Front Page Titles (by Subject) CHAP. VI.: The Reason why Interest was lowered one half after the Conquest of the Indies. - Complete Works, vol. 2 The Spirit of Laws
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CHAP. VI.: The Reason why Interest was lowered one half after the Conquest of the Indies. - Charles Louis de Secondat, Baron de Montesquieu, Complete Works, vol. 2 The Spirit of Laws 
The Complete Works of M. de Montesquieu (London: T. Evans, 1777), 4 vols. Vol. 2.
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The Reason why Interest was lowered one half after the Conquest of the Indies.
GARCILASSO informs us,‡ 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;* when every thing 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 merchandize; 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.
[‡ ]History of the civil wars of the Spaniards in the West Indies.
[* ]In France, Mr. Law’s project was called by this name.