A dual economy develops in New Spain…

A dual economy develops in New Spain during the sixteenth century: the hacienda economy in the Valley of Mexico and the south and the frontier economy of the silver mines to the north.

Silver production collapses by the mid-seventeenth century, however, when mercury, necessary to the refining process, is diverted to the silver mines of Potosi (in present-day Bolivia).

The seventeenth-century mining crisis leads to wide-spread bankruptcy among miners and hacendados (hacienda owners) and also has a negative effect on transatlantic trade.

The financial crisis does, however, promote the production of crude manufactures and food for domestic consumption by the growing population of New Spain.