Spanish Mining Taxes

The mining of precious metals in the new world was an important part of Spain’s economy in the colonial Spanish era. However, the government owned no mines outright—with one exception. It was private citizens who were to find a mine, claim it, work it, and refine the ore. The gold or silver bars then underwent a series of taxes, direct or otherwise.

One indirect tax on silver mining was from the one type of mine that the Crown not only owned but had a monopoly on: mercury. It was discovered in the new world that mercury could refine some types of silver ore better than any other method. For some ore, it was essential. By tightly controlling the supply of mercury, the Crown would know who was refining metals, and could profit off the sale of mercury.

When silver or gold left a refinery in bar form, those bars were to be taken to a treasury office where the tax was to be collected and the bars were to be stamped. The tax was, at most 20%, but at times rates were reduced for silver mining in difficult areas. 10% is the most cited example of taxation on silver. Note that this tax was on the total amount of silver melted into ingots. In other words, the tax was not on the net profit of a mine, but on the gross output of it.

Just before 1700, the law was that all bars of silver had to be minted into coins. The mint was in Mexico City. Most often miners did not carry the bars to Mexico City themselves, but instead sold the bars to middlemen who would take ownership and transport them. The mint charged about 6% for its services. At that point, the coins belonged to whoever had taken the bars to the mint. The coins entered circulation world-wide, and the gold ones at least, were even legal tender in the United States early on.

But the taxation and fees on mining did not stop there. Both silver and gold were used for coins and silver was pegged at a certain percentage of gold. The official rate, set by the Spanish crown, in the Americas was less than the rate in Europe, so on that basis the crown made another gain of up to 12% at times as silver collected by the government was worth that much more in Spain than in the new world.

Another indirect tax was that all practically all goods had to be imported from Spain, and only from Spain. That supported Spanish manufacturers and exporters at the expense of the colonists.

In the end, a bankrupt miner might have no choice but to go further in debt to pay the Crown the gross 10% on the silver bars, and then lose more money selling the bars to a middleman. In total, maybe 1/3rd of the value of the refined silver went to the Crown. Is it any wonder that mining might be carried out in secret, and silver and gold sent east to be traded for goods with the French, or later perhaps with the Americans?

David C Lewis wrote this article. His author page and a link to purchase his book on the San Saba Treasure is here