The Silver Rush: From Wealth to Ruin in the Early Modern Period

In the early modern period, silver became the currency of the world. Never before had any good been so zealously sought after or acquired. Not even the grand spice trade routes over Asia could compare with the enormous scale and complexity the discovery of deposits of silver in Spanish America and Japan brought to global commerce. The silver trade initially brought extravagant, even opulent, wealth to Europe, China, Japan, and the traders in these nations, but in the end resulted in one of the most extreme cases of global inflation ever recorded, ruining the economies of Spain, Portugal, and China.

Socially, the silver trade (and Spanish colonization) ended the native way of life in South and Central America; the inflation brought on by it broke the backs of Chinese peasants and allowed for even more European conquest all over the world.

When the Spanish founded Potosí in 1545, they discovered a mountain that seemed to be made of impure silver. Since precious metals were what the conquistadors had come looking for, Potosí was (pun intended) a gold mine of wealth.

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He Qiaoyuan, a Ming court official, mentioned, in one of his reports to the emperor that, “the Spanish have silver mountains, which they mint into silver coins.” Though it may have seemed to the emperor that Qiaoyuan was exaggerating, in reality, he was entirely correct.

Antonio Vázquez de Espinosa, in his Compendium and Description of the West Indies, writes that between the years 1545 and 1628, “326,000,000 silver coins have been taken out,” not including “the great amount of silver taken secretly from these mines to Spain… and to other countries outside Spain,” taken out without paying the mandatory 20 percent tax/registry fee.

Vázquez also notes that during his visit more than 3,000 Native Americans worked in the mines at one time in horrendous conditions. To better understand the conditions at Potosí, it would be very helpful for one to have a detailed description of both the living and working conditions at Potosí.

Xu Dunqiu Ming in his The Changing Times discusses methods of payment in his contemporary city of Hangzhou, saying: “In the past… customers could pay for dying the cloth with rice, wheat, soybeans, chickens, or other fowl. Now, when you have your cloth dyed you receive a bill, which must be paid with silver obtained from a moneylender.” The Spanish discovery of silver in America and subsequent purchasing of luxury Chinese goods.