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Mercantilism, Spanish Style
Precious metals were valued above all other goods, and the Spanish Crown prohibited the reexport of American silver from Spain without a license. This policy was by no means unique to Spain. In fact, it grew out of the protectionism common to the city-states of medieval Europe. But Spain was the first to implement it on a massive scale and the first to demonstrate its weaknesses. Spain's inability to enforce its mercantilist policies in the seventeenth century mocked its goal of making the Empire strong and self-sufficient. However, even in a weakened condition, Spain's protectionism significantly influenced the direction of the colonial Mexican economy. It concentrated trade at a few choke points and heightened the existing dominance of Mexico City. Protectionism encouraged addiction to routine and an acceptance of fraud and xenophobia.
The Casa's fiscal function typified Spanish mercantilism. The House of Trade collected the import-export tax and the royal fifth on silver. It was to make sure that the Crown received its share of the wealth of the Indies. But neither the Casa nor any other branch of government systematically promoted the Spanish manufacturing needed to meet New Spain's demand for finished goods. Spain could not reciprocate the bounty it received. As early as the 1560s, Spanish advisers criticized the Crown for concentrating on heavy taxes and neglecting the promotion of industry and agriculture. Part of the problem was beyond its control. The inflation that followed massive silver imports made Spanish-produced goods more expensive than their northern European counterparts. In any case, the Crown was disposed to pursue short-term fiscal goals at the expense of long-term developmental goals. |