“Global trade emerged when all important populated continents began to exchange products continuously. It is true that there was an important intercontinental trade before 1571, but there was no direct link between America and Asia, so the world market was not fully coherent or complete. The singular product most responsible for the birth of world trade was… Silver.”

- Dennis O. Flynn, Born with a Silver Spoon

Do Now: How do you think Silver became the first global product?

Objective: How did the Spanish discovery of Silver in Americas impact the world?

Aztec and Inca location in Mesoamerica

How were the Spanish able to defeat and conquer the Aztec and Inca Empires?

Reasons for Spanish Conquest over the Aztecs

1. Diseases, smallpox, measles, influenza

2. Alliances with Aztec enemies, Tlaxcalans – helped by translator Dona Marina (Malinche)

3. Spanish technology and animals (Guns, canons, horses, dogs)

4. Aztecs initially thought Cortez was God Quetzalcoatl

5. Spanish Method of warfare – Aztecs fought to capture enemy, Spanish killed the enemy

“We have pounded our hands in despair against the adobe walls, for our inheritance, our city, is lost and dead.”

- Aztec Warrior

                                     

ART INTERPRETATION

Compare and contrast these two depictions of the conquest of the Aztecs.

Which one most represents the actual event and why?

A. Spanish Conquistadors took over existing tributary networks

B. Like Indian Ocean, Spanish began to tap into vast commercial systems and exploit the existing indigenous empires

C. Unlike Indian Ocean, the New World was not restricted to commercial outposts. It involved the control of large amounts of territory.

Spain’s Tributary Empire

A. Conquistadors were granted or claimed large areas and forced labor upon those who lived there in Mines, plantations (haciendas) and public works.

B. Eventually, Spanish government took more direct control by establishing a viceroy, or royal governor, to control New Spain.

C. They also prevented encomiendas from being hereditary. Once a encomendero died, his land reverted to the crown.

Developed the Encomienda System

According to this painting, what were the conditions of the encomienda system?

A. Bartolomé de las Casas, the famous Defender of the Indians, convinced that the fast disappearing Arawak Indians could not physically tolerate the hard labor expected by the Spanish

B. He recommended the importation of African slaves to do the hard labor. De las Casas believed that the Africans were physically more fit for hard labor than were the Amerindians. 

Bartolome de las Casas

What were the major products exported from the Americas

by the Spanish?

How is this an example of

mercantilism?

A. Discovery of Silver in the Americas made Spain powerful

B. Mita system developed – forced labor in gold, silver, mercury mines.

C. Spain used silver to pay long term debts

D. Purchased manufactured goods and items from China and Far East

The Silver Trade

Silver mine in Potosi

E. Spent money funding military, navy, and European wars. Mighty Spanish Armada was able to rule the seas and dominate trade.

The funding of Silver from the Americas enabled the creation of the Spanish Armada, who dominated until

1588 when they lost to the British.

A. Potosi, major mining city.

B. In Potosí, Spanish administrators initially recruited laborers by adapting the Inca system of draft labor to their own needs. 

C. Mine owners were often frustrated when their quota of workers died of disease and overwork, or when Indians rebelled at Spanish exploitation. 

Mining in Potosi

Silver Trade Impacts the World

Where does most of the Silver seem to come from, and where does it end up?

Silver Trade Impacts the World

“The poverty of Spain resulted from the discovery of the Indies.”

1. Why did some people believe that the New World was the cause for Spanish poverty?

DO NOW:

Silver Production:

Spanish America: 325 tons a year (Official)

325-450 tons a year (Illegal)

Japanese: 200 tons a year

2. With such large production numbers, what effect will this have on the value of silver around the world?

1. The “Silverization” of China in 1430s led to the mass import of Silver world wide. China becomes “Silver Sink”

2. Market Value of silver was twice as high in China as in Spain. Europeans now have something to offer China for silks, porcelain and spices.

3. High overvalued demand and low costing supply resulted in biggest mining boom in human history.

4. Japan produced 30% of world’s silver. Silver profits helped Tokugawa defeat rivals and consolidate power.

Silver Trade Impacts the World

Impact of Silver on Spain“The Spanish government used its ‘Super Profits’ - derived from control of silver production - to launch a deadly, multifront war against the emerging capitalistic states to the north (England and the Netherlands). The northern powers nearly went bankrupt defending themselves against Iberia’s religion-inspired military fanaticism.” - Dennis O. Flynn

How could the actions of the Spanish eventually lead to its decline?

1. Too much Silver production led to inflation and loss of value.

2. Bankers lent money to Spanish crown due to silver fleets despite falling credit and value.

3. Spent money fighting wars with Northern capitalistic competitors.

Spanish Decline:

4. Bought most manufactured goods. Never developed manufacturing of their own.

5. Unfavorable balance of trade with China. Silver not a renewable product like silk, spices, or porcelain.

6. Defeat of Spanish Armada in 1588 marks the end of Spanish dominance.

Sir Francis Drake being knighted by Queen Elizabeth

The Columbian Exchange

sweet potato, chili pepper,

cotton, lumber, squash, furs,

pumpkin, corn, gold, pineapple,

molasses, indigo, turkey, peppers, maize,

tomatoes, tobacco, beans, silver, coffee,

potatoes,

chocolate

Horses, Disease, manufactured goods, sheep, cows, vanilla, measles, melons, onions, iron, peaches, wheat,

smallpox, bananas, plow, sugar, pigs, textiles, rum, typhus, grapes, barley, wine, bubonic plague, olives,

influenza, firearms, rats, writing

Slaves, ivory, gold,

plantain, rice

Mercantilism vs CapitalismMercantilism - Government stresses the creation of a favorable

balance of trade for their nation.

A) Promote internal economy

1. Limit imports - keep profits from enemy or rival states

2. Set Tariffs on imported goods

3. Encouraged and funded merchant fleets and trading companies

ColonyMother Country

Resources

Manufactured goods

Profits

Mercantilism vs CapitalismB) Need for Colonies

1. Provided raw materials and labor source

2. Encouraged industry at home - manufactured goods

3. Colonies used as a guaranteed new market

Mercantilism vs CapitalismCapitalism - Laissez-Faire system that stressed free trade and

competition

A) Created by Adam Smith (Wealth of Nations, 1776)

B) Promotes competition

1. Laissez-Faire - no government involvement

2. Nation’s economy worked through natural law of supply and demand

3. Called for free trade / no tariffs

C) Promotes investors and Entrepreneurs

1. Self-interest will lead to general economic advancement

2. Increased opportunity for merchants