22.6. 6. The Reason why Interest was lowered one-half after the Conquest
of the Indies.
Garcilasso informs us
[9]
that in Spain after the conquest
of the Indies the interest, which was at ten per cent, fell to five.
This was a necessary consequence. A great quantity of specie being all
of a sudden brought into Europe, much fewer persons had need of money.
The price of all things increased, while the value of money diminished;
the proportion was then broken, and all the old debts were discharged.
We may recollect the time of the System,
[10]
when everything was at a
high price except specie. Those who had money after the conquest of the
Indies were obliged to lower the price or hire of their merchandise,
that is, in other words, their interest.
From this time they were unable to bring interest to its ancient
standard, because the quantity of specie brought to Europe has been
annually increasing. Besides, as the public funds of some states,
founded on riches procured by commerce, gave but a very small interest,
it became necessary for the contracts of individuals to be regulated by
these. In short, the course of exchange having rendered the conveying of
specie from one country to another remarkably easy, money cannot be
scarce in a place where they may be so readily supplied with it by those
who have it in plenty.
Footnotes
[9]
"History of the Civil Wars of the Spaniards in the West Indies."
[10]
In France, Law's project was called by this name.
