When Columbus discovered Central America looking for a faster route to South Asia and the spice trade, he was more of a diplomat, than takeover artist. He established the presence for Spain and on the next round of ships Cortes and others came looking for gold, the takeover artists of the day. At the time Cortes had newer and better fighting tools (the gun), the positive value of opposition to the Incas (who treated non Incas very badly) and great ambition to find the sources of gold. In the end Cortez took over the Inca empire for Spain which resulted in the country of Spain jumping to become the most powerful country in the world. According to the book Empire of Blue Water by Stephan Talty, Three Rivers Press, NY, 2007 from the gold mines of Mexico and Peru between 1500 and 1650 approximately 180 tons of gold flowed through the official port of Seville. In addition 16,000 tons of silver came through Spain. One of the affects of this gold and silver was Spain opened a mint in Mexico, the mint produced over 2.68 billion coins and the world used the coins as common currency. The Spanish coin was called the Spanish piece of 8 and you may remember stock prices were quoted in 1/8.

As time went on, the King of Spain Phillip IV was dependent on the gold and silver to pay for the country’s bills. This was great while Spain had control of Central America and the Seas to transport the gold and silver back to Spain. However, things began to change in 1660’s, first the King of England was broke and lusted after Spain’s gold, he  decided to send the navy to takeover Jamaica. If you draw a line across the Atlantic Ocean between Central America and Spain, the line goes through Jamaica or it was a strategic asset. The British takeover of the land of Jamaica and the giving of letters of marque or letters of commission or what is now termed diplomatic immunity which gave captains and the crew the ability to behave similar to pirates, as long as the crown received 10% of the treasure. The captains of the crew similar to many people decided they were prefer not to pay taxes or commissions to any crown became pirates. One of the most important pirates of the era is Captain Henry Morgan, you may know his name from a bottle of rum.

Linking to dividend paying stocks, in this case, Spain had a monopoly on the gold and silver trade, its balance sheet as long as gold and silver came in, there was little worries outside the normal weather concerns. When the conditions changed, partly as a result of Spain not keeping pace with the potential attackers, for example one of the ships travelling back and forth was designed to carry paper work, similar to now, most accountants are not expected to shoot guns to protect the paperwork. The people on the ships were government employees, not navy fighters, but they did ensure the paperwork was done. If you go to a meeting where the company is concerned more with the paperwork than fighting off its competiton, expect the market share to fall and be prepared to sell your shares.

There are more questions than answers, till the next time – to raising questions