Economic Life in Late Medieval and Early Modern Spain, 1085–1815
Summary and Keywords
The period between 1085 to 1815 witnessed important transformations in Spain’s economic history. The transition from a frontier society to one of the largest empires in the world was soon followed by its subsequent decline. During Spain’s Middle Ages two kinds of economies, societies and political structures, existed side by side: One represented by the various Muslim kingdoms and another by the Christians. Their frontiers shifted constantly between 1035 and 1212 to the detriment of Al-Andalus (Muslim Spain), concluding with the conquest of Granada in 1492. Economic dynamism resulted in Christian expansion, reflected in demographic, agricultural, livestock, and commercial growth during the 11th, 12th, and 13th centuries and comparable to that of other medieval kingdoms. Under the stress of the mid-14th-century crisis (plagues, wars, and civil conflicts), economic growth came to a partial halt in the second half of the century. Yet, unlike other areas in Europe, the late medieval crisis had less of an impact in Spain, differently affecting some of the Iberian realms.
After the second third of the 15th century, as it was the case in Portugal, the economy in the Crown of Castile began to grow once more. Castile became the demographic and economic hub of Spain to the detriment of other areas, such as Catalonia, Navarra, or Aragón, which had been more developed in earlier times. The Catholic Monarchs’ rule and their reforms made Spain one of the most prosperous economies in Europe and the center of a sprawling empire. The colonisation of the Americas and the Philippines with their untold wealth further bolstered Spain’s economy. As a result, most researchers agree that Spain reached the height of its economic growth in the mid-16th century, although in a number of regions growth extended into the 1580s. Based mostly in agriculture, the economy also benefitted from the development of crafts and, above all, trade, generating vast tax revenue for the Habsburg monarchy’s expansive policy of war.
After the late 16th century, however, the Spanish economy began to show signs of fatigue, leading to severe crisis that lasted until at least the mid-17th century. This recession heralded a major shift in Spain’s history. Whereas it was the inland areas of Spain that were the most populated and wealthy during the 12th and 13th centuries, these areas were also most affected by the crisis, while the coastal regions would be the first to emerge from the recession. Although Spain failed to reach the heights attained in other countries such as Britain, France, or the Netherlands, an economic revival occurred during the 18th century, moving the Spanish economy beyond what it had been during the final third of the 16th century. Nonetheless, as had occurred in the 17th century, coastal areas developed more intensely than inland, leading to the economic geography of modern-day Spain.
Introduction: Medieval Spain, 1085–1469
The geographical and political entity known today as Spain did not exist until the arrival of the Bourbons in the 18th century. Before then, the diverse Spanish realms were not part of a single unified economy. After the demise of Caliphate (1030s), the Iberian Peninsula fragmented into a plurality of kingdoms. From the emerging Muslim taifa polities in the South to small Christian realms in the North, these kingdoms evolved throughout the Middle Ages into distinct political entities (Portugal, Castile, the Crown of Aragón [itself composed of three distinct regions], and Granada).
Each of these realms had its own administrative structures, languages, traditions, and economies. Each also had its own modes of production, forms of organizing land and labor, methods of cultivating the arable, and trade networks. While economic structures often transcend political frontiers, the sharp differences between geographical regions and political entities fostered a diversity of economies (MacKay, 1977).
The approach in this article is two-pronged: In examining the earlier period, it favors a thematic approach (rural and urban economies). For the early modern period, when the Spanish economy became more integrated, it favors a chronological framework. This section examines rural economies in the Middle Ages as separate from urban or mercantile ones. In truth, during the premodern period and even later, the dichotomy between city and countryside is often a false one. As was the case elsewhere in the medieval West, most urban centers in Castile, Catalonia (with perhaps the exception of Barcelona), and elsewhere were agro-towns. Close economic links bound cities to their hinterland. The countryside (the alfoz or municipal rural jurisdiction in Castilian) supplied the city with much-needed provisions. It was the source for rural migration to the city and even for a steady flow of rural artisanal products. After the 12th century, urban elites invested heavily in the town’s hinterlands and often lived in their country estates during the summer months. Conversely, numerous town inhabitants worked as rural labor. The countryside also supplied agricultural products that allowed for large urban population. Thus, while this article explores rural and urban as distinct categories, one should keep in mind their interconnectedness and that they are discussed separately for the sake of clarity (Ruiz, 1994, 1998).
After examining rural economy(ies), the article turns to the rise of cities and trade. This is done by combining a general description of urban economic developments with some short case studies. While cities played distinct roles in the realms’ economies and political life, it is important to remember, emphasizing peninsular diversity once again, that towns and cities throughout Spain developed in diverse ways. This is more significant when one acknowledges the enduring differences between Islamic rural and urban economies and Christian ones. Although Christians borrowed freely from Islamic economic structures, rural practices, and the like, there were significant differences. In many respects, this prefatory discussion of the Spanish economy before 1500 serves as a reminder of the enduring presence of Islam in most of the southern parts of the peninsula and elsewhere (husbandry, agricultural regimes, building styles, and the like), even after the great Christian conquests of the mid-13th century. In the same fashion, the Spanish economy(ies) also reflected Christian hegemony in the peninsula after the mid-13th century and the slow demise of the peninsula’s role in the wider economy networks of Dar al Islam. As significant as these issues are, it is time to begin to describe rural economies.
Rural Economies and Geography to the Late Middle Ages
Agriculture and Geography
Spain’s geography determined, to a large extent, the social organization of rural space, forms of cultivation, and production in the Middle Ages. Although variations occurred throughout the period between the 1030s and 1469, there was everywhere an enduring commitment to the cultivation of grain (wheat, rye, barley, and so forth) and to viticulture. Dietary demands (based mostly on bread), hospitality, and liturgy (wine for visitors and the Eucharist) made peasants adapt to climate, soil conditions, and the burdens of seignorial power (or relative absence of it). Throughout the peninsula peasants produced mostly those crops that served as the basic sources of food in the Middle Ages and the early modern period. What the peasants grew was also often dictated by the lords’ preference for wheat as a payment-in-kind for rent or peasants dues—wheat over other forms of grain, and, in addition, chickens, honey, and other products. By the late 12th and early 13th centuries, however, payments in issue came to complement or replace payments-in-kind (García de Cortázar, 1988).
Soil conditions, the amount of precipitation, or the relative size of village communities led to rough forms of specialization and preference for certain crops. Although the organization of the soil and peasants’ labor obligations were not unalterable—impacted by climatic, social, peasant movement, and political changes as they were—certain patterns of the rural economy remained fairly constant through time. While much was in common (biennial rotation of fields; the centrality of cereals grains such as wheat, barley, rye; fenced arables as opposed to northern open fields; and the ubiquitous presence of grapes), other things differed. One rural constant, dictated by the nature of the soil and climate and extending into the modern period, was the presence of Mediterranean patterns of cultivation and the widespread use of the Roman plow throughout the peninsula. Practicing the system of rotating fields every other year (though in many areas of the Peninsula fields [because of the poverty of the soil] were allow to rest [fallow] for more than a year) to allow the land to rest (the año y vez system), Spanish rural practices seldom involved the use of the heavy plow (with wheels), the long furrows in open fields, or the three-field system characteristic of northern European medieval agriculture. With some exceptions, most of the soil in the peninsula could not support that type of agricultural practice. The land yields were also significantly lower than the most productive areas of northern Europe. Instead, Spanish agriculture benefitted on the whole from the widespread presence of Mediterranean products and practices: Olives, grapes, dry-farming, extensive fallow periods (Ruiz, 1998).
