Today's selection from Adam Smith's "Wealth of Nations" might have been better used as the Columbus Day reading, for in it, Smith looks at the failures of the Spanish conquistadors. The gold-crazed Columbus and those who followed him were doomed to fail, because finding gold is a crap shoot at best.
Smith writes that colonies traditionally serve as safety valves for increased population. When the existing land was filled, some other place had to be found to help absorb the excess. Also, colonies have the added benefit of providing extra security for the colonizing country -- at least that's how the Greeks and Romans approached it.
The Spanish colonizers of the New World in the 15th and 16th centuries were looking for riches, not territory. The lands Columbus found were abundant in natural resources, but that was not enough to justify their taking. It was gold they sought, and given the general defenselessness of the indigenous peoples, it was easy to strip them of the trinkets they had.
The thirst for gold and the failure to recognize its scarcity were the problems that doomed the Spaniards. Smith called it, "the most disadvantageous lottery in the world." Yet the Spaniards had, in Smith's words, "the absurd confidence which almost all men have in their own good fortune," and expected to find more gold and silver than actually existed.
Gold and silver have value because of its scarcity, Smith concluded. That the Spaniards were deluded into thinking otherwise was a big reason why they failed in their efforts to settle North America.