The Colonial Economy

The Colonial Economy 2023 Colonial institutions 1 Lecture outline • Why did Spain and Portugal colonize the region? • State-sponsored voyages and private conquests. • Adaptations to pre-existing settings. • Early conflicts between conquistadores and between conquistadores and the Crown. • Economic trajectories. Trading routes, merchant guilds, and fiscal and state capacity. • Bourbon Reforms and failed fiscal reforms on the eve of independence. 2 Why Spain and Portugal? Europe in the 15th century 3 Ocean winds 4 5 6 Macaronesia 7 Conquest of the Canary Islands 8 Seaborn empires 9 Iberian voyages Private-public projects 10 Private-public projects 11 Columbus first voyage 12 Portuguese exploration 13 Discovery of Brazil 14 The partition of the world 15 Conquest of the Americas Incorporation into the Iberian monarchies • Spain and Portugal as “composite monarchies”. H. Koenigsberger and J.H. Elliott. • Ruled by the principle of Aeque principaliter. Adeline Rucquoi, Tierra y gobierno en la penı́nsula ibérica The King gathers peoples and, therefore, territories, substituting their former lords with himself, with no attempt to make them one... He integrates diverse peoples who preserve their differences... He does not need to change their language, customs, or laws, but he does have an imperative duty to ensure the orthodoxy of their faith. • Conquests must be defended based on ideas of just war. • Contested space between indigenous people, the early conquistadores, the early missionaries, and the Crown. 16 Composite monarchies 17 Pre-Columbian America 18 Conquest 19 Conquest of the Caribbean 20 Caribbean conquistadores (a) Bartolomé Colón, 1460-1514 (b) Diego de Velázquez, 1465-1524 (c) Juan Ponce de León, 1474-1521 21 Conquest of North America 22 North American conquistadores (a) Hernán Cortés, 1485-1547 (b) Pedro de Alvarado, 1485-1541 (c) Juan de Oñate, 1550-1626 23 North American conquistadores (a) Nicolás de San Luis Montañez, XV - c.1580 (b) Juan Garrido, 1480 c.1550 24 Lienzo de Quauhquechollan 25 Indigenous and African conquistadores 26 Conquest of South America 27 South America conquistadores (a) Francisco Pizarro, 1478-1541 (b) Diego de Almagro, c.1475-1538 (c) Pedro de Mendoza, 1499-1537 28 Early gobernaciones 29 The Brazilian case 30 The aftermath: Demographic structures Demographic collapse • Catastrophic population decline when Europeans arrive. • Main reason: infectious diseases. • But also, due to forced labor and a substantial decline in the fertility rate. • Population only recovered by the late 17th/early 18th century. • Transition from forced labor (encomiendas o repartimientos) toward tribute paid in labor (mita) and wage labor (peonaje). 31 Pre-Columbian population • Europe’s population excluding Russia and Ottoman Empire: 61.6 million De Vries (2013). 32 33 Depopulation ratios • Source: Koch et al. (2018). 34 Demographic collapse • Cocolitztli, matlazahuatl (Nahuatl), gucamatz (Mayan), rupa (quechua). 35 Demographic collapse 36 Demographic collapse • Diseases spreading from Mexico to South and North America. • Guatemala: 1519-1521, 1521, 1533, 1545, 1558-1563, 1576-1578. • Peru: 1524-1526, 1546, 1558-1559, 1585-1591. • From Cartagena to Quito, Peru, Charcas, Chile. • Brazil: Smallpox in 1562-1565 brought from Lisbon to Bahia to all Brazilian coast. 37 Effect on environment 38 Desgano vital • A rapid increase follows most demographic collapses in fertility rates. Not in post-conquest America. • Infantility mortality rates increase, sometimes by infanticide. Contraception methods and abortion rates increase as well. • Why? 1. Low genetic diversity facilitated the spread of diseases. 2. Direct effects of the conquest amplified the severity. José Gumilla, El Orinoco Ilustrado y Defendido Where the number of Indians is known to decline, many childless and entirely sterile Indian women are seen: and these are the ones married to Indians; but at the same time, it is recognized, in the same places and towns, that all the Indian women married to Europeans and to mestizos, quadroons, mulattoes, zambos, and also those who marry blacks, are so fecund and procreate so much, that they can bet... to be on par with the most fertile of the hebrews. 39 Iberian immigration • Between 1506 and 1650, approximately 450,000 Spaniards arrived in America. Chaunu and Chaunu (1955-1958). Out of which, 250,000 had arrived by 1600. Mörner (1976). • Mostly men. Only 16.5% were women: Boyd-Bowman (1976). • How many were residents? 