But Spain has limited trading posts in Africa

Report as inappropriate Your report has been received

Shared by: s0zwPQFl

Tags

Stats

views:: 3
posted:: 11/7/2012
language:: English
pages:: 9

Public Domain

Document Sample

LAH2020: Colonial Economy, 1

The Colonial Economy

Internal economy vs. Imperial economy-- Emergence of a dual economy
local production in the Indies in conflict with the imperial system,
the colonial economy reflected this duality
the exchange of goods internally and transatlantic trade.

IMPERIAL ECONOMY OR THE SPANISH COMMERCIAL SYSTEM

The Spanish form of mercantilism:
1. Wealth was static & limited based upon precious metals-- when metals were traded away for
consumable commodities or for commodities of conspicuous consumption, finance capital was
no longer available for investment in the infrastructure, agriculture or industry.
2. Colonies existed solely for the benefit of the mother country, in this case the crown of Castille.
Control concentrated in Seville in the Casa de Contratacción 80 miles up the Rio Guadalquivir.
Later moved to Cadiz due to silting and larger ships
All products and persons must pass through Casa to get to New World.
In order to exercise greater and more direct control, the crown leased out license to its
favorites
Also leased out licenses for tax farming.

Spanish peninsular economy not adequate to supply needs of the colonies.
Leases in Seville go to Spanish who in turn sell to foreign merchants.
Also when they were not able to supply the demands of Spanish colonies, English,
French & Dutch turned to smuggling.
Led to international friction
1. Other countries want markets in New World
2. Want a share of the silver
3. Also have a religious motivation stemming from the Protestant Reformation.
led to general European war and Spain loses.
War spreads to colonies.

Protestant nations begin picking at invincible Spain.

Piracy: (Early 16th c. – 17th c.)
Attacked the treasure fleets but mostly individual vessels
in the days before nations had large navies, privateers/pirates were instruments
of national defense.
Pirate vs. privateer – an ever changing boundary

Formation of colonies and development of internal colonial economy (17th c.)

Smuggling: (late 17th century –late 18th c. (comercio libre).

Spain concentrated on the most valuable commodity -- silver.
LAH2020: Colonial Economy, 2

Organized shipping of silver into two fleets
Spain to Cartagena then to Portobello in Panama (most valuable) galeones
Silver from Potosi
Second comes from Vera Cruz
Silver from central Mexico and gold from Manila via Acapulco
The two fleets meet in Havana in August/September then sail
together to Spain (Flota)
In 1628 entire fleet captured by Dutch admiral. Piet Heyn off north coast of Cuba

ILLEGAL TRADE:
Spain could never fulfill the contract that was implicit in mercantilist doctrine.
Could not supply what was wanted much less at prices colonists could pay.
Answer is smuggling.
Other European nations, with local connivance. flourished in areas bypassed by the flotas and
galeones.
Northern European nations established entrepots in Caribbean and introduced affordable
products into Spanish America.
They would send ships that would arrive before the ship from Spain did and undercut the market.
Major areas =Rio de la Plata, Caribbean coast. Jamaica/Cuba, Dutch Curacao and Nueva
. Granada.
When European nations recognize that smuggling is more profitable than capturing ships, things
change.
That happens in late 17th. c. 1670.
Calculations of damage to Spanish trade indicate that by the late 17th century more than
half of profits were lost to contraband.
SLAVERY

Two types:
Indian slavery and African slavery.
Indian slavery was theoretically outlawed except in cases of a “Just War” But the practice
of raiding the interior tribes for captives continued thru 1600s.
Most prevalent in Brazil because of the immensity of the interior.
Bandeirantes slave raiding expeditions into Brazil’s interior for agricultural
workers til 18th century.

