197. Extent and power of the Spanish monarchy.—Pursuing now the history of modern commerce by studying its development in different countries, we turn first to the states of the Iberian peninsula, whose great possessions outside of Europe seemed to assure their commercial supremacy.

Shortly before the close of the last century of the Middle Ages three events of great significance occurred in Spanish history. One was the union of the crowns of Castile and Aragon, which brought the greater part of the Iberian peninsula under one ruler. The second was the completion of the centuries old war against the Moors, by the conquest of their last stronghold in Granada. The third was the discovery of America by Columbus. The great Spanish king of the sixteenth century, Charles V, was the most powerful sovereign in the world. He governed at home with undisputed absolutism; he was ruler by one title or another of some of the richest European countries outside of Spain (especially the Netherlands); and he enjoyed in his own right the sovereignty not only over the greater part of America, but over Asiatic and African possessions as well.

198. Rapid development of Spanish industry and commerce.—The rise to greatness of the Spanish kings was paralleled by the development of the Spanish industrial organization. Spain had throughout the Middle Ages been rich only in her raw materials; she had exported wool, iron, and wine, and had imported all her manufactures, largely in foreign ships. The long wars against the Moors had turned people from the industrial arts, so that manufactures were primitive except in a few cities like Barcelona. The most advanced classes in manufactures and trade were not the native Christians but Moors or Jews. A decided advance can be noted under Ferdinand and Isabella, but the movement did not gain full headway till the sixteenth century. Then, it is said, the laborers employed in the textile industries of Toledo rose from 10,000 to 50,000 in about twenty-five years, and still merchants could not supply the demand and had orders for five or even ten years ahead. The industries based on wool, it is said, grew till they supported nearly a third of the population; Spain began to import raw silk and export the finished product, a reversal of previous conditions; great factories were established to make soap and other wares; and the amount of business transacted in Spain made the fairs of Medina del Campo one of the important clearing houses of Europe. Over 100 ships measuring from 300 to 500 tons left Spain yearly for the colonies, and at least as many cleared for European ports; 50 ships or more, it is said, often left the harbor of Santa Maria together, carrying away the salt that was manufactured there.

199. Economic decline in the following period.—Astonishing as is this rapid economic development, it is less striking than the economic decline that followed. Lack of space forbids the discussion in detail of the complex causes which brought about, first, an actual decline of productive power, and then a condition so nearly stationary that Spain was passed by nearly all the other states of western Europe. One important factor, the colonial system of the Spanish kings, will be reserved for discussion later as a separate topic. In this place we shall take up some of the significant facts showing the decline, and suggest some influences that make it intelligible.

The most serious symptom of decadence was an actual decrease of population. In 1723 the total population of Spain was under six million, three million less than the figures show for 1594, when the decline had probably already begun. This decrease is the more significant in that it affected largely the urban groups whose numbers reflect the prosperity or reverses of industry and trade; large cities lost half or even three quarters of their population in half a century. Before the middle of the seventeenth century the wool manufacture consisted only of a few unimportant factories of coarse materials; the silk tax of Granada brought in less than a quarter of what it had yielded under Charles V; and Spain had to rely on other countries to furnish the manufactured wares for export to her colonies. The decline affected not only the quantity of the population, but, to all appearances, its quality as well; beggary and vagrancy became a national curse.

200. Causes of decline; faulty political organization.—The decline in population cannot be explained by emigrations to America, for the drain from that source was small, as will be shown later. Executions by the Inquisition, numerous as they were, could not alone have checked the population. More serious was the expulsion, under ecclesiastical influences, of the Moriscoes of the South, numbering perhaps a million. These people of Moorish blood, the leaders in the agriculture and industry of Spain, in 1609 followed into exile the Jews who had been the leaders in trade; the native Spanish were unfit to fill the gaps thus made in the industrial ranks.