Agriculture in the North: Two Models
The mountainous, green, and Christian North—extending from Galicia in the northwest to the edges of Catalonia in the northeast—received a great deal of precipitation and differed greatly from the drier high plains to the south. Throughout Galicia, Asturias, Cantabria, and the Basque region, free or fairly free peasants (though in Galicia in the late Middle Ages they toiled under oppressive lords) worked small holdings that, although seeking to produce the necessities of everyday life, focused on the tending of fruit trees, livestock, dairy products, and other commodities associated with mountain economies. The northern mountains also provided the demographic capital for Christian expansion and repopulation in the areas to the South (the northern Castilian plain) in the 9th to 11th centuries (García de Cortázar, 1988).
Besides farming, coastal northern communities from Galicia to the Basque region actively pursued fishing and seafaring activities in the Atlantic and the Bay of Biscay. Although these communities connected to long-distance trade with England and Flanders in the 13th century, this section emphasizes the nature of agricultural production throughout northern Spain. Dictated by frequent precipitation, sea breezes, and humidity trapped by the mountain ranges and high plains to the south, the whole area constituted, albeit local differences, a cohesive economic whole. Small and numerous villages, inhabited as already noted by free peasants, dotted the countryside (García de Cortázar, 1982).
Peasant “freedom” made most of the Spanish realms’ economies quite different from the rest of the medieval West before 1350. Whether because of the flow of people to the southern frontiers or the lure of fairly underpopulated lands in the Duero River region, the economic and social relations between peasants and their lords in the Spanish Christian realms was not (with one exception) one of servitude. The Becerro de Behetrías (1351) listed how much the peasants owed, what types of dues they paid (and when), and to whom they owed either work or payments, but neither this survey nor other documents indicated the presence of serfdom. Nobles, ecclesiastical establishments, and the Crown collected dues from villages, most of them located in Castile’s northern region. Other peasants, those of behetría, could, in theory, choose and change their lords. Peasant “freedom,” whether in the North or in the South, played a significant role in the rural economy. Freedom of course meant something different in the Middle Ages than it means today. While there were no peasants without lords, peasant mobility, greater freedom, and reduced seignorial dues triggered by an advancing frontier played a central role in the rural economy. Peasant freedom contrasted vividly with most of the medieval West until the 14th century. It also did so sharply with conditions in northern Catalonia.
An Exception: Catalonia
Eastward of the mountainous north, the hill country of Old Catalonia witnessed a very different form of lordship and ways of organizing labor in the countryside. Some areas of the Crown of Aragon witnessed severe forms of predatory lordship, as was the case in Ribagorza, where conflicts between lords and peasants became endemic. In northern Catalonia, feudal lords deployed a whole host of spurious claims for legitimizing their rule: That the peasants had failed to resist the Islamic invasion, their cowardice an excuse for their servitude. Lords imposed restrictions on the freedom and mobility of their subjected peasants. As serfdom began to wane north of the Pyrenees, the remença peasants (named after the fee peasants had to pay for their freedom) fell into harsh servitude. Because the peasants in the region resisted, agricultural production and rural life were disrupted. After waging (with royal support) two successive campaigns against their lords in the 15th century, the peasants were granted the right to purchase their freedom in 1486 (the Sentence of Guadalupe) (Freedman, 1991).
These small farms, cultivated by servile peasants and engaged mostly on subsistence agriculture (a mix of grain cultivation, fruit trees, livestock, and the like), would give way, with the arrival of freedom, to more sophisticated (and at times prosperous) forms of cultivating large farms, the masia (in Catalan) that, like similar developments in the Basque region, allowed for extended familial housing complexes and increased production.
Agriculture on the Plains
South of the northern mountain regions, most of Central Castile and Aragón were geographically defined by high plains. In the 11th century, the high plains of Castile, the Duero River area, and the river banks along the Ebro River in the kingdom of Aragón were the foci for grain production. With little rainfall—for, in spite of Mr. Higgins’ ditty, the rain in Spain did not fall mainly on the plain—this was mostly dry farming, centered on the cultivation of wheat (the preferred in-kind payment collected by secular and ecclesiastical lords) and other grains. Gardens provided vegetables and other needs. Nearby woods (montes), less a seignorial preserve in Castile than in northern Europe, provided materials for heating and building. Woods were also the pigs’ domain, a cherished resource in a world without an abundance of meat. Livestock (mostly but not entirely sheep), gaining in importance after the official establishment of the Mesta and the opening of lands in Western Andalusia to grazing in 1276, formed an important aspect of the rural economy in these regions.
Villages were larger than in the northern mountains. Villages of over 100 inhabitants were not uncommon, but they were also spread farther apart from each other. Throughout the Middle Ages and into the early modern period, travelers often mentioned the long span of deserted territory between inhabited areas, except for the occasional presence of a venta or road inn. Located on the dry high plains, these villages hugged streams and other water sources that allowed for life. The soil was quite unyielding, requiring constant work and extensive fallow. In the area of Ávila yields of 2x1 had been reported in the early 14th century (contrasting with an 8x1yield in the Chartres countryside in the same period), leaving little margin for survival. Prices of rural property and the market for land in the central plains also reflected the challenges presented by northern agriculture. The fairly constant prices of land over time (in spite of inflation) attests to a rural world slowly adapting to new conditions with little demographic growth.
Yet, some rural communities in the 13th and 14th century (until the Black Death dealt a blow to the population) continuously litigated (and even fought) with other nearby communities or ecclesiastical lords over the boundaries of their respective holdings, access to grazing lands, and dwindling wooded areas. Rather than a sign of a crowded rural landscape (for which there is scant evidence in the early 14th century), there is evidence of pockets of good land with access to water and connections to towns nearby (Ruiz, 1994, 1998).
Not everywhere was the same, however. Gazing eastward, the fertile banks of the Ebro were cultivated, after the Christian conquest of Zaragoza in 1118, mostly by Mudejars (Muslims living under Christian rule) and by Moriscos (Muslims who had been, in theory, forced to convert to Christianity at the beginning of the 16th century). These profitable conditions were duplicated in Valencia after the Christian conquest in 1238 (Burns, 1967).
The Islamic and Christian Rural Worlds: The South to 1248
Further south in Spain’s medieval rural history, two distinct but not unconnected agricultural economic systems developed in southern Iberia in response to political changes. In broad terms (local conditions varied according to numerous factors), the 711 Islamic conquest of most of Spain and the Muslim withdrawal south of the Central Sierras after 751 (except in the regions of Zaragoza and Catalonia) introduced into the Peninsula new crops, sophisticated husbandry and horticulture manuals, and the preservation and improvement of Roman irrigation techniques. The so-called green revolution revolutionized rural production in Islamic Iberia, mostly so during the heyday of the Cordoba Caliphate (9th to early 11th centuries). In some areas, as for example in Seville’s hinterland, the Alfaraje, or in Valencia’s fabled huerta (gardens), the introduction of new plants; hydrological innovations, such as the noria or water-driven wheels; vertical mills; new knowledge of husbandry; and irrigation yielded an agricultural bounty and the ability to sustain large populations. Fruits, such as pomegranates, figs, lemons, and oranges, thrived in Andalusia’s rural world. Sugar and rice, mostly in Valencia, propelled the region to prosperity. Olive trees, the vine (in spite of the Islamic injunctions against wine), other fruits, and silk production served as locomotives for economic growth and for a dynamic economy linked to the wider Islamic commercial networks (Glick, 1979). Important also was the more skilled use of what Vicens Vives called “industrial plants” (madden, flax, cotton, silk, and other products), leading to profitable textile production based on agricultural innovations. Such high-end products as saffron and others also played a significant role in monetizing the rural economy. The South (as was the case with the Rioja in the North) was also a region well suited for the cultivation of grapes and, even more so, olive trees. Olive oil became one of the most profitable crops in medieval southern Spain (Vicens Vives, 1972, 1969).
