ECONOMIC FACTORS, 1516-1700
[Sidenote: Comparative backwardness of Spain in economic development.]
While this era was marked by a brief period of prosperity, and while
there was a noteworthy advance out of medievalism in the evolution of
mercantile machinery, the keynote of the times was the failure of Spain
to keep pace in material welfare with her high standing in other aspects
of life. Spain continued to be a raw material country, although
artificial attempts were still made to create a thriving industrial
development. These efforts, when they did not fail altogether, accrued
to the advantage of foreigners or resulted in establishments which were
of slight consequence in comparison with those of other European lands.
A combination of evils at length sank Spain to such a state of economic
degradation and misery as comported ill with her political reputation in
European affairs and with the opportunities she had had and failed to
employ to advantage. Nevertheless, Spain’s decadence, overwhelming
though it was, is to be viewed from a relative standpoint. Medieval
Spain at its best, except possibly during the Moslem era, did not attain
to an equally flourishing state with the Spain of the seventeenth
century, which marks the lowest point to which she has fallen in modern
times. On the other hand, with relation to other countries in the
seventeenth century and with due regard to the needs which an expanded
civilization had by that time developed, Spain came to be economically
about the most backward land in western Europe. This occurred, in spite
of the fact that Spaniards found and developed such extraordinary wealth
in their new world possessions that their colonies were the envy of
Europe. Spain did indeed get rich returns from her overseas investment,
but these funds and others were squandered in the ways which have
already been pointed out.
[Sidenote: Relative prosperity in the early years of the era.]
[Sidenote: The American trade.]
[Sidenote: Industrial wealth of Seville.]
[Sidenote: Grazing.]
[Sidenote: Fishing.]
[Sidenote: Mining.]
At the outset there was a period of undoubted prosperity, due in part to
a continuation of the favoring legislation of the era of the Catholic
Kings, but more particularly to the enormously increased demand
resulting from the rapid and extensive colonization of the Americas,
whose commerce was restricted by law to favored regions of the Spanish
kingdom. The American trade and to some extent the considerable fortunes
gained in the colonies themselves provided capital for a yet further
expansion of the industrial wealth of the peninsula. The effects were
felt principally in Castile, but were reflected also in Aragon and
Valencia. Seville, as the sole port of the American trade, became
extraordinarily rich in its industrial life, and many other cities
shared in the general prosperity. Woollen goods and silks were
manufactured on a large scale, and many other articles, such as hats,
gloves, soap, leathers, arms, and furniture were also made. Grazing and
fishing were notably productive industries. When Philip II ascended the
Spanish throne in 1556, it is said that the corporation of the _Mesta_
possessed seven million sheep. Part of the wool which they produced was
supplied to Spanish manufacturers, though other sources were also drawn
upon by the makers of woollen goods, but vast quantities of wool were
sent abroad. In 1512 about 50,000 quintals were exported; in 1557 some
150,000; and in 1610 the amount had reached 180,000 quintals. The
whale-fisheries off the northern and northwestern coasts of Spain, at
that time a rich field for this occupation, and the catching of
tunny-fish in the Mediterranean furnished profitable employment to the
people of the coasts, who also made voyages to distant waters, even to
Newfoundland, on fishing ventures. The wars of the reign of Philip II
and the scarcity of boats soon tended to check this phase of economic
expansion. Mining produced but little, in part because the possessors of
_latifundia_--nobles and churchmen--did not care to develop their
estates in this respect and in part because private individuals
generally could not be certain that they would be allowed to enjoy any
profit they might make. Philip II, desirous of remedying this situation,
incorporated all mines into the crown, and encouraged prospecting for
mineral wealth, though exacting certain tributes from those who should
discover and work mines, but even under these circumstances little was
done.
[Sidenote: Relative character of Spanish industrial prosperity.]
[Sidenote: Its duration in time.]
There has been a tendency to exaggerate the state of prosperity to which
Spain attained and to treat it as if it suddenly collapsed. In fact
Spain’s industrial wealth was only great by comparison with what it once
had been and with what it was presently to be in the period of decline.