Deeper-lying causes were at work, however. The damage from any single event could have been repaired if there had been wholesome vigor in the Spanish political organization, as there was and as there is still among the Spaniards as a people. It was the fortune of Spain, at this critical period of her history, to have the control of affairs vested in the hands of rulers who were negligent of her condition, by the distraction of their interests or by natural incompetence, and who wasted her resources. The framework of government offered no chance for good councils to reach the monarch’s ears. Men of business sense were excluded from office even in the towns, so far as possible, and were a rarity in the national parliament; power lay in the hands of lay and ecclesiastical lords who had inherited feudal ideas, the reverse of business-like, from the earlier period of the crusade against the Moors, and who had no understanding of the measures needed for industrial development. There can be little doubt that the prime evil from which Spain suffered was (as it still is) bad government.

201. The burden of taxes.—The chief political abuse appeared in the form of taxes so burdensome in their amount and in the method of collection that industry was stifled. Taxes increased so rapidly in the sixteenth century that in 1594 it was asserted that they amounted to 30 per cent on a man’s property, and that farmers could not exist no matter how small a rent they paid; they left Spain or went to prison. The “alcabala,” a tax supposed to be 10 per cent on a ware every time it was bought and sold, was raised until it absorbed most of the profits of trade and was a leading factor in the decline of industry. A Spanish author of the eighteenth century (Ulloa) shows that a man engaged in the manufacture of a certain stuff would have had to pay in taxes actually more than he earned; “hence it follows that he would have gained more by making nothing, and in Spain it is profitable not to work.” Some industries, more fortunate, paid 60 per cent or 40 per cent of the value of the goods as a tax to the government.

202. Customs duties, on the frontier and inside the country.—The same ruinous excesses marked the policy in customs duties. The government established rates which were for the time enormously high, or absolute prohibitions with the death penalty for infraction. Commerce would have ceased almost altogether if it had not been for the absolute need of foreign wares in Spain after the destruction of home manufactures. The wares were procured partly by smugglers through the corruption of the customs guards, partly by the connivance of the government, which allowed foreigners such favors in measurement and valuation that often not over a quarter of the nominal duty was paid. This allowed wares to enter, but it killed the remnants of active Spanish commerce with Europe, for the favors granted to foreigners were refused to natives. Other measures almost as monstrous were attempted, and failed only because the government lacked power to enforce them. Spanish shipping declined until it practically ceased to exist outside the protected colonial traffic.

Finally, to complete this picture of the difficulties under which commerce labored in Spain, duties existed not only on the frontiers but in the interior of the country, hindering the free passage of goods and the development of resources. Spanish kings made attempts to abolish the internal customs frontiers, which failed through the opposition of interested persons and the royal need for money. It was not until 1717 that the internal duties were done away with, and even then the remedy was insufficient, and Andalusia kept its internal tariff barriers.

203. Examples of bad policy; the Mesta.—An excellent example of the evils of the government’s economic policy is furnished by the history of the Mesta, an association of stock raisers largely devoted to the production of merino wool. The flocks grazed in summer on the highlands of Leon, and descended in winter to Estremadura. The Mesta got such privileges that it killed the agriculture within its reach. Where the sheep had once fed the land could never be alienated for another purpose; no one could bid against the Mesta for the lease of pastures; proprietors along the route of the sheep must sit passive and see the crops destroyed by them. Estremadura, once one of the richest provinces of Spain, became one of the poorest, and parts of it now are nearly desert. The policy of favoring one interest, by sacrificing to it other interests more important, was characteristic of the diseased political condition of Spain; and the wasting of national resources shown in the case of the Mesta was but one of many examples of neglect. The canals and aqueducts of the irrigation system, on which the Moors had lavished their care, were allowed to deteriorate and go out of use; and the forests were cut down to the permanent detriment of the soil and water supply.