1. By 1570 López de Velazco estimates 23,000 households, which points to 140,000 inhabitants in Spanish towns and cities. 2. For Brazil, around 20,700 Portuguese inhabited it. Mostly located in Bahia, Pernambuco, and São Vicente (Sánchez-Albornoz, 2014). 40 Destination of the Spanish migration 41 Origin of the Spanish migration 42 African slavery • The Treaty of Tordesillas prohibited the direct commercialization of enslaved persons by Spain. • Asientos were licenses sold by the Spanish Crown to sell enslaved people in Spanish America. • Cartagena became the main slaver hub. • By the 16th century, there were 35,000 enslaved persons in Mexico and 100,000 in Peru. Lima alone had 14,000 or half of its population (Bowser, 1974). • Enslaved Asians arrived in Mexico and Peru too. • Early Brazil received 50,000 enslaved persons. This will skyrocket in the following centuries. • What determines slavery patterns in the Americas? Arias and Girod (2014). 43 Casta paintings (a) Spanish and Castizo (b) African and Indigenous 44 Castas in Spanish America 45 Racial composition 46 State building in colonial Latin America Spanish state building process • Main factors: 1. Pre-Hispanic political economy (Mesoamerican and Andean societies). 2. Spanish political economy (the Reconquista and Catholicism). 3. Natural endowments (silver, dyes, tobacco, and sugar). • How did a few hundred Spaniards build a new state? 1. Violence and threat of violence 2. Coopting local elites. • The encomienda, repartimento, and mita systems. • Indigenous communities retained high levels of autonomy. • Conflicts among conquistadores and between them and the Crown. 47 The Encomienda system • Perceived as an exploitative regime. • Main purpose: Outsourcing government. An instrument of indirect rule. • Conquistadores became the early encomenderos. • Encomenderos extracted labor and taxes from the local population and provided security and church services. • Threat to the Crown itself. Charles I signs the Leyes Nuevas that de jure extinguishes the category. 48 Encomendero rebellion in Peru, 1544-1548 49 Encomienda system dwindles • Indigenous demographic collapse decreases Encomendero rents, and reduces “strategic benefits of indirect rule” (Garfias and Sellers, 2021). • Repartimento and mita as rotational labor system reverts control to ethnic señorios (Gibson, 1964). • “Solves” labor shortage problems and empowers the Crown. • Two different results: 1. Central Mexico: extinction of encomenderos and repartimentos by mid-17th century. Increasing reliance on labor markets despite rising wage rates (Tutino, 2018). 2. Peru: mita forced labor survived until the 19th century. 50 New realities • Superimposition of new political realities into the old prehispanic system. • A dual political system is created: 1. Republic of Indians: Continuities between señorios and pueblos (Arteaga, 2018; Garcı́a Martı́nez, 2011). 2. Republic of Spaniards: Corregimentos as public offices appointed and paid by royal treasuries (Knight, 2002). 51 Persistance of reliance in encomenderos 52 Indigenous pueblos, 18th century 53 Spanish Cities, 18th century 54 Indigenous alterity 55 Reales Audiencias • Consejo de Indias, created in 1524 as part of the Consejo de Castilla (main administrative body of the Kingdom of Castile; recall: before 18th Century, Spain does not have a unified administrative structure). Governance of America in matters of war, taxes, and its highest law court. • Reales Audiencias served as their territories’ highest civil and criminal law courts. • Acted as State Councils (Haring,1963). • Initially composed by four judges, oidores, and one crown attorney, the fiscal. A president chaired them. They will increase and include other figures through time: separation of civil and criminal chambers, and notaries, bailiffs, and public defenders. • Three type of Audiencias: 1. Audiencias Virreinales: in the capitals of each viceroyalty, chaired by the Viceroy. 2. Audiencias Pretoriales: in the general captancies, chaired by the Captain general. 3. Audiencias Subordinadas: located across territories within the viceroyalties. 56 Spanish administrative hierarchy 57 Overlapping jurisdictions: The Church • Missionaries as a different form of indirect rule. • Religious competition between the different mendicant orders: Mercedarian, Franciscans, Dominicans, Augustinians, Carmelites, and Hieronymites. Jesuits arrived later; first to Brazil then to Spanish America. • Complex setting in South America. E.g., Portuguese Jesuits vs. Spanish Jesuits. • Indigenous bargaining position improved (Herzog, 2015). • Controversial as their loyalties were questioned. E.g., Jesuits and the Távora affair. 