If some form of precious metal coin was being used, it seems like way more of it would be leaving Latin America and entering Spain via tributes than would be moving in the opposite direction. Over time I would think this would lead to a shortage of coin in the Latin Americas?
If a representative currency like US dollars was being used, were they forced to mint more of it to replace cash loss?
I'm sorry if I've got some facts wrong. I just work as a transcriber of university courses, and I was recently working on one for the history of colonial Latin America. The instructor mentioned this move by the King of Spain, and I immediately started wondering how the communities in Latin America would recoup their losses.
Thanks! Quothefool
A reply to /u/Quothefool
This is a very complex question. Focusing first on the Iberian part of the Spanish empire, the 1630s saw a major set of crises in Philip IV's government. Between the resumption of hostilities in the 80YW, the War of Mantuan succession, Spain's increasing involvement in the 30YW, and importantly the looming conflict with France, government finances were truly in shambles. Internally, the finances of Castile was very bad, for it had shouldered the weight of the empire for too long.
Philip IV's favorite, the Count-Duke Olivares, planned a series of wide-ranging reforms starting in the 1620s, trying to form a native banking system instead of relying on Genoese financiers, tax reforms in Castile to give respite to the poor, and a sort of standing army contributed by each constituent state. All of these ran into strong opposition, so in 1626 he opted for a financial intervention by suspending the minting of the vellon coins, which were an alloy of silver and copper. This was already an era where there were too many vellon in circulation, so it was already very devalued. Or in other words, the value of goods in vellon was already highly inflated. Further in 1628 the government attempted price-fixing by withdrawing all vellon coins from circulation, and then reducing its tale by 50%. This, of course, led to devaluation, bringing devastation to private individuals but instant relief to the royal treasury. So the crown was already aware of the issue of the price creep in silver currency and was addressing it.
Now, on to New Spain, it is important to first note that the repartimiento was abolished in all areas except in mining. And in that era, mining was the single most lucrative activity. It is telling that there was very little opposition to this policy, as there was already a decline in available native american labor. To give proper context, this new policy should be viewed not only in terms of ethical policy, but also in terms of the crown's continuing attempt to assert stronger control over the colonial administration. They were aware that the repartimiento was damaging to the well being of the population and that it led to a wide range of abuses and corruption. Finally, even after the system was switched to a contract labor system in some extent, most native american peasants still suffered in the new "market system" and effectively the system was hardly any different than the repartimento system. Administrators and landlords found ways to keep native laborers under debt, so there was very little financial transfer and they of course had to provide labor to pay their debt.
I'm summoning /u/Alotofreading to add his knowledge on the American side.
And to advertise, we will have an AMA soon on "Native American Revolt, Rebellion, and Resistance" on April 15, organized by /u/anthropology_nerd !
J. M. Monteuro, Labor Systems, 1492-1850, in the Cambridge Economic History of Latin America.
J. I. Israel, Mexico and the "General Crisis" of the Seventeenth Century, Past & Present, No. 63 (May, 1974), pp. 33-57
J. H Elliott, Imperial Spain.