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What happened to all the gold Spain got from the New World? (1985)

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Re: What happened to all the gold Spain got from the New World? (1985)

#51

Post by derf_ »

PessimalDecimal wrote: post #25
adastra22 wrote: post #18

Earlier quoted context omitted.

Money is the thing you use to buy things. Wealth is having those things. Only in an ideal world are the two the same. The world is not ideal.

But why couldn't they, e.g. buy other people's thing in exchange for their gold? IOW, why is the relevant fact that _Spain_ didn't have much more wealth despite having more gold? Other people in other countries valued (and still value) gold too.

You can, but then those people have more money, and you have less. The money supply is much smaller than the supply of goods and services, because the same money circulates repeatedly. So simply doubling your money can tilt things a little more your way, but does not make the situation completely lopsided, because you can only spend the extra money once.

Also, to quote Jastram [0], "In spite of the romanticism of the Spanish Main and treasure ships, the supply of gold from the New World was just a trickle by later standards. Less than 1% of what was to be 1930 world production was produced in each of the years from 1500 to 1520." Over the next 80 years, it never got much above 1.3%.

[0] Roy W. Jastram, The Golden Constant (1977), pg. 41.

Re: What happened to all the gold Spain got from the New World? (1985)

#52

Post by gtech1 »

caminante wrote: post #33
ErneX wrote: post #27

Earlier quoted context omitted.

Exactly that, never to be seen again :)

Huh? If you melt down gold, how are you not staring at the same gold? Moscow didn't steal anything either.

Hah, and me who thought they only stole Romania's national treasure, under the guise of 'safekeeping'.

I guess Russia has always been a shitty country.

Re: What happened to all the gold Spain got from the New World? (1985)

#53

Post by lo_zamoyski »

the__alchemist wrote: post #11
Scubabear68 wrote: post #9

Earlier quoted context omitted.

Gold is a VERY unique metal and its value comes directly from that. Particularly the complete lack of oxidation, I'm sure it was seen as absolutely magic that it would not tarnish while every other metal known at the time would oxidize very easily. Value is ultimately always in the eye of the beholder.

Indeed. I believe the parent commenter should pause and assess why people buy things, and what makes something desirable or a luxury good. We can start with mechanical watches: They are of poorer quality by every utilitarian measure than a crystal-oscillator driven one, but command much higher prices and status.

> They are of poorer quality by every utilitarian measure than a crystal-oscillator driven one, but command much higher prices and status.

But the value of the watch is not reducible to its value as a timekeeping device. (Even here, you could argue that the mechanical watch has more instrumental value as a timekeeping device where batteries are unavailable.)

A mechanical watch has greater value as a mechanical watch; it is mechanically more sophisticated, even if not electronically. It can have greater value as a product of superb craftsmanship or as an object of art. (And here, while tastes vary, I would reject the reduction of beauty to taste.)

Re: What happened to all the gold Spain got from the New World? (1985)

#54

Post by Scubabear68 »

lo_zamoyski wrote: post #50
Scubabear68 wrote: post #9

Earlier quoted context omitted.

Gold is a VERY unique metal and its value comes directly from that. Particularly the complete lack of oxidation, I'm sure it was seen as absolutely magic that it would not tarnish while every other metal known at the time would oxidize very easily. Value is ultimately always in the eye of the beholder.

> Value is ultimately always in the eye of the beholder. If you mean value per se, not at all. There are difference kinds of value (intrinsic, instrumental). A piece of bread has objective nutritional value, for example. It doesn’t matter whether you personally dislike bread.

Nope.

As a trivial example, someone with celiac’s disease is not going to value your gluten ridden bread very high.

Re: What happened to all the gold Spain got from the New World? (1985)

#55

Post by AlotOfReading »

empath75 wrote: post #17
ggm wrote: post #2

Marx wrote about commodity fetishism. Perhaps the ultimate version is a belief gold is innately valuable. It has valuable properties, but almost its sole function is to be rare and desirable. That we now use gold for electronics in some ways undermines its rei-ification as the personification of value. Spain fucked up. They mistook the gold for something more valuable than Labor. The Merino sheep of Spain were a bett…

If gold is inherently valueless, then isn’t shipping all of it away immediately to other countries in return for useful goods the most rational thing to do? And if they could get gold at a fraction of the cost of other countries and exchange it for useful goods, isn’t that more rational than building the goods yourself? The Spanish were not stupid and were not acting irrationally — except perhaps thinking on too shor…

It wasn't an arbitrage thing and I'm not sure there's anything fruitful in the comparison to saudi arabia.

The Spanish Empire was, more than anything else, a product of the reconquista. The major institutions of Spain were all directed towards the taking and holding of new lands. When granada finally surrendered in 1492, the monarchy turned towards conquering the canaries and then the new world to avoid the large scale structural changes needed to go from a militaristic, medieval nation to a peacetime state in the early modern. The systems of repartimiento and encomienda were more or less borrowed wholesale from the reconquista. The conquistadors and chroniclers all saw the Americas through the lens of the chivalric literature they loved. The name "California" was borrowed from one of those books, about a fictional island of Amazons who aided the moors.

