WHILE this era was marked by a brief period of prosperity, and while there was a noteworthy advance out of medievalism in the evolution of mercantile machinery, the keynote of the times was the failure of Spain to keep pace in material welfare with her high standing in other aspects of life. Spain continued to be a raw material country, although artificial attempts were still made to create a thriving industrial development. These efforts, when they did not fail altogether, accrued to the advantage of foreigners or resulted in establishments which were of slight consequence in comparison with those of other European lands. A combination of evils at length sank Spain to such a state of economic degradation and misery as comported ill with her political reputation in European affairs and with the opportunities she had had and failed to employ to advantage. Nevertheless, Spain’s decadence, overwhelming though it was, is to be viewed from a relative standpoint. Medieval Spain at its best, except possibly during the Moslem era, did not attain to an equally flourishing state with the Spain of the seventeenth century, which marks the lowest point to which she has fallen in modern times. On the other hand, with relation to other countries in the seventeenth century and with due regard to the needs which an expanded civilization had by that time developed, Spain came to be economically about the most backward land in western Europe. This occurred, in spite of the fact that Spaniards found and developed such extraordinary wealth in their new world possessions that their colonies were the envy of Europe. Spain did indeed get rich returns from her overseas investment, but these funds and others were squandered in the ways which have already been pointed out.

At the outset there was a period of undoubted prosperity, due in part to a continuation of the favoring legislation of the era of the Catholic Kings, but more particularly to the enormously increased demand resulting from the rapid and extensive colonization of the Americas, whose commerce was restricted by law to favored regions of the Spanish kingdom. The American trade and to some extent the considerable fortunes gained in the colonies themselves provided capital for a yet further expansion of the industrial wealth of the peninsula. The effects were felt principally in Castile, but were reflected also in Aragon and Valencia. Seville, as the sole port of the American trade, became extraordinarily rich in its industrial life, and many other cities shared in the general prosperity. Woollen goods and silks were manufactured on a large scale, and many other articles, such as hats, gloves, soap, leathers, arms, and furniture were also made. Grazing and fishing were notably productive industries. When Philip II ascended the Spanish throne in 1556, it is said that the corporation of the Mesta possessed seven million sheep. Part of the wool which they produced was supplied to Spanish manufacturers, though other sources were also drawn upon by the makers of woollen goods, but vast quantities of wool were sent abroad. In 1512 about 50,000 quintals were exported; in 1557 some 150,000; and in 1610 the amount had reached 180,000 quintals. The whale-fisheries off the northern and northwestern coasts of Spain, at that time a rich field for this occupation, and the catching of tunny-fish in the Mediterranean furnished profitable employment to the people of the coasts, who also made voyages to distant waters, even to Newfoundland, on fishing ventures. The wars of the reign of Philip II and the scarcity of boats soon tended to check this phase of economic expansion. Mining produced but little, in part because the possessors of latifundia—nobles and churchmen—did not care to develop their estates in this respect and in part because private individuals generally could not be certain that they would be allowed to enjoy any profit they might make. Philip II, desirous of remedying this situation, incorporated all mines into the crown, and encouraged prospecting for mineral wealth, though exacting certain tributes from those who should discover and work mines, but even under these circumstances little was done.

There has been a tendency to exaggerate the state of prosperity to which Spain attained and to treat it as if it suddenly collapsed. In fact Spain’s industrial wealth was only great by comparison with what it once had been and with what it was presently to be in the period of decline. The manufacture of cloth in the entire kingdom in the most flourishing epoch did not equal the output of the single city of Bruges. That the growth of manufacturing was only ephemeral and did not take root in the peninsula is attested by the fact that it was usually necessary, even in the era of greatest industrial expansion, to depend upon imports to supply Spain’s needs, while the considerable exports of raw materials, especially wool, show that the domestic demand could not have been great. Undoubtedly a good industrial beginning was made, which might have resulted in the economic independence of Spain. It did not continue, however, and the question arises: How long did the era of relative industrial prosperity endure? A precise answer is impossible, because some industries flourished longer than others, or the same industry prospered in one place after it had ceased to do so in another. Conflicting accounts began to appear about the middle of the reign of Charles I, and even in the first half of the seventeenth century there were documents which testified to instances of prosperity. Speaking generally, the decline may be said to have made itself felt in the reign of Philip II and to have become clearly apparent by the middle of the reign of Philip IV.