The AFRICAN SLAVE TRADE:
As Indian populations decline, other labor sources are needed.
Spaniards turn to other sources of labor and find it in Africa.
Bartolome de la Casas recommended that Africans be imported to replace the dying
Amerindians,
Europeans had no theological problem with using blacks as slaves.
But- Spain has limited trading posts in Africa.
Forced to contract with Portugal, which had slave factors in Africa,
Thus Portugal is granted an asiento (contract to procure slaves)
(Spain can never supply her colonies w/ products they need and slaves are no
exception).
LAH2020: Colonial Economy, 3

Asiento held by Portuguese, (Portuguese and Spanish crowns united from 1580-1640)
By the French in 1700, by the British in 1714, and then to monopoly companies of
Various nationalities

The Domestic Economy of the Spanish Colonies

FACTORS OF PRODUCTION = Land, Labor, Capital

LAND
In theory all belonged to state, granted in various tenancy arrangements,
Land was plentiful, Indian systems did not use all available land.
King granted, rented, sold rights of exploitation but he reserved ultimate title to himself.
The privilege was often granted or simply assumed by local cabildos to grant land.
Usually the persons arriving first got prime acreage.
The idea is to make the land profitable and extract products
1. To be sent to Spain;
2. To be consumed locally.
Grantees expected to make certain improvements.
Also with population decline, Indians were congregated into villages and their land was
granted to Spaniards.

LABOR

EVOLUTION OF THE PRINCIPAL LABOR SYSTEMS

1. Encomienda
2. Repartimiento (Mexico)/mit’a or mita(Peru)
3. free wage labor
4. debt peonage for haciendas & obrajes
The Encomienda:
“To entrust” --designed for conversion and to extract tribute,
tribute could be in the form of goods or could substitute labor.
With the New Laws the crown came to gradually control Indian labor
taken out of the hands of encomenderos.
Both in New Spain and Peru encomenderos overworked their tributaries.
tributaries paid foodstuffs, produce, chickens, but encomenderos preferred whatever
could be turned into cash - e.g. in Central America they demanded cacao which was a
profitable export crop.
Regional variations: The encomienda survived on the poor fringes until the 18th century.
1. No mining so no need for mass Indian labor
2. little potential for agricultural wealth—therefore no danger of a wealthy, powerful
encomendero class evolving to challenge the authority of the crown

Repartimiento/mit’a:
LAH2020: Colonial Economy, 4

After the Civil War in Peru was suppressed the crown assumed more direct control.
From 1550 onward all village Indians owed some labor but now it was the civil
authorities that controled the labor.
Local, private interests apply to government officials for an allotment of Indians.
Goals:
1. To allot labor to landholders on an even-handed basis
2. To regulate the numbers of laborers through a forced labor draft
Why the change?
1. Dwindling supply of Indian labor Demand is increasing but population is decreasing
2. Increased # of Spaniards who want Indian labor
especially King’s favorites & officials who try to wrest wealth from first
generation of encomenderos.
Now with Crown in control what evolved was a rotational labor draft
Had precedents in both Aztec and Inca systems --was not so foreign,
(especially when compared to the introduction of the alien money economy)

The use that the labor draft was put to varied in different areas.
In New Spain used for agriculture, repartimiento had a short life
In Peru was the primary supplier of labor for mining industry
It also took the form of labor in textile sweatshops, obrajes.
primarily in Ecuador
obrajes important part of economy of central Mexico, but used ‘free’ labor
In some areas repartimiento died out quickly, e.g. New Spain; in other areas it lasted til the 18th
and 19th centuries.

Free Labor

Why the transition to free labor?
1. No guarantee of labor supply i.e. if you’re ‘somebody’ you’ll get labor, if not …
2. Gradually wages offered to workers (castas) slightly above the renumeration of the
repartimiento
supply of potential workers growing as Indians lost their lands
or drifted away from villages due to intolerable demands for tribute

The MEXICAN ANOMALY

Free labor begin early
1. In areas not a part of Aztec or colonial tribute systems
2. Mines far away from population centers
3. Local Chichimecs not used to systematic labor
Spanish were forced to recruit labor from too far away so they contracted w/ Indians and castas
to provide labor.
Originally free labor supplemented the repartimiento, but eventually replaced it

Debt Peonage and the Hacienda:
Mexico more than anywhere is associated with the hacienda:
LAH2020: Colonial Economy, 5

a large estate pursuing agricultural activities, usually ranching, or with obrajes,
Debt peonage workers are extended goods, food, housing on credit at company store in
return for labor
.It was a way of tying workers to a particular ranch or textile mill, of guaranteeing labor
at modest expense. It too varied over time.
Has a negative connotation b/c of the involuntary connotation associated with it
New studies are revealing that workers sometimes demanded credit in advance
But what else could they do?
Ramifications of free labor system
1. Increased acculturation. Indians permanently away from kinship groups
2. Adopt European way of dress
3. Loss of Indigenous languages and customs.
The process was greater in Mexico
indigenous population survival in Peru, not only because of topography but also
because of the mit’a
Indians would go to work for Spaniards and come back to village.

