1493_ Uncovering the New World Columbus Created - Charles C. Mann [84]
By contrast, the all-too-corruptible Governor Manrique left office on February 19, 1624. The next day he married Verasátegui’s widow and moved into her splendid manor—“serving to eliminate every doubt,” observed Crespo, the Bolivian historian, about “the badly concealed connections that linked the governor and the Basques.” Manrique moved to Cuzco (the Spanish name for the former Inka capital of Qosqo), a wealthy man who would become wealthier. With the departure of both men, passions ebbed. Vicuñas disappeared into the countryside, where they robbed travelers with impunity for years.
Incredibly, the Basque-Vicuña war had almost no effect on the flow of silver. Even as Basques and Vicuñas fought in the streets, they cooperated on mining and refining the silver, then shipping it from Potosí. The last was a huge task. One account describes how a single shipment of 7,771 bars left the city in 1549, four years after the lode’s discovery. Each bar was about 99 percent silver and weighed more than eighty pounds. All were stamped with serial numbers by the foundry and marked with the owner’s stamp, the foundry stamp, and the tax man’s stamp. By the time the assayer individually certified its purity with his stamp, the bar looked as if it had been graffiti-tagged by a demented numerologist. Each llama could carry only three or four bars. (Mules are bigger than llamas, but need more water and are less surefooted.) The shipment required more than two thousand of the beasts. They were watched by more than a thousand Indian guards who in turn were watched by squads of Spanish pistoleros.
Despite these obstacles the Americas produced a river of silver—more than 150,000 tons between the sixteenth and eighteenth centuries, according to the silver trade’s most prominent historians, Dennis O. Flynn and Arturo Giráldez of the University of the Pacific. For those centuries Spanish silver washed around the planet—it was 80 percent or more of the world’s output—overwhelming governments and financial institutions everywhere it landed. “Right at the beginning there was this shot of silver into Europe,” Flynn told me over the course of a long conversation. “We can’t be sure about the numbers, but the amount of silver in Europe may have doubled.”
The Spanish silver peso became a universal currency, linking European nations much as the euro does today. (It was called, famously, a “piece of eight,” because it was worth eight reales—reales were then the basic Spanish coin.) Pesos were the main currency in the Portuguese, Dutch, and British empires and widely used in France and the German states. “Because silver was the money supply,” Flynn said, “there was an uncontrolled jump—an explosion, really—in the money supply across Europe.” Flynn was trained as an economist. “Rapid, unplanned shocks to the money supply are generally a bad idea,” he said. Inflation and financial instability were the result.
After sixty years of frenzied production, Flynn and Giráldez wrote, the world had accumulated so much silver that its value began to fall. A million pesos in 1640 was worth about a third of what a million pesos had been worth in 1540. The impact was multifarious and planet-wide. As the price slid, so did the profits from silver mining—the mining that was the financial backbone of the Spanish empire. Spain did not adjust its tax rates for currency fluctuations (in modern terms, they weren’t indexed to inflation). The king collected the same amount of taxes in silver as he had before, but its value plunged, throwing the government into crisis. Spain’s economy turned to ash, followed by the economies of a dozen other states equally dependent on Spanish silver, one after another like a chain of firecrackers. The well-off felt beggared; the beggars felt desperate. With nothing to lose, they picked up stones from the streets and looked for targets. Ruin was followed by riot and revolution.
Much of the silver from Potosí and Mexico was transformed into “cob” coins, hammered between crudely engraved dies. This four-reale coin was made in