This is, of course, a broad view that does not take into account the many different local conditions or departures from the model. Types of cultivation and rural social conditions varied, reflecting how the Islamic conquest of most of the Iberia peninsula organized rural space. The accepted model for early social patterns of settlement has long been that Arabs, a minority among the heterogeneous invaders, occupied the cities. Berbers, the largest group among the initial settlers and later immigrants, preferred rural spaces (but not always), bringing with them rural practices common to North Africa. Other important groups were the so-called Syrians, as well as “Slavic” people, adding to Islamic Iberia’s ethnic diversity and impacting land distribution. Significantly, a large number of Christians converted to Islam after 711, also ending up as peasants in the thriving agricultural world of al Andalus.
Islamic settlers did not come into an empty land or an uncultivated one. Roman rural life in southern Iberia led to the organization of space into large estates or latifundia, worked earlier by slaves and then by coloni after the early 4th century. It was also marked by the widespread use of irrigation, influencing Muslim rural life and the social and economic organization of labor. Although slavery was not widespread in al-Andalus in the Middle Ages, the small farm communities of the Christian North worked by free peasants was not the norm in the South under either Muslims or Christians.
The South After the Christian Victories, 1248–1469
In the decades after the Christian victory over the Almohads at Las Navas de Tolosa (1212), most of western Andalusia came under Castilian rule. In the southeast, the Muslim kingdom of Valencia also came under Arago-Catalan rule in 1238. In the latter, the rulers of Aragón-Catalonia made a critical decision. Even after Mudejar revolts in the 1260s, they did not disrupt the previous patterns of Islamic cultivation, irrigation, and rural work. In many respects, these patterns of organizing rural labor had already been tested in the kingdom of Aragon, above all, around Zaragoza. The Aragonese example was carried south to Valencia, and the region, its fabled huerta, remained a bright agrarian spot in Iberian medieval rural life.
This was not the case in western Andalusia. In the early stages of the Castilian conquest and settlement of the South, there was an attempt to introduce patterns of cultivation and small holdings (worked by free peasants) that were common in the North. For a variety of reasons, most significantly the expulsion of Muslims from most of western Andalusia after their uprising in the 1260s, maintaining Muslim rural practices in conquered western Andalucia partly or fully failed. In Murcia, for example, the irrigation works so carefully tended by the Muslims collapsed in a few years after the Christian conquest. Faced with this quandary, the king of Castile, Alfonso X, drew new repartimientos (distribution of property to new settlers). These later repartimientos favored great lords, important ecclesiastical establishments, and military orders. In the absence of Mudejar labor and skills, the latifundia (already present in Roman Iberia) emerged as the dominant form of organizing rural space—large villages inhabited by a growing rural proletariat—and a sparse population (concentrated in the towns or in highly productive areas) (González Jiménez, 2008).
By the second half of the 13th century, the transhumance (the annual movement of livestock from summer to winter grazing lands) brought huge flocks of livestock into the area. Although the transhumance had a long history in Iberia, the Mesta, or guild of sheepherders, was not officially established by royal decree until 1276. The movement of livestock throughout the peninsula and the introduction of the merino sheep (with its higher quality wool) after 1300 transformed the Spanish economy. Here, more vividly than in any other example, rural and urban search for profit overlapped. The expansion of the Mesta and the growing export of wool to northern Europe also paralleled a dramatic shift in the Iberian economy (Klein, 1964). As insightfully described by the late Olivia Remie Constable, the Iberian economy shifted from one connecting the region to the vast trade networks of Dar al Islam to one linking northern and southern markets (including England and northern Europe) into growing commercial relationships. These new commercial links and mercantile activity, although based on new forms of rural production, led as well to the revival of urban life in the northern regions of the peninsula. Those economies are discussed next (Constable, 1994).
Urban Economies to the 15th Century
With the already-noted caveat that most towns were closely linked to the rural world around them, cities introduced new dynamics into Iberian societies. Not every region developed urban institutions and economies in the same fashion or in the same chronological period, nor were towns’ commercial life the same everywhere. This is markedly so when grouping these towns into specific geographical and religious contexts. In Islamic Spain, Umayyad Córdoba was a sprawling urban center already in the 9th century with great buildings, institutions of learning, and a sophisticated urban infrastructure. Seville, already an important city under the Caliphate, saw even greater glory and great urban projects under the Almohads in the 12th century. Mallorca, Valencia, Granada, and other Islamic cities had large populations and active trade before the 12th century, predating the urban revival in northern Castile along the Road to Compostela. Linked to North African markets, sub-Saharan trade, and Islamic entrepots in the eastern Mediterranean, and bound by religion and complementing production patterns, Islamic Iberian cities represented one distinct type of urban economic organization until the Christian conquests in the mid-13th century. Granada, the last outpost of Islam in the Iberian Peninsula, and its hinterland remained a vital urban economy until its surrender in 1492, producing silk, iron work, and other luxury or specialized items. An active maritime trade linked Málaga, the main port of the kingdom of Granada, with Islamic cities in North Africa and other regions of Dar al Islam (Torres Balbás, 1971).
This is not to say that some urban centers in Christian Iberia did not show the same agile attitude toward commerce and economic exchanges. Such, as shall be seen, was the case with Barcelona and Burgos, but it is important to note that two of the most important urban economies in the peninsula, Seville and Valencia, had previous lives as part of Islamic trade networks. Keeping always in mind the different path followed by Islamic and Christian urban polities, when discussing urban economies in general, several patterns could be discerned: (a) mercantile activities and manufacturing, though with wide differences in scale from location to location, were present in all urban centers; (b) the number of city inhabitants ranged widely; with some notable exceptions, only a handful of cities or towns (there was legal distinction between the two) surpassed 5,000 to 7,000 inhabitants; and (c) by the late 12th century, almost every town in the Spanish realms experienced a social stratification of its population. The pattern for growing social differences was as follows: Patrician elites monopolized municipal offices and church benefices. Those in the lower levels of society were disfranchised. The urban elites’ social and political power often depended on the ability to fight on horseback as part of the city militia, but owning a horse depended on income, often generated by trade or artisan pursuits (Gautier-Dalché, 1979; Ruiz, 1994).
While there were common structures, there were also marked differences. Thus it may be useful to provide here some brief case studies of the three largest and most important urban centers in the peninsula: One with Christian origins and two others with a significant Islamic past. They certainly did not stand for the whole, and a subsequent section looks at different urban economies in the northern part of the peninsula. Nonetheless, examining the three largest Spanish urban economies provides a partial view of how some cities functioned before the early modern period and what possibilities there were for an intense commercial life in medieval Spain.
Barcelona, Valencia, and Seville
Traveling from his home to the Holy Land, Benjamin of Tudela, a Jew from Navarre, came to Barcelona in the early 1160s. He described the city with laconic details (his main interest was to report on the number of Jews on the cities along his journey), but he also provided important hints as to Barcelona’s thriving commercial life: “This is a small city and beautiful, lying upon the seacoast. Merchants come thither from all quarters with their wares, from Greece, from Pisa, Genoa, Sicily, Alexandria in Egypt, Palestine, Africa and all its coasts” (Benjamin of Tudela, 1907). According to Benjamin de Tudela, Barcelona had a lively trade with the usual Mediterranean (read here Italian) cities, Pisa, Genoa, and others, but its trade network also extended to the Islamic Eastern Mediterranean, Byzantium, and other locations. As such, Barcelona served as an economic interlocutor between specific regions in the Iberian Peninsula (Aragón, Navarre, and other lands west and south of the city) and markets in Egypt and the Maghreb. Barcelona’s commercial life increased further after Sicily became linked to the Crown of Aragón in the late 13th century, and even more so after Alfonso V, the Magnanimous, conquered Naples in 1441, becoming firmly connected to Italy’s economic life. The unexpected yet mutually beneficial alliance between the Crown of Aragón and Genoa in the mid-15th century also expanded Barcelona’s commercial reach.
