Has there ever been anything like the oil boom we see today?

Question

Since the discovery of oil, there have been entire nations that have literally been built from the ground up almost completely with oil money. This has been done, and is still being done, in relatively short spans of time. Has this ever occurred in history at such a magnitude (relative to those times)? If so, what were the consequences? What parallels can we draw to today’s oil boom and its inevitable end?

I am familiar with the gold rushes of the 1800s, but they do not appear comparable to that of today’s oil boom.

Answer 1

SHORT ANSWERS

In terms of impact, the influx of precious metals into Spain (and then to the rest of Europe) from South America from the late 15th to the 16th century is hard to match. For a while, this made Spain enormously wealthy and enabled it to finance armies and conquests on a scale not seen since at least the Roman Empire. It turned Spain into a global power and led to enormous changes in the economies of South America.

Also worth noting is the impact that the silver mines of Laurion had on Athens. These enabled the building of the Athenian navy which played a key role in defeating the second Persian invasion of Greece in 480 BC, and later helped Athens build her empire.

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SPAIN AND SOUTH AMERICA

The amount of silver brought by Spain to Europe was enormous (see stats here), more than Europe had ever seen before. The wealth from South America meant that

In the beginning of the sixteenth century Spain stood, in relation to the other nations of Europe, economically higher than she had ever stood before, or has ever stood since.

Further, these conquests and often ruthless exploitations

laid the foundations of a truly global trade by opening up the great trans-oceanic trade routes and the exploration of unknown territories and oceans for the western knowledge.

The exploitation of the New World also completely changed the economies of the Americas: the settlement of thousands of Europeans engaged in economic activities transformed the continent.

There were also some huge downsides to this for many people, most obviously for those whose gold was taken and for those forced to extract (under often appalling conditions) the silver from the mines. Also, the Price Revolution (believed by most academics to have been primarily a result of the huge amounts of silver pouring into Europe) caused massive inflation in much of Europe (in Spain at least, this hit the poor hardest). It also bankrupted the Spanish monarchy due to successive kings' failure to exercise proper control over the flow and use of silver and gold.

On the other hand the Price Revolution (acknowledgement: Pieter Geerkens for his comment below) was a major economic stimulus:

This important period of economic growth in Europe fostered a new system of economics that would change the world. This new system relied on supply and demand and fluctuating prices. These new ideals and practice are what evolved into our modern system of economics called capitalism....

...The impacts of trade, the change in price, struggle to gain land and power, and especially a new system of economics brought forth a new era and forever changed the way the world is run.

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ATHENS IN THE CLASSICAL PERIOD

The importance of the the mines of Laurion to Athens is well stated by Robin Osborne in Classical Greece 500 - 323 BC. On the importance of this in resisting the Persian invasion:

In the late 480s, a major silver strike resulted, we are told, in a windfall gain for the treasury of one hundred talents...the Athenians used the money to build one hundred triremes, which were soon to be instrumental in defeating the Persians at Salamis and establishing Athens as the leading naval power in the Aegean

This naval power,

underpinned the acquisition of the empire, which in turn funded, through tribute and other revenues, the costly Athenian brand of democracy...without the resources of empire, the Athenians could not have funded pay for public office (even the poor could take part) and an all-powerful fleet (one talent in rowers’ wages alone to keep just one trireme at sea for one month) and supported public works (the Parthenon, not including the cult statue, cost about 470 talents) and built up a cash reserve of almost 10,000 talents on the Acropolis

The silver was used to make coins

The silver extracted from the mines was formed into the Athenian Tetrhadrachmon coin, which became the dominant commercial currency of the eastern Mediterranean during the classical era. These coins, along with the tribute paid by their allies in the Delian league, bestowing even more wealth upon Athenian citizens who used it to maintain their empire and to finance grand cultural projects.

Production declined during the Peloponnesian War (431 - 404 BC) and Sparta's capture of the fort at Dekelia in 413 BC made it difficult for Athens to access the mines.