Yanaconaje (Peru)
Permanent servants, persons who had left their ayalla
From the Spanish point of view, they had left their village but had become attached
permanently to an important person or hacendado family/estate.
Instances of the yanaconaje remaining with an estate if it was sold.
Not slavery but perhaps more like serfs in some respects

CAPITAL
The first capital came from Europe, esp. North-European banking houses i.e.Flemish, Italian,
German, and some Castillian and Aragonese
Invested in mining, agriculture, especially sugar, slaving, pearling.
Indies began generating its own capital
Some from agriculture i.e. Cortes –162Kpesos,
Some from silver and gold, i.e. Atahualpa ransom -971K pesos in gold.
eventually tribute came to be rendered in money
Minimal capital accumulation
Concept of primitive accumulation
Where did the capital go?
Taxes, esp quinto, i.e. kings fifth of mining revenue
European imports
early years for additional expeditions
conspicuous consumption, i.e. houses, dowries, endowments to church.
Little incentive to invest, therefore they spent.
The greatest internal moneylender was the Church, either as a institution or in semi-private
capacities,
Mercantile sector: nothing resembling corporations or associations (investment societies)
Partnerships usually formed for a particular enterprise.
Usually a family enterprise or merchant house linked with crown
one family member went to Indies, brothers remain in Seville (Cadiz after 1717)
LAH2020: Colonial Economy, 6

common to send nephew to be indentured with brother in America.
As there was no incentive and no structure available for capital accumulation, the continuity of a
family fortune was with a man’s heirs.
Often a family fortune would be dissipated by heirs, and/or visicitudes of royal policy, or
transatlantic shipping.
In contrast to land & labor, capital was limited and very unstable.

What was the result of these factors of production?
1. First Generation lived off tribute and looting
dwindling Indian labor
most easily mined metals discovered by mid 1550s
2. As the availability of Indian labor declined, tracts of land wre left vacant and land became
available for commercial agriculture

Agricultural products,
agriculture ie. animal and plant husbandry became the economic base
Crops imported from Spain
wheat, grapes, olives, fruits and vegetables, esp citrus, sugar, bananas.
European animals, swine adapt best, horses, goats, sheep, oxen, chickens,
European animals run wild trample Indian crops
Undesirable fauna and flora such as rats and mice, non-native grasses, dandelions, and
other weeds
The form that commercial agriculture took was estancia and sitio
The development of the pastoral estate, i.e. the hacienda (some arable land and stock raising).
Appeals to Spanish way of life.

Second biggest export is dyestuffs
Cochineal - ground beetles from Mexico inhabit the nopal cactus that produces red dye.
It took 70,000 beetles to make a pound of dye.
Mexican colonists took cochineal in tribute.
Much in demand because northern Europe was beginning to export cloth.
In addition forest trees produced dyestuffs --black, browns, dull reds.
Discovered a wild American species of indigo

Plantation crops also important
cacao –Caribbean basin
Indians used cacao beans as money
ground and mixed with water into thick drink --only for nobility
in its original form, Europeans eschewed it but when mixed with another product
it was made highly appealing, i.e. sugar
Sugar is a tropical and sub-tropical lowland crop which came to be grown in extensive
plantations
slavery/sugar had been moving westward across Mediterranean and to Spain and thence
to the Canaries and Azores.
Sugar into Hispaniola with Columbus - second voyage
first ingenio in 1516, by 1521 exported to Spain.
Charles helped the industry get started
LAH2020: Colonial Economy, 7

ordered that technicians be sent to advise colonists the proper way to cultivate and
refine and that the treasury advance credit to expand production.
Sugar not as important on mainland, small scale production in Coastal Peru but
Mainly for domestic consumption – later becomes important in coastal
Mexico and Caribbean mainlands

Cuba produced hides for export.
Tobacco, not a primary product except in Cuba where soil produced some of the best tobacco in
the world. But smoking had not become a craze until late 16th c.
Other important products cotton, coca, silk.
Cotton used in factory system especially in Ecuador. Textile are produced in urban
workshops (obrajes)

