Colonial India: Organization, Economy, and Impact
Organization and Operation of Colonial India
Conquered lands were incorporated into the relationship of Castile, who financed the company’s discovery and colonization, controlled by establishing a monopoly on immigration and trade. The Indies copied the Spanish institutional organization: first started in the municipality and the viceroys (higher territorial organization), while the hearings were responsible for judicial functions of government.
Two viceroys were founded: the northern New Spain, which included Central America and the Caribbean Islands, and Peru, which stretched from South America to Patagonia. Within the viceroys, governments were created, which were smaller political and administrative units. The viceroys and governors had the highest powers of government in their territories.
At the same time, a specific legislation was developed for the organization of new territories, known as the Leyes de Indias. The first collection was the Laws of Burgos (1512), which responded to a real desire to prevent abuse of the colonists and maintain control over the empire, forbidding slavery, but forcing the Indians to work for the settlers.
The new territory was a major source of income for Castile and, in general, for the Crown, which controlled the commercial traffic and reserved one-fifth (royal fifth) of all the precious metal (gold, silver) and a levy of 7.5% on all goods imported or exported. Gold and silver were the greatest riches of America that were extracted. The major mines were silver and were located in Bolivia (Potosi) and Mexico (Zacatecas), although their full exploitation had to await the discovery of mercury mines in Huancavelica, as this was necessary to refine silver metal (amalgam).
The settlers sought funding sources in the exploitation of land and mines, with the help of native labor. The lands were divided among the settlers, which gave them a farm and a group of Indians. Thus arose the concept of entrustment, widespread in Peru and Mexico. The Indian was “entrusted” to the settler and, in exchange for a theoretical protection, was obliged to pay taxes and hard labor for the master. The mines were royal property and its exploitation was conceded to individuals. They could also use the system of the parcel on his farm, but more common was the mita, forced labor of indigenous people that was articulated in the form of sweepstakes which required each indigenous community to provide a group of workers.
Although in theory the Indians were free subjects of the Crown, in practice they were eventually submitted by semi-feudal forms of exploitation. The provisions of the Crown to prevent abuse on the population, as the New Laws of the Indies (1542), were systematically broken, despite complaints, including those made by Father Bartolome de las Casas. Communication difficulties led to a significant autonomy with respect to the real settlers, coining the statement: “Obey, but not satisfied.” Corruption and exploitation of Indians were from the beginning salient features of the administration in America.
The Impact on the Economy and Society
From the 16th century, the Indies were a great source of trade. Castile supplied wheat, wine, oil, livestock, clothing, weapons, etc., and from America came mainly gold and silver, but also previously unknown agricultural products like corn, potatoes, cocoa, snuff, and peanuts. The American trade monopoly was granted to the port of Seville, from which every American vessel departed or arrived. In 1503, the crown created the Casa de Contratación of Seville to control the traffic of people and goods, and make the actual tax collection. The trip to America was organized by a fleet, vessels that sailed together for mutual protection, and conducted two expeditions a year (round trip). This system allowed to effectively monitor and protect American commerce from the continuous attacks of the English and Dutch pirates.
Without any doubt, gold and especially silver were the goods that dominated American commerce. Throughout the 16th and 17th centuries, especially between 1531 and 1560, stocks of silver in Europe tripled, while gold rose by one third. The huge influx of precious metals led to a dramatic price increase (400%) in Castilian territory, increasing the money supply without increasing production, and led to a phenomenon known as the Price Revolution.
The high indebtedness of the Spanish Crown to fund the expansion first and then the maintenance of the Empire, made that much of this treasure would be spent as quickly as it had been acquired. German and Genoese bankers provided the capital to equip the navy and army, and they received payment, loans at high interest rates, the majority of American treasure. The dynamic effects of gold and silver in the Spanish economy were limited, because the wealth that did not end in the hands of foreign bankers was invested unproductively in jewelry and luxury goods imported.