204. Failure to develop colonial trade.—In the foregoing sketch we find sufficient explanation of the decline of the domestic industry and commerce of Spain; we have still left to consider the question why the evils of the home system were not repaired by the chances for commercial development which the discovery of America and of the sea route to eastern possessions opened. Before the attention of Spanish rulers was absorbed by the attempt to suppress the Protestant movement in Europe and to subject the Netherlands, the crown had won an immense area outside of Europe; even to-day the extent of the Spanish possessions at this period is attested by the hold which the Spanish language still has on the world. Of all the European countries Spain was the one which appeared in the sixteenth century to have the best chance to build up a great commercial empire based on world-wide possessions. Why was not this chance accepted?

205. Spanish colonial policy. Taxes.—It was a misfortune for the Spaniards that they quickly discovered precious metals in America, and in seeking to increase their supply were diverted from a more substantial basis of prosperity. But the final blame for failure lies again not with the people nor with the nature of the colonies, but with the government. The explanation is to be sought in the colonial policy of the Spanish kings. At first the trade to America was comparatively unrestricted. Before, however, merchants could establish the trade relations which would have enabled them to develop the resources both of Spain and the transmarine possessions, the government laid its heavy hand on the trade and held it down so tightly that it never acquired vigor. Heavy taxes were levied on trade, and, as in the case of taxes at home, these often were framed in such a short-sighted way that they brought far more loss to commerce than gain to the treasury. The “palmeo,” for instance, was an export duty levied in the eighteenth century on wares merely according to their bulk, without regard to their value; its effect was to encourage the export of foreign manufactures, which had great value in a small bulk so that they could afford to pay the duty, while the coarser Spanish exports were taxed out of existence.

206. Restriction of trade to appointed fleets.—Ships could not sail to America as might suit the convenience of merchants, but had to sail from a given port (Seville or Cadiz), at a given time, to a given port in America (Porto Bello near the modern Colon, or Vera Cruz). The government by this restriction made it easier to protect the ships at sea, and to collect taxes from their cargoes, but it bound the arms of merchants so fast with its official red tape that they were weak and helpless. In theory two fleets left Spain each year, one for Central America and one for South America; in fact there were years together, especially in the eighteenth century, when fleets did not sail, and when the colonial possessions might have been entirely non-existent so far as regarded benefit to the mother-country.

207. Restriction of the market by the discouragement of emigration.—On arrival in America a cargo was sold sometimes for a tremendous advance over cost. Sometimes, however, and more and more frequently as time went on, a fleet would find on arrival that there was no market for its goods, and they would be sacrificed or brought back to Spain unsold. A special reason for this will appear later, when we refer to the growth of smuggling. One general cause, however, for the weakness of Spanish colonial commerce must be noticed in this place. In contrast to the English, who stimulated emigration and so built up a market for their wares in the colonies, the Spanish kings kept emigration under a system of regulation which was almost inconceivably strict. Colonists were discouraged from settling in the New World not only by the difficulty of getting permission to go out, but also by the poor chances for making a living when they arrived. They were strictly forbidden to engage in any industry which could threaten to compete with a Spanish industry; they were tied down to residence in some particular province; and they were prevented from developing the resources about them by restrictions which applied not only to trade with the mother-country but also to intercolonial trade. Trade with the Philippines, for instance, was closely restricted or even prohibited. Districts in the southern part of South America were subject to similar burdensome restrictions. A settler on the La Plata might have to get his European wares by a trip across the Continent to Lima, then up the west coast, and across the isthmus to Porto Bello. When the privilege of receiving two ships a year was granted to Buenos Ayres a customs frontier was established in the interior to prevent goods from reaching Peru by this route.

