Price revolution

Quick Facts: Who was Price revolution?

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Price revolution

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A major economic period in Western Europe marked by significant, sustained price increases.

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Origins & Early Life

The Price Revolution, sometimes known as the Spanish Price Revolution, was a series of economic events that occurred in the second half of the 16th century, and most specifically linked to the high rate of inflation that occurred during this period across Western Europe. Prices rose on average roughly sixfold over 150 years. This level of inflation amounts to 1.2% per year compounded, a relatively low inflation rate for modern-day standards, but rather high given the monetary policy in place in the 16th century. Generally it is thought that this inflation was caused by the large influx of gold and silver from the Spanish treasure fleet from the New World, including Mexico, Peru, Bolivia and the rest of the Spanish Empire. Specie flowed through Spain increasing its prices and those of allied European countries (e.g., the imperial territories of Charles V).

Career & Major Achievements

Wealth then spread to the rest of Western Europe as a result of the Spanish balance of payments deficit, or was directly introduced to countries like Great Britain and the Kingdom of France, using piracy to attack the Spanish fleet. This enlarged the monetary supply and price levels of many European countries. Most historians look at the end of the Renaissance as the start of the Price Revolution. Often considered a time of peace for the Western European population, the Renaissance was a period when Western Europe experienced equilibrium in the price of commodities and labor. It also was a period when there was a high concentration of wealth in the hands of a few (the Black Death had wiped out nearly a third of the population a century before).

Enduring Legacy & Impact

Additionally, Europe experienced technological advancement in the mining industry, the stream of currency through debasement from royals, and the emergence of Protestantism. The severe shortage of precious metals during the late 15th and early 16th centuries eased in the second half of the 16th century. The Spanish mined American gold and silver at minimal cost and flooded the European market with an abundance of specie. This influx caused a relative decrease in the value of these metals in comparison with agricultural and craft products. Furthermore, depopulation – specifically in southern Spain – resulted in a high rate of inflation.

Historical Fact-Check Quiz: Price revolution

True or False: “The primary cause of the Price Revolution was solely the debasement of coinage by European monarchs.”

Answer (FALSE ❌): While debasement played a role, historians generally attribute the major inflation to the massive influx of gold and silver from the New World.

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