IF a review of the political and ecclesiastical institutions of this period displays the enlightened despotism on its despotic side, a study of the economic reforms effected, or tried, reveals the benevolent or enlightened attitude of the autocratic state endeavoring to improve the lot of the people. In addition to the philanthropic aspect of these attempts, they were influenced, also: by the general current of eighteenth century thought, giving attention to economic problems; by the very evident necessity for reforms in Spain, which country had found itself in a condition of utter misery at the close of the preceding era, with the result that a multitude of pamphlets had been written to explain the decline and suggest remedies; and by the desire to attain other ends, such as that of defence against the aggressions of England, which had to be based in the final analysis on the economic recovery of Spain. Not only in Spain but also in the Americas, and almost more strikingly, this was an age of economic reform, based primarily on Spain’s need of the colonial markets as a factor in her own regeneration. Nevertheless, this was the period when the old monopoly utterly fell, in part because of the entry of foreigners into the colonies or their establishment in Spanish ports to take over the goods coming from the Americas, and in part as a result of a deliberate policy, throwing open the commerce of the new world, if not directly to all nations, at least indirectly through the intervention of the many Spanish cities which came to enjoy the privilege of the overseas trade. The American situation cannot be dealt with here, but it must be held in mind as one of the vital elements in Spain’s economic progress.

The most genuine representative of the century’s political economists in Spain was Campomanes. Although a follower of the French physiocratic school, which maintained that agriculture was the principal sustain of a nation’s wealth, he did not fail to recognize the importance of manufacturing, and endeavored to foster that industry through the dissemination of works of an educative character, the enactment of protective laws, and the founding of model establishments. Of equal rank with Campomanes, though not as effective in achieving reforms, was Jovellanos, while there was hardly a minister of prominence in the entire period who did not attain to some distinction as an economist. The general effect of the reforms was beneficial, making itself felt in all branches of the production, exchange, and consumption of goods, as well as in an increase in population. Thus the 5,700,000 inhabitants of Spain at the beginning of the era had nearly doubled by 1787, when the total was 10,409,879 (or 10,286,150 by another estimate), and had still further increased to 10,541,221 in 1797. The following table of occupations for these two years is interesting both as showing the economic distribution of the population and as indicating the direction of the reforms.

The discrepancies between the two columns are in part accounted for by the fact that Spain was at peace in 1787, and at war with England in 1797. In a total of some 3,000,000 workers it is notable that the majority were devoted to agricultural pursuits (including about 100,000 engaged in pastoral labors), showing that the cultivation of the soil was the principal basis of the national life. The vast number of ecclesiastics, nobles, and servants, nearly a third of the total, is eloquent of the social problem which the government had to face. In the course of ten years they had fallen away to less than a fourth of the whole. Statistics as to density of population showed GuipÚzcoa, Valencia, Asturias, Navarre, and Vizcaya in the lead, with respectively eighty, forty-eight, forty-seven, forty-three, and forty-two inhabitants to the square kilometer. Andalusia had thirty-nine, Granada and Catalonia thirty-four each, Aragon only twenty-one, while Extremadura with fourteen and La Mancha and Cuenca with thirteen each brought up the rear. In total population Galicia led with 1,345,000. Catalonia had 814,412, Valencia 783,084, Andalusia 754,293, Granada 661,661, and Aragon 623,308. Large urban groups were rare; there were fewer than forty cities with a population of 10,000, and seventeen of them were in Andalusia. The four largest cities were Madrid (156,000), Barcelona (115,000), Seville (96,000), and Valencia (80,000). Economic prosperity did not correspond exactly with these figures, for the factors of climate, soil, irrigation, and nearness to the sea entered into the situation.

Despite the great body of reforms carried out, the problem was overwhelming, and much of the country was still in a backward state at the end of the era. Aragon and Old Castile were in a miserable condition, not nearly equalling their agricultural possibilities, and La Mancha was in a far worse plight. The number of large-sized towns in Andalusia gave that land an appearance of wealth and prosperity which was not borne out by the facts, if the situation of the country districts were taken into account. The character of Spanish houses at this time was also expressive of the national economic shortcomings. Cave houses and adobe huts with roofs of straw abounded in Castile. The houses of Galicia were described as having walls of unpolished stone, often without cement, reaching scarcely higher than a man’s head, with great slabs of rock for a roof; the doorway and a hole in the roof served as the only means for the penetration of light and for the escape of smoke; and the domestic animals and the family made common use of the wretched house. In the Basque provinces, Navarre, and Valencia the homes were much better, besides being cleaner, although a lack of glass windows, chimneys, and furniture was quite general in all parts of Spain. Through French influences these defects were beginning to be overcome as the era approached a close. If to this miserable state of the domestic life there is added the ignorance of the people (who resisted innovations designed to benefit them), the economic inequality resulting from the concentration of vast landed estates in a few hands, the difficulty of communications, the burdens of taxation, the mismanagement of the administration (despite the efforts of enlightened ministers), the frequency of wars, and the persistence of a spirit of repugnance to labor (leading to a resort to mendicancy or vagabondage or to a reliance upon a somewhat questionably desirable charity) it becomes clear why the economic situation should have been considered perhaps the most urgent problem which the Spanish ministers had to solve, and their failure to overcome all of the difficulties can be understood. According to Campomanes there was an army of 140,000 beggars and vagabonds in Spain in his day, most of whom were able to work and might have found something to do. He and the other ministers of Charles III endeavored to solve the matter by putting the physically able women in workhouses, the men in the army and navy, and the old and infirm in homes for the aged and in hospitals, but owing to the lack of funds these projects could not be carried out in entirety.

