PART I
Silver Capitalism, 1500â1820
CHAPTER ONE
Empire, Capitalism, and the Silver Economies of Spanish America
IN IMPORTANT WAYS, the first global capitalism developed in and around the Spanish empire that rose in the sixteenth century. There was no grand design. Iberians and other Europeans seeking power and profit drove outward to claim sovereignty where they could and to extend trade as far as possible. In the effort, they engaged diverse rulers and tradersâand the more diverse communities that sustained them. Under Spanish oversight, American silver drew Asian cloth and other goods to global markets, in the process pulling peoples across the Americas and the world into networks of production, profit, and trade lived locallyâyet driven globally.1
To sustain the silver production that drove commercial capitalism for three centuries, Spaniards negotiated the formation of diverse social orders in key American regions. In the Andes, silver attached to indigenous political and social foundations to boom from 1570, fall after 1640, and face native insurgencies in the 1780s. In Mesoamerica, silver built on entrenched landed communities to remain a center of financial power and enduring dynamism from the sixteenth into the nineteenth century. And in the BajĂo and Spanish North America, the removal of sparse natives opened fertile lands and rich mines to European, Mesoamerican, and bound African immigrants, who together and unequally forged a new deeply commercial society that rose around 1600, soared after 1700, and collapsed in insurgency in 1810.
An understanding of the origins and development of Spainâs empire and the diverging histories of its three core silver societies is essential to understand early global capitalism. While the Andes led the first silver boom and the BajĂo and Spanish North America ruled mining after 1700, the Mesoamerican heartland proved the rock of stability that shaped and sustained silver capitalism for three centuries. All developed within Spainâs empire, all stimulated global trade after 1550. They differed owing to their distinct geographies, indigenous legacies, and ways of incorporation into silver capitalism. Community autonomies were key: limited by a rugged ecology in the Andes, near absent in the commercial BajĂo, deep and enduring in Mesoamerica.
The First Global Empire
The first empire of global reach consolidated under Spanish Hapsburg sovereignty around 1600. After a century when dueling Iberian monarchies competed to rule the expansion of European power and trade, in 1580 Felipe II took Portugal and its American, African, and Asian domains under his Hapsburg rule. Until 1640, the monarchy based in Madrid was the primary European regime in the Americas. Its domains and trades spanned the globe. Commerce in American silver, Asian silks, cottons, and spices, and Atlantic sugar and slaves all soared, enriching traders across a Hapsburg world economy and filling Madridâs coffersâwhich still periodically faced bankruptcies due to the costs and competitions of imperial expansion.
In 1600, silver mined by native workers at PotosĂ, high in the Andes, drove expanding trade. Most of this metal that was the worldâs primary money flowed east, profiting merchants in Seville and beyond, funding Spanish power, stimulating production and trade across Europe, and then passing through the Middle East and South Asia to eventually land in China. In return, Chinese and other Asian goods flowed toward Europe. A second stream sent silver from PotosĂ, Zacatecas, and other American mining centers to Acapulco, where it sailed west to Manila, the Spanish-Asian entrepĂŽt where Chinese merchants traded Asian wares for American bullion. The silver of Spainâs Americas drove trade that had encircled the globe by 1600, radically expanding the worldâs money supply while stimulating production across Europe, the Americas, and Asia.2
Meanwhile, Brazil, also under Spanish Hapsburg sovereignty, built the first large Atlantic sugar and slave society, stimulating a burgeoning slave trade, promoting sugar refining and sales in Europe along with the manufacture of goods to supply African trade. And while the silver economy and the sugar and slave trades may appear separateâsilver drawing Asian silks, spices, and other luxuries to Europe and the Americas; sugar planters working enslaved Africans to supply Europeans with profit and sweet stimulantsâthey linked at a key junction: to purchase bound Africans, Europeans had to deliver printed cotton cloth made in India. And the price of Indian cottons wasâat Indiansâ insistenceâpaid mostly in American silver. So while seemingly separate in their New World development, the silver economy and the sugar and slave trades rose as linked sectors of a burgeoning world economy under Spanish Hapsburg oversight.3
The rapid rise of the Iberian empires and global trades that merged under Spanish rule in 1580 is well known. Equally recognized and often emphasized, that first global empire faced a mix of attacks and emulations that challenged its hegemony in the late sixteenth century and limited its power after 1640. The Dutch rebelled to escape Hapsburg rule, creating a republic in the 1560s. They attacked Portuguese ports and trade in Asia; they took key regions of Brazilâs plantation economy in the 1620s, leading the Portuguese to break with Hapsburg rule in 1640. Meanwhile, British and French monarchs saw that they could not compete for Atlantic power unless they joined the scramble for empire and trade, sending both new powers in search of colonies and profits around 1600.
