9 ms·

What happened to all the gold Spain got from the New World? (1985)

125 points by titaniumtown 9mo ago

ggm 9mo ago
Marx wrote about commodity fetishism. Perhaps the ultimate version is a belief gold is innately valuable. It has valuable properties, but almost its sole function is to be rare and desirable. That we now use gold for electronics in some ways undermines its rei-ification as the personification of value. Spain fucked up. They mistook the gold for something more valuable than Labor. The Merino sheep of Spain were a better bet, in the long term. The Spanish gold disappeared into economies with a better sense of what value is.
- yieldcrv 9mo ago
  understanding what humans collectively find valuable is much more lucrative than understanding why humans collectively find a thing valuable being on this forum for a decade I see people consistently get caught up in the latter, at the expense of noticing the opportunities the same people are here for
  - metalman 9mo ago
    then, selling people a better understanding of why they find things valuable, is worth a lot!
  - empath75 9mo ago
    One thing you can do when people are spending money on magic beans is point out that magic beans don’t exist and they are all stupid for buying them. The other thing you could do is open a magic bean store.
    - HPsquared 9mo ago
      Ideally you do the first part while buying up all the beans for cheap, then commence step 2: convince people they are super valuable and sell the magic beans for profit.
- aarroyoc 9mo ago
  Yes, I often say that the gold from America was a poisonous gift. It made the country so rich that they stopped caring about other stuff, they could just buy them from elsewhere. So there was little incentive to manufacture first, and industrialize later. Which is ironic because some of first steam engines you can find in Europe were invented in Spain (https://en.wikipedia.org/wiki/Jer%C3%B3nimo_de_Ayanz_y_Beaumont https://en.wikipedia.org/wiki/Jer%C3%B3nimo_de_Ayanz_y_Beaum...). It also enabled the funding of numerous stupid wars, with the human cost they bring. The name of this process is called the Dutch Disease https://en.wikipedia.org/wiki/Dutch_disease https://en.wikipedia.org/wiki/Dutch_disease Arab states could get into the same trap
  - saidnooneever 9mo ago
    never heard of the dutch disease (i am dutch). pretty cool comment thanks. kind of funny to think they still have trouble to actually extract that gas due to activism around earthquakes and ppl not eager to move away from these places. also now the climate push. it kinda looks (from an uneducated perspective) they suffered this disease for nothing.
  - Herring 9mo ago
    It's a recurring theme. At the time of the Civil War, the Mississippi River Valley had more millionaires per capita than anywhere else in the US. https://www.history.com/articles/slavery-profitable-southern-economy https://www.history.com/articles/slavery-profitable-southern...
    - paganel 9mo ago
      > the Mississippi River Valley had more millionaires per capita TIL. Does anyone have any good recommendations for a (relatively) good social/economic history of the Southern US states? (because I guess that that type of history book would cover this type of information).
      - greenie_beans 9mo ago
        from the antebellum era? try anything by eric foner, but a good place to start is forever free: the story of emancipation and reconstruction. it's accessible history that includes a bit of background about the political economy leading up to the civil war. any of his books about reconstruction might be interesting but not exactly what you're looking for. "black reconstruction in america" by dubois is a keystone text that has a bit about the southern economic history. and maybe "old south, new south" by gavin wright for post reconstruction economic history
- faidit 9mo ago
  Marx called gold "the money-commodity" and said that paper money (even early fiat currency) always represents gold/silver in circulation. The massive Spanish purchases of weapons and other manufactured goods from other countries in the 16th and 17th centuries played a large role in jump-starting the capitalist economic revolution in Europe.
- trgn 9mo ago
  spain was no longer a major player in world politics by 1800s, but they had a good 2-3 century run. not sure if the monetary crisis was really did them in, or more just it being the ebb and flow of history. britain's world dominance is long over too. if they did "fuck up", it was because charles v was the first global hegemon, nobody know how to do that, he was in uncharted territory. and obviously no, the merino sheep weren't a better bet long term, that's absurd. global dominion required a cohesive domestic home country to serve as the wellspring of power, not the fractured foedal remnants of a mediaeval europe that required constant war to keep together. and then of course, industrialize early.
  - B1FF_PSUVM 9mo ago
    > then of course, industrialize early. It's extremely convenient to have coal, iron, and waterways in the region where you wish to achieve that early industrialization. There's a map somewhere showing where those happened - England, France/Germany, eastern/great lakes US.
    - pfdietz 9mo ago
      Also limestone, needed as flux for iron and steel making.
- Scubabear68 9mo ago
  Gold is a VERY unique metal and its value comes directly from that. Particularly the complete lack of oxidation, I'm sure it was seen as absolutely magic that it would not tarnish while every other metal known at the time would oxidize very easily. Value is ultimately always in the eye of the beholder.