The evils of the economic situation being clear, efforts were made, especially in the reign of Charles III, to correct them at their sources. To combat the ignorance, indifference, and in some cases the laziness and prejudice of the masses with regard to labor technical and primary schools were founded and model shops and factories established; prizes were awarded for debates and papers on various industrial subjects; printed manuals, including many translated from foreign languages, were scattered broadcast; teachers and skilled laborers from foreign lands were induced to come to Spain, and Spaniards were pensioned to go abroad to study; privileges, exemptions, and monopolies were granted to persons distinguishing themselves by their initiative and zeal in industry; and laws were passed to raise the dignity of manual labor. In this campaign the government received substantial aid from private individuals. In 1746 the first of the Sociedades EconÓmicas de los Amigos del PaÍs (economic societies of the friends of the country) was founded. In 1766 its statutes were published, serving thenceforth as the model for other like institutions in Spain, all of them devoted philanthropically to the encouragement of agriculture and other phases of the economic life of their particular district. Nobles, churchmen, and members of the wealthy middle class formed the backbone of these societies, of which there were sixty-two in 1804. Many of them published periodicals, or founded schools for the study of such subjects as agriculture, botany, chemistry, the various trades, stenography, and economics. To promote the cultivation of the soil the state itself assisted in schemes for the colonization of waste lands. The most famous instance was that of the government colonies in the Sierra Morena country of northern Andalusia. In 1766 a certain Bavarian adventurer offered to bring six thousand German and Flemish laborers to settle that district. Charles III favored the project, and it was at once undertaken. For a time it was successful; a number of settlements were made,—there were forty-one in 1775,—and considerable crops were raised. In the end the project failed, due to bad administration, lack of funds, the imposition of heavy taxes, the opposition of the clergy to the predominantly lay spirit of the undertaking, the jealousies arising between the Spanish and foreign elements (for many of the colonists were Spaniards), and the failure to provide adequate means of communication whereby the colonists could export their surplus products. Some of the towns continued to exist, however, and the project was influential in causing private individuals to attempt colonizations, several of which were successful. Among other constructive governmental measures were the removal of the legal obstacles to the sale or division of waste lands or lands common, the restriction of the privileges of the Mesta, the betterment of the conditions surrounding leases (favoring the prolongation of the period of the lease, and aiming to assist the individual who actually cultivated the soil), and the reduction of customs duties or a grant of complete freedom of entry in the case of certain raw materials used in Spanish manufacturing establishments. Public works were also undertaken, such as the construction of irrigation canals, though many were not completed or were made so imperfectly that they soon went to ruin; great highways to open up the peninsula were planned, and under Charles III much work upon them was done, though not enough to meet the needs of the country; an efficient mail service was developed by Floridablanca; shipbuilding was encouraged; banditry and piracy were to a great extent suppressed; government support was given to commercial companies; and a national bank was established by Charles III,—which failed in the reign of Charles IV. The government also intervened in problems of local subsistence, with a view to maintaining articles of prime necessity at a low price and in sufficient quantity, but its action in this particular did not always produce the desired result. Finally, the government interested itself in charity. Benevolent institutions were founded, not only with a view to checking mendicancy and vagabondage, but also to provide homes for unfortunate women, insane persons, and orphans. Private individuals gave liberally for these purposes, or founded charitable organizations, which rendered service of a somewhat remarkable character in succoring the poor, building hospitals, and rescuing children. Mutual benefit societies were formed, reaching into every walk of life, and some of these, termed montepÍos or montes de piedad, were made compulsory for the employes of the government; thus the montepÍo for soldiers, dating from 1761, served as a pension system whereby some provision was made for the widows and orphans of the deceased. All of these reforms encountered the difficulties arising from ignorance, conservatism, the resistance of vested interests, graft, and bureaucratic cumbersomeness which have already been discussed. The very immensity of the reforms projected was against their satisfactory execution, for more was tried than could be done well. Other obstacles already mentioned, such as bad administration, insufficiency of funds, and lack of persistence, contributed to the same result. Nevertheless, though plans outran accomplishment, a vast amount was done, especially in the reign of Charles III, when the spirit of the era reached its culminating point.

