If Europe has found such great advan­tage in the American trade, it would be natu­ral to believe that Spain would have found even more.1 She drew from the newly dis­co­ve­red world such a pro­di­gious quan­tity of gold and sil­ver that what we had until then could not be com­pa­red with it.

But (and this one would never have sus­pec­ted) penury cau­sed her to fail almost eve­ryw­here. Philip II, who suc­cee­ded Charles V, was obli­ged to declare the famous ban­kruptcy eve­ryone knows about ; and there has scar­cely ever been a prince who has suf­fe­red more than he did from the grum­bling, the inso­lence, and the revolt of his always poorly paid troops.

From that time, the Spanish monar­chy decli­ned stea­dily. That was because there was an inner, phy­si­cal defect in the nature of this wealth which made it futile, and that defect grew by the day.

Gold and sil­ver are fic­tio­nal or sym­bo­lic wealth. These signs are very dura­ble and almost resis­tant to wear, as befits their nature. The more they mul­ti­ply, the more they lose their value, because they repre­sent less.

At the time of the conquest of Mexico and Peru, the Spanish aban­do­ned natu­ral wealth to acquire sym­bo­lic wealth that depre­cia­tes on its own. Gold and sil­ver were very rare in Europe, and Spain, sud­denly in pos­ses­sion of a very large quan­tity of these metals, concei­ved expec­ta­tions she had never before had. Yet the wealth found in the conque­red coun­tries was not pro­por­tio­nal to the wealth of their mines. The Indians hid part of it ; and besi­des, these peo­ples, who made use of gold and sil­ver only for the splen­dor of the tem­ples of the gods and the pala­ces of the kings, did not seek them with the same ava­rice as we did ; finally, they did not know how to extract the metals from all the mines, but only from those where the sepa­ra­tion is done by fire, not being fami­liar with the man­ner of using mer­cury, and per­haps not with mer­cury itself.

Yet sil­ver did not fail to dou­ble soon in Europe, which appea­red from the fact that the price of eve­ry­thing that was pur­cha­sed was about twice as high.

The Spaniards scou­red the mines, exca­va­ted the moun­tains, inven­ted machi­nes to extract the water, break up the ore and sepa­rate it ; and as they paid no heed to the lives of the Indians, they made them work mer­ci­lessly. Silver soon dou­bled in Europe, and the pro­fit kept shrin­king by half for Spain, which had only the same quan­tity every year of a metal which had become only half as pre­cious.

In dou­ble the time sil­ver dou­bled again, and the pro­fit again shrank by half.

It shrank by even more than half : here is why.

To extract the gold from the mines, pro­cess it as nee­ded, and ship it to Europe, requi­red a given out­lay : I will assume it was as 1 to 64. When the sil­ver had once dou­bled, and conse­quently was half as dear, the expense was as 2 to 64. Thus the fleets that bore the same quan­tity of gold to Spain were bea­ring some­thing which in rea­lity was worth one-half less, and cost one-half more.

If we fol­low the mat­ter from one dou­bling to the next, we will find the pro­gres­sion of the cause of of the impo­tency of the wealth of Spain.

The mines of the Indies have been wor­ked for about two hun­dred years. I will assume that the quan­tity of sil­ver pre­sently in the com­mer­cial world is to the quan­tity there was before the dis­co­very as 32 is to 1, in other words, that is has dou­bled five times ; in two hun­dred years more the same quan­tity will be, to what there was before the dis­co­very, as 64 is to 1, in other words it will again dou­ble. Now at pre­sent fifty quin­tals of gold ore yield four, five or six oun­ces of gold2 ; and when it is no more than two, the miner only reco­vers his costs. In two hun­dred years, when it will be only four oun­ces, the miner will again reco­ver only his costs. There will thus be lit­tle pro­fit to be made in gold. Same rea­so­ning for sil­ver, except that work in the sil­ver mines is a lit­tle more advan­ta­geous than in the gold mines.