  - the__alchemist 9mo ago
    Indeed. I believe the parent commenter should pause and assess why people buy things, and what makes something desirable or a luxury good. We can start with mechanical watches: They are of poorer quality by every utilitarian measure than a crystal-oscillator driven one, but command much higher prices and status.
    - lo_zamoyski 9mo ago
      > They are of poorer quality by every utilitarian measure than a crystal-oscillator driven one, but command much higher prices and status. But the value of the watch is not reducible to its value as a timekeeping device. (Even here, you could argue that the mechanical watch has more instrumental value as a timekeeping device where batteries are unavailable.) A mechanical watch has greater value as a mechanical watch; it is mechanically more sophisticated, even if not electronically. It can have greater value as a product of superb craftsmanship or as an object of art. (And here, while tastes vary, I would reject the reduction of beauty to taste.)
      - the__alchemist 9mo ago
        Can you see how that elegant description you wrote could be applied to Gold?
      - thaumasiotes 9mo ago
        > A mechanical watch has greater value as a mechanical watch Note that this cannot work as a theory of value; everything has infinite value if you define value as "the ability of a thing to be itself".
- ajross 9mo ago
  To be fair, Adam Smith and Marx would 100% agree on this point. It's not "capitalist" to confuse money with value, it's just a mistake.
  - RobotToaster 9mo ago
    A lot of Marx's writing was based on Smith's, so they agree a lot.
- Retric 9mo ago
  Gold is used by industry at current prices due to its physical properties, so its current price and value are fairly close. This still allows for significant price swings because there vast quantities of gold sitting around in vaults, but unlike say bitcoin it does have high intrinsic value. IE: If gold sustained a 90% drop in price across decades at lot more would be used by industry creating a price floor.
  - Epa095 9mo ago
    How can you conclude that the current price and value is fairly close? Seems to me that all you are showing (rightly so) is that there are some use of gold which has higher value than today's price. I agree that industry use creates a price floor, but that might be much lower than what the price is today. I.e if suddenly everyone lost faith in gold as a carrier of value, so everyone who keeps gold just as a passive keeper of value started selling it off, then we would get a new market clearing price which represents golds 'real value'. I have no clue what this would be, but it is certainly not obvious to me that it's close to today's price.
    - scythe 9mo ago
      Gold's resistance to oxidation is pretty unique and valuable. Every metal with similar properties is also expensive — palladium is the most common and its price hovers around several hundred dollars per ounce despite being much less popular for jewelry or currency.
    - Retric 9mo ago
      > current price and value is fairly close I’m talking orders of magnitude here. Supply and demand curves generally have a slope. As in the demand for goods by industry increases as the price decreases. A significantly larger portion of minded gold is used for jewelry than industry or investment, but a price drop would also reduce the amount mined. Combine those and yes gold could get significantly cheaper especially with the vast quantities on hand, but it would still be a very expensive metal vs steel, aluminum, etc.
- empath75 9mo ago
  If gold is inherently valueless, then isn’t shipping all of it away immediately to other countries in return for useful goods the most rational thing to do? And if they could get gold at a fraction of the cost of other countries and exchange it for useful goods, isn’t that more rational than building the goods yourself? The Spanish were not stupid and were not acting irrationally — except perhaps thinking on too short of a time frame. The gold trade was a total moral abomination, but it was a good trade economically for hundreds of years. The main problem was that it was basically an arbitrage play and once the margin got erased from inflation, they had let the rest of their economy atrophy. This is one of the reasons the Saudis invest so much money in tech companies and other industries.
  - AlotOfReading 9mo ago
    It wasn't an arbitrage thing and I'm not sure there's anything fruitful in the comparison to saudi arabia. The Spanish Empire was, more than anything else, a product of the reconquista. The major institutions of Spain were all directed towards the taking and holding of new lands. When granada finally surrendered in 1492, the monarchy turned towards conquering the canaries and then the new world to avoid the large scale structural changes needed to go from a militaristic, medieval nation to a peacetime state in the early modern. The systems of repartimiento and encomienda were more or less borrowed wholesale from the reconquista. The conquistadors and chroniclers all saw the Americas through the lens of the chivalric literature they loved. The name "California" was borrowed from one of those books, about a fictional island of Amazons who aided the moors. Precious metals were a solution to the problems Spanish monarchs had in organizing Spanish society. It paid for soldiers in the monarchy's constant wars. It paid off loans to italian and dutch financiers, and it was something that could much more easily be controlled by a distant monarch than import duties or taxation (which nobility were largely exempt from). It also gave them some limited control over their inflation issues by devaluing and revaluing the coinage as financial pressures required. This eventually caused other problems, but the point is that Spain was never really an arbitrage play. They didn't have to be, since they controlled some 30% of the world's gold supply and >90% of its silver at points.
