A History of Gold and Money, 1450–1920

4 ideas

1. Potosí silver and Spain's vanishing treasure

   After the silver mountain of Potosí was found in 1545, output surged from the 1570s once mercury amalgamation, using mercury from Huancavelica, was combined with the mita, a system of forced rotational Indian labour. The silver was shipped to Seville but did not stay in Spain. It flowed out to pay for Habsburg wars, service debts to Genoese bankers and buy manufactures from the Low Countries, England and France, so Castile was a conduit for treasure rather than its beneficiary.

2. Money's effect depends on receiving structures

   An influx of precious metal does not by itself create wealth or growth. Its effect is set by the social structure it enters. In Spain, treasure fed an aristocratic, rentier and military state that consumed it, while in northern Europe the same silver, arriving as payment for goods, fed merchant and manufacturing classes that turned it into productive capital.

3. Price revolution as class redistribution

   The long rise in prices in the sixteenth century did not fall evenly. Prices rose faster than wages and money-fixed rents, which squeezed wage earners and landlords living on customary dues. The same gap widened margins for merchants, tenant farmers and entrepreneurs, so inflation acted as a hidden transfer of income toward the emerging capitalist classes.

4. Bullion scarcity drove European overseas expansion

   Late-medieval Europe ran a chronic trade deficit with the East, and silver mines were becoming exhausted, which produced a 'hunger for gold' that constrained commerce. The search for new sources of precious metal, first Sudanese gold via Portuguese voyages along Africa and then American treasure, was a central economic motive behind the voyages of discovery rather than a side effect of them.

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