Imperial Spain 1469-1716

by John H. Elliott

  The number of ships making the transatlantic crossing each year varied considerably, according to the economic and political circumstances of the moment, and ranged from sixty to over a hundred. From an early stage the majority of these ships were organized into convoys or flotas, on the Venetian and Portuguese model. There were various reasons for this. The transatlantic crossing, which took some two months, was dangerous, and skilled pilots were scarce; with the increasing quantities of bullion shipped back from the Indies, it was essential to provide a guard; and the registration of cargoes, which was necessary for checking the bullion and for levying the almojari-fazgo – the 7½ per cent duty payable on goods imported into America from Europe – was more easily managed with a regular convoy system starting from Seville and Cadiz and making for one of the three chosen ports in the New World: Vera Cruz, Cartagena, or Nombre de Dios. In spite of these early attempts at control, which placed the organization of the Carrera de las Indias firmly in the hands of the Casa de Contratación and of the Indies merchants of Seville (who were organized into a Consulado on the Burgos model in 1543), the flota system only achieved its definitive form in the 1560s. From then on, in theory if not always in practice, two convoys would sail from Andalusia each year, one to New Spain and the other to Tierra Firme. The first of these, which later came to be known specifically as the Flota, would set sail in April or May for the Gulf of Mexico, while the other, which acquired from its escort of six or eight warships the collective name of the Galeones, would leave in August for the Isthmus of Panama, collecting ships from the northern coast of South America on the journey. Both fleets would winter in America, and would join forces at Havana in the following March for the return voyage to Europe. The convoy system was very expensive, but in terms of security it fully proved its worth. The only occasions on which the treasure galleons fell into enemy hands were 1628, when the Dutch Piet Heyn captured all but three of the vessels, and 1656 and 1657 when the fleet was destroyed by Blake.

  The impact on the Castilian economy of this gradually developing trade between Seville and the New World remains extremely difficult to assess. Two problems are involved: how to measure the stimulus given to the economic life of Castile by the expanding American market, and how to gauge the consequences for Castile of the influx of American silver. The first of these problems requires much more study on a regional basis than it has so far received. Spain under Charles V had not one, but at least three economies, touching each other at various points but none the less distinct. There was Seville and its hinterland, facing towards America; there was northern Castile, traditionally orientated towards Flanders and northern Europe; and there was the Crown of Aragon, still largely concerned with its Mediterranean markets.

  Of these three economic regions it was naturally the Andalusian that reacted first and most sharply to the conquest and colonization of the New World. Around 1500 the city of Seville had some 60,000 or 70,000 inhabitants. During the next two or three decades this figure was reduced by epidemics and by the emigration of able-bodied men to the Indies, but from the 1530s the the figures not only recovered, but began to increase dramatically, until they may have risen to as high as 150,000 by 1588. This spectacular increase made Seville one of the boom cities of the sixteenth century – larger than any other Spanish city, and surpassed in size only by Paris and Naples. It was a bustling, thriving city, with all the marks of the new prosperity that had come from its contact with the exotic world of the Indies; a city which as Guzmán de Alfarache said, had ‘un olor de ciudad, un no sé qué, otras grandezas’. It was crowded with foreign merchants, Italians, Flemings, Portuguese, and it acted as an irresistible magnet to the inhabitants of northern and central Spain, who thought of it as an El Dorado in its own right and as the gateway to the untold riches of America.

  During the course of the sixteenth century the inhabitants of northern Spain moved southwards in their thousands, travelling overland or by sea from Cantabria. This great movement of internal colonization, which gradually tilted the demographic balance of Castile away from the north towards the south and the west, was in a sense the final phase of the Reconquista – that long southward trek of the Castilians into Andalusia in pursuit of wealth. The migrants were coming to a land that had been touched by the brush of prosperity. The valley of the Guadalquivir as far as the Sierra Morena was being planted by Sevillian merchants with cereals, vines and olives for sale in Seville, and for export to northern Europe and to the Indies. Many Andalusian peasants were growing rich on the sales of their crops, and were becoming owners of extensive holdings of land. There were signs, too, of industrial as well as of agrarian vitality in the development of textile production in towns like Úbeda and Baeza, and in the increasing output of Granada silk, for which there was a growing demand in Flanders, France, and Italy.