    - 9mo ago
- anthk 9mo ago
  The School of Salamanca about value and money said something else in 16th century. The Spaniards were anything but dumb. It just happened that the British industrial revolution steamrolled everyone. You can't compete aganst the steam engine and the railway making communications and sharing of goods and raw materials something ridiculously cheap compared to the previous times, even by boat in both UK and Spain where the big rivers like Douro and Tagus could sustain a lot of transport. But, still, the train allowed to reach anyone in the country. Which cheap transportation you can connect industrial powerhouses (and competent engineers and scientists) and the rest it's history. Addthe telegraph on top of that and it's game over for any outdated empire. When knowledge sharing can be reduced hours and maybe a day or two instead of weeks or months, it's like upgrading from having a 486 based computer with DOS to a Ryzen one with multiparallel processing. Literally.
ErneX 9mo ago
510 tonnes went to Moscow to never be seen again. https://en.wikipedia.org/wiki/Moscow_Gold_(Spain) https://en.wikipedia.org/wiki/Moscow_Gold_(Spain)
- caminante 9mo ago
  No it didn't. The gold didn't disappear. Did you actually read the wiki you linked? Spain transferred the gold to Moscow who liquidated it on Spain's behalf to buy guns, fund the civil war, and deposit in banks. There's mixed views whether Moscow took too much of a margin, but they melted down gold after selling it and the gold is still in circulation.
  - ErneX 9mo ago
    Exactly that, never to be seen again :)
    - caminante 9mo ago
      Huh? If you melt down gold, how are you not staring at the same gold? Moscow didn't steal anything either.
      - ErneX 9mo ago
        "The Spaniards will never see their gold again, just as they don't see their ears" this is supposedly what Stalin said according to Alexander Orlov. From the same link.
        throw20251220 9mo ago
        > supposedly
        ErneX 9mo ago
        I’d give it the same relevance as “Moscow didn’t steal the gold” in any case.
mcc1ane 9mo ago
> The problem was that the conquest of the New World left Spain with a lot more money, but not that much more wealth, if you follow me. ELI5, please!
- adastra22 9mo ago
  Money is the thing you use to buy things. Wealth is having those things. Only in an ideal world are the two the same. The world is not ideal.
  - PessimalDecimal 9mo ago
    But why couldn't they, e.g. buy other people's thing in exchange for their gold? IOW, why is the relevant fact that _Spain_ didn't have much more wealth despite having more gold? Other people in other countries valued (and still value) gold too.
    - usefulcat 9mo ago
      They could and they did. That meant that Spain ended up importing more and exporting less, which would have been bad for Spanish businesses. There’s a lot more to “wealth” than just having a bunch of stuff. Especially in the long term, since most “stuff” will wear out or otherwise decay over time.
    - derf_ 9mo ago
      You can, but then those people have more money, and you have less. The money supply is much smaller than the supply of goods and services, because the same money circulates repeatedly. So simply doubling your money can tilt things a little more your way, but does not make the situation completely lopsided, because you can only spend the extra money once. Also, to quote Jastram [0], "In spite of the romanticism of the Spanish Main and treasure ships, the supply of gold from the New World was just a trickle by later standards. Less than 1% of what was to be 1930 world production was produced in each of the years from 1500 to 1520." Over the next 80 years, it never got much above 1.3%. [0] Roy W. Jastram, The Golden Constant (1977), pg. 41.
    - 9mo ago
rayiner 9mo ago
> For the latter part of the 1500s and on into the 1600s Spain was a debtor nation, spending more abroad than it took in. The result was a net outflow of gold and silver. Attempts were made to restrict the export of precious metals, but without much success. In the end it all simply dribbled away. The problem was that the conquest of the New World left Spain with a lot more money, but not that much more wealth, if you follow me. They didn’t realize that until too late, and suffered centuries of poverty as a consequence. Sounds like America since the second half of the 20th century.
- anthk 9mo ago
  Spain was different. There were no 'proper' colonies, but everyething was deal as if they were an inner province in Iberia. That's the way you could get fancy universities for its time. But backwards people like Ferdinand the 7th cut down the modernisation of Spain which could boost us up to the level of France if not more. I'm no kidding. Just look at the Cádiz constitution from 1812. https://en.wikipedia.org/wiki/Ferdinand_VII https://en.wikipedia.org/wiki/Ferdinand_VII https://en.wikipedia.org/wiki/Spanish_Constitution_of_1812 https://en.wikipedia.org/wiki/Spanish_Constitution_of_1812 Not bad for its time at all.
- nradov 9mo ago