Precious metals were a solution to the problems Spanish monarchs had in organizing Spanish society. It paid for soldiers in the monarchy's constant wars. It paid off loans to italian and dutch financiers, and it was something that could much more easily be controlled by a distant monarch than import duties or taxation (which nobility were largely exempt from). It also gave them some limited control over their inflation issues by devaluing and revaluing the coinage as financial pressures required. This eventually caused other problems, but the point is that Spain was never really an arbitrage play. They didn't have to be, since they controlled some 30% of the world's gold supply and >90% of its silver at points.

Re: What happened to all the gold Spain got from the New World? (1985)

#56

Post by Ekaros »

PessimalDecimal wrote: post #25
adastra22 wrote: post #18

Earlier quoted context omitted.

Money is the thing you use to buy things. Wealth is having those things. Only in an ideal world are the two the same. The world is not ideal.

But why couldn't they, e.g. buy other people's thing in exchange for their gold? IOW, why is the relevant fact that _Spain_ didn't have much more wealth despite having more gold? Other people in other countries valued (and still value) gold too.

Think of difference between buying bunch of cars from someone making cars. Instead of buying the factory making cars.

Or maybe currently RAM. You found pile of money somewhere. You buy big amount of RAM. RAM prices go up, you do not care you have money. In a few years DDR6 comes out. The RAM you bought is not that expensive anymore. You do not really have either money or something currently expensive.

Wealth is owning the land, the machines, the buildings, the knowledge(more so now). Being rich is owning lot of what can buy those things. But if you keep spending liquid wealth, eventually it is gone and you are not wealthy anymore.

Re: What happened to all the gold Spain got from the New World? (1985)

#57

Post by Retric »

Epa095 wrote: post #35
Retric wrote: post #15

Earlier quoted context omitted.

Gold is used by industry at current prices due to its physical properties, so its current price and value are fairly close. This still allows for significant price swings because there vast quantities of gold sitting around in vaults, but unlike say bitcoin it does have high intrinsic value. IE: If gold sustained a 90% drop in price across decades at lot more would be used by industry creating a price floor.

How can you conclude that the current price and value is fairly close? Seems to me that all you are showing (rightly so) is that there are some use of gold which has higher value than today's price. I agree that industry use creates a price floor, but that might be much lower than what the price is today. I.e if suddenly everyone lost faith in gold as a carrier of value, so everyone who keeps gold just as a passive k…

> current price and value is fairly close

I’m talking orders of magnitude here. Supply and demand curves generally have a slope. As in the demand for goods by industry increases as the price decreases. A significantly larger portion of minded gold is used for jewelry than industry or investment, but a price drop would also reduce the amount mined.

Combine those and yes gold could get significantly cheaper especially with the vast quantities on hand, but it would still be a very expensive metal vs steel, aluminum, etc.

Re: What happened to all the gold Spain got from the New World? (1985)

#58

Post by caminante »

gtech1 wrote: post #52
caminante wrote: post #33

Earlier quoted context omitted.

Huh? If you melt down gold, how are you not staring at the same gold? Moscow didn't steal anything either.

Hah, and me who thought they only stole Romania's national treasure, under the guise of 'safekeeping'. I guess Russia has always been a shitty country.

Except you're leaving out two key facts:

1. National treasures (ex gold) were returned in '35 and '56.

2. Romania intervened against the Bolsheviks in Bessarabia.

#2 seems like FAFO to me. And I'm sure some Romanians got kickbacks from the "transfers." Nobody forced Romania to transfer their assets.

Re: What happened to all the gold Spain got from the New World? (1985)

#59

Post by Herring »

mcc1ane wrote: post #16

> The problem was that the conquest of the New World left Spain with a lot more money, but not that much more wealth, if you follow me. ELI5, please!

It's just investing vs extracting/exploitation. Both can get you rich, but one is short-term and the other is long-term.

Consider what that means for sustainability and the future.

Re: What happened to all the gold Spain got from the New World? (1985)

#60

Post by anthk »

AlotOfReading wrote: post #55
empath75 wrote: post #17

Earlier quoted context omitted.

If gold is inherently valueless, then isn’t shipping all of it away immediately to other countries in return for useful goods the most rational thing to do? And if they could get gold at a fraction of the cost of other countries and exchange it for useful goods, isn’t that more rational than building the goods yourself? The Spanish were not stupid and were not acting irrationally — except perhaps thinking on too shor…

It wasn't an arbitrage thing and I'm not sure there's anything fruitful in the comparison to saudi arabia. The Spanish Empire was, more than anything else, a product of the reconquista. The major institutions of Spain were all directed towards the taking and holding of new lands. When granada finally surrendered in 1492, the monarchy turned towards conquering the canaries and then the new world to avoid the large sca…

> The conquistadors and chroniclers all saw the Americas through the lens of the chivalric literature they loved.

More like the opposite. The Golden Age of Spain was all about making fun on the knight from the "New Man" making wealth from the Americas.

Heck, it's the main theme from Don Quixote. The old, idealistic, outdated, Medieval wannabe-knight (hidalgo meant hijo-de-algo, son of something, hereditary titles) vs the simpleton but grounded peasant from the New World era. Also tons of peasants tried to travel overseas to make good money, and maybe scaled up their status to the ones from a merchant.

As Cervantes itself was a limp from a war which was something reminiscing old romantic but bullshit times, with Don Quixote you have the clear message that the warrior/knights were looked down against the traveler making wealth from overseas.

Kinda like a far west outdated "Justiciero" in the US from an aristocratic background compared to some middle-level educated hick but with a prosperous job in the 50's thanks to making good money from trade in a fish port.

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