Agro-industrial complexes: Sugar plantations and Obrajes.
.
Except for mining, textile industry the most advanced in terms of organization and technology.
Obrajes made cloth because imports were expensive and Spain could not meet local demand.
This becomes an increasingly important factor in the politics of econimic self-sufficiency
Labor came from Indian workers in the repartimiento
fabric made of cotton, silk, wool, depending on locale
Used dyestuffs.
Produced hats, jackets, hemp sandals, carpet, tablecloths, ribbons & lace
Two types of ownership:
Some were owned by Europeans, also owned plantations or herds (vertical integration)
Others were obrajes de communidad, community based but worked by tribute payers and
controlled by local chiefs who managed to skim off a portion of the profits.
Mutual need, Spaniard needs the mediation of the local chiefs;
collaboration with the Spanish gets local leaders prestige and sometimes relief
from taxes.
By 1550 the Spanish colonies are self-sufficient producing wine, oil, flour, wheat, wool, and
leather.
How did the Spanish government view the colonies’ self-sufficiency?

Great bulk of wealth initially comes from mining.
Gold cycle in Islands: 1503-1560, peak period =1541-60
no way to tell how much left illegally in form of dust, nuggets, or went into local
exchange.
Silver mining
On the mainland a few centers till mid century two big strikes, the discoveries of
Potosi (Peru in 1545)
Zacatecas (Mexico 1546)
Amalgamation process: The discovery and development of this process requiring mercury
Patio process: mixed ground ore with copper pyrite or salt and mercury
The use of mercury, which is poisonous, was costly but it gave greater yields and used
less lumber for fuel (deforestation or non-availability of wood was a major problem in
LAH2020: Colonial Economy, 8

many mining areas).
Process:
Extraction
Ore beat and ground to a powder
pulverized ore mixed with quicksilver(mercury), salt and other reagents, which
amalgamated the mercury and silver
washed to separate the mercury and silver from the powder sludge
amalgam distilled (some of the mercury could be reused)
Importance of Mercury supply:
At first all mercury had to be sent from mines at Almaden in Spain
1560’s: discovery of a rich deposit of mercury at Huancavelica, Peru
Mexico had to import mercury from Spain, all a royal monopoly.

Silver was supposed to be taken to royal assay houses where it was recast into bars, stamped,
weighed, the king’s share set aside, and the rest returned to the owner.
Labor done by tributaries first, later by free wage labor.
Black slaves rarely used for mine work because they were expensive
Silver became the major export
Effect of silver production.
Made conquest/ransoming pale by comparison.
Some few miners became wealthy
Mining was cyclical and risky, very expensive to get into, had to have royal favor to get
mercury, veins could play out unexpectedly or flooding could close a mine.
The trickle-down effect stimulated the local economy and subsidiary industries around
mining towns.
responsible for the development of transportation routes,
So much mineral wealth affected the world economy-
Philip II conducted extensive European wars against the Protestant countries.
Inflation in the 17th century

Did Spain really profit from her Empire?

1. Profits from trade flowed to foreign hands
a. smuggling;
b. Industrial goods came from Northern European countries
2. Silver was quickly dissipated due to Philip II’s wars to wipe out Protestantism
3. That which remained caused
tremendous inflation in Spain,
misery for the Spanish poor
rendered other nations’ goods cheaper than Spanish goods.
Conditions worsened by artificial restrictions.
Spain left commerce in hands of merchant monopoly in Seville, the consulado
farmed out privileges to foreigners
The consulado members act in reality as agents, so bulk of money goes out of the
country.

Classic dependency theory: Spanish America’s dependent position due to a disadvantageous
international division of labor imposed upon them by superior European powers
supported by metropolitan mercantile policies.
Under this arrangement they were required to produce primary goods for export at cheap
LAH2020: Colonial Economy, 9

prices and import finished goods at dear prices.

Neo-Marxist analysis::
1. The development of an economically dominant region imposes dependency upon other
countries and regions that it dominates.
2. Dependency cannot be attributed solely to external forces; it owes in part to internal
infrastructural weaknesses
3. Dependency creates under-development for it is not in the interests of dominant centers to encourage or even allow
the development of subordinate regions
4. Thus, under-development is a chronic state that cannot be escaped through evolutionary stages
of advancement;
countries such as England were never dependent or underdeveloped, they were
initially undeveloped.
5. Under-development can only be remedied by the elimination of external and internal structures
of dependency.