  Nope. By any objective measure the USA has continued to organically generate enormous amounts of real wealth during that period. We have some issues with inequality and letting foreign countries take advantage of our trade policies but the new wealth is quite real.
  - rafterydj 9mo ago
    Could you elaborate a little bit more?
aurizon 9mo ago
With all this gold, Spain went on a buying spree, weapons, art, churches etc - and the sellers(rest of Europe) industrialized as the gold trickled down into THEIR economies. When the gold no longer arrived, Spain went into a steady decline as their rich upper crust of RC Churche, Kings, Queens, Lords, Ladies etc. and eventually became democratic after Franco.
- anthk 9mo ago
  We were democratic before Franco. Twice. Until the damn conservatives threw the Republic down, twice, too.
- otherme123 9mo ago
  Primarily spent in wars (mercenaries, weapons, warships...) and keeping the colonies under control.
hdb385 9mo ago
[dead]
pfdietz 9mo ago
As I understand it, some of the silver was siphoned off in trade with China (via the trans-Pacific route to Manila). China needed continuing silver imports because silver was not used there in the form of standardized coinage, but rather in ingots that were weighed and subdivided, with inevitable continuing loss.
- exidy 9mo ago
  It was very surprising to see zero mention of the Manila galleon[0] trade route in the linked article, even if technically the question was about gold rather than silver. The simple answer to the question of what happened to the money was that Spain spent it! The impacts on SE Asia were profound and are still being felt today. [0] https://en.wikipedia.org/wiki/Manila_galleon https://en.wikipedia.org/wiki/Manila_galleon
  - Dr_Birdbrain 9mo ago
    Would love to read about the impact on SE Asia that continue until today. Do you have a recommended resource?
    - exidy 9mo ago
      It’s a broad subject. You have the existence of the Philippines itself, which is the only majority Christian nation in Asia, and given it passed from Spain to the USA, this influences everything from US force projection in the Pacific to the prevalence of BPO outsourcing to the sectarian conflicts in Mindanao. More directly from the trade itself and the silver it brought permanently altered the demographics, flora and fauna of the region. Southern Chinese traders migrated in greater numbers throughout the region, new world fruits and vegetables such as sweet potato and pineapple are introduced. Chinese merchants in the region are producing Christian religious art for export back to the old world, giving rise to a unique hybrid artistic style.[0] The region as a whole becomes more attractive for the Dutch and the British, which had its own set of downstream consequences … I’m sorry I don’t have a single source that pulls this all together, you would probably need to pick an area and start reading! [0] https://artsandculture.google.com/story/ivories-from-macau-and-goa-intramuros-administration/wAVBpCEwbRQXKQ?hl=en https://artsandculture.google.com/story/ivories-from-macau-a...
nephihaha 9mo ago
Some of it ended up on the sea bed.
beloch 9mo ago
"while the flood of gold into Spain in the 16th century seemed like a big haul at the time, by modern standards it was a trivial amount. Total world gold production during the 1500s is estimated to have been around 36 tons;" -------------- World silver production during the 16th century was around 23 thousand tons[1]. Silver was closer in value to gold back then too, at around one tenth the value per weight. The economic impact of new world gold was a rounding error compared to the impact of silver. If you have a mental image of Spanish conquistadors sparking global inflation purely by looting Inca gold, erase it. The real culprit was silver extracted from Potosi and a few other New world mines. [1]https://digital.library.unt.edu/ark:/67531/metadc40312/m2/1/high_res_d/bomeconpapers_8_w.pdf https://digital.library.unt.edu/ark:/67531/metadc40312/m2/1/...
- pier25 9mo ago
  Zacatecas (Mexico) is mostly a desert now but it used to be covered with forests. The wood was used as fuel for smelting silver during the colonial period.
  - deleted 9mo ago
    [deleted]
- zenmac 9mo ago
  >If you have a mental image of Spanish conquistadors sparking global inflation purely by looting Inca gold, erase it. The real culprit was silver extracted from Potosi and a few other New world mines. That is when labors start to flood to Netherlands.
darubedarob 9mo ago
It got also invested in religious ceremonies like https://en.wikipedia.org/wiki/Thirty_Years%27_War https://en.wikipedia.org/wiki/Thirty_Years%27_War
venturecruelty 9mo ago
A solid 50% of this entire thread is people arguing about inflation and bikeshedding the concept of money. Amazing. (COVID gets an honorable mention. Six years on now, but hey. Stay mad.)
msylvest 9mo ago
Some of all this gold is still on display in Spain. Earlier this year my wife and I visited Granada in southern Spain. Vast amounts, truely impressive, of gold are exposed in its Cathedral and in the burial place of Emperor Karl (Charles/Carlos) and his wife, Isabella. Alhambra is still the #1 sight there but if you can spare the time, do visit these two places. They are co-located in central Granada.
alejohausner 9mo ago
As the poet Quevedo wrote, Nace en las Indias honrado, // donde el mundo le acompaña; // viene a morir en España // y es en Génova enterrado. (Mr. Money) is born in the Indies an honest man, with the world on his side; he comes to Spain to die, and is buried in Genoa.