  The Crown of Aragon shared only marginally in this new-found prosperity. The Catalans unsuccessfully sought permission on several occasions during the reign of Charles V to establish consuls in Seville and Cadiz, and to obtain special privileges in connexion with the American trade. But they benefited indirectly from it in the increased sale of their cloths in the fairs of Castile – three-quarters of all these cloths being bought for shipment to the New World. On the other hand, the connexion between Seville and the north – as distinct from the east – of Spain were very close. Ships from northern dockyards played an important part in the Carrera de las Indias, and there was constant traffic and interchange between the three great commercial centres of Burgos, Medina del Campo, and Seville.

  If the towns of northern and central Castile were so intimately associated with the life of Andalusia, this was primarily because of their own economic vitality, which made their co-operation essential to the merchants of Seville. Seville needed the shipbuilding skills and the navigational experience of the Basques, and it needed the machinery of international credit that had been so elaborately constructed in the fairs of Castile – just as the fairs in turn needed the silver that only Seville could supply. Medina del Campo later became the slave rather than the partner of Seville, and an excessive dependence on the prompt arrival of the treasure fleet brought it to disaster; but in the reign of Charles V, when financial transactions did not yet monopolize its activity to the exclusion of all else, Medina could draw upon the economic resources of the surrounding region to assert its independence.

  The prosperity of northern Castile in the earlier part of the sixteenth century, in fact, equalled or surpassed that of Andalusia. This prosperity, while reinforced by the benefits that came from association with the developing economy of the Spanish Atlantic, was essentially based on the solid foundations that had been laid during the fifteenth century. The spectacular expansion of Castile's international trade in that century had come largely from the Flemish demand for Spanish merino wool – a demand that continued to grow in the early sixteenth century. In the mid-1520s the flocks of the Mesta reached their peak in a figure of some three and a half million head of sheep. But there were other exports besides that of wool. There was a considerable demand in France for the iron of Vizcaya, where the metallurgical industry in the early sixteenth century seems to have been technically advanced. There was a demand too, both in northern Europe and Italy for the products of Spain's luxury industries – ceramics, leather, silk, Toledo blades.

  Castilian industry in the reign of Charles V was therefore benefiting from an increased European demand in an age of international economic expansion. But the most widespread industry was the textile industry, particularly vigorous in Segovia, Toledo, Córdoba, and Cuenca; and here the demand was largely Spanish and American. Apart from what was exported to the Indies, most of Castile's cloth went to supplying the home market. It seems probable that this home market was growing: the population of Castile has been estimated at some 6,270,000 for 1541, and this is believed to suggest some advance since the late fifteenth century. An increase in population presented a challenge to local industry and agriculture, and bot
h showed some signs of rising to the occasion. New land was brought under the plough; new textile centres arose. In spite of the obvious signs of expansion, however, both industry and agriculture suffered from internal weaknesses, and were exposed to external strains which slowed down their progress and partially crippled their performance.

  Castilian agriculture, having been persistently disparaged by a royal policy which favoured the wool interest, was now called upon not only to meet the rising demand at home but also to supply the needs of the American market. The profits to be gained from the sale of wine and oil to the Indies tended to divert capital and resources in the south of Spain from corn-growing to the cultivation of vines and olives. This made the challenge all the greater to the corn-growers of Old Castile. But the majority of these were small peasants without either the resources or the technical skill to tackle the fundamental obstacle to a large increase in corn-production – the problem of drought. Irrigation schemes required capital, which at this time was heavily engaged in commercial projects; and the peasant, left to his own devices, increased his production by the only method he knew: the breaking of new soil. The new land might have to be rented from aristocratic proprietors, who leased it out, often for short periods, at rates which imposed a heavier burden on the peasant than the old feudal dues. Moreover, the money required to develop the land would have to be borrowed from some wealthy villager or townsman. This was done by means of the censo al quitar, a short-term loan at a rate of perhaps 7.14 per cent (one-fourteenth of the capital), guaranteed by a mortgage on the borrower's lands. In theory, the peasant should have benefited by the increase in agricultural prices and by the legal right conceded in 1535 to re-purchase the censo at any time. But in practice his profits were reduced by the tasa or fixed maximum, which was definitively re-established on grain prices in 1539, and he was usually in no position to re-purchase. If the Castilian peasant just managed to hold his own during the reign of Charles V, the increasing amount of peasant indebtedness suggested that future prospects were far from bright: one or two poor harvests or a fall in agricultural prices could all too easily lead to disaster.

