[3] Additionally, Europe experienced technological advancement in the mining industry, the stream of currency through debasement from royals, and the emergence of Protestantism.
When precious metals entered Spain, this influx drove up the Spanish price level and caused a balance of payments deficit.
[6] The deficit was financed by the metals that entered these foreign countries and in turn increased their money supply and drove up their price levels.
Starting in the 1540s a growing amount of silver was shipped to Europe from Zacatecas, Guanajuato and Taxco mines in Mexico and the Potosí mountain in Peru.
Bodin dismissed this argument, contending that the growing influx of silver from the Spanish Americas was the primary cause of price inflation.
[12] Championed for the quantity theory of money, Bodin was able to demonstrate that the inflation of prices in France was due far more to Spanish-American influx than to any change in coin debasement.
This, however, was not true; less well known is an even earlier Spanish publication in a treatise from 1556 by the cleric Martín de Azpilcueta of the Salamanca School, which made virtually the same claim about the role of Spanish-American silver in the rise of prices.
Previously, Spanish kings (at least from 1471) issued a largely copper fractional coinage called blancas, with a nominal money-of-account value of 0.5 maravedí, but with a very small amount of silver to convince the public that it was indeed precious-metal "money".
The difference between the silver- and vellon-based price indexes in Spain showed that the purely copper coinage other European countries used made up a much smaller proportion of the total coined money supply (something the Spanish kings had overlooked and Malestroit was able to pinpoint).
[3] Demographic factors also contributed to upward pressure on prices with the resurgence of European population growth after the century of depopulation following the Black Death (1347–1353).
Later on, increased population placed greater demands on an agricultural area that had contracted significantly after the 1340s, or had been converted from arable to less intensive livestock production.
[citation needed] However, population growth and recovery in countries such as England are not consistent with inflation during the early stages of the price revolution.
[8] Critics of the population argument raise the question that if England at the beginning stages of the price revolution was very unpopulated, how could any renewed growth from such a low level immediately spark inflation?
[19] The significant increase of European population in the period 1460–1620 meant that there were now more people to be fed, clothed, and housed raising the demand for goods of all kinds.
Until the mid-17th century, the number of mouths to feed outran the capacity of agriculture to supply basic foodstuffs, causing the vast majority of people to live in a constant state of hunger.
Hamilton also pointed to monopolistic and other non-competitive techniques as the typical pricing behavior for European products and factor markets of the period.
In the 1520s and 1530s, ships full of Aztec and Inca treasures arrived from Mexico and Peru to the courts of Charles V as homage of Hernán Cortés and Francisco Pizarro.
Those treasures were usually minted into coins in Seville and transferred to German bankers in Antwerp, a port city of the Burgundian Low Countries where major agencies of the Fugger and Welser were located.
Certain golden objects have survived in descriptions: for example, some were displayed in Brussels to the German artist Albrecht Dürer who wrote: "In all my life, I have seen nothing that rejoiced my heart so much as these things".
In 1528, Charles V carved out a colony in Venezuela for his German bankers, hoping to discover the legendary golden city of El Dorado.
In the 1540s and 1550s, the discovery of silver mines in the Americas (such as Potosí, Zacatecas, Taxco, Guanajuato, Sombrerete) increased the flows of precious metals.
[21] [22][23] Conditions in 16th century Europe support the view that the separation of constantly rising prices and fixed rents destroyed landowners.
Small landowners of the hidalgo class, the lower clergy, government officials, and many others all found their standard of living reduced as commodity prices rose beyond their means.
However in the second half of the century, when the conditions of the Price Revolution got worse and relentless inflation began to make Spanish enterprise less competitive in the international and colonial market, not all merchants and manufactures found life enjoyable.
Enormous fortunes were made in the Indies trade (whose expansion was related directly to the rise of prices) and this encouraged more investment and profitable returns.
Profitable returns were distributed beyond the merchant houses of Seville to entrepreneurs in other parts of Spain, as the American market took the oil and wine of Andalusia, the wool of Castile, the metallurgical products and ships of the Basque country.
[24] Unlike many other states of the period, the Republic of Genoa gambled the majority of its economic interest on the Spanish monarchy—bankers invested their money in the crown and farmers of Spanish revenue, while Genoa's merchants and nobles settled in Spain (Madrid, Seville, Kingdom of Naples and Sicily) marrying local nobility and monopolizing majority of the trade.
[25] A multitude of small investors, Genoese and others, obtained from the Crown long-term securities (Spanish: juros de resguardo) as collateral for their loans.
Genoa benefited from the price revolution as they enjoyed the advantage of "increasing returns to scale in international financial services".