<P> The Reconquista allowed the Catholic Monarchs to divert their attention to exploration . In 1492, Pope Alexander VI (Rodrigo Borgia, a Valencian) formally approved the division of the unexplored world between kingdoms of what is today Spain and Portugal . New discoveries and conquests came in quick succession . </P> <P> In 1492, when Cristopher Columbus brought 1,500 colonists with him on his second voyage, a royal administrator had already been appointed for what the Catholic kingdoms referred to as the Indies . The Council of the Indies (Consejo de Indias), established in 1524 acted as an advisory board on colonial affairs, and the House of Trade (Casa de Contratación) regulated trade with the colonies . </P> <P> Following the discovery of America and the colonial expansion in the Caribbean and Continental America, valuable agricultural products and mineral resources were introduced into Spain through regular trade routes . New products such as potatoes, tomatoes and corn had a long - lasting impact on the Spanish economy, but more importantly on European demographics . Gold and silver bullion from American mines were used by the Spanish Crown to pay for troops in the Netherlands and Italy, to maintain the emperor's forces in Germany and ships at sea, and to satisfy increasing consumer demand at home . However, the large volumes of precious metals from America led to inflation, which had a negative effect on the poorer part of the population, as goods became overpriced . This also hampered exports, as expensive goods could not compete in international markets . Moreover, the large cash inflows from silver hinder the industrial development in Spain as entrepreneurship seems to be dispensable . </P> <P> Domestic production was heavily taxed, driving up prices for Aragon and Castile - made goods, but especially in Castile where the tax burden was greater . The sale of titles to entrepreneurs who bought their way up the social ladder (a practice commonly found all over Europe), removing themselves from the productive sector of the economy, provided additional funds . </P>

What did spain spend most of its new wealth on
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