The Spanish Empire, Silver, & Runaway Inflation: Crash Course World History #25


Hi. I’m John Green, this is Crash Course
World History and today we’re going to talk about the entire fracking globe over the course
of several centuries so let’s get right to it! Mr. Green! Fracking? You don’t know about Battlestar Galactica
yet, Me From The Past? Oh, man, there are so many great things in your future! Today, I’m going to try to show you how
tiny Spain’s influence spread around the world and shaped the lives of almost every
human on the planet, generally in negative ways. I know, everything is such a bummer on Crash
Course recently. It’s the sixteenth century. People are getting richer, they’re living
more connected lives and all I can do is whine about how much better the old days were. What am I, your grandpa? Let’s get festive.
Woooo! [theme music] So the Aztecs weren’t the first impressive
polity in Mesoamerica, that honor would go to the Olmecs or the Mayans. But they were
probably the greatest. The Aztecs formed out of an alliance of three
major cities in modern day Mexico in about 1430, just 89 years before Cortez and his
conquistadors showed up. The Aztec state was very hierarchical, with
an emperor at the top and a group of unruly nobles beneath him, just like Europe! And
in addition, there was a class of powerful priests whose job it was to keep order in
the cosmos. So, Aztec religion held that history was cyclical
and punctuated by terrible disasters and then would ultimately end with a massive apocalypse.
And the job of the priests was to avoid these disasters, by appeasing the gods, generally
through human sacrifice. The Aztecs extended their control over most
of southern Mexico, parts of Guatemala and the Yucatan, and they demanded tribute from
conquered people in the form of goods, precious metals, and people to sacrifice. If you’re familiar with The Hunger Games,
it won’t surprise you to learn that this didn’t sit very well with said conquered
people. And the fact that the Aztecs were basically ruling over thousands of people
who hated them made it a lot easier for Cortez to come in and find allies to overthrow them. All that noted, in less than a hundred years,
the Aztecs accomplished some amazing things. Especially the building of their capital city
Tenochtitlan, on the site of modern day Mexico City, which was like Venice in that it was
divided and serviced by canals. They also had floating gardens, called chinampas, which
provided food for the city. Oh, it’s already time for the open letter? Alright. An open letter to Human Sacrifice. But first,
let’s see what’s in the secret compartment today. Oh, nice! Come on. Be a mushroom, be
a mushroom, be a- ohhh dahh! Dear Human Sacrifice, Look, I’m not going
to defend you. But if you really believe that the world is going to end if the gods are not
appeased, then human sacrifice… kind of makes sense. And as evidence for this, let me submit to
you that we engage in human sacrifice all the time. Remember the movie, The Dirty Dozen? No?
Because you’re too young? That makes me hate myself. Anyway, it was all about glorious sacrifice
and how a few have to die in order for many to live. Did you at least see that uh, that meteor movie
that Ben Affleck was in? What was that called, Stan? Stan: Asteroid. John: Asteroid! Stan: Armageddon. John: Armageddon! Armageddon. Right. Like
that. Human sacrifice. Best wishes,
John Green Alright, now let’s head south to the Inca
civilization, which was older than the Aztecs and in some ways even more impressive. Founded
in the 13th century, the Inca empire ruled between 4 and 6 million people by the time
the Spanish showed up in 1532. Trade and a very effective administrative
structure held the empire together, which was even more impressive when you consider
all the roads and temples that were built atop mountains with nothing to haul things
up those mountains, except for llamas and people. The Inca had no written language but they
were able to keep records with knotted strings called quipus. And they were really good at
integrating conquered people into the empire, mandating that people learn the Incan language
and vitally, they ordered every male peasant under the Inca control to do unpaid work for the Inca
government for a specified period of time each year. This system, which the Inca called mit’a
allowed them to build all those roads and temples. The Spanish would later adopt this
system, and the hierarchical system with the emperor at the top, except they would make
it all, you know, much suckier. And, yes, that is a technical historian term. So, the Spanish arrived in Mexico in 1519,
and in Peru in 1532, benefiting in both cases from total chaos due to disease. And after
conquering the Inca and the Aztecs, they created an empire with two administrative divisions.