125 points by titaniumtown 9mo ago

ggm 9mo ago

Marx wrote about commodity fetishism. Perhaps the ultimate version is a belief gold is innately valuable. It has valuable properties, but almost its sole function is to be rare and desirable. That we now use gold for electronics in some ways undermines its rei-ification as the personification of value. Spain fucked up. They mistook the gold for something more valuable than Labor. The Merino sheep of Spain were a better bet, in the long term. The Spanish gold disappeared into economies with a better sense of what value is.

yieldcrv 9mo ago
understanding what humans collectively find valuable is much more lucrative than understanding why humans collectively find a thing valuable being on this forum for a decade I see people consistently get caught up in the latter, at the expense of noticing the opportunities the same people are here for
- metalman 9mo ago
  then, selling people a better understanding of why they find things valuable, is worth a lot!
- empath75 9mo ago
  One thing you can do when people are spending money on magic beans is point out that magic beans don’t exist and they are all stupid for buying them. The other thing you could do is open a magic bean store.
  - HPsquared 9mo ago
    Ideally you do the first part while buying up all the beans for cheap, then commence step 2: convince people they are super valuable and sell the magic beans for profit.
aarroyoc 9mo ago
Yes, I often say that the gold from America was a poisonous gift. It made the country so rich that they stopped caring about other stuff, they could just buy them from elsewhere. So there was little incentive to manufacture first, and industrialize later. Which is ironic because some of first steam engines you can find in Europe were invented in Spain (https://en.wikipedia.org/wiki/Jer%C3%B3nimo_de_Ayanz_y_Beaumont https://en.wikipedia.org/wiki/Jer%C3%B3nimo_de_Ayanz_y_Beaum...). It also enabled the funding of numerous stupid wars, with the human cost they bring. The name of this process is called the Dutch Disease https://en.wikipedia.org/wiki/Dutch_disease https://en.wikipedia.org/wiki/Dutch_disease Arab states could get into the same trap
- saidnooneever 9mo ago
  never heard of the dutch disease (i am dutch). pretty cool comment thanks. kind of funny to think they still have trouble to actually extract that gas due to activism around earthquakes and ppl not eager to move away from these places. also now the climate push. it kinda looks (from an uneducated perspective) they suffered this disease for nothing.
- Herring 9mo ago
  It's a recurring theme. At the time of the Civil War, the Mississippi River Valley had more millionaires per capita than anywhere else in the US. https://www.history.com/articles/slavery-profitable-southern-economy https://www.history.com/articles/slavery-profitable-southern...
  - paganel 9mo ago
    > the Mississippi River Valley had more millionaires per capita TIL. Does anyone have any good recommendations for a (relatively) good social/economic history of the Southern US states? (because I guess that that type of history book would cover this type of information).
    - greenie_beans 9mo ago
      from the antebellum era? try anything by eric foner, but a good place to start is forever free: the story of emancipation and reconstruction. it's accessible history that includes a bit of background about the political economy leading up to the civil war. any of his books about reconstruction might be interesting but not exactly what you're looking for. "black reconstruction in america" by dubois is a keystone text that has a bit about the southern economic history. and maybe "old south, new south" by gavin wright for post reconstruction economic history
faidit 9mo ago
Marx called gold "the money-commodity" and said that paper money (even early fiat currency) always represents gold/silver in circulation. The massive Spanish purchases of weapons and other manufactured goods from other countries in the 16th and 17th centuries played a large role in jump-starting the capitalist economic revolution in Europe.
trgn 9mo ago
spain was no longer a major player in world politics by 1800s, but they had a good 2-3 century run. not sure if the monetary crisis was really did them in, or more just it being the ebb and flow of history. britain's world dominance is long over too. if they did "fuck up", it was because charles v was the first global hegemon, nobody know how to do that, he was in uncharted territory. and obviously no, the merino sheep weren't a better bet long term, that's absurd. global dominion required a cohesive domestic home country to serve as the wellspring of power, not the fractured foedal remnants of a mediaeval europe that required constant war to keep together. and then of course, industrialize early.
- B1FF_PSUVM 9mo ago
  > then of course, industrialize early. It's extremely convenient to have coal, iron, and waterways in the region where you wish to achieve that early industrialization. There's a map somewhere showing where those happened - England, France/Germany, eastern/great lakes US.
  - pfdietz 9mo ago
    Also limestone, needed as flux for iron and steel making.
Scubabear68 9mo ago
Gold is a VERY unique metal and its value comes directly from that. Particularly the complete lack of oxidation, I'm sure it was seen as absolutely magic that it would not tarnish while every other metal known at the time would oxidize very easily. Value is ultimately always in the eye of the beholder.
- the__alchemist 9mo ago
  Indeed. I believe the parent commenter should pause and assess why people buy things, and what makes something desirable or a luxury good. We can start with mechanical watches: They are of poorer quality by every utilitarian measure than a crystal-oscillator driven one, but command much higher prices and status.
  - lo_zamoyski 9mo ago
    > They are of poorer quality by every utilitarian measure than a crystal-oscillator driven one, but command much higher prices and status. But the value of the watch is not reducible to its value as a timekeeping device. (Even here, you could argue that the mechanical watch has more instrumental value as a timekeeping device where batteries are unavailable.) A mechanical watch has greater value as a mechanical watch; it is mechanically more sophisticated, even if not electronically. It can have greater value as a product of superb craftsmanship or as an object of art. (And here, while tastes vary, I would reject the reduction of beauty to taste.)
