Economic Transformation of 18th Century Spain under the Bourbons
1. Introduction
The 18th century in the Hispanic domains began with the reign of Philip V in 1700. Spain was involved in the War of Succession (1700-1715), where France and the Spanish Bourbons faced England and Austria over the Spanish throne. Finally, Felipe de Anjou became King of Spain, agreeing to reject his claim to the French throne, marking the start of Bourbon rule in Spain.
Spain’s economic situation generally improved during this century in agriculture, livestock, fisheries, industry, trade, and economic thought. However, progress was hindered by problems and constraints, preventing Spain from matching the economies of France and England.
2. Major Reforms of the Bourbon Kings in the Spanish Colonies
2.1. Philip V (1700-1746)
Philip V’s major reforms focused on trade, endorsing mercantilist measures such as prohibiting the import or export of textile manufactures and grain. He attempted to revive colonial trade by creating privileged trading companies. After the Treaty of Utrecht in 1713, Spain had to open trade with America to England, benefiting English merchants more than the Spanish, who were subject to the regulations of the Casa de Contratación monopoly.
2.2. Ferdinand VI (1746-1759)
Ferdinand VI appointed the Marquis de la Ensenada as Secretary of Finance and the Navy, who led most of the reform work during his reign. Ensenada proposed state participation to modernize the country and maintain a strong international position, considering France and England as allies.
Ensenada implemented reformist projects like the new Treasury model in 1749, aiming to replace traditional taxes with a tax proportional to each contributor’s economic capacity. He also proposed reducing state subsidies to Parliament and the army, facing opposition from the nobility.
He created the Real Giro in 1752, a bank transfer system to encourage public and private funds outside of Spain. He promoted American trade, attempting to end the Indies monopoly and eliminate injustices in colonial trade. He supported registered ships against the fleet system, allowing Spanish ships to trade freely with America, increasing revenue and reducing fraud.
2.3. Charles III (1759-1788)
Charles III appointed the Marquis de Esquilache as finance secretary, who consolidated Crown estates, controlled ecclesiastical sectors, and reorganized the army. Spanish intervention in the Seven Years’ War required increased income, achieved through tax increases. Simultaneously, the liberalization of grain trade led to a rise in staple prices due to speculation and poor harvests.
During Charles III’s reign, the Economic Societies of Friends of the Country were developed, created by his minister José de Gálvez. Campomanes, in his Treatise on the Redemption Regalia, emphasized the importance of education for the welfare of the state and citizens, advocating for a more equitable land distribution.
In 1787, Campomanes drafted a plan to resettle the depopulated areas of Sierra Morena and the Guadalquivir valley. This brought in Catholic immigrants from Central Europe and Germany to promote agriculture and industry in declining areas.
Charles III also created the Banco de San Carlos in 1782 and undertook public works projects. He initiated a significant business plan, focusing on textiles, luxury goods, and consumer goods.
2.4. Charles IV (1788-1808)
The reign of Charles IV featured the Count of Floridablanca, who implemented measures to condone tax delays, limit bread prices, restrict the accumulation of mortmain assets, eliminate primogeniture, and promote economic development.
In 1792, Manuel Godoy became the first minister. Godoy, an enlightened figure, encouraged educational reforms, such as the mandatory teaching of applied science and economics in schools. He also supported the Economic Societies of Friends of the Country and the confiscation of property belonging to religious communities.
3. Agriculture in the Iberian Peninsula
The vitality of farming was critical for long-term population growth. The 18th century in Spain saw a demographic recovery and an agricultural boom. The demographic recovery, starting in the late 17th century, was sustained by constant agricultural production.
Agriculture was the main occupation, with 58% of Castilian GDP and 70% of the working population engaged in it, according to the Floridablanca census.
Given the strong focus on agriculture, the concept of land reform took shape throughout the century, culminating in Jovellanos’s Report on the Agrarian Law (1794) to the Economic Societies of Friends of the Country. Jovellanos advocated repealing legal, social, and natural obstacles hindering Spanish agriculture.
Despite technical limitations, Spanish agricultural production increased, especially in the first half of the century. Expansion was primarily extensive, with new lands cultivated through deforestation, swamp drainage, and irrigation works.
Increased production resulted from expansion rather than intensification. Productivity remained modest due to undeveloped technical means: the Roman plow prevailed, mules and oxen replaced horses, reducing plowing depth, lack of livestock housing prevented effective fertilization, and fallow fields saw only a slight reduction. New crops like potatoes and corn, grown on the Cantabrian coast, had little impact elsewhere.
Limitations in Spanish agriculture emerged in the 1760s due to diminishing returns. Clearing new, lower-quality land without proper irrigation and fertilization reduced average annual income.
