4.5: New World Wealth

An important source of wealth in all of the Americas for the Spanish crown was discovered in 1545: the enormous silver deposits of the mountain of Potosi in present-day Bolivia. Extracting the metal required slave labor produced by the native people, which often led to death from exhaustion.

Part of that abuse inflicted upon the native population grew out of the crusading tradition. The Christian Bible did not explain their origins, so the Spanish invented various hypotheses, such as Native Americans were descended from the Lost Tribes of Israel described in the Old Testament. By the 1530s, the general consensus was that Native Americans were blank slates who had to be conquered for their own good. Although the Pope recognized the humanity of the Indians, the church continued to support forcible conversion. Native Americans were referred to as the “justly conquered" and either enslaved outright or conscripted as serfs in service to Spanish colonial masters.

In the New World, Spanish royal authority was enforced by two viceroys, royal officials who ruled over the northern and southern parts of the territory. Under them, rich nobles (often originally successful conquistadors) ran encomiendas, feudal estates with the legal right to exploit native labor. These estates often evolved into even larger haciendas, the size of whole states back in Europe.

The vast majority of Spanish immigrants were men. However, a formal ban on marriage between Spanish men and native women did not prevent the growth of a large “mixed” class of mestizos, the children of Spanish – American unions who were often recognized as legitimate children. A racialized hierarchy existed in the New World society, and more ethnic mixing occurred in Central and South America than in North America.

The surplus of precious metals generated by American mines undermined the vitality of the Spanish state itself in the long run – Spain did not have to cultivate trade nor pursue technological or bureaucratic innovation in the same manner as the rest of the European powers. Even though Spain was the most powerful state in Europe in the sixteenth century, its longer-term trajectory was one of decline, in large part because of its commercial stagnation. In addition, so much bullion was shipped back to Europe that inflation undermined its value, which weakened Spanish power even more.