208. Supply of the market by smugglers.—Spanish colonists increased but slowly, therefore, in numbers and riches, and furnished a poor market for Spanish exports. The Indians were even worse customers. Natives who went barefoot and had no beards were forced, it is said, to buy razors and silk stockings at exorbitant prices, but of course they had no natural desire for those or other European wares, and took only an inconsiderable amount. As the home manufactures declined in vigor, exports to the colonies came to consist almost entirely of the wares from other European countries, and even these were obtained mainly through smugglers. The government could maintain its regulations against Spaniards, but not against foreigners, who absorbed the most profitable parts of the trade, and spoiled the market for merchants who obeyed the restrictions. The English and Dutch islands became the stations for an illicit trade which flourished as the regular trade declined. After 1713 England had the right, by treaty, to the monopoly of the African slave trade with the Spanish possessions, and was privileged to send out nearly five thousand negroes a year. The English had moreover the right to send out one trading ship of 500 tons; they secretly enlarged the capacity of the ship and used accompanying transports to carry still more cargo.

209. Wares of the colonial trade.—Of the products which Spanish America furnished to commerce silver continued the most important during the colonial period; the list of a ship’s cargo begins always with an enumeration of the “plate,” in bullion and coin, of which but a small part was gold. A fleet which left America in 1582 comprised 37 ships, “and in every one of them there was as good as thirty pipes of silver one with another, besides great store of gold, cochinilla, sugars, hides, and Cana Fistula (arrow-root?) with other apothecary drugs.” Descriptions of cargoes in the eighteenth century are substantially similar; among additional wares enumerated we find indigo, cocoa, vanilla, sarsaparilla, “Jesuit’s bark,” (quinine) “Paraguay tea” (maté), etc. The chief export from the La Plata region was hides, of which two ships brought nearly 40,000 in 1723. Most agricultural products were too bulky to pay for transportation.

The Spanish exported to the colonies assorted cargoes; one of 1625 included “Wines, Figs, Raisins, Olives, Oyle, Cloth, Cursies (kerseys, light woolens named from an English town), Linnen, Iron and Quicksilver for the mines.”

210. Reform of the colonial system about 1750.—In the eighteenth century the old Spanish colonial system went to pieces. The government recognized at last that it could not execute the laws which it had made, and that the system which was meant to form the basis of a great empire resulted only in stifling Spanish commerce and in encouraging foreigners to great illegal gains. Foreigners were still excluded in theory; the importance of the change lay in the opening of the trade to the Spanish who had before been excluded by restrictions and taxes. Spanish merchants were allowed first to send out ships independent of the fleets, and then in 1748 the fleets were given up altogether. The prohibition on commerce between the colonies was removed, and many new ports in America were opened to the European trade. An indication of the results that might follow such a change in policy had been furnished by the experience of Havana. When this city was captured by the English in 1762 and thrown open to English trade, 727 merchant vessels entered the harbor in less than a year. Even though the prohibition of trade with foreigners was still retained, the effect of the reform in policy was nothing less than magical. In ten years the trade and the customs duties increased about eightfold.

The reform came too late to benefit the Spanish industrial system. The colonies were destined to exercise their new strength in breaking their old bonds; while the home industries had decayed so far that a revival was impossible in competition with industries of more progressive nations. We leave Spain in the eighteenth century as we found her in the fifteenth century, serving the other countries of Europe by the production of raw materials, and dependent on them for her manufactured goods. Running through the list of the principal Spanish exports in the eighteenth century we find among them some that had undergone the first stage of manufacture, like wine, oil, soap, soda, and iron; but most were simple raw materials such as wool, salt, fruits, and nuts.

211. Portugal; promise of commercial greatness in the sixteenth century.—The little country of Portugal, numbering perhaps a million inhabitants, built up in the sixteenth century a commercial empire worthy to rank with that of Spain, and exceeding in importance that which any of the more northern states in Europe had yet established. I have already recounted the achievements of the Portuguese in maritime explorations. The part which they played in these expeditions prepared them for the oceanic commerce which developed after the discovery of America and of the sea route to India. While other nations stronger than Portugal in resources and industrial development were still unready to put forth their strength in distant commerce, Portugal shared with Spain the extra-European world, and gained for herself the richest part, the East. Da Gama returned to Lisbon in 1499 with a cargo which repaid sixty times the cost of the expedition. This was the beginning of a series of voyages devoted especially to the importation of pepper and other spices, which could be bought so cheaply in the East that they returned immense profits in Europe. Even the gold and diamonds which came later from Brazil were less valuable to Portugal than the monopoly she now possessed in the spices, drugs, dyes, and manufactures, which formerly had been obtained only by the expensive land route.