The manufacture of cloth in the entire kingdom in the most flourishing
epoch did not equal the output of the single city of Bruges. That the
growth of manufacturing was only ephemeral and did not take root in the
peninsula is attested by the fact that it was usually necessary, even in
the era of greatest industrial expansion, to depend upon imports to
supply Spain’s needs, while the considerable exports of raw materials,
especially wool, show that the domestic demand could not have been
great. Undoubtedly a good industrial beginning was made, which might
have resulted in the economic independence of Spain. It did not
continue, however, and the question arises: How long did the era of
relative industrial prosperity endure? A precise answer is impossible,
because some industries flourished longer than others, or the same
industry prospered in one place after it had ceased to do so in another.
Conflicting accounts began to appear about the middle of the reign of
Charles I, and even in the first half of the seventeenth century there
were documents which testified to instances of prosperity. Speaking
generally, the decline may be said to have made itself felt in the reign
of Philip II and to have become clearly apparent by the middle of the
reign of Philip IV.
[Sidenote: Handicaps on agriculture.]
Agriculture did not advance much from its wretched state of the previous
era. The economists, giving undue importance to the accumulation of
specie, and obsessed by a desire to develop manufactures, did not
appreciate the fundamental value of agriculture; grazing was favored at
the expense of farming; agricultural labor, never plentiful, was still
more scarce after the expulsion of the Moriscos; and the evil of
_latifundia_ tended to reduce the amount of land cultivated. The laws
encouraged agriculture only when it did not interfere with what were
considered the more important industries. Legislation was frequent
forbidding the cultivation of lands which had ever been devoted to
grazing and compelling their restoration to that industry, and the old
privileges of the _Mesta_ were maintained to the detriment of the
farmers. The scarcity of agricultural labor caused an immigration from
other countries, especially from France, and this increased after the
expulsion of the Moriscos. It did not solve the problem, as the
foreigners were wont to return home, after they had accumulated savings.
Under the circumstances it is not surprising that agricultural
production did not meet the needs of the peninsula. Something was done
to protect farm laborers, and some government projects of irrigation
were undertaken, but not enough was done to offset the handicaps which
the state itself imposed. Intensive cultivation by small proprietors was
one of the needs of the time, and one attempt to bring this about in
Granada was made. Some 12,500 Castilian, Asturian, and Galician families
were sent there to replace in a measure the several hundred thousand
expelled Moriscos. The experiment was successful, and the colonization
took root, but it was not repeated. Nevertheless, eastern and southern
Spain had their period of relative prosperity, especially through the
cultivation of the vine and the olive. The Americas offered a rich field
for the export of wine, since the growing of vines was prohibited there,
and the soil, climate, irrigation canals, and Morisco labor (prior to
the expulsion) of Valencia, Granada, and Andalusia were well adapted to
provide the desired supply. Even this form of agriculture suffered a
serious decline in the seventeenth century, due largely to the loss of
the Moriscos.
[Sidenote: Comparative prosperity of Spanish commerce.]
[Sidenote: Prosperity of Seville and Medina del Campo.]
Spanish commerce had its era of splendor and its period of decline, but
the former was prolonged much more than in the case of the manufacturing
industry, because of Spain’s serving as a medium for distribution
between foreign countries and the Americas, and because of the continued
exchange of raw materials for the foreign finished product after Spain
herself had ceased to be a serious competitor in manufacturing. Seville
was by far the most prosperous port in the country, since it had a
monopoly of the American trade, which also necessitated the sending to
that city of goods from the other parts of Spain and from foreign
countries for trans-shipment overseas. Mercantile transactions on a
great scale, involving the modern forms of credit and the establishment
of branch houses in all parts of the world, were a natural outgrowth of
Seville’s great volume of trade. The wealth of the city continued until
well into the seventeenth century. The transfer of the _Casa de
Contratación_ (which handled Spain’s commerce with the Americas) from
Seville to Cádiz occasioned a decline of the former and a corresponding
prosperity of the latter. Possibly next in importance to Seville in
mercantile affairs was the inland city of Medina del Campo, site of the
greatest of Spanish fairs and, except for the east coast provinces, the
contractual centre of the entire kingdom. Purchases, sales, and
exchanges of goods entering or leaving the various ports of Spain were
usually arranged there. Numerous other cities shared with Seville and
Medina del Campo in the commercial activity of the sixteenth century,
even those of the east coast, although the forces which had occasioned
their decline in preceding eras were still operative and were to renew
their effects before the sixteenth century had much more than passed the
halfway mark. The Mediterranean trade of Spain remained largely in the
hands of the Catalans, however. North European commerce, of which that
with Flanders was the most important, was shared generally by Spain’s
Atlantic ports, although those of the north coast had in this case a
natural advantage.
