voyage—one that would last nine years. He was skilled in military tactics, seafaring, and handling men and was incredibly ambitious.

However he was only in charge of five of the fleet’s 16 ships. Overall command was given to Tristão da Cunha, who led the expedition up the east coast of Africa, and around Madagascar. They built a fort at Socotra to prevent Arab traders from passing through the mouth of the Red Sea and ensure a Portuguese trade monopoly with India.

In August 1507, Albuquerque was given permission by Tristão da Cunha to take six ships and 400 men. They headed straight for the Arabian and Persian coasts and, heavily armed, they sacked five towns in five weeks. Albuquerque then decided to attack the town of Hormuz (Ormuz), which was located on an island between the Persian Gulf and the Gulf of Oman.

Taking it would cripple Turkish trade with the Middle East as it was the terminus for caravan routes from Egypt, Persia, Turkestan, and India. Even though Hormuz had a population of between 60,000 and 100,000, Albuquerque was able to capture the town and force it to pay him an annual tribute.

Monument of Afonso de Albuquerque

Albuquerque, appointed to succeed Almeida, found Almeida reluctant to hand over the office. Almeida was keen to avenge the death of his son, who was killed by an Egyptian fleet. He jailed Albuquerque and then led the Portuguese into a naval battle off the island of Din near Goa in February 1509.

In October 1509 the marshal of Portugal, Fernando Continho, on a tour of inspection, ordered the release of Albuquerque and demanded that Almeida hand over his office. Albuquerque then set out to create the Portuguese empire in Asia.

In January 1510 he attacked the port of Cochin but was unable to capture it. Two months later he attacked and took the town of Goa. After being there for two months he was forced out, but retook Goa in November 1510.

Albuquerque then made for Malacca (now Melaka), the richest port on the Malay Peninsula. It was the center where traders from the Indonesian archipelago brought their spices. It had a population of 100,000 and was well armed.

With 15 ships, three galleys, 800 European and 200 Indian soldiers, in July 1511, he attacked Malacca and after a day, took the city, which his men looted. They loaded their treasure into the Flor do Mar, and the ship was so overloaded that it sank off the coast of Sumatra; the wreck has never been found.

Back in Goa, Albuquerque fought off the attackers and then took a group of Portuguese and Indians to try to take the port of Aden. They failed and they returned to India. In February 1515, he again sailed from Goa, taking 26 ships to Hormuz.

However he was taken ill in September and sailed back to Goa. On the way back he heard that his success had made him many enemies in Lisbon and he had been replaced by an enemy, Lopo Soares. Albuquerque died on December 15, 1515, at sea off the coast of Goa.