  The textile industry, while enjoying a boom similar to that experienced by Castilian agriculture, also rested on precarious foundations. There were, from the first, problems of quality. While the Castilian cloth industry was carefully – and indeed excessively – regimented under guild control, little trouble was taken about the technical training of cloth-workers, and there was an endless stream of complaints about the low quality of home-produced wares. A further problem was that of labour. A young industry suddenly found itself flooded the an enormous home and American demand, which it was ill-equipped to meet. Failing to find sufficient labour among the urban artisans, it turned first to the peasants, and then to the army of vagabonds and beggars which tramped the Castilian roads. In 1540 the poor law of 1387 was renewed, imposing harsh penalties on vagrants and authorizing local authorities to set them to work without pay. The passing of the 1540 poor law was a victory for the school of the great humanist philosopher Juan Luis Vives, whose De Subventione Pauperum, published at Bruges in 1526, had demanded an absolute prohibition on begging and the close regulation of public charity. But while Crown and Cortes had come out in favour of the Vives approach to the problem of the idle poor, it was bitterly criticized by members of the Mendicant Orders, who did their best to reduce the effectiveness of the new legislation. The insistence of Fray Domingo de Soto and his colleagues that begging was a fundamental human right of which nobody should be deprived clearly aroused considerable public sympathy, for in 1552 the Cortes again had to insist that vagrants should be set to work, on the grounds that ‘there is a shortage of workmen rather than of work to be done’. But although the legislation of 1540 continued to be the basis of government policy it seems to have remained virtually a dead letter. The vagrants continued to evade the half-hearted attempts to coerce them, and the persisting labour shortage undoubtedly contributed to one of the principal defects of Castilian cloths – their excessively high price.

  Throughout the early years of Charles V's reign there had been a swelling chorus of complaints from the home market about the high price of Castilian manufactures, and in particular of home-produced textiles. This reached its climax in the Cortes of Valladolid of 1548, which attributed the high prices to the demand for Castilian cloths outside Spain, and proposed as a remedy that the import of foreign cloths into Castile should be permitted, while all exports of Castilian manufactures, even to the Indies, should be forbidden. The Crown responded by allowing the import of foreign textiles, but the Cortes remained dissatisfied. In 1552 they pressed again for a ban on exports to America. While the Crown again refused to accede to so drastic a proposal, it moved one step further in the direction desired by the Cortes by prohibiting all exports of Castilian cloth except to the Indies.

  This remarkable legislation of 1548–52 was followed, as might have been foreseen, by a sharp depression in the Castilian textile industry, which suddenly found itself threatened by the competition of cheaper foreign products; and further legislation had to be hastily introduced in 1555 and 1558 rescinding the ban on exports. But ephemeral as was the legislation of 1548–52, its significance was enormous, for it marked the point at which the expanding Castilian economy was confronted by its first severe crisis – a crisis which, as the legislation showed, found the country groping in the dark for a way of escape from its dilemmas.