58 Missionaries in Latin America 59 Missionaries in Mexico 60 Jesuits in South America 61 Jesuits missions in Paraguay 62 The missions and state building in Latin America 63 Determinants of forced labor Index pre-colonial hierarchies 64 Mineral endowments 65 Indigenous forced labor, I 66 Indigenous forced labor, II 67 African slavery, I 68 African slavery, II 69 The economy The colonial economy: main features • Low labor/land ratio. • Spanish Main: mining (gold and silver). • Large plantations (sugar and tobacco): concentrated in Brazil and the Caribbean. • Core area around Mexico and Peru. • Agriculture: communal land (natives and the catholic church). • Fixed trading routes with Flota system 70 The political economy of the Spanish Empire • Main activities: • Mining as a source of income. • Trading as source of rents. • Three main agents: • Miners. • Merchants. • Crown. • A fourth agent, the Church, explains the control of the rest of the credit markets. 71 Mining • Important silver mines: Potosı́ (1545), Zacatecas (1546), Guanajuato (1550), Parral (1623). • Crown’s tax: Royal fifth, reduced to 10% in 1548 for some merchants, and later in the 18th century it was further reduced to 3%. • Technological breakthrough: amalgamation with mercury used by Bartolomé de Medina in Pachuca in 1555. • Mining-led growth (Dobado and Marrero, 2011). • Mercury in Almadén and Huancavelica. Crown’s monopoly sold it at subsidized prices. • Key difference between Mexico and Peru: • Peru: one big focal mine, where mita labor prevails. • Mexico: several mines spread throughout the area, where a labor market prevails. 72 Silver production 73 Precious metals arriving to Europe 74 Almadén mine 75 Cerro Rico de Potosı́ Spanish friar, 1630 Potosı́ lives to serve Spain’s imposing aspirations: it serves to chastise the Turk, humble the Moor, make Flanders tremble, and terrify England. 76 Gold 77 Brazilian gold rush • Brazil, 60%; New Granada, 19%; Mexico, 8 %; Peru, 4 %; Chile, 4 %; Ecuador, 3 %; Caribbean, 2%. 78 Bandeirantes 79 Implications of Brazilian gold rush 80 Spanish Atlantic trade • Casa de la Contratación in Seville founded in 1503 to oversee American trade. • The galleon/flota system started in 1546 and operated until the 18th century. • Medieval oriented: A system of trade fairs where merchants on both sides of the Atlantic would meet. • System of armed convoys as the safest way to travel. Lower risks for merchants. Easy to tax for the Crown. • A route from Seville to New Spain and another one from Seville to Panama, where they would meet the Lima merchants. • Consulados as merchants guilds: Seville (1543), Mexico City (1594), and Lima (1614). 81 82 Spanish America trading routes 83 Contraband trade 84 Atlantic trade bibliography 85 Spanish Pacific trade • The Manila Galleon trade was the most lucrative single voyage in the early modern world. “the richest ships in all the oceans” (Schurz, 1939). • Spain settles in the Philippines in 1565. • Unregulated until 1593. Rapid growth up to 1640, when South Sea trade between Peru and New Spain was forbidden. • The Pacific “suffered the most abusive ... restrictive and prohibitionist legislation” (Bonalian, 2010). • Spanish lake or Mexican lake? • Incentives to overload and delay departure led to a major rate of shipwrecks (Arteaga, Desierto, and Koyama, 2023). 86 The Manila Galleon 87 Pacific trade route 88 Pacific trade bibliography 89 Other exports: cochineal, dye, sugar, tobacco (a) Cochineal Bug 90 Industry in Latin America: obrajes • Debate about the existence of national or regional markets. • Shipbuilding industry in Havana, Maracaibo, Cartagena, Guayaquil. • Manufactures organized in medieval guild-like systems. • Textile manufactures “forced solution to the problems of commercial supply in imperfect markets” (Salvucci,1987). Richard Salvucci, Textiles and Capitalism in Mexico Until the eighteenth century, the inhabitants of New Spain largely made their own cloth. Until then, colonial textiles were sheltered from competition, since imports—by price or quality, or both—were luxury goods.” 91 The fiscal reforms in the 18th Century Royal treasuries 92 Stakeholder empire? 