SILVER REMITTANCES FROM NEW SPAIN IN INTERNATIONAL EXCHANGE - HISTORY - 2025

The remittances of silver from New Spain in international trade represented an important chapter in world economic history. The global circulation of Latin American silver between the 16th and 18th centuries transformed this mining product into an almost universal metallic money.

This silver flow had its highest peak during the 18th century. The reasons for global trade and the circulation of this "commodity" money have their explanation in the dynamics of supply and demand. On the supply side, the silver mines of Latin America were the richest in the world.

These mines allowed a voluminous and growing production of bars and coins for several centuries. On the demand side, silver being one of the precious metals valued at that time, it was natural for it to dominate as a medium of exchange in a wide range of transactions.

World trade from silver remittances

Some historians have linked silver to the origins of a new world trading system in the 16th century. At the time, there were already products such as silk, salt, spices and even gold, which were traded in Europe, the Middle East and Asia.

However, after the introduction of the silver remittances from New Spain in the international exchange, a true world trade began to be established.

Worldwide payment methods

There was already a great variety of means of payment circulating in the world in that same period, there were even metallic coins minted by the States.

There were also products with barter value, including cotton, tobacco, snail shells and cocoa. Likewise, bills of exchange created by merchant bankers could be used for the payment of transactions.

However, it was from New Spain's silver remittances that large transatlantic and trans-Pacific trade flows began to be generated. These flows completed the circle of global trade.

Background

For a long time the possession of precious metals (gold and silver) in Europe was considered a sign of wealth. The discovery of the New World and the verification of the existence of gold in the discovered lands aroused interest in Spain.

The Spaniards came after gold to present-day Mexican territory and then the Crown put its highest hopes in obtaining this resource. Using local labor, they exploited the first veins known to the indigenous people.

This gold exploitation allowed the commercial exchange with Spain. As a result of this exchange, the colonizers were able to bring cattle, seeds, and farm implements to the new lands. This gold period lasted until the early years of the 1540s.

From that date, silver deposits began to be discovered in the north of New Spain. The first veins discovered are those of Taxco and Zacatecas. The "gold rush" is replaced by the "silver rush", and later, as the labor force was insufficient, African slaves were incorporated into the exploitation of the silver deposits.

To increase production, new processing techniques were introduced, which soared the amounts of extracted metal. Although gold was still being mined, its quantity was negligible compared to silver.

Then the era of silver remittances from New Spain began in international exchange. The effect spread to the economy of the Colony, the metropolis (Spain) and all of Europe.

Effects edit

Flourishing port cities

One of the effects of silver remittances from New Spain on international exchange was the flourishing of port cities. Seville, in the Old World, was transformed from a provincial port into an important city and political center.

In the beginning, the Spanish colonists did not produce all the inputs they needed, so Seville became the main supplier to the New World. Wine, oil, flour, weapons and leather were sent, among other things. These goods were paid, in part, with New Spain silver remittances.

Inflation

Due to the exorbitant amounts of silver available to pay, prices rose sharply. This unleashed an inflation that started in Spain and spread throughout Europe. The inclusion of the Philippines in the trade route worsened the situation by the incorporation of higher priced exotic goods.

On the other hand, the Spanish Crown also used remittances to meet financial commitments on the European continent.

This exacerbated inflation and took the prices of Spanish products to levels out of competition in international markets. This closed the possibility of exportation and brought the economic stability of the Spanish kingdom to a critical situation.

Brake on Spanish development

Likewise, another of the impacts of silver remittances from New Spain on international exchange was the loss of Spanish entrepreneurship.

The large inflows of silver held back the industrial development of Spain due to the disappearance of the commercial initiative for the generation of new businesses.

Decrease in silver remittances

The flow of silver remittances from New Spain declined in the late 17th century. The boats no longer returned to Spain with the amounts of silver they used to carry; this greatly affected the trade volume with Spain.

In this sense, one of the reasons for the decline in remittances was the fear of their loss at sea. There was a constant siege of the transatlantic route: pirates, corsairs and buccaneers kept constant vigilance on the fleets in charge of transporting the remittances. On several occasions, neither the fleet nor the shipment reached its destination.

In addition, the Spanish nation faced other internal problems that exacerbated this commercial crisis. Consequently, New Spain began to produce what it previously imported from Europe. The cities of New Spain were strengthened in this period due to the success of the measures they took to overcome this crisis.

Already economically strengthened, the individuals of New Spain began to reinvest the silver in American territory. This favored a reactivation of the viceregal economy, but further reduced the sending of remittances from New Spain.

References

1. Marichal, C. (2006). The Spanish-American Peso: Export Commodity and Global Money of the Ancient Regime, 1550–1800. In S. Topik, C. Marichal and Z. Frank (editors), From Silver to Cocaine: Latin American Commodity Chains and the Building of the World Economy, 1500–2000, pp. 25-53. Durham: Duke University Press.
2. Palace of Mining, Faculty of Engineering, UNAM. (s / f). History of Mining. Taken from palaciomineria.unam.mx.
3. Treviño, M. (s / f). The paths of silver, pp, 24-35. Taken from Eprints.uanl.mx.
4. UCDavies. (1999). Gold and Silver: Spain and the New World. Taken from mygeologypage.ucdavis.edu.
5. Delgado, G. (2006). Mexico history. Mexico: Pearson Education.