Agriculture did not advance much from its wretched state of the previous era. The economists, giving undue importance to the accumulation of specie, and obsessed by a desire to develop manufactures, did not appreciate the fundamental value of agriculture; grazing was favored at the expense of farming; agricultural labor, never plentiful, was still more scarce after the expulsion of the Moriscos; and the evil of latifundia tended to reduce the amount of land cultivated. The laws encouraged agriculture only when it did not interfere with what were considered the more important industries. Legislation was frequent forbidding the cultivation of lands which had ever been devoted to grazing and compelling their restoration to that industry, and the old privileges of the Mesta were maintained to the detriment of the farmers. The scarcity of agricultural labor caused an immigration from other countries, especially from France, and this increased after the expulsion of the Moriscos. It did not solve the problem, as the foreigners were wont to return home, after they had accumulated savings. Under the circumstances it is not surprising that agricultural production did not meet the needs of the peninsula. Something was done to protect farm laborers, and some government projects of irrigation were undertaken, but not enough was done to offset the handicaps which the state itself imposed. Intensive cultivation by small proprietors was one of the needs of the time, and one attempt to bring this about in Granada was made. Some 12,500 Castilian, Asturian, and Galician families were sent there to replace in a measure the several hundred thousand expelled Moriscos. The experiment was successful, and the colonization took root, but it was not repeated. Nevertheless, eastern and southern Spain had their period of relative prosperity, especially through the cultivation of the vine and the olive. The Americas offered a rich field for the export of wine, since the growing of vines was prohibited there, and the soil, climate, irrigation canals, and Morisco labor (prior to the expulsion) of Valencia, Granada, and Andalusia were well adapted to provide the desired supply. Even this form of agriculture suffered a serious decline in the seventeenth century, due largely to the loss of the Moriscos.

Spanish commerce had its era of splendor and its period of decline, but the former was prolonged much more than in the case of the manufacturing industry, because of Spain’s serving as a medium for distribution between foreign countries and the Americas, and because of the continued exchange of raw materials for the foreign finished product after Spain herself had ceased to be a serious competitor in manufacturing. Seville was by far the most prosperous port in the country, since it had a monopoly of the American trade, which also necessitated the sending to that city of goods from the other parts of Spain and from foreign countries for trans-shipment overseas. Mercantile transactions on a great scale, involving the modern forms of credit and the establishment of branch houses in all parts of the world, were a natural outgrowth of Seville’s great volume of trade. The wealth of the city continued until well into the seventeenth century. The transfer of the Casa de ContrataciÓn (which handled Spain’s commerce with the Americas) from Seville to CÁdiz occasioned a decline of the former and a corresponding prosperity of the latter. Possibly next in importance to Seville in mercantile affairs was the inland city of Medina del Campo, site of the greatest of Spanish fairs and, except for the east coast provinces, the contractual centre of the entire kingdom. Purchases, sales, and exchanges of goods entering or leaving the various ports of Spain were usually arranged there. Numerous other cities shared with Seville and Medina del Campo in the commercial activity of the sixteenth century, even those of the east coast, although the forces which had occasioned their decline in preceding eras were still operative and were to renew their effects before the sixteenth century had much more than passed the halfway mark. The Mediterranean trade of Spain remained largely in the hands of the Catalans, however. North European commerce, of which that with Flanders was the most important, was shared generally by Spain’s Atlantic ports, although those of the north coast had in this case a natural advantage.