But Barcelona became an important economic center for other reasons as well. The Llibre de les solemnitats de Barcelona often list the guilds participating in royal entries, the Corpus Christi processions, and other festive celebrations. It is an impressive list of different crafts, ranked by their importance. At the other end of the economic spectrum, the honored citizens of Barcelona’s lavish houses (almost strongholds) along the carrer de Montcada and elsewhere throughout the city also attest to the power of trade in turning merchants into nobles (Amelang, 1986; Bensch, 1995).
As Barcelona reached its economic peak in the 15th century, the city began to decline. Changes in the general Spanish economy, the rise of the Atlantic after the encounter with the New World (especially after 1521), the hegemony of Castile within the peninsula, and the slow decline of the Mediterranean marked the end of Barcelona’s preeminence in the peninsula. Torn by civil conflicts between two factions, the Biga (the ciutadans honrats and powerful merchants) and the Busca (artisans and lesser merchants seeking to wrest power from Barcelona’s oligarchical elites), the city entered its long period of decline. This meant Valencia’s gain.
Better located for trade in the western Mediterranean (above all with the Balearic Islands and North Africa) and with Atlantic ports through the Straits of Gibraltar, Valencia rose to economic prominence in the late Middle Ages. Valencia drew on a productive hinterland, enjoyed an inexpensive labor pool (Mudejars and later Moriscos), and profited from the production of commodities such as sugar, rice, saffron, and other products. Silk and paper, the latter produced mostly at Xátiva (a city in the kingdom of Valencia), enjoyed great popularity in markets throughout the region, in the rest of Spain, and even abroad. Paper became important in Valencia, as it began to replace (or complement) parchment from the early 14th century onwards.
Valencia’s economy, however, depended on far more than agricultural products from its fabled huerta or paper from Xátiva. It was a thriving port city, with a heterogeneous population of Christian, Jews, Muslims, and others. In the late 14th and 15th centuries, it was an important slave market. In Valencia Muslims captured in corsair raids or in peninsular wars, natives from the Canary Islands in the late 15th century, or Slavic women from the eastern Mediterranean were sold and bought. Some of them became converts to Christianity in complex dances of social, economic, and cultural relationships (Iradiel Murugarren, 2017).
More than a century before Seville became Spain’s most vital economic center because of its monopoly of the Atlantic trade, the city already had one of the largest urban populations in the Iberian Peninsula and a robust economic life. Drawing on its hinterland, the Aljarafe, producing such exportable commodities as grain, olive oil, and wine, Seville also benefitted from a privileged location. The Guadalquivir River connected it to the Atlantic and, after the early 16th century, to the New World. Though a series of river valleys and road networks, Seville also had access to the Mediterranean Sea, circumventing the perils of the Straits of Gibraltar. Under the Almohads, the city had long attracted foreign merchants, above all, the Genoese, who set their trading stations and businesses there. Many of them settled in Seville for the rest of their lives, as was the case of Francisco Imperial. Born in Genoa, he lived in Seville for most of his life, becoming a noted poet in Alfonso V’s court in Naples. The foreign mercantile presence remained vital for the economy of Christian Seville, connecting the Mediterranean Sea to Atlantic ports and northern Europe.
Artisanal pursuits, in a wide range of areas, general manufacturing, ship building, leather goods, textiles (including silk cloth), and a large variety of other goods contributed to Seville’s prosperity in the 14th-century and afterwards. The city also benefitted from the presence of Jewish merchants and small shopkeepers, as well as a number of Mudejars, many of them engaged in the building trade. Its large foreign mercantile colonies connected the city to a wider world beyond peninsular boundaries and to banking institutions abroad. All of these activities rested on profitable agricultural and livestock pursuits that gave Seville advantages not present, to such an extent, elsewhere in Castile (Collantes de Terán, 1977).
Urban Centers Along the Road to Compostela
In the North, the evidence for urban economies is more limited. Urban life on the northern high plains (above all on the regions that would later become Castile) was fairly unimportant until around the 11th century. The river of pilgrims traveling along the road to Compostela to the tomb of St. James; the reconquest of territories on the borders of Islamic Iberia, such as Ávila, Segovia, and Zaragoza; and Christian royal resettlement policies led to the rise of northern towns and cities. In northern Castile a new dynamic social group, the bourgeoisie, came into being. Their growing social, economic, and political roles transformed northern Iberian society in general and its economy in particular. These developments came in two distinct forms: First, towns and cities that emerged along the pilgrimage route, and second, the small towns that rose on the Cantabrian and the Bay of Biscay coasts, functioning as outlets for the northern Castilian trade with England and Flanders. As to the latter, one may summarize their emergence as follows.
From their origins and settlements in the 12th century, coastal towns in Cantabria (Santander, Laredo, Castro Urdiales, and others) and in the Basque region (Bilbao, San Sebastián, and others) developed two specific (but complementary) economic profiles. First, these towns carried on a substantial trade with England, the English possessions in western France, and, above all, Flanders. Although this trade would only reach its highest point in the early modern period, the introduction of the merino sheep into the peninsula around 1300, the need for quality wool by Flemish textile centers, and the discovery of marketable iron mines around Bilbao established patterns of trade that are easily documented by the late 13th century. Some ports, as the accounts of the early 1290s show for San Sebastián and Fuenterrabía, became the entry point for fine cloth and many other products to be distributed throughout the peninsula by long-distance merchants from the Castilian interior. These goods also included salted fish, manufactured products, and the like. In the dated parlance of the 1970s, 13th-century Castile was an “underdeveloped economy” (a condition somewhat reversed in the 16th century), exporting raw products (wool, iron, spices from the South, and so forth) and importing finished goods (mostly textiles) in rather extraordinary amounts (over 1,000,000 maravedíes in a single year through one single port). Fishing was also an important economic activity of these urban economies in the late Middle Ages. Together with livestock and fruit trees abundant in their lush green hinterlands, these small towns played a significant role in the realm’s economy as links to the northern European economy (Solórzano Telechea, 2002, 2005). The towns in the interior, most of them on the pilgrimage route, clearly show the connections between coast and interior. Coastal communities were a part of sophisticated trade networks centered around the cities along the road to Compostela, most of all Burgos. The latter town did not have extensive manufacturing or the pretense of an established textile production, as Segovia and Cuenca did. It did not have a significant role in the Mesta, as Soria (southeast of Burgos) or Ávila (south of the Duero River valley) had. It was not a center for wine production, as Logroño or Haro were. It did not draw upon a rich river valley agricultural production as Zaragoza (in Aragon) did. What then was Burgos’ role in Spain’s late medieval economy?
Economic Life in Burgos: A Brief Case Study
Burgos served as a node for complex trade networks. Goods coming from the South were transported to the Bay of Biscay and Cantabrian ports for export to England and Flanders. Numerous Burgalese merchants traded abroad (their numbers rose substantially in the 16th century). They were also found in the Basque and Cantabrian ports receiving merchandise from northern Europe (mostly Flanders) for distribution throughout northern Castile, Navarre, and eastwards to Aragón. Unlike Ávila, where Jews and Muslims had a significant presence in local trade and artisanal pursuits, in Burgos Christian merchants monopolized those activities. Economic success, as already noted, translated into political power, allowing these merchants to play leading roles in the city and the realm.
Burgos seems to have also had a significant role in kingdom-wide finances, though Jews and Conversos (after the 1391 destruction of the city’s Jewish community) had perhaps the lion’s share of those financial activities. The city, probably between 5,000 and 7,000 inhabitants by 1300, did not have the economic power of Seville, Barcelona, or Valencia, nor did it have far-flung links to the Mediterranean and Atlantic worlds. Yet, Burgos filled an important niche in the regional economy of northern Castile, linking it to other areas of the Iberian Peninsula (Ruiz, 1994).