[Sidenote: The _consulados_ and other mercantile machinery.]
The inevitable result of the commercial activity of the sixteenth
century was the development of a mercantile machinery to handle the
trade. This occurred, in Spain, on the basis of institutions already in
existence, the _consulados_, merchants’ exchange buildings (_lonjas_),
and fairs. To the earlier _consulados_ of Valencia (1283), Barcelona
(1347), Saragossa (1391), Burgos (1494), and Bilbao (1511) there were
added those of Seville (1543) and Madrid (1632). Although the
_consulados_ of the ports differed in some respects from those of the
interior the same principles applied to both,--so much so, that the
ordinances of the _consulado_ of Burgos were the model for that of
Bilbao. The _consulado_ of Burgos served as the type, indeed, upon which
the ordinances of many of the later _consulados_ were founded, wherefore
its description may suffice for all. Strictly speaking, the _consulado_
was only the tribunal of the body of merchants, who together formed the
_universidad_, or association, for purposes of trade, although the term
_consulado_ came eventually to include both. Many cities lacked the
tribunal, but did possess the _universidad_ of merchants. The tribunal,
or _consulado_, of Burgos exercised jurisdiction in mercantile cases,
and also had charge of such important matters as maritime insurance,
charter-parties, and the patronage of certain pious foundations. The
_universidad_ met annually to elect the officers of the _consulado_,--a
prior, two consuls, and a treasurer. The jurisdiction of the _consulado_
as a court was not limited to cases arising in Burgos, but extended to
other towns and cities for many miles around it. There was an appeal in
criminal cases to the _corregidor_ of Burgos, but in civil cases the
_consulado_ was independent of both the royal and the municipal courts.
The _consulado_ of Madrid introduced some novelties, principal among
which was its close attachment to the national bureaucracy through the
intervention in its affairs of the _Consejo Real_. Various cities
founded merchants’ exchange buildings, including some which had no
_consulado_. As for the fairs, the great importance of Medina del Campo
has already been mentioned. Two fairs a year, in May and October, were
held at that city, on which occasions merchants, bankers, and brokers
from all parts of the world gathered there. By the end of the sixteenth
century the fairs of Medina del Campo were already in a state of
decline, and they received a death-blow when by royal mandate Burgos
replaced Medina del Campo as the contractual centre of Spain. Burgos
did not greatly profit, however, for the general mercantile decadence
had begun to affect all commercial institutions in the country.
Mercantile machinery survived after the period of prosperity had passed,
and thus it was only to be expected that a central institution should at
length be founded. Such was the case, for the _Junta de Comercio y
Moneda_ (Junta, or Council, of Commerce and Coinage) came into existence
in 1679. During the remainder of this era it was of slight consequence,
however.
[Sidenote: Medieval character and inconsistencies of mercantile
legislation.]
The legislation of the period reflected the prevailing economic ideas,
such as the exceptional importance attached to precious metals, the
insistence that the balance of trade should favor exports (lest imports
should result in specie going out of the country), the favor shown
toward the policy of protection, and in a measure the continuance of the
medieval penchant for government regulation of industry. The state was
not consistent, however, varying its laws according as the needs of the
treasury or of European diplomacy or of any passing crisis might direct.
