Spain’s 17th Century: Crisis and Economic Shifts
After the Spanish hegemony, a crisis occurred, which offered the possibility of making changes to maintain hegemony. Why did change not occur? Because the institutions did not make it possible.
The mid-seventeenth century produced a new phase of population growth, agricultural products, maritime trade, American trade, and the emergence of Spanish bankers replacing foreigners. It also produced the diffusion of crops (maize) that are diversified and specialized. There is a difference between the Spain of the periphery (progressive) with a dynamic economy and the Spanish (conservative) with a weighted economy.
Recovery and New Growth Phase
- Population growth uneven in regions
- Increase of agricultural product
- Momentum of maritime trade, long-haul (Peninsula and Latin America) and short-haul (coastal)
- There are two areas in which progress is made and others where it starts to get lost inside the American economy. American trade begins to be better than Spain’s.
- Bankers and settlements arising lent money to the Crown and moved to foreigners, leaving the Spanish alone.
This adds up to a period in which wars are reduced and lower financial costs.
The Treasury also improved by increasing the volume of the collection; it will do is centralize the collection.
That will allow to reduce the taxation of staples, thus increasing the consumption of society.
This allows the Crown to make monetary reform with the devaluation of the currency, and the problem was the replacement of silver resources.
Although these measures were positive, they had a limited impact on economic growth. The growth came from the field. It consolidated a number of tenants that will jump off a farming and livestock market driven and that requires the organization to introduce new crops, livestock operation.
Main novelty: new crops (maize) are having effects on livestock development. We also emphasize the diversification and specialization.
The problem is that faced with an institutional framework that blocks change. The seventeenth century ends with two different economies: a Castilian center that has no innovations and a periphery and coastline where innovations are introduced that can be incorporated into the modern economy.
The structure of the Castilian was maintained and not put into question.
It was a society articulated through the ideology that boasted less productive activity.
After failed attempts to reform the Conde Duque de Olivares was accentuated by the Finance (rested on borrowed money from bankers or well settled and paid the armies of the Hapsburgs). But this was not enough for what they have manipulated the currency and bankruptcy.
All this is exacerbated by the burden of social structures:
- The aristocracy was not productive activities and to cope with their crisis changed the nature of their land.
- The Church did the same but managed to stop this religious fervor was at the time. The nobles were funded.
- In the urban gentry began to levy taxes for the Quran and invest in farming, controlled public lands (common property), obtained from these hunting, wood …
Population decreases in all regions. There was a rural exodus; the crisis was based on the Castilian countryside especially.
To Overcome the Crisis
Expect that the extensive model had the solution, the decrease in population caused the decline in marginal lands (Malthusian model). But you could opt for enhancements (crop rotation, elimination of fallow new complementary crops, livestock husbandry …)
To make innovations had to finance and feudal England had that mentality, Spain had not and that was the key. Perhaps if he had but was not strong enough and was uneven in terms of regions. In Castile were more reluctant to these improvements, however, in the Mediterranean were more conducive to it.
While some innovation was introduced, they were insufficient. The urban gentry tried to opt for the income from livestock and their position of power to tax collection.
In conclusion, the crisis demanded the introduction of institutional changes. Those who could change the production model did not with the necessary intensity.
Urban network fell up in the previous century. Moved the capital from Valladolid to Madrid. Tertiary sector was developed with the help of servants.