What followed is the stuff of textbooks. The Dutch ruled the European economy and Asian trade through the seventeenth century. The British and French built power at home and colonies in the Americas. By the eighteenth century, they were competing to rule Europe and the Atlantic, setting Britain on course to global dominance in the nineteenth century. Spain and its empire have come to define failure. Portugal broke away in 1640 to rule an empire reduced mostly to South Atlantic domains focused on sugar and slaving. A weakened Spanish monarchy faced rebellion at home and defeat in war; 1648 famously marks its fall to secondary power in Europe. For a century and a half, those who aimed to rule Spain, Habsburgs and then Bourbons, and to revive the Spanish economy, wrote endless laments that convinced contemporaries and later historians that Spain was an entrenched calamity, its empire a crisis that would not end.4
For a long time this view has resonated uneasily with those who study Spainâs Americas. If the silver economy slowed after 1640, from 1700 it revived and soared to unprecedented levels in New Spain. If financiers and merchants, miners and landlords, in Mexico City and New Spain complained, it was not about imminent demise, but in opposition to disruptive policies coming from reformers in Spain. While Spain faded as a European power and Bourbon rulers searched for reforms to prevent collapse, New Spain thrivedâand negotiated to blunt policies imposed by distant, self-deprecating, and sometimes self-destructive rulers in Spain.5
It is time to understand the Spanish empire as a complex, diverse, and changing global domain that endured for more than three centuries and stimulated global economic interactions pivotal to the rise of capitalism. The empireâs economic dynamism continued even while Spain faded as an imperial power. Spainâs Americas were pivotal to expanding global production and trade from the sixteenth through the eighteenth centuries.
Disease, Depopulation, and Reconstruction, 1500â1600
Everyone knows that Spainâs empire began in the violence that destroyed Amerindian polities: from the Inca empire that ruled across the Andes to the Mexica (Aztec), Tarascan, and other states locked in constant wars to dominate Mesoamerica. Many also know that Europeans brought diseases that devastated Amerindian peoples, setting off a continental depopulation that in a century neared ninety percent. Yet out of that violence and destruction a silver economy rose after 1550 to mobilize profit-seeking Europeans, bound Africans, and scarce Amerindians in a new economy that transformed lives across the Americas and drove unprecedented global integrations. Such outcomes do not and cannot justify origins in destruction. But if we aim to understand the role of Spain and its American domains in the origins of the modern world, we must explore how depopulation, the fall of Amerindian states, the rise of a global empire, and the creative adaptations of people across the Americas led to a new world becoming capitalist.
From the first, Iberian conquests were entrepreneurial endeavors funded by investors seeking profit, driven by men ready to use violence in search of gain, and only sanctioned by the monarchy once success seemed at handâand revenues flowed in. Those original and enduring goals must not be clouded by the religious legitimations of Spanish rule or the creative cultural adaptations of Amerindian peoples facing new powers.6
And the adaptations of indigenous Americans were more than cultural. âConquestâ was never a war of Europeans against Amerindians. Before outsiders stumbled onto the Americas in 1492, the hemisphere was a vast domain of complex polities, ways of production, social relations, and cultural contests. Diverse states faced enemies within and beyond their borders; they fought rivals, resistant subjects, and contenders who challenged their rule. When Europeans intruded, the battles of âconquestâ everywhere saw vastly outnumbered Europeans use the advantages of naval power, metal weaponry, firearms, and the mobility allowed by horses and hogs to ally with disaffected Amerindians against old enemies or resented rulers. Iberians claimed power backed by mostly indigenous armies.