While lordship permeated Spanish agriculture, land relations varied by region. Shared property and feudal relationships between lords and tenant farmers involved varying degrees of land possession, as seen in Valencia and Galicia, where peasants became de facto landowners due to long-term contracts. In Castile and Andalusia, lords maintained control over their land, adjusting income based on the business cycle.
Most land was owned by the nobility and exploited by family units, except in Andalusian estates.
Following the 1766 Esquilache Riots, reforming governments recognized that agricultural stagnation could lead to social unrest. Their objective was enlightened social stability and increased state revenue. They aimed to create a rural middle class of family farming units producing for a freer market, benefiting consumers. This involved reforming land ownership and production relations, liberalizing grain trade, limiting livestock interests on the plateau, colonizing new lands, undertaking public works for freight transport, promoting rural industry, and disseminating new techniques and crops through newspapers.
However, resistance from privileged classes and the complex agrarian reality led to ambiguous or contradictory legislation, ultimately benefiting those with more economic and legal resources.
Ambitious reform ideas failed when they challenged important aspects of society. Expropriations or confiscations, like those by Charles III, faced opposition from the privileged classes. Measures granting greater freedom to farmers led to lower-class rebellions, such as the 1766 mutiny, rooted in hunger and rising prices.
4. Spanish Ranching
Livestock experienced relative stability in both transhumance and stationary farming.
The 18th century was a great period for livestock on the Plateau. Since Philip IV’s reign (1621-1665), livestock had enjoyed significant privileges, including grazing facilities for internal transfers in the mountains and plains of Castile, La Mancha, Extremadura, and Andalusia. Meseteño cattle wool was of excellent quality and favored by foreign markets.
This livestock was divided among thousands of Castilian landowners, especially the lower nobility within the military orders, who benefited from owning pastures. This elite, represented by the Honrado Concejo de la Mesta in Madrid, marginalized rangelands economically.
Stationary livestock was crucial for small and medium peasant farms, providing fertilizer, draft power, and food. As land clearing expanded, conflicts between herders and farmers became constant.
Livestock faced a dual reality. The 18th century was favorable, but population growth, land reclamation, and pasture decline would affect livestock in the next century. Rising agricultural prices made it unprofitable for farmers to export wool in exchange for imported cereals.
5. Fishing and its Expansion
in the eighteenth century.
Fishing in Spain in the eighteenth century had a real importance in the Spanish economy. The fisheries occasioned by the activation of several economic sectors such as shipbuilding, manufacture of gear, catch and salting the retail and wholesale. Also, the fish was an essential part of the diet of a pre-industrial population because of its low cost and its protein value.
In addition, fishing mobilize significant resources. The Atlantic and Mediterranean were balanced in terms of troops, which in total was counted some 25,000 fishermen and 5,000 vessels of various styles of fishing. In the northern peninsula, the fishing was minimized because of the practice of expulsion of the Spanish ships of Newfoundland (now island belonging to Canada, but in the eighteenth century belonged to England). In Galicia change proved to be the true paradise of coastal fishing in good weather.
By contrast, the Andalusian coast had a modest activity, focusing on tuna and sardines. In the Mediterranean, Catalonia was leading this sector, accounting for 27% of the Spanish fleet.
There were two main systems of fishing, which involved two models that are different: sedentary and mobile. The first grouped fishing bait, trap and purse, the second was divided into two branches: the art of shooting and dragging. The latter highlighted in the eighteenth century bous: it was a drive system with a fine mesh and dense, sweeping the seafloor collecting everything that was in him. Towing procedures became the most popular, being cheaper and more profitable than any other.
Government actions in relation to fishing went to a triple front: improved working practices and the dissemination of technical improvements, regulate trawl gear that were illustrated with suspicion by their possible harmful effects to nature, and promote fisheries high ka through creation of chartered companies, such as the Royal Society of Marine Fisheries in 1775.
6. The start of the Spanish industrial development.
With a little innovative agricultural sector, which promoted the liberalization of labor, it was difficult to occur on takeoff revolutionary Spanish industry.
Against this reality, it is equally true that the gradual increase of population and food resources allowed for an increased demand for manufactured goods, especially in the second half of the century. There was growth without development, ie ka tradition and innovation were equally present in industrial activity, although the first seems to have had more weight than the second.
From an essentially mercantilist thought that to maintain a favorable trade balance was necessary to create a strong domestic industry capable of competing with foreign producers and secure supplies to all the Spanish dominions, both peninsular and colonial. To achieve this, it was necessary to make three types of actions to root out the decay of plants: stimulation and regeneration in the various social groups, socio-economic reform and organizational context where the industry was evolving and review of government policies made above.
Taking the whole century, the reformist policy was evolving from a greater state intervention inspired by mercantilism to greater belief in the virtues of freedom and private initiative advocated by the Physiocrats and liberal approaches.
