Mining, the Americas

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Mining, the Americas

Although a complex mosaic of factors underpinned Spanish imperialism in the Americas, there is abundant evidence that for the conquistadors—as for the monarchy that licensed their expeditions—the quest for gold was of fundamental importance. The tone was set at the outset, with Christopher Columbus's log entry for October 13, 1492, describing his first encounter with native Americans:

I was attentive and sought to learn whether they had gold and I saw that some of them wore a small piece suspended from a hole they have in the nose. And I was able to understand by signs that, going to the south there was a King who had large vessels of gold and who had a great deal of it.

Cuba, located by taking this southward course, yielded little immediate treasure. Gold nose ornaments and bracelets were found in northern Hispaniola, however, as well as a river, promptly named "River of the Gold," "all full of gold, to such an extent that it was a marvel." For the next two decades, the economic life of Hispaniola was underpinned by gold. This was obtained not from mines but, first, from accumulated native treasure, and, as these stocks diminished, from placer deposits in riverbeds panned by native conscripts. The conquests of Panama and Costa Rica similarly provided access, by looting and barter, to the artifacts, and to a lesser extent the placer deposits, of more advanced native societies that for centuries had been accumulating gold objects produced by the sophisticated technique of lost-wax casting. Remittances of gold to Spain reached an early peak in 1511 to 1515, and, after a brief fall reflecting the rapid decline of the native labor force in the islands, boomed from the early 1520s as the conquest of Mexico yielded much treasure. In 1520, for example, Hernán Cortés sent objects worth 32,400 pesos to Charles I, which he described as "so marvelous that considering their worth and strangeness they are priceless." The unsentimental sovereign had them promptly melted down for their bullion value.

The subsequent conquest of Peru (1532–1533), where Francisco Pizarro found an enormous stock of decorative and even utilitarian gold and silver objects, produced even greater riches. Many of these treasures were not "Incan" in a strict sense, but the products of earlier cultures whose craftsmen had been masters of advanced hollow-case casting and soldering for at least 2,000 years. Pizarro melted down virtually everything he could get his hands on, producing at Cajamarca alone—in 1533, from Atahualpa's ransom—13,420 pounds of gold and 26,000 pounds of silver. The sack of Cuzco, in November 1533, revealed incredible treasures, including life-size animal and human gold figures, all destined for the melting pot. On every occasion that treasure was distributed, scrupulous care was taken to set aside the one fifth due to the crown. The first consignment of Peruvian booty—part of the Cajamarca yield—reached Seville in 1534 in the custody of Hernando Pizarro (Francisco's half-brother), who returned to his native Extremadura to recruit more men for the Peruvian adventure. As men flowed one way, the bullion that fired their imaginations continued to pour in, giving a significant boost to the volume and value of trade in each direction. One significant feature was that silver, which had represented less than 1 percent of the value of bullion reaching Spain in the 1520s, began to rival gold in the 1530s. Indeed, it exceeded gold by a ratio of 7 to 1 in terms of volume, although the greater value of gold (10 to 1 in this period) allowed the latter to retain its supremacy, at least in the short term.

By the late 1530s, despite the continuing subjugation of regions with large treasure stocks—for example, New Granada (modern Colombia)—the more farsighted settlers realized that the bonanza of native gold was drawing to an end, and that in the future bullion would have to be secured by the development of mining. By the second half of the sixteenth century, New Granada was emerging as the major gold-producer in South America, particularly as miners invested in the purchase of black slaves to replace the diminishing native labor force in Cáceres and Zaragoza. This early boom fizzled out in the 1620s, but gold production increased in New Granada from the late seventeenth century, as new deposits were opened up. Calculating actual production is virtually impossible, but what is certain is that exports of gold to Spain reached an annual average of two million pesos by the late eighteenth century. Chile, Mexico, and Peru also emerged as significant producers of gold—responsible for about two million pesos a year between them—but were overshadowed from the 1690s by Brazil, where the discovery of gold in the rugged interior sparked off a gold rush in Minas Gerais, Goiás, and Matto Grosso. The boom lasted until the 1750s, drawing thousands of settlers from the coast, and estimated total production in the eighteenth century reached thirty million ounces (roughly the same as that yielded by the California gold rush of the nineteenth century). In Spanish America, by contrast, silver mining reigned supreme, following the beginning of the exploitation of fabulously rich deposits at Potosí in Upper Peru (modern-day Bolivia) in 1545 and Zacatecas (in Mexico) in 1548. All production figures are to some extent "guesstimates," but what is certain is that in the period 1500 to 1650, registered trade conveyed 181 tons of gold and 16,000 tons of silver from America to Spain. Small amounts of copper were also exported, and more was mined for local use, but significant exploitation of this metal and of tin would not occur until the late nineteenth century.