How did outnumbered entrepreneurial conquerors emerge with claims to rule, assert the sovereignty of a distant king, and proclaim the universal power of God? Smallpox and the other diseases that drove a century of depopulation set that outcome. The first key battle of conquest proved devastating to Hernån Cortés and his men in the famous noche triste. Then smallpox struck in 1520, sparing Spaniards while killing uncounted Mesoamericans: rulers and commanders; priests and traders; soldiers and peasants; men, women, and children. Cultural despair exceeded physical destruction. In 1521, Cortés mobilized surviving Tlaxcalan and other native allies to defeat the Mexica, claim power for Castile, and proclaim the sovereignty of God.7
In South America, smallpox came overland from Panama to strike Inca domains before Europeans arrived. The disease killed the Inca emperor in 1527, setting off a war of succession while thousands died in an unknown plague. Only that context of death and division explains Francisco Pizarro's 1532 capture of Atahualpa at Cajamarca with but 168 Europeans in his company. Only the combination of that limited first conquest and the continuing disease-driven depopulation allows comprehension of the three decades of wars that followed, before Spanish rule began to consolidate in Inca domains that spanned the Andes.8
For decades after the dates celebrated as conquests, 1521 in Mesoamerica, 1532 in the Andes, persistent political jockeying and continuing conflicts among European factions and diverse indigenous lords and communities shaped an uncertain New World. Spaniards claimed to rule via encomiendas, rights to tributes in goods and work service long paid to native overlords.9 Surviving indigenous lords often saw encomiendas as alliances, a sharing of rights to rule and collect tributes in communities still subject to native lords and now allied with newcomers who brought new goods, new technologies, and new beliefs along with new diseases. Even as imagined by Spaniards, encomiendas set European power in indigenous traditions. Conquerors gained tributes earlier claimed by native lords; they depended on native intermediaries and indigenous ways of production and workâeven as they demanded radical cultural change.10
For a time, a few Europeans gained wealth in indigenous produce. Some mobilized native labor rights, set workers to pan for gold, and found tantalizing riches. But gold quickly panned out, and continuing depopulation undermined encomenderosâ wealth and native lordsâ roles in alliances with grasping newcomers. Indigenous lords died as often as commoners, cutting claims to legitimate rule that might serve Spaniardsâ interests. And as population plummeted, so did encomienda tributes in goods and labor services. A grant of 6,000 tributary households might make a conqueror/encomendero rich and keep his native ally/intermediary pivotal. A community reduced to 1,000 households paid radically reduced tributes, leaving many a conqueror far from home wondering why he stayed in an inhospitable New World.11
Around 1550, depopulation was making colonial rule ever less promising to Iberians, surviving native lords faced the diminishing value of alliances with new rulers, and indigenous majorities struggled to sustain families and communities dying in waves of plagues. Spanish rule began to consolidate and surviving Amerindians experimented with Christianity, but the future of a New World forged in entrepreneurial conquest and devastating depopulation was uncertain.
Then in the 1550s, a surge in global demand for silver changed the course of history. From first contacts in the Caribbean in the 1490s through early decades of conflict and conquest on the mainland, gold taken from streams and surface deposits funded Spainâs American enterprise and stimulated Atlantic trade.12 Gold was not money in the precontact Americas, but did serve as a medium of valued art. Natives mined gold, delivering some to Spaniards as encomienda tribute; encomenderos sent tribute work gangs to pan for moreâbut returns diminished in a few decades. Americans also knew silver, again not as money but as a medium of ornamentation. Andeans and Mesoamericans refined ore by fire. Early in the 1530s, natives at Taxco southwest of Mexico City learned of Europeansâ demand for silver; they increased mining aiming to profit while Europeans struggled to rule of a regime and society they barely knew.13
In the 1540s, as gold became scarce and Taxco made the possibilities of silver clear, Spaniards searched for new minesâmeaning they pressed native allies t...