Decline and Revival in the Late Middle Ages, 1350s–1469
As was the case in most of western Europe, the Iberian Peninsula was deeply affected by the late medieval crisis. Throughout Spain, demographic dislocations, following the conquests of most of Andalusia in the mid-13th century, changing climate, the chronic political conflicts (triggered by royal minorities), and noble rapacity created a context in which economic growth was difficult. In Castile and elsewhere in the peninsula, the population may not have recovered its precrisis level until 1500. By 1351, the Becerro de behetrías showed that almost one-quarter of the villages in northern Castile had been deserted. In parts of Aragón and Catalonia, the conflicts between peasants and lords also affected agricultural production and the realms’ stability. Some semblance of order would not be restored (certainly in Castile) until the reign of the Catholic monarchs. Their economic reforms, taming of the nobility, and renewal of royal authority provided the context for Spain’s hegemonic role in European politics.
As a counterpart to the violence and noble selfishness, displays of wealth reached new levels. In Castile, the increased importance of wool exports to Flanders (and the linking of the Castilian economy to that of the Low Countries) brought untold wealth to nobility and the Crown. Merchants, who were part of these commercial networks, also profited. Taxes on the movement of the livestock across the peninsula and on the Jews brought fabulous sums for the Crown, even though some of it often ended up in the magnates’ coffers. This new wealth, standing in sharp contrast to the economic difficulties of those discussed later, was displayed in elaborate festivals, cathedral-building, and patronage of the arts. By the end of the 15th century, Castile also benefitted from the opening of the Atlantic trade. In fact, the entire peninsula witnessed a slow but significant shift from the Mediterranean to the Atlantic.
The eastern realms’ economic well-being was linked to Mediterranean markets. The disruptions of agriculture, already noted, were initially compensated by the Arago-Catalan links to Genoa, Naples, and Sicily and by the greater prosperity of Valencia to the detriment of Barcelona. The union of the crowns by the marriage of Isabella and Ferdinand led eventually to the final shift of power and reform to Castile. The shift to the Atlantic, in spite of the enduring Spanish interest in Italy, also affected the Catalan economy. There, especially among the seminoble urban elites, display and lavish expenses were also the counterpart to a society growing more impoverished by the day (Ruiz, 2007).
Thus the Iberian realms, united by marriage in the late 15th century (but not administratively or economically), were poised to become the hegemonic military and political power in Europe and the world. Its vast colonial empire provided new resources. This wide range of developments propelled the variegated medieval Spanish economies into the early modern period. The outcome of greater political integration, the demise of Islamic rule in the peninsula, and closer ties with Flanders and Italy, Spain (mostly dominated by Castile) moved toward a more dynamic and integrated economy. Those changes in late medieval Spain and the early modern period are discussed next.
The Spanish Economy in the Early Modern Age
The period from the end of the Middle Ages to the Napoleonic wars (early 19th century), and, especially the years between the mid-15th century and the end of the 16th, represented the high point in Spain’s economic history, a fact confirmed by Spain’s international prominence. During these centuries, Spain emerged as one of the greatest empires in world history, with territories in several continents: Africa, Asia, and, above all, Europe and the Americas. Throughout these domains, merchandise, people, fashions, cultures, and ideas circulated, signalling the beginnings of the First Global Age.
Economic Expansion, Discoveries, and Conquest, ca. 1450–ca. 1504
One of the Iberian Peninsula’s most salient economic features was its early recovery from the late medieval crisis; it was one of the areas of Europe to first emerge from the long-enduring crisis. At the end of the Middle Ages, the Iberian Peninsula’s economy was notable by Castile and Portugal’s dynamic recoveries, far more vigorous than that of other parts of Europe. In contrast to what has traditionally been said, recent research shows that the great development of both territories in the 16th century began in earnest at the beginning of the previous century, laying the foundations for later economic and cultural growth. A resurgent economy also served as the stepping stone for the geographical discoveries of the Atlantic routes, the departure of Europeans to America, and, ultimately, the formation of the Portuguese and Spanish Empires. The arrival of wealth and precious metals from Asia and America accelerated the economic and political developments that begun in the early 15th century (Yun Casalilla, 2004). The characteristics of this growth were varied and multiple, although, as shall be seen later, it was the commercial and financial sector that saw the most growth.
At the beginning of the 15th century, and specifically since 1425–1430, there were obvious indications that the late medieval economic crisis was ending, as tithing incomes in certain regions rose steadily. The recovery occurred mostly in Castile (in the Duero River Valley area), in Andalusia, and in the kingdom of Valencia. Several factors show the slow but continuous growth of the Spanish economy. First was the reversal of demographic decline and a clear population growth. Although it is very difficult to quantify this demographic increase due to the absence of statistical sources, the population in continental Spain rose from approximately 3.4 million inhabitants in 1400 to 4 million in 1480, 4.6 million in 1530, and 6.6 million in 1590. Within this demographic trend, 80% belonged to the territories of the Crown of Castile. More than a quarter of these corresponded to inhabitants in the Duero Valley, followed by Andalusia and la Mancha. This demographic growth affected both countryside and cities, resulting in the development of multiple medium-sized cities and towns, making up a Castilian urban network comparable to those found in Italy or the Netherlands.
Demographic development was accompanied by agricultural expansion. In this regard, it is worth highlighting several matching facts: The clear extension of the cultivated land, the result of the new clearings and the management of the system of cultivation by leaves, and the expansion of new crops, since the agricultural growth was not merely cereal—in certain sectors of the Duero Valley vineyards and certain industrial crops, such as madder or linen, could be found. Without a doubt, the most spectacular was the growth in livestock. Merino sheep numbered around 10.5 million head distributed throughout Castile in 1500. As noted, the Castilian merino sheep transhumance was organized by the Mesta. One-third of the wool was exported. Another contributing factor to the rural growth was the diffusion of protoindustrial activities (Klein, 1964; Phillips & Phillips, 1997). Thus, in the regions around Segovia, Avila, Palencia, Cuenca, Bilbao, Cordoba, Ciudad Real, Toledo, and Cameros, one finds a multitude of craft activities, such as leather, iron, and, above all, textiles from the middle of the 15th century onward. Although some were of little importance, others, such as those from Segovia, Cuenca, Ávila, or Palencia, were structured under more complex organizational forms by adopting the home delivery system or verlagssystem. If the panorama of the Castilian rural world was one of prosperity until at least 1570–1580, the same could also be said of the cities. During the 15th and 16th centuries great urban development took place in inland Castile and Andalusia. The population grew and the territory expanded. The industrial framework was renewed both by manufacturing activities aimed at a public with increasing purchasing power and by the development of rural crafts linked to the Castilian urban merchants.
In contrast, in the rest of the Spanish Christian kingdoms the situation was very diverse. Valencia was in a golden age, the outcome of its strong contact with other regions and the arrival of foreign merchants. Together with its agricultural development, the city had for a while the largest population in the Iberian Peninsula with about 70,000 inhabitants. The 15th century, however, was also a time of deep crisis for previously prosperous areas of Catalonia, Aragon, Navarre, and the Muslim kingdom of Granada. The Catalan case was especially severe. Apart from losing a large part of its foreign markets (dating back to the previous century), it was, as already noted, plagued by strong social tensions and civil wars. This caused most of the economic activity of the Spanish Mediterranean coast to shift to Valencia and, to a lesser extent, toward Mallorca.