The handicraft industry was the key characteristic of the secondary sector throughout the century. It was a traditional organization in which a teacher in his home and studio, collaborating with one or more journeymen and apprentices, produced a product that the city’s guilds imposed. The workshop was the protagonist of industrial life: occupying entire neighborhoods in the city, whose streets adopted the name of the trade they developed. However, the shortcomings craft, especially in the textile industry, had favored the development of rural industry in many parts of the Spanish geography. In the late eighteenth century there were about 7,000 in Castile workshops dedicated to the drapery, linens and silks.
Although the textile industries in Galicia, Valencia and Catalonia, and the ironworks industry in the Basque land, had some economic development, the truth is that capital is managed was owned by a few traders. The failure of rural industry because of the low attendance of capital, of the technical backwardness and lack of competitiveness, encouraged the creation of concentrated manufacturing supported by the State. Many new factories were born in the heat of the state needs. Some were for military reasons, such as shipbuilding in El Ferrol, Cadiz and Cartagena, steel mills or factories Liérganes and La Cavada. Other factories were purpose of helping the state coffers, as the tobacco factory in Seville, or textiles to meet the needs of society with the creation of factories of wool, silk, linen and cotton in Guadalajara, Talavera de la Reina, León y Ávila, respectively.
Bourbon authorities of this century showed interest in the industrialization of Spain, participating in joint ventures with private capital plants, facilities that were privileged to tax exemptions or incentives for commercialization. They formed several companies dedicated to wool and silk industry. The experience was very satisfactory and they only seemed to industrial promotion and trace their development when they passed into private hands.
Now, among these articles organized through the efforts of private capital and the occasional support of the state cotton mills in Catalonia were one of the largest and most important developments of the century.
6.1. The industrialization of Catalonia.
Catalonia underwent a process of industrialization most powerful and influential than any other Spanish region. Catalonia represented through how industries should be developed and linked to the European area, but we must also take into account the proximity of Cataluña to European influences have allowed most revolutionary ideas, for example, the wool industry in Palencia.
In Catalonia, state enterprises set up in Barcelona focused on thecastings for military artillery, and were transferred to private managers per seat. These industries depend on military demand and therefore successful, generally speaking, while this demand persisted, ie, while the state had money. It is clear that the reign of Philip V was a good time for these industries, which did not prevent many technological and managerial problems.
State Factories company took the form of concentrated, ie, all operations were located in the production process in a building. Not to be confused with the term plant is used for subsequent companies. The meeting in a building responding to political reasons and design work of labor control, not a technical need is the will, to the late eighteenth century , to the modern factory. New technologies and methods do not always sexito were tested, although it has always tried. In some cases, certain machines came into being not because they represented significant layoffs and full employment also fell within the objectives of these companies.
As for the cotton industry, it is noted that the first was established in Barcelona in 1738, by Stephen Canals Canet and Buenaventura. Both were unionized in the corresponding sector, but there was no cotton craft guild. The Indian industry developed so quickly. It was made entirely of cotton fabrics in Barcelona, as opposed to simply printed, they became more traditionally in workshops where there was a table for punching, which gave the drawing to the tissues that were imported from another country.
By 1750 the Indian traders were preserve tissue weavers contracting with other guilds. By 1740 there were about 12 looms, Indiana in 1750 had eight factories with 300 looms. This spectacular growth is due in part to the protectionist policy of Philip V, who came to reinforce the action of private initiative.
Referring to the silk industry, saying he had almost urban location. The big shopping silk could be found in Catalonia and Valencia, where he worked to renew technology industry since the late seventeenth century. This meant that Barcelona maintained and increased production of silk, and also that from this center will revitalize traditional silk business, like Toledo, ose silk and create new centers in Madrid.
As with the wool industry, production of silk fabrics grown mainly during the first half of the century to decline after everywhere. Barcelona was a center for silk experienced a significant revival since the late seventeenth century. But the war of succession was a serious impediment to the work, and the subsequent reactivation not be noticed until 1730. In that decade the majority of silk guilds renewed their ordinances in order to adapt their ancient privileges to the new situation.
Catalonia also stood out for their textile industries to supplements such as hats and shoes, and steel industries.
7. World trade in eighteenth century Spain.
Trade between the leaders took a position as first-line for many represented the measure of economic progress of Spain. The expected increase in agricultural and industrial production was linked to the possibility of finding new markets. Even more, international politics was a way to make the Spanish economy be strengthened through good trade agreements.
7.1. Domestic trade.
It seems clear that the increase of population, agriculture and industry, coupled with good economic conditions in the international context, caused a considerable increase of trade both at home and abroad.
In Spain, the ratio of trade to barely more than local or district level through the markets and fairs were held everywhere. The peasant consumption was high because farmers were supplied food produced from their own clothes and most of the tools work or home. Moreover, the class had little capacity to produce consumption and income accumulated by the mighty final tug not accounted for consumption. The poverty of most of the Spanish and the unequal distribution of property and income, were the central issues to raise demand and consumption.
