Silver Is Discovered in Spanish America

Spanish discovery of rich silver veins in the viceroyalties of New Spain and Peru sparked a rush of fortune-seekers from Europe to America, resulting in transformations of the local labor system and dramatic changes to the global economy.

Summary of Event

In the mid-sixteenth century, Christopher Columbus’s dream of finding great riches in the New World was finally realized. Soon after the fall of the Aztec Empire in 1521, the Spanish conquistadors found small deposits of silver in central Mexico. In the 1540’, however, far more dramatic discoveries took place. By then, Spaniards had traveled south, where they encountered a thriving Inca Empire Inca Empire . In 1545, the first major silver strike occurred in Potosí, in present-day Bolivia, at what came to be called the Cerro Rico (Rich Hill). Rich veins of ore were easily accessible in the upper part of the mountain. Spaniards flocked to the new viceroyalty of Peru, hoping to make their fortune. At roughly the same time that Potosí began its boom, silver strikes were also made in north-central Mexico. The silver extracted from Zacatecas, where strikes were made between 1546 and 1548, contributed to make the viceroyalty of New Spain a thriving colony. Americas;discovery of silver in
Silver;discovery of in the Americas
Exploration and colonization;Spain of South America
Mendoza, Antonio de
Toledo, Francisco de
Charles V (Holy Roman Emperor)
Mendoza, Antonio de
Toledo, Francisco de

Silver from New Spain was transported to Europe and minted as coinage.

(Frederick Ungar Publishing Co.)

The confirmation that the Spanish possessions in the New World were indeed treasure troves brought major changes in global population movement and in the world economy. It also transformed relations between the colonizers and the indigenous people of Peru and Mexico. Before 1545, the Spaniards who came to America were primarily adventuresome conquerors who hoped to find wealth but were prepared for hardships and even fierce battles with the indigenous population. With the discovery of huge silver deposits, however, businessmen and investors began to find the New World attractive. Those who now came across the Atlantic often expected to stay for a while, and so more and more of them brought their families. Colonization;Spain of the Americas

Spain’s king, Emperor Charles V, was determined that his American colonies should be governed well. Antonio de Mendoza (viceroy of New Spain from 1535 to 1550) and Francisco de Toledo (viceroy of Peru from 1569 to 1581) proved a credit to their king. They administered the viceroyalties efficiently and fairly, curbed rebellions, and presided over an expansion in mining activities. To discourage smuggling and tax evasion, Charles appointed crown officials who served tours of duty in the New World, where they took charge of minting the silver and collecting the royal tax. Charles also established a fleet system to protect the silver bars from pirate attacks on their journey from America to Spain. Taxation;Spanish Americas

Silver production brought dramatic change to colonial towns. Devout Spaniards contributed a share of their new wealth to the Church, and splendid cathedrals were built in the viceroyalties of New Spain and Peru. Silver funded the coming of more missionaries and the establishment of monasteries and convents in the colonies. The areas around the mines witnessed a tremendous growth in population. Most of the new arrivals were not Europeans, however; they were indigenous peoples recruited to work in the mines. Some of this labor was coerced. In Peru, Francisco de Toledo established a system whereby indigenous communities were responsible for providing a quota of mine workers to Potosí each year. This system, called the mita, disrupted indigenous villages. Many of the mitayos traveled far from their homes to the mines, so they took with them their wives and children. Once in Potosí, a significant number opted not to return to their villages.

The mines also recruited paid laborers, at wages that were higher than those offered indigenous peoples engaged in any other service. There was a reason for the higher wages: Working in the mines could be very dangerous. Injuries and death on the job were not uncommon. After digging or blasting into the mountain to uncover the veins of ore, miners used pickaxes to extract the silver and then, climbing up precarious ladders, brought out hundreds of pounds of ore on their backs. As more and more indigenous communities resisted their mita obligations, wages continued to attract workers to the mines. Since it was also necessary to supply food and clothing for those working in the mines, a cash economy emerged, buttressed by wage labor.