Economic activities linked to trade and finance help to explain the early resurgence of the Iberian Peninsula, both in Spain and in Portugal. One initial cause for this commercial success was the changes that occurred in the structure of international trade in Europe at the end of the Middle Ages. On the one hand, the economic and, above all, commercial recovery of regions on the European Atlantic coast should be noted. Portugal, Gascony, Brittany, Normandy, England, the Netherlands, and the German coasts with centers such as Hamburg, Lübeck, Bruges, Antwerp, London, Rouen, Nantes, Bordeaux, and Lisbon experienced a vigorous economic revival. In the Mediterranean, on the other hand, the late medieval crisis had altered the landscape of commercial powers, ennobling the mercantile elites of Genova and Venice—plus other minor ones, such as Florence, Lucca, Ragusa, and Milan—and sinking Pisa and Barcelona. In the Iberian Peninsula, although subject to Italian influence, the Valencian economy experienced a boom, and there was a remarkable presence of merchants and Castilian fleets in that sea. The third area of commercial development was located in the mid-Atlantic—the Canary Islands, Madeira, Azores, and the west coast of Africa—serving as launching points for the subsequent routes to Asia and America. Thus, throughout this new commercial geography, the merchants of Castile and Portugal, being located in the middle of all these territories, had the ideal location to take advantage of these new opportunities.
From the middle of the 15th century onward Spanish foreign trade witnessed a spectacular growth, reflected in the formation of permanent colonies of Castilian merchants in the main European commercial centers: Bruges, Antwerp, Nantes, Rouen, Bordeaux, London, Bristol, Lisbon, and Florence.
Although trade encompassed all kinds of articles, those from Spain—wool, iron, dyes, oil, sugar, fruit, and so on—played a significant role. Significantly, merchants in these locations, Castilians and otherwise, were also skilled in the handling of new mercantile techniques, such as the letter of exchange, maritime insurance, and double-entry accounting, which gave them advantages over their foreign competitors. All of this was paralleled by an intense internal trade, as seen in the rise of fairs and local markets distributed throughout Spain, The most important exchange centers were located in Burgos, Valladolid, Toledo, Seville, and Valencia, in addition to the great fairs at Zafra, Medina del Campo, Villalón, and Medina de Rioseco (Casado Alonso, 2003).
It is within this context of general economic growth, especially trade, finance, and navigation, in which the geographical expansion of the Iberian kingdoms can be situated, leading to geographical discoveries, especially during the reign of the Catholic monarchs. The conquest of Granada in 1492, the last territory of the Iberian Peninsula in Muslim hands, marked the end of the Reconquista. It also led to a growing demand for gold, ivory, and other African products, together with spices and exotic Asian objects. This, in turn, triggered the Portuguese conquest of certain strategic places on the west African coast (Madeira, Azores, Ceuta, Safir, Cape of Aguer, islands of Cape Verde, Guinea, and so on), by the Castilians (Canary Islands) and the possibility to acquire commodities highly valued by a European population anxious for novelties and with greater purchasing power. Discoveries and conquests culminated with Vasco de Gama’s voyage to India in 1498 and, above all, with Columbus’s voyage to America in 1492. Beginning with the conquest and settlement of the Caribbean islands, Castilian presence in the New World continued with Hernán Cortés’ overthrow of the Aztec Empire in Mexico in 1520; with the Pizarro brothers’ conquest of the Inca Empire in Peru by 1536; and so on, until the Spanish Empire in America was established. This expansion, completed with Magallanes and Elcano’s circumnavigation of the world in 1519–1521, signalled the first global age and the maritime linking of Europe, Asia, Africa, and the Americas with the subsequent circulation of people, goods, fashions, and cultures (Bernal, 2005; Yun Casalilla, 1998).
The Golden Age of the Spanish Economy, ca. 1504–ca. 1590
From the beginning until the end of the 16th century (albeit the crises of the first 21 years) the Spanish economy experienced continuous growth. That economic development allowed, to a large extent, for the establishment of a Spanish Empire that lasted until the beginning of the 19th century. The Spain’s economic growth in the 16th century resulted from gains made in the previous period, the general European economic transformations in the 15th century, the promotion of transatlantic trade, and the arrival of precious metals and goods from America (Wallerstein, 1974, 1980). In contrast to what some historians have argued about this period, Spain, and especially the Castilian territories, did not have a peripheral economy Rather, it was far more robust than that of many of its European neighbors. The Spanish economy became one of the most dynamic in those years, attracting the notice and investment of businessmen and foreign monarchs, a situation that proved to be very different from that of later centuries (Casado Alonso, 2011; Yun Casalilla, 1998).
The Spanish population, like that of Europe in general, increased significantly during the 16th century. From 1530 to 1591 the number of inhabitants in peninsular Spain grew from 4.6 million to 6.6 million. There were, however, great regional differences. In Castile, the population grew at a rate of 0.5 inhabitants per year, allowing it to continue to be the Spanish territory with the greatest demographic resources. In Aragon the rate was 0.4 inhabitants per year. But within these political spaces, the differences were significant. Those that previously had higher densities, such as the Duero Valley or the Basque provinces, grew less, while the rest increased at rates above 0.75%. The same demographic growth took place in Aragon, led by the kingdom of Valencia.
These increases occurred both in countryside and city, and, more significantly, a dense urban network was created. Consisting of large and small urban nuclei—many of them with over 5,000 inhabitants and comparable, as already noted, to those in the Netherlands or Italy—such demographic expansion had an agrarian base, continuing the patterns of the cycle started in the middle of the 15th century. However the existing data shows, once again, with regional differences, that until the 1580s there was an increase in production, especially of wheat and other cereals but also of other agricultural commodities, such as wine, oil, nuts, sugar, and certain products for industrial use: Linen, silk, hemp, and barilla. This resulted in a sharp increase in the clearing of mountains and vacant lots. In addition, at least until the middle of the century, there was an increase in the number of the livestock, especially sheep, reflecting a growing demand for raw material for national and foreign textile industries (Vassberg, 1984). Research based on the evolution of ecclesiastical tithes indicate that the highest levels of agricultural production and income would have been reached in the final years of the second third of the 16th century—levels that would not be reached again later in the 18th century, although there is a great historiographic debate about it (Álvarez Nogal & Prados de la Escosura, 2013).
Spain’s 16th-century economic growth was also marked by the increase in craft activities. Textile manufacturing remained the most important industrial sector, as was the case in other parts of preindustrial Europe. Large textile centers in Segovia, Cuenca, Córdoba, Valencia, Perpignan, Toledo, and Granada, most of them organized under the putting-out system, increased their production, marketing their goods at fairs and other venues for commercial exchange. In addition, cloth manufactured in rural textile areas supplied segments of the market with lower purchasing power (Phillips & Phillips, 1997). During the 16th century, the Spanish textile industry experienced an improvement in product quality, as well as an increase in production. Nonetheless, internal demand left the imports of foreign fabrics, especially linen and silk, fairly unchanged. At the same time, in northern Spain, above all in the Basque provinces, there was a marked increase in steel production, aimed at supplying the Spanish demand from the American colonies and abroad. Similarly, the development of international trade and the needs of the monarchy to have large and armed ships (to be used in wars or fleets connecting Seville to America) spurred shipbuilding (Marcos Martín, 2000).
Trade and finance, however, profited the most from economic growth. Starting from the gains made in the previous century, internal exchanges rose dramatically, reflected in the proliferation of fairs and local and regional markets throughout Spain. In all of them, according to the fiscal data, there was a clear increase of buying and selling, both by well-off social groups and peasants. The latter resorted to the market for supplies and to sell their products. At the same time, an entire hierarchical system of exchange locations emerged (regulated by various legislations) with large general fairs (Medina del Campo, Villalón, and Medina de Rioseco), others of regional scope, and, below, the rural markets. These commercial sites were enhanced by a spectacular increase in consumer credit. In fact, there is reliable indication that the majority of transactions were made on credit.
The greatest economic advances, however, occurred in foreign trade (Casado Alonso, 2017).