Were one to dis­co­ver mines so rich that they yield more pro­fit, the richer they are, the soo­ner the pro­fit will cease.

The Portuguese have found gold mines in Brazil so rich that the pro­fit of the Spaniards must neces­sa­rily drop consi­de­ra­bly soon, and their own as well.

I have seve­ral times heard peo­ple deplore the blind­ness of François I’s coun­cil that tur­ned away Christopher Columbus when he made his pro­po­sal for the Indies. In truth, we per­haps impru­dently did some­thing very wise. Spain acted like the insane king who asked to have eve­ry­thing he tou­ched turn to gold, and had to ask the gods to put an end to his misery.

The com­pa­nies and the banks which seve­ral nations esta­bli­shed put the fini­shing stroke to deva­luing gold and sil­ver in their qua­lity as signs : for by means of new fic­tions they so mul­ti­plied the signs of sup­plies that gold and sil­ver only par­tially ful­filled that func­tion, and as a result became less pre­cious.

Thus public cre­dit ser­ved them in lieu of mines, and fur­ther dimi­ni­shed the pro­fit which the Spanish deri­ved from theirs.

It is true that the Dutch, through the com­merce which they plied in the East Indies, gave some value to the Spaniards’ mer­chan­dise : for as they bore sil­ver to bar­ter against Oriental mer­chan­dise, they relie­ved the Spanish in Europe of part of their pro­vi­sions that were too abun­dant there.

And this com­merce, which seems to concern Spain only indi­rectly, is advan­ta­geous to her as it is to the nations which are car­rying it on.

From all we have just said, we can judge the most recent ordi­nan­ces of the Spanish coun­cil that for­bid the use of gold and sil­ver for gil­ding and other super­flui­ties : a decree such as the State of Holland would make if they for­bade the consump­tion of cin­na­mon.

My rea­so­ning does not apply to all mines : those of Germany and Hungary, which yield lit­tle beyond costs, are very use­ful. They are loca­ted in the prin­ci­pal state ; they give work to seve­ral thou­sand men who consume its over­pro­duc­tion of food­stuffs ; they are pro­perly one of the coun­try’s manu­fac­to­ries.

The mines of Germany and Hungary pro­mote agri­culture, and the work of the Mexican and Peruvian mines des­troys it.

The Indies and Spain are two powers under a sin­gle mas­ter ; but the Indies are the prin­ci­pal one, and Spain is only acces­sory. It is in vain that poli­tics tries to reins­tate the prin­ci­pal one as the acces­sory : the Indies still draw Spain to them­sel­ves.

Of approxi­ma­tely fifty mil­lion in mer­chan­dise that goes every year to the Indies, Spain fur­ni­shed only two and a half mil­lion ; the Indies are thus doing a trade of fifty mil­lion, and Spain of two and a half mil­lion.

A wind­fall which owes nothing to a nation’s indus­try, to the num­ber of its inha­bi­tants, or to its agri­culture, is a bad kind of wealth. The king of Spain, who recei­ves large sums from his cus­toms house in Cadiz, is in this res­pect just a very rich indi­vi­dual in a very poor state. Everything takes place bet­ween forei­gners and him, with his sub­jects get­ting hardly any share : this com­merce is inde­pen­dent of his king­dom’s good and ill for­tune.

If a few pro­vin­ces in Castile gave him a sum like that of the cus­toms house in Cadiz, he would be far migh­tier ; his wealth could only be the effect of the coun­try’s wealth : these pro­vin­ces would drive all the others, and all toge­ther they would be in a bet­ter posi­tion to sus­tain the res­pec­tive bur­dens ; ins­tead of a great trea­sury, there would be a great peo­ple.

This appeared twenty years ago in a little manuscript book of the author’s, which was almost entirely merged with this one. [Considerations sur les richesses de l’Espagne, OC, t. VIII, p. 595-623.]

See the voyages of Frezier.