    - the__alchemist 9mo ago
      Can you see how that elegant description you wrote could be applied to Gold?
    - thaumasiotes 9mo ago
      > A mechanical watch has greater value as a mechanical watch Note that this cannot work as a theory of value; everything has infinite value if you define value as "the ability of a thing to be itself".
ajross 9mo ago
To be fair, Adam Smith and Marx would 100% agree on this point. It's not "capitalist" to confuse money with value, it's just a mistake.
- RobotToaster 9mo ago
  A lot of Marx's writing was based on Smith's, so they agree a lot.
Retric 9mo ago
Gold is used by industry at current prices due to its physical properties, so its current price and value are fairly close. This still allows for significant price swings because there vast quantities of gold sitting around in vaults, but unlike say bitcoin it does have high intrinsic value. IE: If gold sustained a 90% drop in price across decades at lot more would be used by industry creating a price floor.
- Epa095 9mo ago
  How can you conclude that the current price and value is fairly close? Seems to me that all you are showing (rightly so) is that there are some use of gold which has higher value than today's price. I agree that industry use creates a price floor, but that might be much lower than what the price is today. I.e if suddenly everyone lost faith in gold as a carrier of value, so everyone who keeps gold just as a passive keeper of value started selling it off, then we would get a new market clearing price which represents golds 'real value'. I have no clue what this would be, but it is certainly not obvious to me that it's close to today's price.
  - scythe 9mo ago
    Gold's resistance to oxidation is pretty unique and valuable. Every metal with similar properties is also expensive — palladium is the most common and its price hovers around several hundred dollars per ounce despite being much less popular for jewelry or currency.
  - Retric 9mo ago
    > current price and value is fairly close I’m talking orders of magnitude here. Supply and demand curves generally have a slope. As in the demand for goods by industry increases as the price decreases. A significantly larger portion of minded gold is used for jewelry than industry or investment, but a price drop would also reduce the amount mined. Combine those and yes gold could get significantly cheaper especially with the vast quantities on hand, but it would still be a very expensive metal vs steel, aluminum, etc.
empath75 9mo ago
If gold is inherently valueless, then isn’t shipping all of it away immediately to other countries in return for useful goods the most rational thing to do? And if they could get gold at a fraction of the cost of other countries and exchange it for useful goods, isn’t that more rational than building the goods yourself? The Spanish were not stupid and were not acting irrationally — except perhaps thinking on too short of a time frame. The gold trade was a total moral abomination, but it was a good trade economically for hundreds of years. The main problem was that it was basically an arbitrage play and once the margin got erased from inflation, they had let the rest of their economy atrophy. This is one of the reasons the Saudis invest so much money in tech companies and other industries.
- AlotOfReading 9mo ago
  It wasn't an arbitrage thing and I'm not sure there's anything fruitful in the comparison to saudi arabia. The Spanish Empire was, more than anything else, a product of the reconquista. The major institutions of Spain were all directed towards the taking and holding of new lands. When granada finally surrendered in 1492, the monarchy turned towards conquering the canaries and then the new world to avoid the large scale structural changes needed to go from a militaristic, medieval nation to a peacetime state in the early modern. The systems of repartimiento and encomienda were more or less borrowed wholesale from the reconquista. The conquistadors and chroniclers all saw the Americas through the lens of the chivalric literature they loved. The name "California" was borrowed from one of those books, about a fictional island of Amazons who aided the moors. Precious metals were a solution to the problems Spanish monarchs had in organizing Spanish society. It paid for soldiers in the monarchy's constant wars. It paid off loans to italian and dutch financiers, and it was something that could much more easily be controlled by a distant monarch than import duties or taxation (which nobility were largely exempt from). It also gave them some limited control over their inflation issues by devaluing and revaluing the coinage as financial pressures required. This eventually caused other problems, but the point is that Spain was never really an arbitrage play. They didn't have to be, since they controlled some 30% of the world's gold supply and >90% of its silver at points.
  - 9mo ago
anthk 9mo ago
The School of Salamanca about value and money said something else in 16th century. The Spaniards were anything but dumb. It just happened that the British industrial revolution steamrolled everyone. You can't compete aganst the steam engine and the railway making communications and sharing of goods and raw materials something ridiculously cheap compared to the previous times, even by boat in both UK and Spain where the big rivers like Douro and Tagus could sustain a lot of transport. But, still, the train allowed to reach anyone in the country. Which cheap transportation you can connect industrial powerhouses (and competent engineers and scientists) and the rest it's history. Addthe telegraph on top of that and it's game over for any outdated empire. When knowledge sharing can be reduced hours and maybe a day or two instead of weeks or months, it's like upgrading from having a 486 based computer with DOS to a Ryzen one with multiparallel processing. Literally.