On the one hand, exchanges with the European Atlantic markets (especially the Netherlands, France, and England) and with the Mediterranean (Genoa, Tuscany, Sicily, and Naples) were characterized by the export of wool, iron, spices, dyes, sugar, leather, and silk in exchange for cloth, metal objects, wax, wheat, wood, works of art, paper, and upholstery. This allowed for the formal establishment of strong colonies of Spanish merchants in Bruges, Antwerp, Rouen, Nantes, Bordeaux, Lisbon, and Florence. In addition, there was a vigorous colonial trade with America, la carrera de Indias (Bernal, 1992). The latter grew steadily and spectacularly from 1504 to 1592, although there were moments of stagnation in the middle of the century. All kinds of merchandise flowed to the American colonies, from foodstuffs to manufactured goods. Many of them came from Spain, but many others came from the rest of Europe. It was therefore not surprising that Seville, the port that controlled this trade, was filled with all kinds of merchants. Many of them were foreigners, who saw an inexhaustible source of profits in that market. The city had the largest population in Spain and one of the largest in Europe, comparable to Naples, Rome, or Paris in those years.
Departing from Cartagena de Indias, Nombre de Dios, Veracruz, and Havana, the fleets brought dyes, hides, sugar, cotton, and objects from Asia—arriving in the Manila galleons sailing from the Philippines to Acapulco in Mexico—and, above all, gold and silver. In short, this enormous wealth benefitted many people, Spanish and foreign alike. In particular, the goods from America (especially bullion) benefitted the Royal Treasury, its well-being dependent on the arrival of American bullion. All of these exchanges brought about a sharp rise in the cost of living, the so-called price revolution, with its devastating effects on the immediate and long-term Spanish economy.
Current historiography has argued that one of the evils of Spain’s16th-century economy lied precisely on Spanish fiscal policies, characterized by budgetary deficits since the reigns of the Catholic monarchs, Charles I, and, especially, Phillip II. Although economic growth allowed for an increase in expenditure, the increase in income was the outcome of an increase in taxes, affecting mainly Castile (around 69%), while the rest of the territories under the control of the Spanish Empire (Monarchy after 1556)—the Netherlands, Naples, Sicily, Milan, Catalonia, Valencia, Navarre, and Aragon—contributed on a smaller scale to the tax burden. This situation had a negative impact on Castilian taxpayers, the most prosperous of all the domains. Escalating expenses, caused by continuous wars waged by the Spanish monarchs to maintain their hegemony in Europe, also led to the painful state of the treasury. Along with deficits, as in all periods, strong credit growth appeared. Throughout the 16th century, Spain’s kings resorted to the great international banks—first German, then Genoese—to obtain liquidity with which to cover the kingdoms’ deficit and to pay their current expenses, above all, mercenary troops. Financing Spain’s debt brought great benefits to these foreign bankers. Thus a significant part of the American gold and silver ended outside Spain. In addition, the huge amounts of public debt detracted Castilian savings from other investment options that would have been more beneficial to the Spanish economy as a whole. New attitudes toward wealth and work emerged. While in part these ideas reflected the chivalrous mentality of the period, the economic reality was that the yields of public and private debt were greater than those obtained from investments in trade, agriculture, or industry. Yet, in spite of tax increases and the continuous arrivals of precious metals from America, Philip II had to declare bankruptcy in 1557, 1575, and 1596. Bankruptcies resulted from the monarch’s inability to pay foreign loans on time and the exclusionary policies toward the “hated Genoese bankers.” Although the Crown put pressure on the Cortes to allow new taxes, these measures proved to be useless, plunging into an abyss the battered Spanish economy from the 1580s onward (Älvarez Nogal & Chamley, 2018; Gelabert. 1999; Ladero Quesada, 1999).
Peninsular Spain’s economic growth was reflected in Spanish America. After the discovery of America in 1492, an intense process of conquest took place that ended more or less by the mid-16th century. Initially, the European arrival in the New World led to a sharp demographic decline, resulting from the epidemics brought by Europeans and the impact of harsh work on the indigenous population through the system of encomiendas. This decline was subsequently lessened with the arrival of Spaniards and, above all, with the continuous marriages—opposite to what took place in North America in the 19th century—between these and Indian women, resulting in an ethnically complex population. At the same time, a strong trade developed—la carrera de Indias—controlled by the Crown through the Casa de la Contratación in Seville, the only entity authorized to make such exchanges. Through this route, organized through the fleet system that departed from Spain to Havana, Veracruz, Nombre de Dios, and Cartagena de Indias, European manufactures and foodstuffs flowed in exchange for colonial products and precious metals. At the end of the 16th century, this trade did not comprise more than 2% of the gross domestic product (GDP) of the Castilian economy, although it reported numerous benefits to merchants, financiers (Spanish, Germans, Genoese, French), and the Crown itself. A similar situation took place in regard to the income of the royal treasury. Income from the colonies—including remittances of precious metals—only represented 25% of those obtained by the Crown from different parts of its empire (Yun Casalilla, 2004).
The Crisis of the 17th Century
At the death of Philip II in 1598, the Spanish economy was already showing clear signs of decline. From the 1580s onward, inland Spain, both the Mesetas and the Cantabrian coast, the driving forces behind economic growth since the Middle Ages, showed signs of exhaustion: Bad harvests, stagnation of production, epidemics, sluggishness of the big fairs, a decrease in internal and external exchanges, and so on. As the 17th century began, the crisis spread throughout the whole of Spain. But the impact of it and, above all, its denouement, was dissimilar in the different territories. While the center of the peninsula was hit hard by the recession, the periphery managed to emerge from the crisis by the middle of the century. And so a process began that has continued to this day. The interior of the Spanish and Portuguese peninsula became less populated—with the exception of Madrid because of its status as the capital—while the coastal areas grew, a change from what had taken place throughout the Middle Ages and the 16th century. The subsequent industrialization in the 19th and 20th centuries would increase this centrifugal tendency, producing the economic and demographic structure that currently exists in Spain. In general terms, the Spanish population decreased until the middle of the17th century. The reasons for this decline were the same as those of other European regions, especially the Mediterranean ones: Epidemics, subsistence crises, the direct and indirect consequences of wars, emigration to America, expulsion of the Moriscos, and economic recession. All of these factors led to poverty and peasant indebtedness, the sclerosis of social structures, the intensification of fiscal pressure, and the nefarious economic policies carried out by the monarchy and other ecclesiastical and municipal institutions. Although exact figures are not available, it is estimated that the Spanish interior lost between 30% and 50% of its inhabitants (Marcos Martín, 2000; Sebastián Amarilla, 2013).
Although the population of the periphery grew, the global figures speak of stagnation, an important economic factor in itself. This is especially so since it was accompanied by the disappearance of the powerful urban network (large to small cities included) that existed until this century. The phenomenon was, therefore, the opposite of what took place in the kingdoms of North Atlantic Europe—Holland, France, and England during that period. These economies would then wrest from Spain its continental economic and political hegemony.
There were several indicators of decline of activity in agriculture: Bad harvests, peasant indebtedness, fall in land income, fall in prices, decrease in agricultural and livestock exchanges, decrease in wool exports, and so on. Differences, of course, existed. All of the research, especially that based on the decimal data, coincide in pointing out the collapse of the peninsular interior (both Mesetas, Extremadura, Aragón, and even Andalusia). In contrast, Galicia, the Cantabrian coast, and the Basque Country, although they fell in the first half of the century, grew during the second half of the century thanks to the introduction of corn and other intensive crops. The same situation—with the boom in wine production, mulberry, legumes, and some industrial crops—seems to have occurred in Mediterranean agriculture, despite various social conflicts: The war of Els Segadors (The Reapers) in Catalonia and the expulsion of the Moriscos in Valencia. These changes increased in the 18th century.
In manufacturing and productivity, the same signs of decline were apparent. A very important sector, textiles, saw the weaving activity of centers such as Segovia, Granada, Aragón, and Valencia decline, while those of Cuenca and Córdoba practically disappeared. At the same time, imports of foreign cloth increased. In metallurgy and shipbuilding, both significant in the Basque Country, something similar happened. In general, Spain suffered from industrial sluggishness, fall in consumption, technological backwardness, and the weakness of the export of manufactured products.
