Economic Reforms in Spain Under Charles III
Limiting Livestock Interests of the Mesta
The Honourable Council of the Mesta was affected by liberalization measures. With the increasing price of corn, owners chose to invest in crops rather than livestock. The colonization of new lands in 1767, under the supervision of Pablo de Olavide, launched a plan to colonize uninhabited regions of Sierra Morena, which were infested with bandits. Spanish, German, and Flemish Catholic immigrants were used, and the state provided them with a free house, furniture, tools, livestock, and seeds.
The settlement calls resulted in new populations (La Carolina, Santa Elena, Guarromán, Jaén, among others) and were a success: ten years later, there were more than 10,000 farmers in the reforested areas.
Industry
According to the census of 1787, 14% of the workforce worked in industry. The most common form was the traditional artisan workshop, subject to the unions. The most extensive industry was textiles. Enlightened reformers sought to promote manufacturing, a production system that emerged in Europe in the 17th century.
The state created many royal manufactures (carpets, glass, porcelain, weapons). It also created utilitarian articles, such as the production of woolen cloth. To boost private manufacturing, new factories were disassociated from the rigid union rules. In 1783, a royal decree of Charles III declared “all jobs honorable.” The most prosperous manufactures were printed cotton fabrics in Catalonia. Looms and workers were concentrated in factories owned by businessmen who also marketed the product. In 1789, the first Catalan looms were introduced, allowing strong growth of trade within this industry.
Domestic Trade
Domestic trade was underdeveloped and was an obstacle to increased production. To improve transport, and with it trade, a policy of public works was initiated. These works were aimed at improving transport infrastructure and irrigation. Construction continued on the Canal de Castilla, and the Imperial Canal of Aragon was started; both were completed in the 19th century.
Foreign Trade
Foreign trade was further developed. Improvements were undertaken at the ports, and in 1778, a decree extended colonial free trade to most of the Spanish ports. This measure was especially important for the industry in Barcelona. It stimulated colonial trade and raised the profits of major retailers. Privileged trading companies were established, such as the Royal Guipuzcoana Company of Caracas, which promoted the cultivation of cotton and snuff.
The Financial State
To afford expenses, the tax system barely changed, although there were attempts to restore some taxes, like the sales tax. However, the state went into debt again during the reign of Carlos III due to the wars that were undertaken. To solve this problem, the National Bank of San Carlos (1782), the predecessor of the Bank of Spain, was created.
Its function was to finance the national debt by managing the so-called royal notes, government bonds for which interest was paid to those who acquired them. They could also be used as paper money and formed, therefore, the first banknotes in the history of Spain. Over time, many real vouchers circulated and depreciated, but they continued to be issued.
The government was concerned about the spread of technical innovations. It sent technicians overseas, organized and promoted scientific expeditions, and encouraged technical publications. It also created the Economic Societies of Friends of the Country, which would extend to many provinces to study and determine the status of each, promote agriculture, commerce, and industry, translate and publish foreign books, and promote the dissemination of Physiocratic and liberal ideas.