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5.1. The colonial economy

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Juan Cobo

on 15 November 2018

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Transcript of 5.1. The colonial economy

Housekeeping and announcements:
Turn OFF your cell phone.
You may use a computer ONLY for taking notes. Surfing the web, checking social media, etc. distract not just you but also those seated around you.
Come on time.
If you must leave before the end of class, let me know IN ADVANCE and leave quietly.
Use the restroom IN ADVANCE.
I won't go beyond our allotted time. Do NOT pack up early.
I encourage you ask questions from the floor during lecture. Just raise your hand.

4.1. The colonial economy
The colonial economy
Today
Mining
Sugar
Trade
Mining
Gold exhausted in the Caribbean in the first decades of the 16th century.
Later gold production concentrated in New Granada (modern-day Colombia — around 50% of all gold extracted in Spanish America); later (1690s) huge gold deposits found in Brazil.
But extraction of precious metals dominated by silver production.
And silver production dominated by Mexico and Peru (99%).
Spanish American economic expansion
By late 1600s, Spanish America beginning to be more prosperous and vibrant than the Peninsula in practically all material respects.
Backbone of economic expansion population growth.
Population of Mexico ~1.5 million 1650, ~3m 1740s, ~6m 1800.
Population of Spanish America overtakes that of Spain in the eighteenth century.
By 1800, population ~12.5m in Spanish America cf. ~10.5m in Spain
Sugar
Sugar production introduced in Caribbean in 1503.
Production becomes important when gold deposits begin to be exhausted.
By 1571, Puerto Rico and Hispaniola exporting 750 tonnes of sugar to Europe.
Production far greater in Brazil: 25,000 tonnes by 1610.
Source: TePaske 2010, p. 16.
Mining
1530s, silver found near Mexico City. Production impressive by contemporary standards.
1540s, real boom begins when silver is found in northern Mexican plateau.
In Peru, mining begins in 1538 in mines already exploited by indigenous people.
View of Potosí, from Herman Moll, Map of South America, London, c. 1715

Technology
Initially, Spaniards drew on native mining and refining techniques where they existed (Andes) — with added benefit of Spanish iron and steel tools.
Silver production, 1521-1800
Major mining centers
Overlays from
The Cambridge History of Latin America
, vol. I, p. 106-107.

1545, discovery of silver at the Cerro Rico de Potosí, in modern-day Bolivia.
1550-1650, Potosí alone would produce almost half of all silver in Spanish America.
Mexico
Peru + other NW
Rest of the world
Source: TePaske 2010, p. 113.
Where does it go?
Only ~21% paid in taxes ("Royal Fifth").
The rest is in private hands.
Much of the royal portion is sent to Spain — but only initially.
Source: TePaske 2010, p. 6.
From 17th century, shipments of bullion to Spain fall while production booms. Why?
An increasing proportion of tax revenues comes to be spent
in the New World
.
Popular view: "Spaniards stole it" / "se lo robaron".
Actually:
How do Spanish Americans spend their 79%?
Where does it go?
Massive inflation in Europe 1550-1650.
Everyone blames New World silver.
But the problem had started earlier.
Much of the silver never even goes to Europe.
What about inflation?
1271, Mongols conquer China, inheriting paper currency regime and extending it disastrously.
1368, overthrown by the Ming dynasty, and many economic policies reversed.
Paper currency abolished, and China returns to silver currency.
Result: massive, sustained, demand for silver.
Asian deposits exhausted by 1540s, when NW boom begins.
By 1597, value of Acapulco-Manila trade greater than Mexico-Seville trade.
Source: http://www.gov.ph/images/uploads/manila-accapulco-galleon-trade-2.png
Consequences?
Spanish
real de a ocho
(Spanish dollar), minted around Latin America, becomes the first global currency.
Latin America integral part of the "First Globalization".
Huge amounts of Chinese products imported into the New World.
But Spain is excluded from much of this economic prosperity — and the cracks begin to show in the cohesiveness of the empire.
Soon facing competition from French, British, and Dutch (to which we will turn in Unit 6).
Other export-directed agriculture
Figures from Bakewell 2004, and the CHLA vol. II. All approximate.
Cuba – Sugar production
(tonnes)
1760 — 6,000
1792 — 15,000

Venezuela - Cacao Production
(Number of cacao trees in the province of Caracas)
1684 — 500,000
1720 — 3,000,000
1744 — 5,000,000+


(
Chile – Wheat
(exports in bushels, from Valparaiso)
1705 — c. 99,000
1735 — c. 180,000

Buenos Aires – Leather production
(Number of hides exported)
1715 — 45,000
1724 — 60,000
1760s — 150,000 p.a.
1779-1795 — 330,000 p.a
.