A similar recession can also be seen in domestic and foreign trade. The fall in consumption, the disappearance of the market network and fairs, and the lessened activities of many of the urban centers explain the first of these phenomena. As far as foreign trade is concerned, although colonial trade with America remained important, most of that trade was by then in the hands of foreign merchants—the French, Dutch, and English—who saw the carrera de Indias as an inexhaustible source of profits, with silver continued flowing to Seville. As a consequence, the American colonies became less and less dependent on the metropolis, while the Spanish presence in the European mercantile centers, once very important, practically disappeared. As a result, the Crown’s fiscal problems persisted as a heavy burden on the Spanish economy. Foreign policy needs and the expenses of continuous wars abroad increased fiscal pressure, monetary alterations, the frequent issuance of public debt, bankruptcies (1647, 1652, 1662, and 1663), and the sale of everything that implied income: Uncultivated lands, positions in the administration, titles of nobility, privileges, and so on. The dependence on foreign bankers increased. The Genoese financiers were replaced by the Dutch and the Portuguese Jews. The crown’s bankruptcies were paralleled by that of municipal institutions with similar consequences. The final result was an exhausted and impoverished country, together with Spain’s loss of its international prominence.
Economic Recovery: Growth, Reformism and Enlightenment, Last Third of the 17th Century–1789
From the mid-17th century, demographic indicators show that certain Spanish regions (Galicia, Andalusia, Basque Country, Navarre, and Catalonia) had fairly recovered from the crisis. Moving toward the end of the century, such development seemed to become generalized throughout Spain. The establishment of new crops, combined with the specialization in others such as wine, oil, or silk, explains the growth of coastal areas. Even in the interior of the peninsula, the spread of legumes and minor cereals led to an increase in livestock farming. In the industrial sector there were also some signs of recovery, especially in textile production (Marcos Martín, 2000).
The arrival of the new Bourbon dynasty, after the War of Succession (1705–1714), accelerated these changes, allowing the economic recovery to continue. The population grew from 7.7 million in 1700 to about 11 million by 1800. This growth was similar to that in the rest of Europe, although it was most evident from 1750 on with significant declines in catastrophic mortality. Demographic increases were more intense in coastal areas, but even inland Spain recovered the population it had in the late 16th century. Nonetheless, Spain was poorly populated compared to the rest of Europe (Lynch, 1994).
Economic growth drove demographic gains. Agricultural production increased and diversified. In inland Spain, ploughings increased as did lands dedicated to the cultivation of cereals, vineyards, and legumes, while transhumant sheep farming grew as well. In Galicia, the Cantabrian coast, and the Basque Country, agricultural growth continued with the corn revolution and the introduction of potatoes. In Catalonia, the cultivation of vineyards to produce brandy for export increased, a phenomenon that extended to the areas of Malaga, Jerez, and the Canary Islands. Meanwhile, in Valencia and Murcia, there were substantial gains in agricultural areas irrigated for the production of rice, vegetables, legumes, and industrial plants. Yet, land ownership remained a problem in 18th-century Spain. The nobility and ecclesiastical institutions’ dominance and the rigidity of legislation was not conducive to land reform. Hence, despite that century’s agricultural expansion, social and economic inequalities increased in rural areas, leading to the discontent and social tensions prevalent at the end of the century. All of this happened in spite of the rulers’ enlightened attempts to enact measures favoring modernization, yet held back by fear of altering the existing social and political order.
As far as manufacturing production is concerned, there was growth, but it was weak. There were attempts to copy the French model of Royal Factories, but their results were not very successful. Some areas continued their traditional production: Textiles (cloth in Segovia, Béjar, Alcoy; silk fabrics in Valencia; linen in Galicia), iron and steel industry (Basque Country), and naval construction (Basque Country, Cadiz, and Cartagena). But the substantial change came from Catalonia’s textile production. The cloth industry expanded there considerably. Since the arrival of the Bourbon dynasty, and despite the defeat of the Catalans in 1714, Catalan merchants and manufacturers could freely trade their goods throughout the rest of Spain and the American colonies. The most important factor, however, was the introduction of cotton manufactures that, imitating the English model, were mechanised, giving rise to an incipient Catalan industrialization.
General economic growth was directly linked to the development of commerce. Internal exchanges increased, there were improvements in land transport, the number of local fairs and markets augmented, and certain inland customs were abolished between Castile and the Crown of Aragon. Yet, the most positive side took place in foreign trade. There, trade activity reached the levels of the 16th century with the Atlantic trade as the great protagonist. From the middle of the century, the government authorized free trade with America from different Spanish ports, thus ending Seville’s and Cadiz’s monopoly. This fostered the formation of a mercantile bourgeoisie, especially in peripheral Spain, helping to explain its greater dynamism in relation to the inland areas (except Madrid, the site of the royal court). However, the danger of successive wars against England, and the problems derived from the boom in smuggling, cast a pall over colonial trade.
At the same time, in the Spanish Empire, Bourbon interventionism, in accordance with the mercantilist doctrines prevailing at the time, led to greater control of the colonies. In global terms, all productive activities increased, both in America and in the Philippines, forming an economy less and less dependent on the metropolis. Nonetheless, the colonial trade in sugar, cocoa, tobacco, dyes, and, especially, silver continued to be very important. Although it never accounted for more than 2% of Spain’s GDP, it continued to generate good profits for traders and the royal treasury. Even the crown itself promoted it through the creation of trade companies, such as those in the Philippines, Havana, and Caracas. Such wealth especially favored a part of the American society, the Creoles, who began to see royal intervention with suspicion.
Economic Recession, Wars, and the Beginning of the Crisis of the Ancient Regime, 1789–1815
In 1789 the Spanish economy, although it had been partially transformed, showed signs of stagnation and of having reached its productive ceiling. Agrarian expansion ended, leading to social inequalities and enormous popular discontent. In the countryside, production and income declined, leading to peasant indebtedness and the rise of catastrophic mortality and famines. The only possible way out of such stagnation was institutional changes, fiercely opposed by the nobility and the church. In the urban world, the situation was not better, since in a deeply rural Spanish economy, the impoverishment of the population generated sharp falls in the demand for manufactured goods and trade. In one of the pillars of Spain’s economy, colonial trade, there was a sharp drop in exchanges as a result of the naval wars against England and the resistance of the American elites to continue dependence on the metropolis. All of these facts had repercussions on another of the monarchy’s power base: The treasury. There was a fall in royal income since 1793 while also an excessive increase in expenses caused by the high cost of war. The only way out was to resort, once again, to indebtedness, as attempts to raise taxes collapsed in light of popular resistance. One more point deserves reiterating. As it had occurred in the 17th century, throughout the early modern and present period economic development was more intense in coastal areas than inland, and this led to what is the economic geography of modern-day Spain. As a result, from representing 27% of Spain’s population in 1591, this figure had risen to 45% by 1857–1860. This phenomenon was to increase even further after industrialization and up to the present day. In 2018, Spanish coastal areas, which, together with Madrid, represent 30% of the country, now account for 90% of its population.
The War of Independence (1808–1814) put even more pressure on the weakened Spanish economy. The Napoleonic invasion and the guerrilla war against the French led to the destruction of a great part of Spain’s productive sector. Added to this was the institutional confusion caused by the existence of two parallel governments, one under the liberals of Cadiz and another under French protection. All of this led to an increase in fraud, the refusal to recognize lordly rights, and refusal to pay taxes due to town councils and the monarchy. The volume of colonial trade also fell, aggravating the imbalances in Spain’s trade. But, above all, the war served to strengthen the desire for independence of the American Creole elites. The colonial independence revolts were about to begin against a monarchy lacking the economic resources to face them. It was the beginning of the end of the Spanish Empire (Llopis, 2004).
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