Potosi, Zacatecas and the globalization of trade

Potosi

Silver was discovered at Potosi in 1545, which quckly became one of the most productive silver mines in the world. The silver from Potosi funded the Spanish empire, and contributed to the economic development of Europe. Before the conquest, Inca Emperor Huayma Capaj sent miners to find gold and gems in Sumaj Orko (rich hills) to decorate the Temple of the Sun in Cuzco.When miners began to dig, a voice as loud as thunder came from the hills and said in Qechua “This is not for you; God is keeping these riches for those who come from afar.” The miners fled and renamed the mountain Potosi, which means “to thunder, burst, explode.”By 1573, a town of 120,000 people had grown up around the mines. (This was as large as London, and larger than Seville, Madrid, Rome and Paris).

Between 1503-1660, 185,000kg of gold and 16,000,000kg of silver were exported from Spanish colonies to Spain. (This was 3x more than all European reserves).

New Technology for mining silver: Mercury amalgamation process, (after 1535)

After 1535, most coinage in Europe was coming from Potosi and Zacatecas.In 1540, 1.5 million ounces/yearBy 1590, 10 million

All European mines put together: 3 million oz.

This was a HUGE influx of silver into the European economy!

Spain’s exploitation of the silver of Potosi and Zacatecas coincided with an economic crisis in china.

China’s currency collapsed and to stabilize their economy, they monetized silver. This meant that taxes had to be paid in silver…

Now China has a huge demand for silver and is willing to pay very good prices in silks, porcelain, tea, spices, etc. for silver.

About 2/3 of the silver of Zacatecas and Potosi went straight to China via the Spanish colony in the Philippines.

Chinese Demand for Silver

Consequences of Spanish Colonization: For the Americas – Demographic catastrophe: 80% decline in population over the first 100 years (most of the death was from disease and unhealthy working conditions). – Slavery: Large-scale enslavement of American Indians and African slaves

– Ethnocide: attempt to wipe out the way of life/civilization of native peoples.

– Columbian Exchange

Consequences of Spanish Colonization: For Europe:

•Massive influx of gold and silver• Stimulates trade, cash flow, economic growth• Spurs Inflation

• Europe begins to gain in power an wealth, and by 1750, is the most wealthy and powerful part of the world.

•Increased competition between kings (beginnings of national identity)

•Spread of Christianity and European culture around the globe

•Columbian exchange