ErneX 9mo ago

510 tonnes went to Moscow to never be seen again. https://en.wikipedia.org/wiki/Moscow_Gold_(Spain) https://en.wikipedia.org/wiki/Moscow_Gold_(Spain)

caminante 9mo ago
No it didn't. The gold didn't disappear. Did you actually read the wiki you linked? Spain transferred the gold to Moscow who liquidated it on Spain's behalf to buy guns, fund the civil war, and deposit in banks. There's mixed views whether Moscow took too much of a margin, but they melted down gold after selling it and the gold is still in circulation.
- ErneX 9mo ago
  Exactly that, never to be seen again :)
  - caminante 9mo ago
    Huh? If you melt down gold, how are you not staring at the same gold? Moscow didn't steal anything either.
    - ErneX 9mo ago
      "The Spaniards will never see their gold again, just as they don't see their ears" this is supposedly what Stalin said according to Alexander Orlov. From the same link.
      - throw20251220 9mo ago
        > supposedly
        ErneX 9mo ago
        I’d give it the same relevance as “Moscow didn’t steal the gold” in any case.

mcc1ane 9mo ago

> The problem was that the conquest of the New World left Spain with a lot more money, but not that much more wealth, if you follow me. ELI5, please!

adastra22 9mo ago
Money is the thing you use to buy things. Wealth is having those things. Only in an ideal world are the two the same. The world is not ideal.
- PessimalDecimal 9mo ago
  But why couldn't they, e.g. buy other people's thing in exchange for their gold? IOW, why is the relevant fact that _Spain_ didn't have much more wealth despite having more gold? Other people in other countries valued (and still value) gold too.
  - usefulcat 9mo ago
    They could and they did. That meant that Spain ended up importing more and exporting less, which would have been bad for Spanish businesses. There’s a lot more to “wealth” than just having a bunch of stuff. Especially in the long term, since most “stuff” will wear out or otherwise decay over time.
  - derf_ 9mo ago
    You can, but then those people have more money, and you have less. The money supply is much smaller than the supply of goods and services, because the same money circulates repeatedly. So simply doubling your money can tilt things a little more your way, but does not make the situation completely lopsided, because you can only spend the extra money once. Also, to quote Jastram [0], "In spite of the romanticism of the Spanish Main and treasure ships, the supply of gold from the New World was just a trickle by later standards. Less than 1% of what was to be 1930 world production was produced in each of the years from 1500 to 1520." Over the next 80 years, it never got much above 1.3%. [0] Roy W. Jastram, The Golden Constant (1977), pg. 41.
  - 9mo ago

rayiner 9mo ago

> For the latter part of the 1500s and on into the 1600s Spain was a debtor nation, spending more abroad than it took in. The result was a net outflow of gold and silver. Attempts were made to restrict the export of precious metals, but without much success. In the end it all simply dribbled away. The problem was that the conquest of the New World left Spain with a lot more money, but not that much more wealth, if you follow me. They didn’t realize that until too late, and suffered centuries of poverty as a consequence. Sounds like America since the second half of the 20th century.

anthk 9mo ago
Spain was different. There were no 'proper' colonies, but everyething was deal as if they were an inner province in Iberia. That's the way you could get fancy universities for its time. But backwards people like Ferdinand the 7th cut down the modernisation of Spain which could boost us up to the level of France if not more. I'm no kidding. Just look at the Cádiz constitution from 1812. https://en.wikipedia.org/wiki/Ferdinand_VII https://en.wikipedia.org/wiki/Ferdinand_VII https://en.wikipedia.org/wiki/Spanish_Constitution_of_1812 https://en.wikipedia.org/wiki/Spanish_Constitution_of_1812 Not bad for its time at all.
nradov 9mo ago
Nope. By any objective measure the USA has continued to organically generate enormous amounts of real wealth during that period. We have some issues with inequality and letting foreign countries take advantage of our trade policies but the new wealth is quite real.
- rafterydj 9mo ago
  Could you elaborate a little bit more?

