This graph, from Ward Barrett, "World Bullion Flows, 1450-1800," in James Tracy, ed. The Rise of Merchant Empires, (Cambridge and New York, 1990), shows how the total of American silver (and silver equivalent of gold) production was distributed.  Most went to Europe, and most stayed in Europe with a rising amount going out of Europe to finance trade overseas.

This graph, also derived from Ward Barrett's article, shows how the European trading powers dispersed their silver imports from the New World to finance imports from the rest of the world.  Most of it went to maintain trade with the eastern Mediterranean (the Levant) and with the Baltic regions.  But in the 17th and early 18th centuries, growing amounts went to Asia.  These were shipped out from Amsterdam either by the Dutch East India Company (VOC, for Vereengde Oost-indische Compagnie) or the English East India Company (EIC).  Both were joint stock companies, whose shares enjoyed an active resale market on the Amsterdam stock exchange.  Only the EIC shares were traded on the London stock exchange.

The effect of the continued import of silver into Europe (high-powered money in the form of foreign reserves) helped finance the so-called Price Revolution of the 16th century in Europe.  The figures below are from Fernand Braudel and Frank Spooner, "Prices in Europe from 1450 to 1750," in the Cambridge Economic History of Europe, vol. IV, "The Economy of Expanding Europe in the 16th and 17th Centuries. Cambridge, 1967.

(I still love these graphics!)

These graphs show, first the ineluctable depreciation of the various moneys of account, the local currencies used in the various European states.  Despite the continued growth in the supply of silver, all the countries ended up depreciating their currencies in terms of silver.  Economic logic tells us that if nothing else had changed other than the growth of supply of silver, everything else would be worth more silver, not less.   In fact the graph on p. 459 shows that, yes, gold became worth more in terms of silver.  Throughout Europe in the 16th century, an ounce of gold rose in value in terms of silver from around 11 ounces of silver to nearly 16 ounces, a rise of 50% in the bimetallic ration.   The fiscal demands made upon all European states by the rising expense of the military revolution and the nearly constant pressure of warfare accounts for this pattern.

 These graphs show how the price of a bushel of wheat in terms of silver rose over the 16th century everywhere in Europe, from the northern Baltic to the southern Mediterranean.  This was the economic consequence of American silver being distributed throughout Europe from Spain, either in military expenditures (often the case) or in importing luxuries for Spain or supplies for the American colonies.

The interesting facts are that: 1) the price rises were permanent, unlike previous cases of inflation in Europe; and 2) the differences narrowed, especially in the 18th century.  Even as prices seemed to be falling in the richest areas (Holland, England, northern France), they continued to rise in the exporting regions of the Baltic, showing the influence of increased intensity of trade.

  These graphs show that prices of consumables rose throughout Europe, in line with the rise in the price in the price of wheat. Money wages did not rise nearly as rapidly, however, so that real wages stagnated (Spain), or fell (England & Alsace). These different effects on real wages lead to two opposing views of the effects of the Price Revolution on the European economies in the 16th century. Earl Hamilton -- demand pull, as long as capitalists could control wages, as in France and England, but not in Spain.  Profit inflation in northern Europe then promoted the rise of capitalism there.

John U. Nef -- supply push, argues from the case of England that capitalists could not control wages.  Both food and fuel costs rose for them throughout the 16th century.  They were forced then to respond to profit squeezes by adopting new technology.  The easiest to adopt was use of coal as a substitute for wood as a fuel.  But to be effective, coal had to be burned in fireplaces for home heating or in refractory furnaces for industrial uses.  These were major capital expenses, requiring an expansion of scale of output -- profitable only if export demand could be counted on and capital formation financed somehow.

Resolving these two contrasting views has led to lots of scholarly revisionism and research -- I want to concentrate on the financial history, believing it the strategic factor.