The Riches at the Bottom of the Sea: The Wrecks That Helped Bankrupt an Empire

In June 1708, the Spanish galleon San José was struck by a British cannon and exploded off the coast of present-day Colombia. Nearly six hundred people died, and with them vanished one of the richest cargos ever lost at sea: some 200 tonnes of gold, silver and precious cargo, much of it destined for the Spanish Crown.

The ship’s sinking was a military loss. But it was also something far more damaging: a financial catastrophe that exposed the deep dysfunctions of an imperial system built on extractive incentives, mismanagement, and corruption.

The San José was part of the ‘Flota da Tierra Firme’ (the mainland fleet), one of the great arteries of the Spanish imperial system. It connected the Viceroyalty of Peru - where gold and silver were mined - with Spain, via Panama and the Caribbean port of Cartagena. This transatlantic route was essential to the financial survival of the Spanish monarchy. It moved precious metals extracted in the Andes, carried overland across the isthmus at Panama, and loaded onto heavily armed galleons bound for Cádiz.

What the San José was carrying in 1708 was not just treasure, but opportunities. Much of the gold had been sitting in the colonies for years. During the War of the Spanish Succession, delays in shipping, fears of interception and administrative inertia meant that vast sums of tax revenue and private wealth were stockpiled rather than shipped. Had it shipped earlier, the fates of European empires might have been different.

Not surprisingly, by 1707 officials were under pressure to gather what they could and move it back home fast.

On board the San José were crates of silver coins, ingots, copper, Chinese porcelain, emeralds and cocoa.

But the most politically sensitive cargo was the gold: newly minted coins produced at the Lima Mint, struck from Peruvian gold by order of the Viceroy. They were intended to fund Spain’s war effort, stabilise its finances, and pay back loans.

They were critical to Spain and its government: the Spanish imperial treasury depended on a share of all extracted gold and silver - called the quinto real (the royal fifth).

A new archaeological paper published in Antiquity adds remarkable detail to this story. Since the discovery of the shipwreck site in 2015, Colombian researchers have used remote vehicles to map the wreck. In the latest phase, they focused on the gold coins scattered across the seabed - known as in English as cobs (from the Spanish cabo - meaning ‘end’ or ‘piece’) and in Spanish as macuquinas. These were irregular hand-struck coins minted in Lima.

A Peruvian 8 Escudo coin

High-resolution images have revealed their markings clearly: the Jerusalem Cross, the Pillars of Hercules above stylised waves, and the mint stamp of Francisco de Hurtado, Chief Assayer in 1707. These are 8-escudo coins, the highest denomination of the time and were produced in the year before the ship sank. Their mint marks confirm they were struck in Lima from gold mined in the highlands of Puno and Huamanga in Peru.

We know from the new finds that the shipment was part of a coordinated extraction of precious metal, the gold minted and shipped under official orders. But their presence in large, concentrated clusters on the wreck also shows how cargo was organised: grouped not only by official function, but likely by ownership. Some clusters likely represent private fortunes, others state funds, but all were carried together. In other words, public and private interests were blended together.

I’ve long been interested in bullion flows from the Americas and in shipping from the ‘New World’ because the destination of much of the gold and silver was in Asia - in China, India and elsewhere.

I’ve been particularly interested in another shipwreck - this time that was part of the galleon trade across the Pacific that operated between 1565 and 1815, along the Acapulco-Manila route that linked Mexico and the Philippines.

Funnily enough, one of the vessels I’ve looked at was also called the San José.

The namesake ship sunk near Lubang Island, Philippines, in July 1694. It was carrying a vast cargo of silks and spices, as well as almost 200,000 pieces of Chinese and Japanese porcelain, 47 chests of gold and gold objects, as well as hundreds of chests filled with precious stones.

The total value of the cargo was 7,694,742 pesos. That’s more tha $500 million in today’s money.

The loss of such a massive sum did huge damage to Spanish imperial finances - just like the other San José.

What was most interesting, though, was why this galleon sank. It owed much to the asymmetry of how the Spanish empire functioned where the interests of the central government and those of its officials were misaligned.

In theory, taxes needed to be sent back to Spain. In practice, officials, merchants and local elites found ways to delay, disguise or divert these flows.

Coins intended for the Crown were often kept back to fund local networks of favour and debt. When large remittances were finally made, they were frequently bundled with private wealth - sometimes disguised as public cargo to avoid taxes or scrutiny.

This made the treasure fleets a target not only for rival navies but for anyone who had a stake in the imperial economy. Officials along the route were routinely bribed to approve false manifests or to permit the substitution of lower-grade cargo that meant lower taxes - and higher profits.

Appointments to oversee shipping or minting were prized not for their official salaries, but for the opportunities they offered for side payments.

The earlier San José reflected this world perfectly. The amount of goods and treasure on board was far beyond what would normally be carried on a single vessel. Why? Because officials wanted to line their own pockets. One way to do that was to hold back the date of departure for as long as possible, in order the maximise the bribes they could pick up by loading more and more goods on board.

Of course, the more heavily loaded a vessel, the higher the potential take. That put ships at risk twice over: first, of overloading (which threatened stability at sea); and second, because delays to sailing dates meant that windows when weather was clement narrowed: ships sailing into bad weather were - of course - more likely to run into trouble than those that sailed ahead of it.

That could not just spell bad news for the ship, its cargo and its crew; it could mean disaster.

That’s what happened in 1694: the San José set off behind schedule, and ran into storms that it could - and should - have avoided if it had sailed before the typhoon season.

As this brilliant paper by Desirée Desierto, Mark Koyama and Fernando Arteaga shows, the system itself was the problem: leaky local bureaucracy did huge damage to empires.

That has some significance today, particularly when one thinks about efficiency, transparency and the functioning of institutions. But perhaps more importantly, it shows the dangers and vulnerability of supply chains: when a state depends on revenues that sink to the bottom of the sea - whether because of a storm or because of British cannon fire - it can bring economic compression that produces lethal shocks.

Small knocks can have dramatic impacts. That’s a big part of the other part of my day job at the moment: benchmarking risks - whether related to Russia or China or the US; to climate events or new tech. Things that seem stable can crumple and collapse under pressures that are much more modest than most people think.

I’ll be writing more about that in the coming weeks.

More soon.