Economic Reforms and Trade in 18th Century Spain
Conclusion
In the economic field, a stream of liberalization dominated, extolling the role of absolute monarchy in economic transformation. There was greater economic backbone with the disappearance of borders, implementation of public works programs, and momentum in industry and trade (incubators and Royal Factories). Trade with America was liberalized. However, in agriculture (agrarian reform projects) and finance (taxation in a system of cadastre in Castile and Aragon), the limits of economic reform were imposed, and the survival of the old order dominated. The poor development of the reintegration process in the State territorial domain of the privileged caused the failure of many reforms.
The outbreak of the French Revolution conditioned the government policy of the day (Floridablanca), causing a conservative shift in defense of absolutism to preserve the monarchy and legitimate authority over any hint of disobedience, ending the reformist spirit. His successor, Godoy, after the war, returned his gaze to the reformist legacy of Carlos III. Measures were taken to liberalize trades to the detriment of the power of the unions, divide lands in the province of Extremadura among poor farmers, and abolish discriminatory taxes with the publication of Jovellanos’s Agricultural Law Report. Again, the measures can be considered insignificant, based more on economic needs than reform targets themselves. The conservative reaction and the war ended any intention of change.
Articles
Population growth increased the demand for handicrafts, but it was not enough for industrial take-off because farming income was low. The failure of agrarian reform prevented the development of industry. The mass of people did not raise their standard of living, and the purchasing power of the working classes remained low.
Craft production was characterized by its scattering among small cities, as well as workshops for the survival of guilds, with small and ancient technology (Enlightenment thinkers fought incessantly against the guilds). In the second half of the eighteenth century, the guilds’ control over industrial production was eliminated, as it represented a serious obstacle to modernization. In 1790, freedom for the exercise of any trade was decreed without having to go through the guild’s examination.
In the first half of the century, Spain attempted to adapt to the French model of manufacturing. There were royal manufactures (with technical and financial control by the government) for luxury goods to meet the demand of the wealthiest (tapestry factory of Santa Barbara, San Ildefonso crystals, Buen Retiro porcelains, silks from Valencia and Murcia), products intended to supply the military (weapons), or shipbuilding (El Ferrol and Cartagena). In the textile field, Crown wool establishments were installed in Segovia, Guadalajara, San Fernando, and Brihuega. Another important industry of the eighteenth century was the Royal Tobacco Factory of Seville. In general, these companies were characterized by low profitability and were a burden on state budgets.
Some individuals were interested in the “manufacturing” model because of the possibilities it offered to escape union control. Regarding private enterprise, the work of businessman Juan de Goyeneche in New Baztán (brandy, silk, chamois) and the industrial merchant class must be highlighted. From the forties, this class organized a number of Indian textile industries (cotton prints) whose main advantage was not being subject to union control as they were newly established. These industries were the true origins of the Catalan textile industry of the nineteenth century.
Trade
Trade was the sector that experienced the greatest growth in the eighteenth century. Enlightened reformers placed it at the center of their concerns: trade was essential to meet the needs of the monarchy, strengthen the state, recover a position in Europe, and obtain a favorable trade balance.
Commercial activity was facilitated by the convergence of two stimuli: the economic recovery of the first half of the eighteenth century and mercantilist thinking, which sought to improve internal communications and enable trade.
Regarding internal trade, it only existed due to excessive barriers that hindered its development, such as internal customs, tolls, strong local consumption, and especially transportation difficulties.
To facilitate the movement of goods within the country, measures were taken, such as the abolition of internal customs in 1717, with the exception of the Basque Country and Navarre. This benefited Catalonia, which introduced its products into Castile. Internal communications were also improved, but this did not prevent large areas of the peninsula from being totally isolated from others. It was easier for American cotton to reach Barcelona than for Palencia wheat. Thus, poor agricultural and livestock development and the lack of purchasing power among most of the population were serious difficulties for the articulation of a national market.
Foreign trade experienced significant progress, largely due to the removal of impediments when the abolition of the monopoly of the House of Trade with the Indies was decreed. To this end, decrees on Freedom of Commerce were issued in 1765 and 1778, which involved opening mainland ports to trade with America. It ceased to be a monopoly of the port of Seville and the House of Trade. Chartered companies were created to promote trade exchanges with America (Society of Barcelona, Caracas, Philippines). Trade consulates were established in all major cities to bring together the most dynamic business sectors. The Annual General Mines of Commerce was also strengthened to control all commercial activity in the entire monarchy.
American trade provided capital to private hands (for a small group of entrepreneurs who were weak bourgeois merchants and a few manufacturers) and resources to a Treasury that was always scarce. In the first case, these resources were used differently, being invested in real estate and scarce land in Andalusia (Seville-Cadiz axis), while in Catalonia, the money was invested in trade or industry.
Banking System
The weakness of the commercial and industrial bourgeoisie explains the limited role of credit and banking. The small commercial enterprises and the lack of agricultural investment made a banking network unnecessary. It was the problem of the state’s indebtedness that led to the founding of the first national bank in the time of Carlos III: the National Bank of San Carlos (1782).