During the Habsburg period Spanish America's preeminent mining center was Potosí, standing at an altitude of over 4,000 meters (13,123 feet) in the mountains of Upper Peru. In 1550 to 1554 alone, it yielded no less than thirteen million pesos, outstripping neighboring Porco (where the Incas had mined silver), and other Andean centers including Castrovirreina, Oruro, and Cerro de Pasco (in production from 1555, 1606, and 1630, respectively). Its rich surface ores—in the first two decades some had a silver content as high as 50 percent—were smelted in ovens known as guayras, and by 1556 the crown was receiving over 450,000 pesos as its fifth. Revenue remained at this level until 1567, when a temporary recession was caused by the working-out of the rich surface ores—yields had fallen to 2 percent by 1570—making smelting uneconomical, particularly because of the high costs of obtaining fuel from distant forests. Registered output fell back sharply from ten million pesos in 1565–1569 to 6.4 million in 1570–1574 (a five-year period during which Zacatecas produced slightly more), reducing the profits of both the miners and the crown. However, the crisis was only temporary, for in 1571 the refining process that extracted silver from ore by amalgamation with mercury was successfully introduced at Potosí, permitting silver production to expand to forty-seven million pesos in the 1570s and sixty-four million in the 1580s. The royal fifth yielded more than a million pesos a year in the period 1579 to 1634, before the onset of a gradual, if uneven, decline in the second half of the century. In the period 1550 to 1629 registered production at Potosí totaled 371 million pesos, compared with 90 million at its nearest rival, Zacatecas.

Potosí's preeminence resulted from three factors. The first, and most obvious, was the abundance of ores yielding sufficient silver to make mining profitable, despite their falling value after the boom of the first two decades. Unlike the Mexican mining centers, Potosí also enjoyed a guaranteed supply of mercury from Huancavelica (in central Peru), where production of the precious liquid metal began in 1564. Getting the mercury to Potosí was not easy—it either had to be carried by mules and llamas along 1,200 kilometers (745.6 miles) of mountain tracks 5,000 meters (16,404 feet) high or shipped down the coast to Arica for an equally difficult overland journey—but the required annual supply of 5,000 quintales (hundredweight) was guaranteed. The miners of Mexico, by contrast, were almost entirely dependent on shipments from Seville of mercury from the Spanish mine of Almadén (and occasional supplies from Huancavelica), the regularity of which was often affected by conflicts in the Atlantic between Spain and other maritime powers. Consequently, Mexican miners, and the merchants upon whom they relied for capital, were more reluctant than their Peruvian counterparts to invest in the extraction of ores in times of unc ertainty, because only those of high grade were worth processing by smelting when mercury was unavailable. Potosí's third, and most decisive, advantage was the system of draft Indian labor, the mita, implemented in 1573 by viceroy Francisco de Toledo, which provided for the delivery of thousands of natives to work in its mines and refining plants. By 1578 the annual draft had been fixed at over 14,000, one-seventh of the adult male population of a series of provinces selected by Toledo. Despite subsequent revisions downward to 4,000 a century later, as disease and migration took their toll on the dwindling native population of the contributing provinces, the system gave the Potosí miners a guaranteed supply of fixed-price labor. Some of the Europeans allotted quotas of Indians were actually able to receive substantial incomes without mining or refining any silver, by agreeing with native community leaders that cash compensation might be sent to them instead of laborers. The mita system, which also supplied a smaller number of conscripts to the Huancavelica mercury mine, theoretically reconciled the notional "freedom" of the native population with the crown's desire to provide the mining industry with a subsidized labor force. In reality it resulted in widespread and systematic abuse of the conscripts, many of whom either died from overwork or mercury poisoning or were prevented from returning to their communities at the end of their year of service at Potosí.

The rapid increase in Potosí's output in the last quarter of the sixteenth century resulted in a parallel growth in bullion remittances from Peru to Spain, from nearly five million pesos in 1571–1575 to a peak of twenty-four million in 1591–1595. In the latter period a further ten million arrived from Mexico. Enormous though they were, these remissions did not represent total production, for some silver remained in America to finance local trade or for manufacture into jewelry, some was diverted to Asia in return for Chinese silks shipped through Manila to Acapulco, and an incalculable amount lubricated contraband trade. The first two decades of the seventeenth century witnessed the onset of what would become by mid-century a sustained fall in silver remissions to Spain, reflecting to some degree gradual falls in production at Potosí and Zacatecas. At Potosí, for example, the fifth yielded one million pesos for the last time in 1649, falling to 800,000 in 1659, 624,000 in 1669, and 622,000 in 1679. By 1700 it brought in 434,000, and it continued to slide until 1736 when, in an attempt to revive the industry, the crown halved the tax to a tenth. This measure promptly reduced the revenue to a mere 183,000 pesos, but thereafter tighter fiscal controls coupled with an increase in silver output gradually raised the yield to 400,000 by 1780. Production difficulties in both Mexico and Peru, reflecting increasing problems in maintaining adequate supplies of labor (because of native depopulation) and mercury (because of frequent international conflicts), were partly responsible for the decline in the volume and value of transatlantic trade in the late Habsburg period. However, the fundamental cause was not economic decline in America. Rather, as France, England, and the Dutch Republic seized Caribbean islands and engaged in contraband and direct attacks on Spanish shipping both in the Caribbean and in the Pacific, a growing amount of private silver was retained in America to finance regional and contraband trade. At the same time, the bulk of the crown's diminishing taxation revenue was diverted into expenditure on defense. In Peru, for example, total crown revenue in 1653 was 3.7 million pesos, of which 490,000 was spent on defense costs and 1.7 million was remitted to Spain. In 1686 to 1690, by contrast, average annual revenue had fallen to 3.1 million pesos, but defense costs had multiplied threefold, to 1.3 million pesos a year, and thus remittances to Spain averaged a mere 150,000. A similar trend can be seen in Mexico, which by 1700 was providing 3.9 million of Spanish America's total bullion production of 8.3 million pesos. Although output at Zacatecas, which accounted for 40 percent of total Mexican production in the seventeenth century, fell by half in the second quarter of the century, and the industry as a whole was depressed in 1635 to 1690 (mainly because of a shortage of mercury), the fall in output was much less severe than the downward curve in official transatlantic trade. There, too, a greater proportion of silver was being retained to pay for a more sophisticated defensive-administrative apparatus, and to finance the creation of an economic infrastructure that was becoming more developed than that of Spain itself.