Who does all the work?
How is this wealth distributed? Who is benefiting, at whose expense?
Where does all the silver go?
Manufacturing

(
Most significant textile production, but far from industrialized.
Production focused on clusters of small workshops, and productivity only increases by increasing input.
Is this the beginning of a great divergence?
Why are some industries the source of enormous innovation, but not others?
Manufacturing
Office hours:
HSSB 4224, Tuesdays 10:00 am -1:00 pm,
and by appointment.
Class 1: Mining, sugar, and trade
HIST 151A. Latin American History, c. 1492-1810
University of California, Santa Barbara
Prof. Juan Cobo, jcobo@history.ucsb.edu
Unit 5: The colonial economy
Next Wednesday, May 16th, is the deadline to show me an outline of your research paper. If you still don't have a question — and most of you don't — come see me ASAP.
Last time
Foundations and background
The ideology of empire
The materialization of ideology
Midterm preparation
The silver peso as global commodity
From Spanish currency to universal money.
1 silver peso = 8 reales = 272 maravedís = one ounce of silver.
Only a handful of mints established around the New World: Mexico, Santo Domingo, Lima, Potosí, Bogotá, Popayán, Guatemala, and Santiago de Chile.
The peso in Europe
By the late 16th century, silver pesos become the most widely circulating currency in the world.
Antwerp, in the Spanish Netherlands, becomes a focal point for their arrival into Europe in framework of Habsburg administration and foreign policy.
But even larger proportion of silver imports into Europe private remittances and payments:
Spanish Americans pay for their imports with silver and gold.
Complemented by vast undeclared smuggling.
Key to success the maintenance of high quality coinage
And this itself essential to the crown being able to tax gold and silver effectively.
But circulation of metallic currency within Spanish America paradoxically limited.
Most of it goes somewhere else. This was an
export

manufacture
.
The peso leaves Europe
From Spain and Spanish territories, 1/3 of silver coins end up in France, England, and the Dutch Republic, where they are resmelted or counterstruck.
But 2/3 used for international trade with Baltic, Russia, the Middle East, India, and China.
Spanish and Portuguese trade routes, 16th century
Wikimedia Commons
What is going on?
The facts do not bear out the easy economic characterization of Spanish colonialism that holds that economic activity was directed to the benefit of the metropolis.
Later, 18th-century efforts to reverse this (the focus of unit 7), confirm this, and were themselves hugely controversial and unsuccessful.
The real issue (and, from the perspective of modern nationalist narratives, the uncomfortable truth) is the hugely unequal distribution of this Spanish American wealth within Spanish American society.
Modern reconstruction of a guayra. Photograph by Pablo Cruz. http://discovermagazine.com/2016/may/15-freeze-frame
Guayras small layered clay furnaces placed on hillsides and ventilated by drafts of wind.
Spaniards generally lack knowledge of mining techniques — the silver industry of early modern Europe was centered primarily in Germany.
And Spanish smelting techniques (furnaces with bellows) inadequate, especially in the Andes:
Little oxygen and fuel at high altitude.
Andean ore lacked flux (cleaning, flowing, or purifying agents) essential to this sort of refining
Extraction of silver initially focuses on rich surface ores, so costs low, but refining the ore still a challenge.
So reliance on indigenous techniques
Up to 1570s, mine owners outsourced production to indigenous managers.
From A. F. Frezier, A voyage to the South Sea, London, 1717.

B. Crushing mill
C. Patio
H. Removal of mercury
But 1555, huge technological breakthrough in Mexico: amalgamation refining ("the patio process").
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