This is the second of several documents in the Document-Based Question (DBQ) from the 2006 AP World History exam. Tomas de Mercado was a Spanish scholar writing in 1571, a time when the establishment of the Spanish Empire was beginning to have dramatic effects on the economies of Spain, Europe, and the world. Mercado is attempting to explain these changes, which, as he points out, involve inflation. It is relevant to the question posed on the exam, which is as follows: "Analyze the social and economic effects of the global flow of silver from the mid-sixteenth century to the early eighteenth century."

From this source, we can see that educated Spanish observers (for the sake of document analysis, it is important to note that Mercado is a "scholar") thought that the effects of the silver trade involved increased demand for Asian luxury goods in Spain, an overall price increase as silver flowed from the Americas to Spain to China, and the further integration of the global economy. A good answer would use this document along with others which either corroborate, contradict, or qualify it in order to construct an original argument.

This document is written from the point of view of a Spaniard who would have been thinking about the economic situation of the time in which he was living.  The point of the document is that the Chinese were selling all sorts of goods to the Spanish in the Philippines and were buying nothing from them.

Remember that this question is asking you about the flows of silver during this time -- about their economic and social effects.  This document (and you should compare it to Document 4) is making the point that all of the silver is flowing in to China and none is coming back out.  This was a major issue for the Europeans at this point in history since they believed in mercantilism and the need to have a favorable balance of trade with bullion flowing into your country rather than out of it.

The point of the document, then, is that (from the Spanish point of view) the trade with China was too one-sided, causing the Spanish to lose silver to the Chinese.