Thus prohibitions against foreign goods were often maintained, while at
other times the greatest freedom of entry was allowed. In the treaties
of peace of the sixteenth century care to safeguard the commercial
interests of Spain was employed, but in the seventeenth century they
were often sacrificed through the indiscretions of ministers or for
political reasons. Thus Spain’s need of allies against France occasioned
the grant of a right for the free entry of goods into Spain (but not
into the colonies) to the Protestant Netherlands, England, Denmark, and
Portugal, with reductions in duties. Treaties of 1665 and 1667 with
England abolished Spain’s right to inspect English boats or to search
the houses of British subjects, amounting to a virtual invitation to
smuggling, which was in fact the result. Smuggling in connivance with
Spanish officials became so general (not altogether by Englishmen) that
it was regarded as a necessary evil. The government displayed a tendency
to facilitate internal commerce,--as by the suppression of interior
customs lines,--but the protective and regulative spirit of the Middle
Ages was too often apparent. Thus prices were fixed and exclusive
rights of sale granted. A curious instance of the latter (though not out
of keeping with the age) was the permit given to the religious orders of
Madrid to open taverns for the sale of beverages accruing from their
crops. When certain abuses and some scandal resulted the privilege was
withdrawn, but was later renewed subject to certain conditions, one of
which was that friars should not serve the wines to customers.
[Sidenote: Difficulties over coinage.]
Legislation with relation to money was particularly abundant. One grave
error of the past was constantly committed from the time of Philip II to
the close of the era, the debasement of the coinage with a view to
relieving the difficulties of the treasury, but the results were not
more favorable than in former years. Despite governmental care in the
matter of coinage, diversity of coins was still a problem. In addition
to the national moneys there were regional pieces and numerous foreign
coins. Attempts were made to fix the relation between them, but without
great success. One factor which was not appreciated at the time was that
of the cheapening of money through the enormous importation of precious
metals from the Americas, resulting in a corresponding advance in
prices. The high prices were ascribed to the exportation of precious
metals from Spain, and stringent laws were passed to prevent it. It was
difficult, however, to keep the gold and silver in the country.
[Sidenote: Scant attention to public works.]
The national record of the House of Austria in public works cannot be
said to have been good. The need for more and better roads was generally
recognized, but unless they suited military purposes or were to be made
use of in a royal progress, or journey, the state would rarely build
them. Municipalities and groups of merchants (especially the
_consulados_) did something, but were hampered by the centralizing
spirit of the government. A license from the _Consejo Real_ was
required, even though the state were not to pay. There were too few
roads, and existing highways were as a general rule in a bad state of
repair. Many bridges were constructed by the government in the sixteenth
century, but only a few in the century following. Plans were also
discussed for deepening the channels of Spain’s great rivers, but that
of the Tagus alone received attention, and the work to that end by
Philip II was destroyed by the negligence of his successors. In like
manner irrigation on a large scale was planned, but scarcely anything
was accomplished. On the other hand this period marked the beginning of
a mail service as an auxiliary of economic life; it was due to the state
only in that the government granted a monopoly of the privilege to a
private individual. Between 1580 and 1685 the extension of the service
to foreign countries was brought about. Naturally the whole system was
as yet defective from the modern standpoint. The government did expend
moneys, however, for military objects and state buildings. Forts were
built the length and breadth of the Spanish world, although many of them
were allowed to decay in the seventeenth century. Royal palaces and
houses of recreation and several splendid churches for royal use, all of
which added to the glamor of monarchy, were built at state expense. The
municipalities also erected public edifices, such as merchants’ exchange
buildings and city halls.
[Sidenote: Foreigners in Spain and legislation concerning them.]
One of the most controversial questions of the era was that of the entry
of foreigners into the economic life of the peninsula. This had begun to
be a factor (without referring now to the earlier arrival of Moslem and
Jewish elements) in the reign of the Catholic Kings, but it was a much
more prominent issue in the period of the House of Austria. It was
complicated by the fact that certain groups of foreigners might be
welcomed (laborers for example), while others (merchants and
manufacturers in particular) were not, but all elements would be both
wanted and opposed by some class of the Spanish people at any given
time. In general, popular opinion whether of rich or poor was adverse to
foreigners. At times the kings yielded to the complaints of the people
and passed restrictive laws, but at other times, urged on by financial
needs and political aims, they took the contrary course. Dependent as
they were upon foreign money-lenders the kings could not refuse to grant
the privileges and monopolies which their creditors exacted as security.
