The New World Economy: Slavery, Silver, and War

The New World Economy: Slavery, Silver, and War

But it changed with the discovery of huge deposits of silver near Potosi, and huge amounts of silver flowed out of the New World. Despite their wealth, the Spanish crown declared bankruptcy several times because it had to pay for arms and loans because of the wars. Landes said that the main idea was that Spain became, or stayed poor, because it got too much money from the Americas, paradoxically, because they had money to invest or to spend, but they chose the second option: luxury and war.

The Plantation System and the Slave Trade

The New World economy was based on a plantation system using imported African slave labor, initially for the production of sugar, but eventually adopted to tobacco in the 17th century and cotton in the 18th century. Before the discovery of the New World, the Portuguese had already worked out a slave-based plantation system for sugar production on the islands they had conquered in their quest for a sea route to Asia. The French and the English also soon created slave-based sugar plantations on Caribbean islands, deforesting them so much that erosion wrecked the fertility of the soil and changed local climates as well.

For nearly three hundred years, European slave traders took thousands of African slaves every year to the Americas. Two triangles of trade linked the Atlantic World, arising in the 17th century and maturing in the 18th century:

• The First Triangle: Commodities from the Americas were taken to England where they were exchanged for slaves that came from Africa.
• The Second Triangle: Rum went to Africa from England’s North American colonies in exchange for slaves that went to the Caribbean, where they produced molasses from sugar refining that went to New England to produce more rum.

In all of these transactions, Europeans and North Americans made money and accumulated wealth at the expense of Africans and South Americans. African kings and traders got richer by selling slaves, and little by little it became a weapons race, exchanging arms by selling slaves again. The continent lost tens of millions of able-bodied people. The increasing competition and influx of European weapons fueled warfare and instability that continues today. The Atlantic Slave Trade contributed to the development of racist ideology, and because most of the slaves taken were men, the long-term demographic effect was relevant.

The Collapse of African Kingdoms and European Wars

When the slave trade was finally outlawed in the Americas and Europe, the African kingdoms whose still had it collapsed, leaving them open to conquest and colonization. Warfare defined the emerging European state system (the War of Spanish Succession ended in 1713; the Thirty Years’ War ended in 1648; the Seven Years’ War, 1754-1763; or even the American War of Independence, 1776-1783), in which France and England competed, with the latter emerging as the strongest European state. But only one state could gain if another lost, and the best way to do this was to keep the largest possible quantity of the world’s stock of precious metals, especially silver, forcing European New World colonies to trade only with their mother country.