The inevitable result of the commercial activity of the sixteenth century was the development of a mercantile machinery to handle the trade. This occurred, in Spain, on the basis of institutions already in existence, the consulados, merchants’ exchange buildings (lonjas), and fairs. To the earlier consulados of Valencia (1283), Barcelona (1347), Saragossa (1391), Burgos (1494), and Bilbao (1511) there were added those of Seville (1543) and Madrid (1632). Although the consulados of the ports differed in some respects from those of the interior the same principles applied to both,—so much so, that the ordinances of the consulado of Burgos were the model for that of Bilbao. The consulado of Burgos served as the type, indeed, upon which the ordinances of many of the later consulados were founded, wherefore its description may suffice for all. Strictly speaking, the consulado was only the tribunal of the body of merchants, who together formed the universidad, or association, for purposes of trade, although the term consulado came eventually to include both. Many cities lacked the tribunal, but did possess the universidad of merchants. The tribunal, or consulado, of Burgos exercised jurisdiction in mercantile cases, and also had charge of such important matters as maritime insurance, charter-parties, and the patronage of certain pious foundations. The universidad met annually to elect the officers of the consulado,—a prior, two consuls, and a treasurer. The jurisdiction of the consulado as a court was not limited to cases arising in Burgos, but extended to other towns and cities for many miles around it. There was an appeal in criminal cases to the corregidor of Burgos, but in civil cases the consulado was independent of both the royal and the municipal courts. The consulado of Madrid introduced some novelties, principal among which was its close attachment to the national bureaucracy through the intervention in its affairs of the Consejo Real. Various cities founded merchants’ exchange buildings, including some which had no consulado. As for the fairs, the great importance of Medina del Campo has already been mentioned. Two fairs a year, in May and October, were held at that city, on which occasions merchants, bankers, and brokers from all parts of the world gathered there. By the end of the sixteenth century the fairs of Medina del Campo were already in a state of decline, and they received a death-blow when by royal mandate Burgos replaced Medina del Campo as the contractual centre of Spain. Burgos did not greatly profit, however, for the general mercantile decadence had begun to affect all commercial institutions in the country. Mercantile machinery survived after the period of prosperity had passed, and thus it was only to be expected that a central institution should at length be founded. Such was the case, for the Junta de Comercio y Moneda (Junta, or Council, of Commerce and Coinage) came into existence in 1679. During the remainder of this era it was of slight consequence, however.

The legislation of the period reflected the prevailing economic ideas, such as the exceptional importance attached to precious metals, the insistence that the balance of trade should favor exports (lest imports should result in specie going out of the country), the favor shown toward the policy of protection, and in a measure the continuance of the medieval penchant for government regulation of industry. The state was not consistent, however, varying its laws according as the needs of the treasury or of European diplomacy or of any passing crisis might direct. Thus prohibitions against foreign goods were often maintained, while at other times the greatest freedom of entry was allowed. In the treaties of peace of the sixteenth century care to safeguard the commercial interests of Spain was employed, but in the seventeenth century they were often sacrificed through the indiscretions of ministers or for political reasons. Thus Spain’s need of allies against France occasioned the grant of a right for the free entry of goods into Spain (but not into the colonies) to the Protestant Netherlands, England, Denmark, and Portugal, with reductions in duties. Treaties of 1665 and 1667 with England abolished Spain’s right to inspect English boats or to search the houses of British subjects, amounting to a virtual invitation to smuggling, which was in fact the result. Smuggling in connivance with Spanish officials became so general (not altogether by Englishmen) that it was regarded as a necessary evil. The government displayed a tendency to facilitate internal commerce,—as by the suppression of interior customs lines,—but the protective and regulative spirit of the Middle Ages was too often apparent. Thus prices were fixed and exclusive rights of sale granted. A curious instance of the latter (though not out of keeping with the age) was the permit given to the religious orders of Madrid to open taverns for the sale of beverages accruing from their crops. When certain abuses and some scandal resulted the privilege was withdrawn, but was later renewed subject to certain conditions, one of which was that friars should not serve the wines to customers.

Legislation with relation to money was particularly abundant. One grave error of the past was constantly committed from the time of Philip II to the close of the era, the debasement of the coinage with a view to relieving the difficulties of the treasury, but the results were not more favorable than in former years. Despite governmental care in the matter of coinage, diversity of coins was still a problem. In addition to the national moneys there were regional pieces and numerous foreign coins. Attempts were made to fix the relation between them, but without great success. One factor which was not appreciated at the time was that of the cheapening of money through the enormous importation of precious metals from the Americas, resulting in a corresponding advance in prices. The high prices were ascribed to the exportation of precious metals from Spain, and stringent laws were passed to prevent it. It was difficult, however, to keep the gold and silver in the country.

The national record of the House of Austria in public works cannot be said to have been good. The need for more and better roads was generally recognized, but unless they suited military purposes or were to be made use of in a royal progress, or journey, the state would rarely build them. Municipalities and groups of merchants (especially the consulados) did something, but were hampered by the centralizing spirit of the government. A license from the Consejo Real was required, even though the state were not to pay. There were too few roads, and existing highways were as a general rule in a bad state of repair. Many bridges were constructed by the government in the sixteenth century, but only a few in the century following. Plans were also discussed for deepening the channels of Spain’s great rivers, but that of the Tagus alone received attention, and the work to that end by Philip II was destroyed by the negligence of his successors. In like manner irrigation on a large scale was planned, but scarcely anything was accomplished. On the other hand this period marked the beginning of a mail service as an auxiliary of economic life; it was due to the state only in that the government granted a monopoly of the privilege to a private individual. Between 1580 and 1685 the extension of the service to foreign countries was brought about. Naturally the whole system was as yet defective from the modern standpoint. The government did expend moneys, however, for military objects and state buildings. Forts were built the length and breadth of the Spanish world, although many of them were allowed to decay in the seventeenth century. Royal palaces and houses of recreation and several splendid churches for royal use, all of which added to the glamor of monarchy, were built at state expense. The municipalities also erected public edifices, such as merchants’ exchange buildings and city halls.