93 94 Bourbon and Pombaline reforms • Imperial reforms in Europe and America aimed at building a fiscal-military state. • Main goal: full and direct control of taxation through territorial unification and tax simplification (Torres-Sánchez, 2015). • Some overhaul in first half of 18th century to curb contraband: 1. Creation of New Granada Viceroyalty in 1717. 2. License given to Royal Guipuzcoan Company of Caracas in 1728 to monopolize trade in the Orinoco. • New Spain’s silver production was booming, and tax remittances were increasing. • Seven Years’ war was the crossroad event that made reforms urgent in the Americas. 95 Importance of merchants Miles Wortman, Bourbon Reforms in Central America: 1750-1786 An inordinately strong merchant class controlled not only commerce, but equally prices, trade regulations, and tax regulation. The area was more a fief than a kingdom, with Spanish and Guatemalan merchants ruling over Central American domain. • Merchants exercised political control through control of goods. • Merchant guilds in Mexico City and Lima at the top of the hierarchy (Arteaga,2022). • Control of trade routes was at risk after 1762. • Window of opportunity for the Crown to curb their power. 96 “Free trade” reforms • Charles III appointed a technical commission that recommended abolishing the Cadiz monopoly and opening Atlantic trade to more ports in America and Spain (Fisher, 1997). • Decentralized trade routes are the optimal solution as an underdog. • 1765/1789 set of reforms that allow alternative places to participate in the Spanish American trade. • Problem: balance between securing new trade routes and asserting royal authority as the source of legitimacy of said routes. • Solution? Create alternative corporate bodies in the model of the Lima and Mexico City merchant guilds: Buenos Aires, Caracas, Cartagena, Guadalajara, Guatemala, Havana, and Veracruz. 97 “Free trade” reforms 98 “Free trade” reforms • Effects on trade disputed. However, there is an agreement that exports and imports increased throughout the Americas (Cuenca-Esteban, 2008). • It allowed the former periphery to experience economic growth more than proportionally to the former core regions of the Empire (Ellingsen, 2020). • Failing to coopt said regions also led to significant incentives for secession (Arteaga,2022). 99 British North America vs. Spanish North America 100 Intendente reforms • In 1776, the Viceroyalty of Rio de la Plata is created. Luis Navarro, Intendencias en Indias Acting at an ever faster pace, twelve years were enough for Galvez to profoundly alter the general outlook of the New World. His work had affected all the Spanish domain, with the sole exception of the Viceroyalty of Santa Fe [Nueva Granada]. And he had already taken the fundamental step against it when he was surprised by death on June 17, 1787. • Administrative overhaul between 1783-1787 that consolidated territorial units around intendants, that supplanted corregidores. • Direct challenge to former governance institutions. • Overlapping authority with the viceroy. • Supplanted local creole elites in favor of better paid-government bureaucrats. Who mostly came direct from Spain. 101 Intendente reforms • Results according to Chiovelli et.al. (2022): 1. Improvements in tax revenue, and an increase in fiscal capacity. 2. Decrease in indigenous revolts. 3. Reduction in legitimacy by heightening tensions with local elites. 102 Uninteded consequences? John Lynch, Spanish Colonial Administration, 1782-1810 ...the corregidor, the very archetype of erring officialdom, whose repertoire included almost every device known in the history of administrative corruption - the farmed and unaccounted revenue, the holding of royal funds in deposit to be used as private capital, the forced Indian labour without pay, and above all the notorious repartimiento, or forced sale of merchandise at outrageous prices to the unfortunate natives. • In 1786 the repartimento system was outlawed. • The case of Oaxacan indigenous communities that produced cochineal: • Cochineal is risky as it is affected by the vagaries of the environment. Alcalde mayor acted as creditor and provided cash advances (Baskes, 2000). • Outlawing repartimiento led to a worse outcome. Left the indigenous populations uninsured and, hence, had fewer incentives to produce. • After the reforms, indigenous communities “became poorer and more indigenous” (Diaz-Cayeros and 103 Jha, 2022). 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