The History of Precious Metals in Spain

A brief insight into the period of Roman rule

The first documented gold trading was in about 700 BC, when the Phoenicians came to Spain to trade their tools and glass beads for Spanish gold. In 25 BC, the region of el Bierzo, which included the mine that was to become the largest of the entire Roman Empire, was conquered. Two hundred years later, mining in ‘Las Medulas’ started on a large scale. The gold and silver that was excavated there financed the rest of the Roman expansion. The mine met the desire for greater wealth and benefitted from the ‘free’ local labour available after the Romans gained dominance over the territory.

The Romans were well known as specialists in hydraulic mining. To expose and release gold deposits from the earth, they used hydraulic pressure. Miners would carve aqueducts into the rock, which were used to transport water from the nearby creeks and rivers. Then the flow of water would fill the excavated cavities, causing pressure streams strong enough to pierce and break up the thick rock walls. The mine featured channels and reservoirs, as well as intricate hydraulic systems, which diverted high-pressure water to the site for processing. The water was also used to wash the gold deposits. This method was used all over the world until the 1800s.

Numismatic coin showing Sisebut, King of the Visigoths and ruler of Hispania and Septimania, from 612 – 621; 1.45 grammes

The Visigoths are at the gates

Under the dynamic King Leovigild, the Visigoths kingdom flourished. His aim was to rule over the whole of the Pyrenean peninsula. In pursuit of this expansion, Leovigild fought campaigns against the east Romans, the Kingdom of Suebi (now the region of Galicia and north Portugal), the Cantabrian, the Basque and other smaller kingdoms. In 570, he “laid waste the region of Bastetania and the city of Málaga, by defeating their soldiers”. His campaigns continued annually over the next five years. Despite the fact that he was constantly at war with the Byzantines in the south of Spain, Leovigild tolerated them and embraced their way of living as well as their monetary system. From the start of his reign, the Visigoth kingdom issued coarse coinage of its own designs. During a rebellion in southern Hispania, Leovigild struck and issued gold tremisses with a cross first introduced by Emperor Tiberius II. However, when he regained full control of the Iberian Peninsula, he stopped displaying the image of the Roman emperor on his coins to signal denial of the formal authority of Constantinople.

Numismatic coin showing King Philipe V, CA 1700 -1746, 3.34 grammes

Gold Drives up Prices During the Renaissance Period

The Spanish price revolution began in about 1470 and lasted until around 1650, during which gold and silver poured into Spain from the new world. The amount of gold arriving from across the Atlantic each year drastically increased following the discovery of precious metals in South America. Twenty percent of all loot taken from the conquests was reserved for the King of Spain and was referred to as the ‘quinto real’ or ‘Royal Fifth’. Most historians consider the end of the Renaissance as the start of the Spanish price revolution. It increased Spanish prices and consequentially spread inflation throughout western Europe. Economist Earl Hamilton argues that prices in Spain rose by approximately 250 percent between 1500 and 1600. The consequence was that Spanish exports became uncompetitive in Europe. There was a rapid increase in money (then silver and gold), chasing a fixed amount of goods. It enlarged the money supply and prices across many European countries. The influx of gold contributed to Spain’s relative decline and low living standards in future centuries. The Spanish spent their gold on commodities from other countries, without producing much in terms of exports themselves. Because consumer goods could easily be imported, there was little incentive to produce goods and undertake the necessary investments in infrastructure and develop the domestic economy, particularly in respect of investing in technology. When the flows of gold dried up, the Spanish economy was left lagging behind that of its European neighbours, which led ultimately to a decline in the Spanish empire.

England, by contrast, was arguably, the chief beneficiary. The huge quantities of treasures acquired by Sir Francis Drake enabled Queen Elizabeth I to pay off a considerable chunk of the national debt. The accumulation of gold helped finance a rapid expansion of the navy. It is an irony that the industrial revolution, which was to follow in the nineteenth century, may never have got off the ground in Britain, if it had not received this substantial windfall of treasures.

It is also worth noting that although the inflows of gold and silver were huge sums for the time, they only represent a fraction of today’s annual global gold production. In the sixteenth century, total gold global production is estimated to have been less than 100 tons compared to more than 100,000 tonnes of global production during the twentieth century.