Registered bullion output increased fourfold in Spanish America in the eighteenth century, with Mexico recording an increase of 600 percent and Peru (including Upper Peru, which was transferred to the new viceroyalty of the Río de la Plata in 1776) an increase of 250 percent. In Mexico the first surge forward occurred in the first three decades, with output rising from 3.9 million pesos in 1700 to an average of 10.2 million in the 1720s. It grew more modestly to an average of thirteen million in the 1750s, and then declined (to an average of 11.9 million in the 1760s) before recovering to 17.2 million in the 1770s. Thereafter, the spectacular growth continued, with production averaging 19.4 million in the 1780s and 23.1 million in the 1790s, a level maintained in the first decade of the nineteenth century (22.7 million a year), before the onset of insurgency in 1810 reduced output in 1810–1814 to a mere 9.4 million a year. The record year was 1804, when Mexico registered 27 million pesos (two-thirds of all American production) and the single mining center of Guanajuato produced as much silver as Peru and Upper Peru combined.

In South America total output declined in the first quarter of the eighteenth century (from 6.4 to 3.5 million pesos a year), before the onset of a steady increase to a high point of 10 million pesos a year by century's end. By then Potosí was producing about 3 million pesos a year (as it had in the 1650s). Potosí's primacy was under threat, however, from the central Peruvian center of Cerro de Pasco, where output grew rapidly in the last quarter of the century—partly because merchant capitalists based in Lima invested there rather than at Potosí, following the separation of the latter from the viceroyalty of Peru. In Mexico, too, long-term investment by prominent merchant families was far more important in promoting growth than the attempts made by the crown in the 1780s to promote technical innovation and acquaint miners with new processing and engineering techniques. The Spanish mining specialist Fausto de Elhuyar succeeded in establishing a School of Mines in Mexico in 1792, while his brother Juan Joséhad some success in introducing new technology in the Mariquita silver district before his death in 1796. However, the expedition to Peru and Upper Peru led by the Swedish scientist Thaddeus von Nordenflicht in 1788–1810 achieved little, partly because the conservative mining community reacted with hostility to his attempts to persuade them to adopt expensive new machinery for the amalgamation of their ores.

The bulk of Spanish America's mining production during the boom period of the late eighteenth century—over 20 million pesos a year, representing 62 percent of registered output—continued to be remitted to Spain, with the balance being consumed within the American economic system. According to some estimates, about half as much again of official production escaped registration and taxation, disappearing into the increasingly complex channels of contraband trade established primarily in the Caribbean and the Río de la Plata by traders from England and British America. Whether by these informal routes or by reexport from Spain to pay for the manufactured goods required in America that peninsular industry was unable to provide, most American bullion ended up in the countinghouses of Britain, Holland, and other European countries, feeding the increasing international demand for the silver required for trade with Asia. In relative terms, the importance of treasure imports into Spain diminished in the last quarter of the eighteenth century, from an average of 76 percent of the total value of goods arriving from America to an average of 56 percent. This shift was due to the gradual liberalization of trade during the reign of Charles III, which promoted the production and export of agricultural goods—mainly sugar, hides, cotton, coffee, and indigo—in parts of Spanish America hitherto regarded by the crown as of secondary importance, precisely because of their inability to provide significant quantities of precious metals. Nevertheless, the boom in American silver production meant that the volume of bullion reaching Spain continued to grow. Trade in all commodities came to an abrupt standstill in 1796, with the outbreak of what turned out to be prolonged hostilities between Spain and Britain, which in the commercial sphere led Charles IV to grant permission in 1797 for Spanish American ports to trade with neutral ships. When the crown withdrew that permission in 1799, the emerging agricultural regions, notably Venezuela and the Río de la Plata, began to demand genuine free trade in order to preserve their newfound prosperity, gradually realizing that they would first have to win their political independence in order to secure commercial freedom. The majority of the inhabitants of silver-producing Mexico and Peru, by contrast, remained loyal to the royalist cause in 1810.

see also Potosí.


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Mining, the Americas

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