It would seem, however, that by far the greater number of the
foreigners were engaged in the less remunerative occupations. A writer
of the seventeenth century says that there were 120,000 foreigners in
domestic service, and goes on to say that they also engaged in such
occupations as street hawking, the keeping of retail shops of all
varieties (sellers of meat, wine, cakes, etc.), and the mechanical
trades, including even those of porter and vendor of water. In 1680 the
French ambassador estimated that there were 77,000 of his countrymen in
Spain, many of whom were farm laborers, but there were considerable
numbers in various other occupations, ranging from the wealthy merchant
down to the lowly shepherd or peddler. Other nationalities were also
prominent. Laws were passed limiting the number of trades in which
foreigners could engage, but they seem to have been without avail, for
both the complaints and the legislation were often repeated. The victory
of the foreign element began to be more apparent by the middle of the
seventeenth century. Philip IV enacted laws to encourage immigration,
because of the scarcity of labor, and permitted a foreigner who had
lived for many years in Spain and married a Spanish woman to enjoy
privileges little short of those of a native. Similar laws were made in
the reign of Charles II.
[Sidenote: Statistics of population.]
[Sidenote: Prevalence of vagabondage.]
The economic status of Spain in this era could be more clearly set forth
if it were possible to have fairly reliable data as to population. In
the middle of the sixteenth century there may have been about six and
three quarter millions of people in Spain. By the end of the century
some estimates hold that the numbers had increased to perhaps eight and
a half millions, but there is ground for doubting these assertions.
Figures for the seventeenth century are even more uncertain, but there
is a general agreement that the population declined. One estimate makes
the population of Spain 5,700,000 at the end of the era. Misery,
idleness, and vagabondage were characteristic of Spanish life in the
late sixteenth and throughout the seventeenth century; it has been
estimated that there were 150,000 vagabonds at the close of the
sixteenth century whose principal occupations were begging, thieving,
and prostitution. It is true that a like state of affairs existed in
other countries, and that many foreigners were included in this element
in the peninsula, but conditions were probably worse in Spain than
elsewhere in western Europe.
[Sidenote: Causes of vagabondage.]
Much has been written about the causes of vagabondage in Spain. The
principal causes undoubtedly were economic. Foreign writers have charged
it to Spanish pride and scorn of manual labor as well as to a certain
native laziness. These allegations are true to some extent, flowing
naturally from the circumstances of the history of Spain. Slavery had
been perhaps more general and long-continuing in the peninsula than in
other parts of Europe, and the slaves had usually been Moslem in faith;
thus Spaniards might naturally be disinclined to do the work of slaves
and infidels, and the same spirit would be present on its religious side
to make them object to working in company with the questionably orthodox
Moriscos. The general desire of Spaniards to be regarded as of noble
blood also tended to make manual labor unpopular, since there was a
strong class prejudice that nobles should not engage in such work.
Finally, the ease of entry into religious orders had rendered escape
from toil possible for a great number, and had increased the sentiment
against laboring with one’s hands. The only way out for a great many was
the life of a vagabond. The sudden wealth acquired by individuals in the
Americas reacted psychologically to make the necessarily slow accretions
of property in Spain an irksome prospect. The exaltation of military
glory had the same general effect, but as the Spanish armies were small
this occupation was not open to everybody, and its perils and
irregularities in pay made not a few hesitate to enter it. Furthermore,
there were many contemporary writers, Cervantes among them, who pointed
out that the life of a vagabond had a certain appeal for many Spaniards;
young men of good family not infrequently joined bands of gypsies.
[Sidenote: Inability of the government to cope with the situation.]
The poverty of Spain was general by the middle of the seventeenth
century, and the state of the country got steadily worse thereafter.
Bread riots frequently served as a reminder to the authorities, who
indeed made many attempts to remedy the situation. Their measures to
attack the root of the evil were worse than useless, however, being
based on economic misconceptions or being discontinued (when they might
have proved beneficial) if they ran counter to governmental policies.
