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 short of a time frame. The gold trade was a total moral abomination, but it was a good trade economically for hundreds of years.

The main problem was that it was basically an arbitrage play and once the margin got erased from inflation, they had let the rest of their economy atrophy.

This is one of the reasons the Saudis invest so much money in tech companies and other industries.

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AlotOfReading 9 hours ago | parent [-]

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.

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anthk 8 hours ago | parent [-]

> 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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AlotOfReading 6 hours ago | parent [-]

Don Quixote came out nearly a century after Cortes and is often cited as specifically having killed the genre/culture it was parodying. Look at how much Diaz talks about Amadis with full seriousness.

	▲	anthk 5 hours ago \| parent [-]
		I would like to think that the New World self-building travelling pragmathism killed the epic born maybe from the Reconquista epics and of course from El Cid. It's like finding New York policemen devouring dime novels around the Far West and believing themselves as lonely, macho gunslingers... In the end the 70's cop movies aren't that different to a Western movie, but they still look a bit rusty compared to a Charles Bronson movie with slight detective skills where a bit of slow pace and thinkering it's needed and most of the old rural tropes wouldn't apply to a big city. A similar thing would be comparing the Medieval Spain tactics against the post-Spain birth ones where guns were becoming to be the norm, such as the Arcabuz. The old men in knight novels fought for their own good cause, but the New World men where just about the profit and trade. Coming back to Spain with goods was far more 'secure' than getting your life threatened by Mesoamerican tribes everyday. I mean, if you got the goods and avoided any fight, the better. It would be the most rational thing to do for the times. Specially without advanced medicine. Meanwhile, it's obvious that the old Quixotic man wasn't afraid of death, but the new pragmatic Spaniard would have for sure a different mindset. Still a Catholic, but he would value far more its life once he was aware that some of his neighbours could improve their life in a trip and actually have some terrenal, tangible, REAL goods to enjoy instead of being tied to a farm or the fields and maybe just religion and the paradise as a relief. Your values could quickly shift once you turned back to Spain loaded as hell with spices -very valuable for the time-, salt, exotic fruits, gold and who knows what. That and the incipient technology. Windmills? Guns? Far better ships? To hell with the hoe.