The "royal fifth" on gold and silver mined in Spanish America had its origins in medieval Castile, where the royalty ranged as high as two-thirds of bullion and a fifth of booty. To encourage mining output in America, however, a decree of 1504 established the royalty on bullion at one-fifth.
Gold washing in the Caribbean yielded some quinto revenue, but with the discovery of the great silver-mining districts of Mexico and Peru in the mid-1500s, the quinto became a significant and dependable source of revenue for the royal treasury. When miners presented silver or gold for taxation, treasury officials first collected an assay charge of 1-1.5 percent and then calculated the quinto on the remaining bullion.
Declining ore quality and lower profits led the crown to rescind the quinto on silver and to levy a lower royalty, the tenth (diezmo). The government temporarily halved the Mexican quinto in 1548 for the refiners, although bullion merchants were to continue paying one-fifth. But the concession to the mine operators soon became permanent, and treasury officials found the distinction between producers and merchants impossible to enforce. By the mid-1600s, the quinto on Mexican silver had practically disappeared, replaced by the diezmo. The Peruvian quinto remained in force until 1736, when Andean silver producers also began to pay the tenth.
As to gold, mined in much smaller quantities, the crown maintained the quinto longer: until 1723 for Mexico; 1738 for Guatemala; and 1778 for the Andes. In 1778 the crown imposed a uniform rate of 3 percent on colonial gold production.
It is impossible to know how much silver and gold escaped paying the royal fifth, but the quinto yielded large sums for the treasury: for example, more than 1.5 million pesos per year during the 1630s from the viceroyalty of Peru. The quinto and diezmo data in colonial tax records have enabled economic historians to calculate the amount of bullion legally produced in the colonies.
Brazilian gold producers also paid a quinto on their output to the Portuguese crown. As in the case of the Spanish colonies, Brazilians found the quinto a serious disincentive to production and reportedly engaged in massive smuggling to avoid the royalty.
See alsoMining: Colonial Spanish America .
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Kendall W. Brown