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Other sources / further reading:

Douglas Fisher, 'The Price Revolution: A Monetary Interpretation'. In The Journal of Economic History Vol. 49, No. 4 (Dec., 1989), pp. 883-902

Bernard Moses, 'The Economic Condition of Spain in the Sixteenth Century'. In Journal of Political Economy Vol. 1, No. 4 (Sep., 1893)

New World Encyclopedia, 'Spanish Empire'

Answer 2

Sugar cane in the Caribbean comes to mind. The islands were sporting single purpose economies for all practical intents, much like a number of OPEC countries do.

It was extremely valuable, too. In the aftermath of the 7 years war, France preferred to give up its Canadian possessions to keep Guadeloupe and Martinique.

The parallel extends somewhat in that sugar cane's importance declined after sugar beet became widespread, leaving many an island without much of an economy.

Answer 3

I would posit that such booms and rushes are not the exception but the norm, and there is more to be learned from the study of them than from mere war and politics. The effects of the latter are comparatively easily (and often, quickly) reversed, while the effects of booms and rushes usually reverberate for generations.

Some examples:

• Bananas. Today we take for granted the availability of fresh fruit in the marketplace, so it's hard to imagine what the introduction of the banana to the diet of the rapidly urbanizing USA meant. But the effect of the rapid development of the industry in tropical economies are still felt today, both politically and economically.

• Meat. Argentina rose from obscurity to one of the richest countries in the world, while Chicago became one of the world's great cities in hardly more than a generation - all because the discovery that it was possible to ship meat to Europe in ice-cooled ships.

• Slaves. Of course.

• Furs. If Beijing wasn't so damned cold, it seems unlikely that Russian would have found their way through Alaska to as far as California, but such was the market for furs there.

• Opium. British rule in India can't be understood without reference to the boom in opium exports to China. It can be argued that no other commodity in history had a greater effect, politically and economically, on more people than this one item, which took less than 20 years to develop but centuries to undo its harm.

• Silver. As noted by others.

• Grain. Supplying grain to Rome was first the source of great wealth for Sardinia, Corsica, and other provinces, and later their ruin as their soils degraded, their market diminished, and their competition bested them.

• Consumer Electronics. If the Pearl River Delta was an independent country, we'd certainly talk about the boom there in the same terms as the oil boom in the Persian Gulf. And the geopolitical ramifications are similar in magnitude.

The list goes on and on and it's a very worthwhile area of study. One of the fundamental questions of economics is the extent to which global economic growth is driven by this sort of exogenous exploitation, as opposed to internal growth and invention. Obviously this question is intertwined with serious moral and political issues.

Answer 4

Peru's Guano Era comes to mind. Within about 2 decades, it economy boomed. However, as the guano ran out, a diversification into saltpeter did not work out so well, and the lost war with Chile dropped Peru back to its pre-Guano economic situation.

Answer 5

One example of a region that became wealthy and powerful after a single event was California, whose Gold Rush directly and indirectly increased the population of the state by an order of magnitude.

Answer 6

For more than thousand of years the Middle Asia and some neighbouring regions got profits from the Silk Way from China to Europe. It worked practically until Vasco Da Gama. As for longevity of the source of free money, interesting people and ideas, I think, it was the record.

As for gold/silver rushes, they brought inflation, too, and were not so useful. The industry appearing around them was scarce.

Manaus cauchuc rush was, I think, the most sad case - when an industry appeared... and disappeared before eyes of one generation.

The most radical example, with the greatest difference with and without the resource, I think, was Nauru - where the whole island/state was digged off.

California was an interesting example, where one rush (gold) switched to another, more soft one (whales).

Answer 7

The coming together of coal, iron/steelmaking and the invention of the steam engine in pre-Victorian Britain produced the first wave of cheap energy.

While not very far ahead of other European countries, leading the wave seems to be instrumental in transforming just another European colonial power to the first global (admittedly short lived) Empire.

Cheap power provided the means to process goods in factories, as well as to streamline transport and trade in those goods (even though much bulk transport remained under sail), as well as to dominate and control the trade routes with naval power.

As other countries could catch up reasonably quickly, and steam was surpassed by other technologies, it didn't last very long.