One of the most controversial questions of the era was that of the entry of foreigners into the economic life of the peninsula. This had begun to be a factor (without referring now to the earlier arrival of Moslem and Jewish elements) in the reign of the Catholic Kings, but it was a much more prominent issue in the period of the House of Austria. It was complicated by the fact that certain groups of foreigners might be welcomed (laborers for example), while others (merchants and manufacturers in particular) were not, but all elements would be both wanted and opposed by some class of the Spanish people at any given time. In general, popular opinion whether of rich or poor was adverse to foreigners. At times the kings yielded to the complaints of the people and passed restrictive laws, but at other times, urged on by financial needs and political aims, they took the contrary course. Dependent as they were upon foreign money-lenders the kings could not refuse to grant the privileges and monopolies which their creditors exacted as security. It would seem, however, that by far the greater number of the foreigners were engaged in the less remunerative occupations. A writer of the seventeenth century says that there were 120,000 foreigners in domestic service, and goes on to say that they also engaged in such occupations as street hawking, the keeping of retail shops of all varieties (sellers of meat, wine, cakes, etc.), and the mechanical trades, including even those of porter and vendor of water. In 1680 the French ambassador estimated that there were 77,000 of his countrymen in Spain, many of whom were farm laborers, but there were considerable numbers in various other occupations, ranging from the wealthy merchant down to the lowly shepherd or peddler. Other nationalities were also prominent. Laws were passed limiting the number of trades in which foreigners could engage, but they seem to have been without avail, for both the complaints and the legislation were often repeated. The victory of the foreign element began to be more apparent by the middle of the seventeenth century. Philip IV enacted laws to encourage immigration, because of the scarcity of labor, and permitted a foreigner who had lived for many years in Spain and married a Spanish woman to enjoy privileges little short of those of a native. Similar laws were made in the reign of Charles II.

The economic status of Spain in this era could be more clearly set forth if it were possible to have fairly reliable data as to population. In the middle of the sixteenth century there may have been about six and three quarter millions of people in Spain. By the end of the century some estimates hold that the numbers had increased to perhaps eight and a half millions, but there is ground for doubting these assertions. Figures for the seventeenth century are even more uncertain, but there is a general agreement that the population declined. One estimate makes the population of Spain 5,700,000 at the end of the era. Misery, idleness, and vagabondage were characteristic of Spanish life in the late sixteenth and throughout the seventeenth century; it has been estimated that there were 150,000 vagabonds at the close of the sixteenth century whose principal occupations were begging, thieving, and prostitution. It is true that a like state of affairs existed in other countries, and that many foreigners were included in this element in the peninsula, but conditions were probably worse in Spain than elsewhere in western Europe.

Much has been written about the causes of vagabondage in Spain. The principal causes undoubtedly were economic. Foreign writers have charged it to Spanish pride and scorn of manual labor as well as to a certain native laziness. These allegations are true to some extent, flowing naturally from the circumstances of the history of Spain. Slavery had been perhaps more general and long-continuing in the peninsula than in other parts of Europe, and the slaves had usually been Moslem in faith; thus Spaniards might naturally be disinclined to do the work of slaves and infidels, and the same spirit would be present on its religious side to make them object to working in company with the questionably orthodox Moriscos. The general desire of Spaniards to be regarded as of noble blood also tended to make manual labor unpopular, since there was a strong class prejudice that nobles should not engage in such work. Finally, the ease of entry into religious orders had rendered escape from toil possible for a great number, and had increased the sentiment against laboring with one’s hands. The only way out for a great many was the life of a vagabond. The sudden wealth acquired by individuals in the Americas reacted psychologically to make the necessarily slow accretions of property in Spain an irksome prospect. The exaltation of military glory had the same general effect, but as the Spanish armies were small this occupation was not open to everybody, and its perils and irregularities in pay made not a few hesitate to enter it. Furthermore, there were many contemporary writers, Cervantes among them, who pointed out that the life of a vagabond had a certain appeal for many Spaniards; young men of good family not infrequently joined bands of gypsies.