aurizon 9mo ago

With all this gold, Spain went on a buying spree, weapons, art, churches etc - and the sellers(rest of Europe) industrialized as the gold trickled down into THEIR economies. When the gold no longer arrived, Spain went into a steady decline as their rich upper crust of RC Churche, Kings, Queens, Lords, Ladies etc. and eventually became democratic after Franco.

anthk 9mo ago
We were democratic before Franco. Twice. Until the damn conservatives threw the Republic down, twice, too.
otherme123 9mo ago
Primarily spent in wars (mercenaries, weapons, warships...) and keeping the colonies under control.

hdb385 9mo ago

[dead]

pfdietz 9mo ago

As I understand it, some of the silver was siphoned off in trade with China (via the trans-Pacific route to Manila). China needed continuing silver imports because silver was not used there in the form of standardized coinage, but rather in ingots that were weighed and subdivided, with inevitable continuing loss.

exidy 9mo ago
It was very surprising to see zero mention of the Manila galleon[0] trade route in the linked article, even if technically the question was about gold rather than silver. The simple answer to the question of what happened to the money was that Spain spent it! The impacts on SE Asia were profound and are still being felt today. [0] https://en.wikipedia.org/wiki/Manila_galleon https://en.wikipedia.org/wiki/Manila_galleon
- Dr_Birdbrain 9mo ago
  Would love to read about the impact on SE Asia that continue until today. Do you have a recommended resource?
  - exidy 9mo ago
    It’s a broad subject. You have the existence of the Philippines itself, which is the only majority Christian nation in Asia, and given it passed from Spain to the USA, this influences everything from US force projection in the Pacific to the prevalence of BPO outsourcing to the sectarian conflicts in Mindanao. More directly from the trade itself and the silver it brought permanently altered the demographics, flora and fauna of the region. Southern Chinese traders migrated in greater numbers throughout the region, new world fruits and vegetables such as sweet potato and pineapple are introduced. Chinese merchants in the region are producing Christian religious art for export back to the old world, giving rise to a unique hybrid artistic style.[0] The region as a whole becomes more attractive for the Dutch and the British, which had its own set of downstream consequences … I’m sorry I don’t have a single source that pulls this all together, you would probably need to pick an area and start reading! [0] https://artsandculture.google.com/story/ivories-from-macau-and-goa-intramuros-administration/wAVBpCEwbRQXKQ?hl=en https://artsandculture.google.com/story/ivories-from-macau-a...

nephihaha 9mo ago

Some of it ended up on the sea bed.

beloch 9mo ago

"while the flood of gold into Spain in the 16th century seemed like a big haul at the time, by modern standards it was a trivial amount. Total world gold production during the 1500s is estimated to have been around 36 tons;" -------------- World silver production during the 16th century was around 23 thousand tons[1]. Silver was closer in value to gold back then too, at around one tenth the value per weight. The economic impact of new world gold was a rounding error compared to the impact of silver. If you have a mental image of Spanish conquistadors sparking global inflation purely by looting Inca gold, erase it. The real culprit was silver extracted from Potosi and a few other New world mines. [1]https://digital.library.unt.edu/ark:/67531/metadc40312/m2/1/high_res_d/bomeconpapers_8_w.pdf https://digital.library.unt.edu/ark:/67531/metadc40312/m2/1/...

pier25 9mo ago
Zacatecas (Mexico) is mostly a desert now but it used to be covered with forests. The wood was used as fuel for smelting silver during the colonial period.
- deleted 9mo ago
  [deleted]
zenmac 9mo ago
>If you have a mental image of Spanish conquistadors sparking global inflation purely by looting Inca gold, erase it. The real culprit was silver extracted from Potosi and a few other New world mines. That is when labors start to flood to Netherlands.

darubedarob 9mo ago

It got also invested in religious ceremonies like https://en.wikipedia.org/wiki/Thirty_Years%27_War https://en.wikipedia.org/wiki/Thirty_Years%27_War

venturecruelty 9mo ago

A solid 50% of this entire thread is people arguing about inflation and bikeshedding the concept of money. Amazing. (COVID gets an honorable mention. Six years on now, but hey. Stay mad.)

msylvest 9mo ago

Some of all this gold is still on display in Spain. Earlier this year my wife and I visited Granada in southern Spain. Vast amounts, truely impressive, of gold are exposed in its Cathedral and in the burial place of Emperor Karl (Charles/Carlos) and his wife, Isabella. Alhambra is still the #1 sight there but if you can spare the time, do visit these two places. They are co-located in central Granada.

alejohausner 9mo ago

As the poet Quevedo wrote, Nace en las Indias honrado, // donde el mundo le acompaña; // viene a morir en España // y es en Génova enterrado. (Mr. Money) is born in the Indies an honest man, with the world on his side; he comes to Spain to die, and is buried in Genoa.