This was accompanied by a number of drawbacks represented corporate interests and the inability to move it to the Royal Treasury the resources required. Even so, the leaders made their commitment to eliminating internal tariffs between the ancient kingdoms, goal achieved in 1717, but could do nothing against internal tolls, being many of them in the hands of the nobility. In 1757 he proceeded to the cancellation of the rights of general taxation imposed on goods with the aim of encouraging freedom of their traffic. In 1765 he decreed the abolition of the rate of grain. Despite the efforts, the trade practice continued during the century strongly regulated by the state, unions and local authorities.
FinallyWas the time of Charles III when plans took a definite road through a radial pattern that Madrid was trying to unite with the main capitals. It also began a series of inter-regional road and began construction of over 700 bridges, numerous channels devoted to stimulate the commercialization of agriculture and many seaports arrangement. The main products that benefited from the communication network were manufacturing Catalan, Galician lingerie, silk production Valencian Castilian wool, fish, and the Basque industry.
7.2. Foreign trade.
Foreign trade in the peninsula was entirely in the hands of foreigners. England, France and Holland were the three countries become more interested in the Spanish and American market.
The secondary role of Spain in European politics of the time, forced numerous concessions, sanctioned by treaties and trade agreements, countries like England and France. Cloths English and French, the French silk, grain in years of poor harvests and industrial tools, made up the bulk of Spanish imports. Wool dyeing American products, oil, wine and other commodities, along with silver, were the main exports to Europe.
7.3. Trade with America.
The American trade has undergone significant changes. The main ymimportant ore-century occurred in 1717, when Philip V moved the American monopoly of Seville to Cadiz. At this time also the privileged companies proliferated, driven by the Board of Trade and also evidence of a mercantilist mindset. Large companies protected by the State, obtained a monopoly of trade with a particular American region (1).
The second major innovation of the American trade was the free trade decree of 1778. Earlier in 1765, was authorized to nine Spanish ports to direct traffic islands of the Antilles. The positive results of the measure were to be extended to other areas of the Americas. Finally, in 1778, was granted freedom traffic thirteen Spanish ports (Seville, Cadiz, Malaga, Almeria, Cartagena, Alicante, Alfaques Tortosa, Barcelona , Santander, Gijón, Coruña, Palma de Mallorca and Santa Cruz de Tenerife), and 22 American ports.
Finally, in 1790 abolished the House of Trade. With these two reforms of Carlos III and Carlos IV, the trade with America in recent years of the century grew around 400% of annual average. Some areas benefited from this peninsular, as the proportion of Spanish products in these shipments went to grow by 4% over at least the first fifteen years following 1778.
(1). The Caracas Company, founded in 1728 by merchants Gipuzkoa, was formed to trade with Venezuela, and was protected by the state.Felipe V: the renovation of Spain, Agustín González Enciso. Pamplona, editorial Eunsa 2003.
8. Eighteenth century economic thought.
Economic science was revealed as an effective instrument of combat against the scholastic thought and as a discipline with strong analytical skills with respect to the specific problems of a material to be addressed to ensure the happiness of the subjects and the grandeur of the monarchy. Quite a few thinkers were housed in the economy by recognizing its own century social science.
It is true that the Spanish economic thought did not have the strength and novelty occurred in Italy, France and England also studies Spanish thinkers, like Jovellanos or Campomanes, were read in Europe to see Spain only. The pragmatic and moderate the Spanish reformers have prevented an overview of the national economy and its policies.
It can be argued that mercantilism was had before the current hegemony over most of the century. A path of economic thought in essence seeking to develop a favorable trade balance by increasing the productive forces which would prevent having to bring goods from abroad due to American silver. However, asAs the century economic thinkers advanced the Spanish began to change in positions in other doctrines seeking practical solutions. So gradually began to appear physiocracy influences of liberalism first and later. Physiocracy is based on belief in a natural order organized by physical laws that made possible that nature does not consume more than it produced, thus allowing the existence of a net surplus to be distributed among social classes. Agricultural production thus acquired a priority.
In England, the liberalism of Adam Smith believed in the free private enterprise and individual interests as central tenets of economic action as the State an institution that was only trying to avoid obstacles that might oppose the full development of individuals and their needs. This liberalism had a great reception in Spain, although late in the eighteenth century.
9. Bibliography.
· Philip V: Renewal of Spain: society and economy in the reign of the first Bourbon, Agustín González Enciso. Pamplona, editorial Eunsa 2003.
· Spain in the XVI, XVII and XVIII: economy and society, Alberto Marcos Martin. Barcelona, Editorial Crítica 2000.
· Carlos III and his times: the enlightened monarchy, led by Isabel Alonso-Muñumer Enciso. Barcelona, Editorial Carroggio 2003.