The Seventeenth-Century "Depression"
The commercial triumphs of the late sixteenth century had an unwelcome sequel in the business failures of the seventeenth century. Scholars now agree that from the 1640s through the 1660s colonial Mexico's silver output slumped. Given that silver was New Spain's main export, this meant that transoceanic trade shrank and the capital it generated for investment at home also shrank. Even interregional trade with Central America or Venezuela depended on New Spain's silver. Lacking the mercury needed to process the silver ore, mine owners went bankrupt; lacking specie, merchants failed; lacking loans, sugar planters and cloth producers curtailed operations. Combined with the Indian population reaching its lowest point ever in 1630-50, and with increased attacks by foreign corsairs, New Spain seemed to be in the grip of a depression.

Yet, where some historians have found depression, others have seen opportunity. With the decline of fleet sailings, contact with Spain became less frequent, and this has led to the claim that the seventeenth-century contraction presented New Spain with a chance to produce more of its manufac tured goods and assert more control over its own economy and its governance. Since registered silver declined from about 46,000,000 pesos over the 1630s to about 35,000,000 pesos over the 1640s, and remained close to the latter level for the next two decades, there was still enough to finance some production and trade. The seventeenth century may have offered a chance for a pattern of growth centered more on Mexico and possibly less controlled by an elite linked to Spain.

The history of merchants and markets during these problematic years offers the best evidence we now have to address the autonomy hypothesis. Examining the history of the seventeenth-century wholesalers and their families, we do not see much change in how the economy was organized. Relative to other social groups in the elite—bureaucrats, clergy, hacendados, and mine owners—the wealthy merchants remained very important to the economy, particularly as sources of credit. Studies of Puebla, Guadalajara, Zacatecas, and Cuernavaca all confirm this. Nor did they modify their approach to conducting business. Indeed, their trade became more monopolistic and their ties with Spain remained close, as many wholesalers continued to act as commission agents for Sevillian traders. Consumers, for their part, continued to seek foreign fabrics. Even buyers with modest incomes could sometimes purchase the fine-quality but less expensive China wares.

Yet, colonial Mexico's wholesalers also continued to plow some of their profits back into financing production. The same internal trends that fostered a certain degree of specialization and regional exchange before the 1630s continued during the slump. Whether total textile production expanded to compensate for lack of imports is hard to say. We know it grew in regions like Queretaro but declined in others like Puebla. It is certain that craftspeople continued to turn out clothing. Sugar producers continued to seek licenses to plant and processed their crop into sweets and cane brandy, ranchers sold their hides to make saddles and shoes and interregional trade benefited. The structure of the economy formed in the sixteenth century persisted through the contraction.