Direct legislation against vagabondage was frequent, but was evaded as
often as enacted. When people were forbidden to remain in the country
without working, the vagabonds made a showing of becoming porters or of
engaging in other like occupations, under the guise of which they
continued their loose practices. When these occupations were limited
they were to be found as theoretically in the service of the noble or
wealthy, whom social pride induced to have as many in their following as
possible. When this custom was attacked direct evasion of the laws was
rendered possible through charitable institutions, especially through
the free soup-kitchens of the religious orders. On the benevolent side
the problem was also approached through the founding of poor-houses,
although this method was not yet greatly developed, and through the
conversion of the former public granaries (_pósitos_), in which stores
of grain were kept to guard against the possibility of famine, into
pious institutions for the gift or loan of food supplies to the poor.
[Sidenote: Contemporary opinions as to the causes of Spain’s economic
decline.]
The fact of Spain’s economic decline has perhaps been pointed out with
sufficient clearness. It is now pertinent to sum up the causes which had
produced it. According to Altamira there was “a great variety of causes,
accumulated upon a country which entered the modern age with weak and
incipient economic energies, a country whose governments let themselves
be dragged into an imperialistic policy (in great part forced upon them
by problems traceable to Ferdinand the Catholic and the fatal
inheritance of Charles I), neglecting, more for lack of means than
intentionally, those measures which could best contribute to better the
productive power and well-being of the country.” This is an epitome not
only of the causes for Spain’s economic decline in this period but also
of modern Spanish history. It places the fault where it belongs, on
Spanish imperialism with its train of costly wars, a policy which Spain
might have followed so far as the Americas were concerned, but which
proved an impossible strain on her resources when carried beyond the
Spanish peninsula into Europe. This was one of the principal causes
assigned at the tune. Some others may also be enumerated. The increase
in the _alcabala_ and in other taxes was often mentioned as a principal
cause, although it is easy to see how this might have been a result of
the warfare. In like manner another group of causes set forth at that
time might well have been results of the economic decline, such as the
following: emigration to the colonies; the lack of government aid to
industries; the invasion of foreign goods and foreigners into Spain; and
the decline in population. Other causes alleged by contemporaries and
deserving of prominent mention, though less important than that of the
European wars, were these: the repugnance of Spaniards for manual labor;
bad financial administration by the government; the prodigality of the
kings in granting favors and exemptions; the governmental practice of
fixing the prices of agricultural products; the evil of absentee
landlordism, especially in the case of the _latifundia_, which were not
developed to the extent of their resources; waste of the means of
production in luxury; the great number of convents and monasteries; and
the exemptions enjoyed by a vast number of individuals.
[Sidenote: Causes assigned by later writers.]
Later writers have put emphasis on other matters. Some present-day
historians assign the expulsion of the Moriscos as the principal cause
of the economic decline. It did leave many trades without hands, and
temporarily depopulated whole districts, but it seems hardly accurate to
regard it as anything more than one of many contributory causes. Writers
of the seventeenth century were impressed by its religious and political
advantages, and do not seem to have regarded it as of serious economic
import. The economic effects of the conquest of the Americas have also
been set forth to account for Spain’s decline. That conquest induced the
already-mentioned get-rich-quick spirit among Spaniards, and encouraged
the false economic idea that precious metals are the basic form of
wealth, leading to the assignment of an undue importance to them. More
serious, perhaps, was the fact that the Americas drained Spain of some
of her best and most virile blood. The number of Spaniards who went to
America, however, was not excessive,--little more than the number of
Englishmen who crossed the seas in the seventeenth century. Furthermore,
Spain most certainly secured a vast financial profit out of the
Americas, not only from precious metals, but also from commerce and the
employment which thousands obtained both in Spain and in the colonies.
Spanish soil was indeed not fertile enough to support a policy of
European imperialism, and that argument has been put forward, but the
fault was less in the land itself, which in other days had produced more
richly, than in the methods (or lack of them) employed to develop its
capacities. Foreign commercial vicissitudes, which are also alleged to
account for Spain’s economic fall, did indeed help to bring it
about,--such, for example, as the disastrous consequences of the silting
in of the port of Bruges, which city had been one of the best purchasers
of Spain’s raw materials. While it is indeed impossible to assign any
single event or condition of affairs as the _sine qua non_ of Spain’s
decadence, one factor stands out from the rest, however, as the most
important,--that of the oft-mentioned policy of Spanish imperialism in
Europe.