To what degree did Spain benefit or become

disadvantaged from its exploration and conquest of

the New World?

Benefits

• Increase in prestige and power so that Spain became competitive with other Euro powers.

• Great wealth fueling its artistic period.• Opportunities for Spaniards – more than at

home!• Fulfillment of Spain’s Christian mission.

Disadvantages

• Price revolution and inflation, increase in royal expenditures, instability of royal finances, and repudiation of royal debt.

• Overextension of Spain’s ability to promote Catholicism (conflicted with other empires)

• Difficulties fulfilling economic demands b/c of expulsion of traditional trading populations (Jews and Muslims), discouraging economic modernization and manufacturing.

Latin American Silver and Spain

Chapter 15

Iberian Empires in the Americas• Conquest grew out of individual efforts by

freelance adventurers, NOT royal policy• Conquistadors were awarded with control of

their own encomiendas– By 1570, large parts of C and S America were

controlled as semiprivate regimes of conquistadors!• The king worried about control• 1500s saw a steady increase in Spanish

population rise in the demand of food and goods.

Silver and the Spanish Economy

• Though gold was rare, it soon became evident that silver was not began to flow to the Old World

• Spain used silver to pay long-term debts.• This money was also used to build a large army and

navy to fight wars in Europe to try to stop the spread of Protestantism – (The Spanish Armada)

• This money also funded Spanish trade in silks, spices and other exotic Asian goods stimulating global trade

The Negatives• Too much silver production led to inflation and

loss of value– Excess amounts of silver available made it less

valuable!• Precious metals get their value from their scarcity

– Inflation hurt Spanish businesses and artisans who could not compete with cheaper Asian goods

• The Spanish bought most of their manufactured goods; never developed their own industry.

As a result…

• Because silver is not a renewable product like silk, spices, and porcelain, Spain developed a NEGATIVE BALANCE OF TRADE with China.

• Spain over-extended itself trying to fight Protestant countries – Dutch, British– Bankers lent money to the Spanish Crown despite

falling value – which created bigger problems• 1588 – Spanish Armada defeated by British.

New Government Policy

• Mercantilism– Government protects the domestic market so as

to guarantee a favorable balance of trade.• Limit imports• Set tariffs• Encourage trading companies