  The nature of the crisis was obvious enough: Castilian goods were appreciably more expensive than goods imported from abroad. But the exact reasons for this were far from clear to contemporaries, and have remained a subject for vigorous, if inconclusive, debate into our own day. The Cortes attributed the phenomenon to the heavy foreign and American demand for Castilian goods. During the 1550s another possible explanation of the rise of prices in Spain was put forward by Martín de Azpilcueta, one of the members of the distinguished school of writers on economic and monetary matters which flourished at Salamanca University in these years. Writing in 1556, Azpilcueta listed a number of reasons why the value of money might change. His seventh reason was that ‘money is worth more when and where it is scarce than where it is abundant’, and elaborating on this he wrote: ‘We see by experience that in France, where money is scarcer than in Spain, bread, wine, cloth, and labour are worth much less. And even in Spain, in times when money was scarcer, saleable goods and labour were given for very much less than after the discovery of the Indies, which flooded the country with gold and silver.’4 Here was the first clear exposition of the quantity theory in relation to the influx of precious metals from America – published twelve years before its exposition by the French Jean Bodin, who is usually given the credit for its discovery.

  It was only in the present century, however, that an intensive effort was made to correlate Spanish prices with the figures for the import of American bullion. In 1934 the American economic historian Professor Earl J. Hamilton, after collecting and processing a vast amount of statistical information on American silver and Spanish prices, came to the conclusion that ‘the extremely close correlation between the increase in the volume of treasure imports and the advance of commodity prices throughout the sixteenth century, particularly from 1535 on, demonstrates beyond question that the “abundant mines of America” were the principal cause of the Price Revolution in Spain’.5 This explanation was readily accepted at the time, but in recent years there has been a growing awareness that acceptance of the theory in the form presented by Hamilton creates certain difficulties to which no solution has yet been forthcoming.

  There is no dispute as to the existence of a sharp upward trend in Spanish price movements during the sixteenth century: Hamilton's figures suggest a fourfold increase between 1501 and 1600. Nor is there apparently any dispute that Spanish prices moved ahead of other European prices, and that the exchanges were usually unfavourable to Spain. The disagreement has come over the neat coincidence found by Hamilton bet
ween the rise in prices and the figures for bullion imports; and more recently it has extended to the whole question of the exact chronology of the price increases.

  Hamiton's reading of his figures led him to conclude that Spanish prices passed through three stages:

  1501–1550 a moderate rise;

  1550–1600 the culmination of the price revolution;

  1601–1650 stagnation.

  This coincided very satisfactorily with the movements in the import of American bullion, which not only showed a remarkable agreement with the general price trend, but also could often be very closely correlated with many of the short-term price movements. The correlation, however, eventually prompted certain embarrassing questions. Did Hamilton's figures, drawn from the official registers at Seville, really represent the total import of American silver into Spain? If, as seems probable, there was large-scale contraband, the figures lose much of their value. Still more important, what really happened to the silver when it reached Seville? Hamilton's thesis presupposes its steady injection into the Spanish economy, and a widening circle of rising prices as the silver moved outwards from Andalusia and spread through Spain and then through other parts of Europe. But this thesis ignores the question both of the ownership of the silver and the purposes to which it might be put. As regards the King's portion of the bullion imports, this tended to be mortgaged in advance to his foreign bankers, who might well transfer it abroad at once, without its in any way touching the Spanish economy. The private portion of the bullion imports could obviously be used for a wide variety of purposes and not necessarily monetary purposes depending on individual tastes. It would be reasonable to assume, however, that a large proportion of the silver remitted from America to Seville was intended to pay for goods sold in the Indies. If these goods were Spanish in origin, then the silver might well be expected to flow back into Spanish hands; but the extent to which they were Spanish in origin naturally depended upon the capacity of Spanish industry to meet the demands of the American market. Since there are many indications, especially in the second half of the sixteenth century, that Castilian industrial production was lagging badly behind the demand, it is natural to assume an increasing share of foreign products among the cargoes destined for America. In spite of the prohibitions on the export of precious metals from Spain, it is perfectly clear that the silver used to buy these foreign goods did not stay in the country, and that its registration at Seville was often a mere formality before its owners sent it abroad at the earliest possible opportunity. In view of this, the total quantity of silver registered at Seville and the total quantity entering Spain cannot safely be considered as automatically equivalent to each other. The close correlation between Spanish prices and bullion imports is therefore difficult to accept as it has so far been presented, since nobody knows what proportion of the bullion was actually imported into Spain.