Explain How The Discovery Of Silver In Potosi Led To A Changing World Economy

Question One
Explain how the discovery of silver in Potosí led to a changing world economy. What impact did this change have on social groups in Latin America and elsewhere? Who benefitted from this new economic system? Who lost? Why?

In the middle of the sixteenth century Portuguese and Spaniards discovered large veins of silver in the southern Andes in Portosi (Sterns Chapter 1 p. 90) this discovery of silver led to alterations in the world economy, impacted the social groups in Latin America and other parts of the world in a variety of ways. While some were able to benefit others did not for several reasons.
Firstly, China who was a dominant power in that era had a high demand for silver. Trade between china and other countries was

Mining of this silver created trade links between the Americas, Europe, Asia, china and other countries which in turn led to the development in the economic growth on a global scale. This global economy began with the establishment of commercial and transportation centers in newly developed cities in the Americas in order to facilitate the extraction and transportation of the silver from the mines. Large estates known as haciendas to house colonists from Europe were established. They also developed a new agricultural economy in order to supply the countries in the east with other needed products such as sugar, tobacco, coffee, cotton. These raw materials were shipped to Europe and were used to produce the goods that were demanded by

They established strict social class systems based on race and ethnicity and wealth. As the colonists began to have offspring with the natives, this gave rise to the development of new ethnic groups which resulted in the development of new social classes. This was further compounded with the influx of African slaves into the Americas which were needed as labourers in the mines and on the farms. They too contributed to the development of new ethnic groups as they mingled with the natives, colonists and their offsprings. It became extremely difficult to clearly distinguish one’s position in society based solely on race and ethnicity. The Europeans imposed completely alien economic, religious and conceptual structures in Latin America. (Conquest of the Americas ppt.slide 2) This alien structures combined with the ideas, beliefs and cultural practices of the natives as well as the Africans caused the development of new social structures that was vastly different what originally existed in the Americas. This factory owners, colonists, merchants, industrialists etc. help to create a new class system based on newly acquired wealth known as the middle class or bourgeoisie which vastly changed the existing social structured