Potosi — From Riches to Ruin

Herman Moll: Map of South America, London c.1715 (detail: Inset view of Potosi by Bernard Lens) Image courtesy of Wikimedia Commons

The first international city wasn’t London, Paris or Rome but a mining hamlet high in the Andes that supplied the world with silver in the 16th century.  University of Tulane historian Kris Lane describes this boom-town in Potosí: The Silver City that Changed the World (2019)  and offers up a cautionary tale of avarice and greed that seems uncomfortably familiar today. In a recent essay in Aeon, Lane catalogues the unexpected wealth of this mountain empire. 

Venetian glassware, Russian leather goods, Japanese lacquerware, Flemish paintings and bestselling books in a dozen languages. Votive African ivories carved by Chinese artisans in Manila were especially coveted by the city’s most pious and wealthy women (who) clicked Potosí’s cobbled streets in silver-heeled platform shoes, their gold earrings, chokers and bracelets studded with Indian diamonds and Burmese rubies. Colombian emeralds and Caribbean pearls were almost too common. Peninsular Spanish ‘foodies’ could savour imported almonds, capers, olives, arborio rice, saffron, and sweet and dry Castilian wines. Black pepper arrived from Sumatra and southwest India, cinnamon from Sri Lanka, cloves from Maluku and nutmeg from the Banda Islands. Jamaica provided allspice. Overloaded galleons spent months transporting these luxuries across the Pacific, Indian and Atlantic oceans. Plodding mule and llama trains carried them up to the lofty Imperial Villa.

In the 1500s, a representative of the Spanish Empire,  Viceroy Francisco de Toledo, transformed Potosí from a hardscrabble mining camp into a “motor of commerce and war,” erecting mills, dams and canals to supply the Imperial Villa with hydraulic power, and establishing a mint, filled with pieces of eight, handworked by African slaves.

The city was rife with all the problems we see today.  Hundreds of thousands of Andeans became refugees and the land was denuded in the search for timber and fuel.

The production of mercury, needed to refine silver, fouled the region’s air and streams. The city’s refineries “belched lead and zinc-rich smoke,” guaranteeing that “children would suffer lifelong stupefaction.”  Both the people and the land grew sick, while the new technologies prospered.

Environmental hazards multiplied as the city boomed, and with these ills came murderous social conflicts, vagabondage, sex-trafficking, gambling, political corruption and general criminality. Epidemics swept the city every few decades, culling the most vulnerable...The Habsburg kings of Spain cared little about Potosí’s social and environmental horrors. Potosí silver, for them, was an addiction: deadly and inescapable. For more than a century, the Cerro Rico (Rich Hill) fueled the world’s first global military-industrial complex, granting Spain the means to prosecute decades-long wars on a dozen fronts – on land and at sea. No one else could do all this and still afford to lose.

But that’s not all.  In 1647,  Potosi also became been the center of a financial boondoggle not unlike the one orchestrated by Bernard Madoff early in this century.  

Medieval Spanish Eight Reales from the Potosi mint, courtesy of Wikimedia Commons

Facing royal bankruptcy, King Philip IV dispatched a former inquisitor to unravel a massive debasement scheme that had metastasized inside Potosí’s royal mint. The plot corrupted nearly every official within 1,000 miles. Even Peru’s viceroy was suspected of complicity. Potosí’s debased coins, mostly pieces of eight, hit world markets after 1638, and before long merchants from Boston to Beijing were rejecting Potosí coins. The fountain of fortune had become a poisoned well. It took more than a decade to hunt down and punish the great Potosí mint fraud’s culprits and to restore the coinage to proper weight and purity...The global flood of bad coins hurt everyone, rich and poor. Genoese, Gujarati and Chinese bankers suffered ‘haircuts’, merchants worldwide forfeited precious ties of cross-cultural trust, and soldiers throughout Eurasia saw their pay halved or worse.

And here you have it — a scathing description of the first global economy, the ease with which it was corrupted,  how its collapse ricocheted around the world and displaced so many people from their homes.   

In 1678, a priest from Baghdad, Don Elias of Mosul came to  Potosí, hoping to collect alms for his church. By then the mines were nearly exhausted.  But Don Elias was astonished by the city’s royal mint, with piles of ‘pieces of eight’ fashioned nearly a century earlier.  He saw them “heaped on the floor and being trampled underfoot like dirt that has no value.”

Read this fascinating article here.

And be sure to check out Aeon, a magazine of ideas that never fails to edify and amaze. 

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