New World Gold: Cultural Anxiety and Monetary Disorder in Early Modern Spain (review)

Vilches has done a prodigious amount of research in the propaganda and literature triggered by, and written about, the impact of America on Spain, by which she means primarily Castile. She has mined the plays and short stories of the era for popular impressions of the impact of America and of American bullion and examined writings by protoeconomists of the day and by a number of arbitristas—writers who proposed various policies (some idiotic and others plausible) to restore Spanish/Castilian industry, commerce, and, above all, moral health.

Echoing in an uncanny way 2010 arguments about government deficits, loans from outside lenders, selfishness and malfeasance at the highest levels of economic activity, Vilches discusses the growing distance between a Christian, Catholic, Iberian moral economy and a growing world of imaginary money. The latter took the form of credit, government bonds (juros), futures buying and selling, purchase and sale of annuities, and parasitic spending habits by wealthy elites. This flood of paper, or “near money,” combined with the vast influx of gold and silver, triggered inflation. Most of the bullion was silver, but Vilches prefers a literary allusion to gold as the symbol of fixed value in money. This inflation undermined the stable relationship between goods and gold upon which the fondly remembered (if not imaginary) moral economy was based.

Vilches’ underlying premise is that the discovery of the Americas— and its bullion—was central to expanding the world of exotic finance, triggering the cultural anxiety to which the title refers. This cultural anxiety was, in part, a reaction to the re-orientation of the aristocracy, which was no longer known for its military expertise and leadership but for its conspicuous consumption and effete social mores. The aristocracy’s growing dependence on entails (mayorazgos); mortgaging of entail income without investing productivity; and buying annuities from the Crown, monasteries, and convents marked the elite class as an unproductive social parasite. Concurrently, the growing use of credit by the commercial world; the dangerous mingling of public and royal loans and credit; and the multiplier effect of government credit, thanks to American silver, created a shadowy world of finance and imaginary money that was understood by few and misunderstood and feared by many.

The linkage between American bullion, Hapsburg power, the decline of Castilian manufactures and urban life, and recurrent food shortages and epidemics is well known to historians of early modern Spain. Vilches discusses how during the first generation of exploration, when returns to investors were meager, the conquistadores peddled the novelty of new birds, new plants, new art forms, new minerals, and new people as a form of wealth. Vilches documents the connections between this early “wealth,” the expansion of Iberian trade, and the later diversion of American wealth to aristocrats and European merchants and manufacturers through illustrations taken from popular literature, plays, and the laments of would-be reformers (whose ideas about what needed fixing are often more informative than their proposed remedies).

The linkages that produced cultural anxiety are well explored; the underlying assumption of a correlation between American wealth and Spanish decadence, however, is a vintage interpretation. Yet correlation does not always explain causation. In fact, Vilches leaves out another contribution to Spain’s prolonged crisis: The Crown’s role in accumulating, sometimes confiscating, and routinely exporting bullion on a huge scale to pay for its endless wars in the Mediterranean, Germany, and the Netherlands hastened the spread of inflation and stimulated competing industries in Italy and northwestern Europe.

Vilches implies that the vast influx of wealth (that is, monetary metals) from America created the social and moral gulf between high finance and the moral economy of local, everyday life. But this dynamic had been active in much of Europe for at least three centuries—a case in point being the Italian banking crisis of the 1390s. Moreover, most of the financial techniques of sixteenth-century Europe were used elsewhere as well, from the Ottoman...