The Vice royalty of New Spain, founded in 1521, and the Vice royality of Peru, founded
in 1542. In some ways, the Aztec and Inca empires were
perfect for Spanish conquest. Their administrative structures were similar, there was a similar
link between secular and religious power, albeit different religions. All of which made
it relatively easy for the Spanish crown to step into the void left by those two great empires
and send their own administrators to run the place. While most of the Spanish aristocrats who
came over ran large agricultural operations, you don’t see a lot of movies called, like,
Indiana Jones and the Search for A Nice Farm in the Countryside. The real glory for conquistadors
was gold. Initially they found some, both in the Caribbean
and in Mexico, but never enough to get, like, super-rich. Fortunately, or as I will argue,
unfortunately, they did find a mountain made of silver. So the Spanish adapted the mit’a, which the
Incas had used to build roads and public buildings, to mine and process that silver. So one seventh
of the adult male Indian population from each district was required to work in the silver mines
for a year, being paid only subsistence wages. Now, you might wonder why the Spanish didn’t
purchase African slaves to work in the mines. They did in Mexico, but in South America it
was cheaper to use indigenous labor. Purchasing slaves was inefficient because
one: They didn’t have experience working at high altitudes, and two: Mine work was
super deadly. Mercury, which can be used to refine silver
ore, was found at the mountain of Huancavelica. And mercury poisoning among miners was so
common that parents would often maim their children to keep them from having to work
the mines. You can see why I’m struggling to be festive! Let’s go to the Thought Bubble. So Spanish mines in the Americas produced
over 150,000 tons of silver between the 16th and the 18th centuries, over 80% of the world’s
supply. Spain became the richest nation in Europe and Spanish silver pesos became the
de-facto currency. But the Spanish royal family does not appear
to have understood inflation, and the huge influx of silver caused skyrocketing inflation,
and since they never set tax rates to account for it, they collected the same amount of
money sixty years after the discovery of silver, but that money was worth a fraction of what
it once had been. And in general, it’s not clear that Spain benefited much from the discovery
of silver. Rich countries have a way of finding their
way into expensive and not totally necessary wars, and Spain was no exception. While empire
wasn’t the central cause of Spain’s many 16th century wars, it sure did fund them. So in 1519, which was a heck of a year for
Spain, Charles V united the kingdoms of Spain and Austria by being named head of the Holy
Roman Empire, so called because it was not holy, not Roman, and not an empire. Charles had this dream of a unified central
Europe, which was constantly being thwarted by German nobles, who had a dream of a non-unified
central Europe, and eventually Charles V’s ambitions were shattered and he gave the Austrian
half of his kingdom to his son Ferdinand, and gave Spain with the American stuff to
Philip in 1556. Thanks, Thought Bubble. So, Philip II didn’t
only inherited all of Spain’s holdings in the Americas and in Europe and in the Phillip-not-a-coincidence-ines.
He also inherited a rebellion in the Netherlands, because the Dutch were like, “We’re gonna
be Protestant, also you guys know nothing about economics,” which, incidentally, the
Dutch are still saying to the Spanish. And then the English sided with the Dutch
and there was a war featuring a disastrous invasion of England, called the Spanish Armada,
in 1588. England’s success against the Spanish, even though it can largely be chalked up to
the weather, was credited to Queen Elizabeth I. That led to a period of wealth and national
pride, which meant that people had both the money and the desire to see, I don’t know,
plays about old English Kings named Richard. And that, my friends, is how the discovery of silver in Bolivia
contributed to the genius of William Shakespeare. Anyway, American silver didn’t cause these
wars anymore than it wrote Hamlet, but the new wealth made both more possible. Knowing
that they had this enormous silver “war chest” at their disposal made them much more inclined
to build all those ships that got sunk in 1588. And soon enough even a mountain of silver
couldn’t pay for all their warring, and the Spanish crown had to borrow money, which they
couldn’t pay back, so they defaulted on their debt several times in the 17th century.
Yay, silver! So, most of the silver mined in the Americas
went to Europe, but at least a third of it went to China. Either directly, on Spanish
galleons, or indirectly through through the purchase of Chinese goods. China had encountered inflation of its own
after printing the world’s first paper money in the 12th century, so they switched back
to coins. Initially, Chinese coins were made out of copper or bronze, but their economy
was so big — they were the leading producer of consumer goods until the 19th century — that
they ran out. So they went to silver. Now, China didn’t have a lot of silver itself,
but Japan did, so they traded manufactured goods for it, but soon even that wasn’t
enough. This was mostly because in the 16th century, China changed its tax structure.
Taxes, man, they’re at the center of human history. In the early part of the Ming Dynasty, Chinese
farmers paid their taxes in goods, mainly grain, and labor. But as more silver entered
the economy, the Ming government changed its policy and required taxes to be paid in silver. This meant that almost everyone in China had
to produce something that could be sold for silver, which usually meant silk. In fact, the Ming
government often required people to make silk. That glut of silk inevitably led to a price
drop, which hurt the Chinese economy but not nearly as much as it hurt the Spanish economy,
where almost every silk producer was put out of business. So much for the idea that global
outsourcing is a new problem. You’d think all this silver would make the
Chinese incredibly rich, just like the Spanish, right? Well, yes, just like the Spanish, in
that they got rich, but they didn’t stay rich. The Ming government also failed to peg
taxes to inflation, and spent too much on defense, notably the Great Wall. And by the 17th century the Ming were overthrown
by the Fu Manchus. Oh, it’s just the Manchus? Guh! History, always disappointing me. As
the historian Dennis Flynn put it, “A significant hunk of the GDP of China – then the world’s
biggest economy – was surrendered in order to secure a white metal that was produced
mostly in Spanish America and Japan… Think about what else those resources could have
been used for.” The Spanish empire’s silver trade was the
first truly global market — even India was involved, but we’re really out of time — and its consequences
were dire, even if it did make some people rich. Both Spain and China experienced inflation
that weakened their governments. The environment suffered. The search for precious metals led
the Spanish to find and eventually destroy two of the world’s great empires, the Aztecs
and the Inca. And many thousands were killed mining silver
and the mercury used to refine it. But before you say it wasn’t worth it, remember that
this process led to the life that you have today, one where I can teach you history through
the magic of the Internet. Worth the sacrifices, human and otherwise? I don’t know. You tell
me. Thanks for watching. See you next week. Crash Course is produced and directed by Stan
Muller. Our script supervisor is Danica Johnson. The show is written by my high school history
teacher Raoul Meyer and myself, and our graphics team is Thought Bubble. Last week’s phrase of the week was “number
four, letter u” if you want to suggest future phrases of the week or guess at this week’s
you can do so in comments, where you can also ask questions that will be answered by our
team of historians. Thanks for watching Crash Course, and as we
say in my hometown, Don’t forget to be awesome!

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