The poverty of Spain was general by the middle of the seventeenth century, and the state of the country got steadily worse thereafter. Bread riots frequently served as a reminder to the authorities, who indeed made many attempts to remedy the situation. Their measures to attack the root of the evil were worse than useless, however, being based on economic misconceptions or being discontinued (when they might have proved beneficial) if they ran counter to governmental policies. Direct legislation against vagabondage was frequent, but was evaded as often as enacted. When people were forbidden to remain in the country without working, the vagabonds made a showing of becoming porters or of engaging in other like occupations, under the guise of which they continued their loose practices. When these occupations were limited they were to be found as theoretically in the service of the noble or wealthy, whom social pride induced to have as many in their following as possible. When this custom was attacked direct evasion of the laws was rendered possible through charitable institutions, especially through the free soup-kitchens of the religious orders. On the benevolent side the problem was also approached through the founding of poor-houses, although this method was not yet greatly developed, and through the conversion of the former public granaries (pÓsitos), in which stores of grain were kept to guard against the possibility of famine, into pious institutions for the gift or loan of food supplies to the poor.

The fact of Spain’s economic decline has perhaps been pointed out with sufficient clearness. It is now pertinent to sum up the causes which had produced it. According to Altamira there was “a great variety of causes, accumulated upon a country which entered the modern age with weak and incipient economic energies, a country whose governments let themselves be dragged into an imperialistic policy (in great part forced upon them by problems traceable to Ferdinand the Catholic and the fatal inheritance of Charles I), neglecting, more for lack of means than intentionally, those measures which could best contribute to better the productive power and well-being of the country.” This is an epitome not only of the causes for Spain’s economic decline in this period but also of modern Spanish history. It places the fault where it belongs, on Spanish imperialism with its train of costly wars, a policy which Spain might have followed so far as the Americas were concerned, but which proved an impossible strain on her resources when carried beyond the Spanish peninsula into Europe. This was one of the principal causes assigned at the tune. Some others may also be enumerated. The increase in the alcabala and in other taxes was often mentioned as a principal cause, although it is easy to see how this might have been a result of the warfare. In like manner another group of causes set forth at that time might well have been results of the economic decline, such as the following: emigration to the colonies; the lack of government aid to industries; the invasion of foreign goods and foreigners into Spain; and the decline in population. Other causes alleged by contemporaries and deserving of prominent mention, though less important than that of the European wars, were these: the repugnance of Spaniards for manual labor; bad financial administration by the government; the prodigality of the kings in granting favors and exemptions; the governmental practice of fixing the prices of agricultural products; the evil of absentee landlordism, especially in the case of the latifundia, which were not developed to the extent of their resources; waste of the means of production in luxury; the great number of convents and monasteries; and the exemptions enjoyed by a vast number of individuals.

Later writers have put emphasis on other matters. Some present-day historians assign the expulsion of the Moriscos as the principal cause of the economic decline. It did leave many trades without hands, and temporarily depopulated whole districts, but it seems hardly accurate to regard it as anything more than one of many contributory causes. Writers of the seventeenth century were impressed by its religious and political advantages, and do not seem to have regarded it as of serious economic import. The economic effects of the conquest of the Americas have also been set forth to account for Spain’s decline. That conquest induced the already-mentioned get-rich-quick spirit among Spaniards, and encouraged the false economic idea that precious metals are the basic form of wealth, leading to the assignment of an undue importance to them. More serious, perhaps, was the fact that the Americas drained Spain of some of her best and most virile blood. The number of Spaniards who went to America, however, was not excessive,—little more than the number of Englishmen who crossed the seas in the seventeenth century. Furthermore, Spain most certainly secured a vast financial profit out of the Americas, not only from precious metals, but also from commerce and the employment which thousands obtained both in Spain and in the colonies. Spanish soil was indeed not fertile enough to support a policy of European imperialism, and that argument has been put forward, but the fault was less in the land itself, which in other days had produced more richly, than in the methods (or lack of them) employed to develop its capacities. Foreign commercial vicissitudes, which are also alleged to account for Spain’s economic fall, did indeed help to bring it about,—such, for example, as the disastrous consequences of the silting in of the port of Bruges, which city had been one of the best purchasers of Spain’s raw materials. While it is indeed impossible to assign any single event or condition of affairs as the sine qua non of Spain’s decadence, one factor stands out from the rest, however, as the most important,—that of the oft-mentioned policy of Spanish imperialism in Europe.