212. Failure of Portugal to maintain her position.—Portugal was favored not only by conditions in Europe, which gave her the start on other states, but also by conditions in Asia which enabled her able agents to build up, through naval power, a commercial overlordship which brooked no competitors, either Asiatic or European.

Portugal was, however, destined to play a great part in European commerce for only one century. We cannot, as in the case of Spain, say that a mistaken policy was the cause of her decline, for although the Portuguese commercial policy was very similar to the Spanish and would have shown the same weaknesses if it had been allowed to develop, more important forces were at work to drive Portugal from the rank which fortune had conferred upon her.

213. Weakness in resources; bad effects of Spanish rule, 1580-1640.—Portugal was not only small but industrially undeveloped, and from the very first depended on other countries for the wares which she exported to the East. Her explorations and her distant commerce were due to the energy of the dynasty rather than that of the people, and it was the misfortune of the country, in the critical period 1580 to 1640, to fall under the rule of Spanish kings whose influence on her commercial interests was entirely for the bad. Of the 806 vessels which Portugal sent to India, 1497-1612, only 186 sailed after 1580, and not only the number but the quality declined in a period which should have been marked by growth. Countries like England and Holland, which were far stronger economically than Portugal, refused longer to allow her the profits of trade while they did the work of production, and the English broke the power of the Portuguese in India, while the Dutch drove them from the eastern islands.

214. Failure of Portugal to recover her position by commerce with Brazil.—After the recovery of her independence in 1640, Portugal could look only to her American possession, Brazil, for the means of developing her commerce. The Dutch were expelled from that possession, and the discovery of gold there stimulated the growth of trade. Comparing the latter part of the eighteenth century with the earlier part of the seventeenth, the commerce between Portugal and Brazil is said to have increased twenty-fold. In place of a dozen ships a hundred sailed every year for America, returning with sugar, tobacco, hides, brazil-wood, gold, and diamonds.

The profits of this commerce, however, went for the most part to foreigners. Conditions at home had gone from bad to worse. The slight advance which the country had achieved in agriculture and manufactures before the discoveries had been lost by the attraction of all energetic spirits into commerce and navigation. African slaves took the place of free men in the fields. Portugal staked everything in the sixteenth century on the chance of commercial greatness, and when she lost, lost all.

215. Dependence of Portugal on England.—“In 1754 Portugal scarcely produced anything towards her own support. Two thirds of her physical necessities were supplied by England. England had become mistress of the entire commerce of Portugal, and all the trade of the country was carried on by her agents. The English came to Lisbon to monopolize even the commerce of Brazil. The entire cargo of the vessels that were sent thither, and consequently the riches that were returned in exchange, belonged to them. Nothing was Portuguese but the name.” Reviewing the list of exports to Brazil we find, in fact, that they were wares which Portugal was herself unable to produce, and which were supplied by England: woolens, hats, stockings, gloves, metals, linens, etc. England had taken advantage of her economic and political weakness to make a mere dependency of her, imposing treaty obligations which gave the English producers every advantage in her markets, and which reduced her to a state of pitiable subjection.

The great Portuguese statesman, Pombal, who made the statements quoted at the beginning of this section, attempted to reanimate industry, and succeeded to a slight extent in throwing off the English supremacy. At the close of the eighteenth century, however, Portugal had still only one strong national industry, the production of wine (port, so called from its place of shipment, Oporto) for the dinner tables of the English upper classes; and in spite of the efforts of Portuguese statesmen even the wine trade was controlled by English merchants.

QUESTIONS AND TOPICS

BIBLIOGRAPHY