On the silver trail

The Spanish empire was the first of Europe’s great overseas empires, and for many years the richest and most powerful.

The Spanish empire was the first of Europe’s great overseas empires, and for many years the richest and most powerful. It was also unusual in being an empire of colonists. The Portuguese, and later the Dutch, created coastal forts and settlements which served as trading posts for high-value commodities, chiefly spices. But the Spanish extended their power into the vast spaces of the South American interior, populating the towns with native Spaniards and their half-caste cousins, and lording it over the indigenous inhabitants who worked the great agricultural estates and ranches. With an estimated quarter of a million emigrants in the 16th century and twice that many in the 17th, Spain was the source of the first wave of the great migration of Europeans across the globe which continued until the 20th century.

Britain’s empire was the only comparable case. But it was founded on private enterprise and a highly decentralised model of governance, whereas the American colonies of Spain were essentially creations of the Spanish state, founded by royal initiative and tightly controlled by judges and bureaucrats sent out from Spain.

What made this vast enterprise possible was silver. The world’s chief monetary metal had grown progressively scarcer in late medieval Europe, generating a severe deflation. But it was found in great quantities in Spanish South America. Potosí, in what is now Bolivia, was for more than two centuries the world’s richest silver mine. Regular convoys of armed ships carried the annual tribute of silver back to Seville, where it funded Spain’s expensive European wars. By the end of the 16th century, more than 95 per cent of cargo leaving South America for Europe was precious metal, almost all of it silver.