Far beyond the regions from which it was extracted, American silver contributed to major transformations in the world economy. It lured Spaniards to America, creating a labor crisis and rising wages and costs in Spain. The increased supply of silver, a common currency in the early modern world, also spurred inflation. American silver thus caused a “price revolution,” first in Spain and later throughout Europe, as the silver quickly made its way out of Spain for a variety of reasons. For one, Spaniards used silver to purchase from other Europeans consumer goods and food supplies that were then shipped to the colonies, where they were sold for a profit. Furthermore, King Charles I of Spain was also Holy Roman Emperor Charles V, ruling over the unwieldy Habsburg domain. In response to the political challenge of new Protestant rulers, Charles funded a series of wars in support of Roman Catholicism. These costly wars drained American silver out of Spanish coffers and into the hands of European bankers and suppliers.

Once the wars of religion ended in 1648, competition for New World colonies began in earnest. Now American silver was used to fund nationalist wars, as England, Holland, and France expanded their colonial holdings, while Spain and Portugal attempted to hang on to territory they believed was rightfully theirs. Increased commerce with the East took American silver to the Ottoman Empire, to India, and to China, bringing with it a rise in prices around the globe.

There is a cautionary irony to the story of American silver. The areas where it was mined and to which it was first shipped benefited only temporarily from their windfall. In fact, the wealth from American treasure failed to foster sustained economic growth not only in Potosí and Zacatecas but also in Spain. Although Potosí had become one of the largest and richest cities in the world by 1650, after the more easily accessible silver had been mined the area entered into a steep decline. Spain, controlling the richest silver mines in the world, witnessed a significant downturn in the seventeenth century, when the power of England and France surpassed that of Spain and the source of imperial wealth shifted from the extraction of bullion to the development of plantation agriculture based on African slave labor. Economy;Europe

The discovery of silver in New Spain and in Peru confirmed hopes that the New World housed immense treasure. While many benefited from the extraction of silver, however, others, especially the indigenous peoples of America, were exploited. The price increases generated by the rush to the New World and by the increased amount of bullion affected economies and governments all over Europe and as far away as the Middle East and China. The new supply of silver encouraged a growing acceptance of the theories of mercantilism, which called for limited manufacturing in the colonies, and it thereby fostered growing tensions between European mother countries and their colonies.

Further Reading

  • Bakewell, Peter John. Miners of the Red Mountain: Indian Labor in Potosí, 1545-1650. Albuquerque: University of New Mexico Press, 1984. Discusses the richest period of extraction at Potosí, focusing on the use of indigenous labor in the mines.
  • Bakewell, Peter John. Silver Mining and Society in Colonial Mexico: Zacatecas, 1546-1700. New York: Cambridge University Press, 2002. Examines the onset and development of a mining industry in Mexico.
  • Ferry, Stephen. I Am Rich Potosí: The Mountain That Eats Men. Introduction by Eduardo Galeano. New York: Monacelli Press, 1999. Exceptional photographs of miners in present-day Potosí.
  • Galeano, Eduardo. Open Veins of Latin America: Five Centuries of the Pillage of a Continent. 25th anniversary ed. Foreword by Isabel Allende. New York: Monthly Review Press, 1997. This passionately written condemnation of the economic exploitation of Latin America includes a good description of the effects of silver mining on the global economy.
  • Hamilton, Earl J. American Treasure and the Price Revolution in Spain, 1501-1650. New York: Octagon Books, 1965. The classic account of how American silver, and the inflation it fostered, transformed Europe’s economy and brought on the decline of the Spanish Empire.
  • Stein, Stanley J., and Barbara Stein. Silver, Trade, and War: Spain and America in the Making of Early Modern Europe. Baltimore: Johns Hopkins University Press, 2003. Discusses the effect of American silver on nationalist wars in Europe and on the eventual decline of Spain.

Oct. 12, 1492: Columbus Lands in the Americas

Beginning c. 1500: Coffee, Cacao, Tobacco, and Sugar Are Sold Worldwide

16th century: Worldwide Inflation

1502: Beginning of the Transatlantic Slave Trade

Jan. 23, 1516: Charles I Ascends the Throne of Spain

Beginning 1519: Smallpox Kills Thousands of Indigenous Americans

Apr., 1519-Aug., 1521: Cortés Conquers Aztecs in Mexico

June 28, 1519: Charles V Is Elected Holy Roman Emperor

Aug., 1523: Franciscan Missionaries Arrive in Mexico

1532-1537: Pizarro Conquers the Incas in Peru

1542-1543: The New Laws of Spain