The Treasure of the Americas
Between 1500 and 1650, Spanish conquistadors and the colonial system they built extracted an estimated 181 tonnes of gold and 16,000 tonnes of silver from the Americas — principally from the Potosí silver mine in modern Bolivia and the gold deposits of New Granada (modern Colombia). This was the largest single monetary injection into the European economy before the industrial era.
Potosí: The Mountain of Silver
The Cerro Rico ("Rich Mountain") at Potosí was discovered by Spanish colonists in 1545. Located at 4,090 metres altitude in the Bolivian altiplano, it proved to contain one of the richest silver deposits ever found. At its peak in the late 16th century, Potosí was one of the largest cities in the world — larger than London or Paris — its population sustained entirely by silver mining.
The silver was extracted using the mita system: a form of forced labour conscription applied to indigenous Andean communities. A percentage of each community's adult male population was rotated through service in the mines annually. The mortality rate was severe; exposure to mercury (used to process silver ore via the amalgamation process) caused widespread illness. Estimates suggest 8 million people died in the Potosí mines over the colonial period, though the figure is disputed.
The Flow of Silver
The silver did not remain in Spain. Spanish imperial finances were permanently overextended — constant warfare in Europe (the Dutch Revolt, wars with France and the Ottoman Empire, the Armada) meant that silver arrived in Seville and was immediately pledged to creditors. Genoese and German banking houses (the Fuggers, the Welsers) had financed the Habsburg empire's wars and were paid in American silver as it arrived. The silver then flowed north: to the Netherlands (Spain's wealthiest province until its rebellion), to England through trade, and across Europe through commercial networks.
Spain, the recipient of the treasure, developed what economists now call "Dutch Disease": the influx of monetary wealth without corresponding productive investment caused the prices of Spanish goods to rise, making Spanish manufactures uncompetitive internationally. Spain deindustrialised while its competitors industrialised.