To form a correct idea of the state of agriculture in this period it is necessary to note how the lands of the peninsula were distributed. At the beginning of the nineteenth century, after a hundred years of effort directed to the release of realty, the church possessed 9,093,400 fanegas[66] of land, the nobles 28,306,700, and the plebeian class 17,599,000, but the greater part of the estates of both the nobles and the plebeians was entailed, and therefore impossible of alienation, closing the door to the growth of a class of small proprietors. The proportion of proprietors to population was only one in forty. In Ávila, for example, the church owned 239,591 fanegas, 157,092 were entailed, and only 8160 were cultivated by owners who resided in the neighborhood. The small proprietor was to be found principally in the north and east, but he was far outnumbered, even in those regions, by the lessees of lands, who were also the overwhelmingly strongest element numerically in Castile. The forms of renting were various, both as to the type of payment required and as to the length of term. Where the term was practically hereditary, conditions were much better, approximating those of the small proprietor. In Andalusia latifundia were the rule, cultivated in only a portion of the estate by day laborers, who were employed at certain seasons of the year, living in a state of great misery at other times. This evil was tempered in Extremadura by the utilization of lands common. Despite the sincere attempts of the government to encourage agriculture, that industry was still in an extremely backward state at the close of the era, with only a little of the cultivable ground planted, an insufficient development of irrigation, and a lack of fencing. Valencia and the Basque provinces were the most nearly prosperous regions; the others were in a wretched state. In addition to the governmental reforms already referred to, the following may be mentioned: several laws of Charles III forbade owners to dispossess tenants arbitrarily, and even went so far as to prohibit ejectments unless the owner should consent to reside on his lands and cultivate them; attempts were made to procure reforestation, partly with a view to conserving the water supply, but the national repugnance to trees was so great that the laws were not carried out; and the abusive privileges of the Mesta were attacked by Charles III, and in the next reign, in 1795, the separate jurisdiction of that organization was taken away, but as the laws did not clearly authorize the enclosure of cultivable lands the relief to agriculture was slight. Wheat was the principal crop, supplying more than enough, in normal years, for the needs of the peninsula. Grapes were also raised in large quantities, and were made into excellent wines, many of which were exported. For the rest there were fruits, vegetables, the silkworm, and other things of the sort which had always been cultivated in the peninsula. Various kinds of beans, and especially chickpeas (garbanzos), were grown in large quantities, and furnished an important element in the nation’s food. An estimate made in 1812 calculated the total value of farm products as 72,476,189,159 reales (about $4,500,000,000) yielding annually some 3,600,000,000 reales (about $225,000,000).

In their efforts to revive manufacturing the kings continued during most of the period to follow the old ideal of state protection and state initiative in placing industries upon a firm foundation, intervening, also, to regulate the work on its technical side. In the second half of the century, especially in the reign of Charles III, the liberal ideas of the physiocratic school, hostile to all forms of government regulation, brought about the employment of a new system, leaving matters to the decision of the individuals concerned. Laws were now passed removing the prohibitions of earlier years. Joined with the educative measures already referred to, such as the establishment of model factories and the importation of foreign workmen, the new methods brought about a revived intensity of industrial life. Much the same things as formerly were made; the textile factories of Catalonia and Andalusia were the most prosperous. The chemical industries and those having to do with the preparation of foods did not develop equally with others. The Americas continued to be one of the principal supports of Spanish manufacturing, as a purchaser of the goods made in the peninsula. After centuries of scant productivity in mining, Spain began again to yield more nearly in accord with her natural wealth. A great variety of mineral products was mined, although very little of precious metals. On the other hand the formerly prosperous fishing industry was in a state of decline. In 1803 it was estimated that the total industrial yield for that year was 1,152,660,707 reales (about $72,000,000). The revival, however, was of an ephemeral character, for the social factors affecting labor were too grave a handicap. Thoroughgoing popular instruction was necessary before there could be any permanent advance; the Spanish laborer was able enough, but needed to be rescued from his abysmal ignorance. Wages were low. In 1786 the ordinary laborer of Seville earned four and a half reales (about $.28) a day; in Barcelona the average was eight reales ($.50). Agricultural laborers in Andalusia made from three and a half to five reales ($.22 to $.33) a day; shepherds got two pounds of bread daily and 160 reales ($10) a year. To be sure, money was worth more than now. Work was not always steady, with the result that famine and beggary were frequent. There was no such thing as organized labor; to go on strike was a crime. The only remedy of the laborer against his employer was an appeal to the corregidor, but this was so ineffectual that it was rarely tried.

Attempts were made to combat the obstacles which hindered Spanish commerce. Unable to compete with other European countries in the export trade, except as concerned small quantities of certain raw materials, Spain was hard pressed to maintain an advantage in her own domestic and American field. At the beginning of the century many of the laws tended in fact to discriminate against Spaniards, as witness the heavy export duties, which were collected according to bulk, thus operating against the type of products which Spain most frequently sent abroad. Charles III changed this system, collecting duties according to the nature of the goods as well as paying regard to weight, and charging a higher rate against foreign cargoes. Taxes were numerous in kind and heavy in amount, wherefore smuggling and graft overcame some of the beneficial effects which might have been expected from this legislation. Protective tariffs and prohibitions were also employed to encourage Spanish manufactures and trade, but particular exigencies often caused a reversal of this policy in the case of certain items of foreign make. Thus the importation of foreign muslins was forbidden in 1770, but in 1789 the prohibition was removed when it was found that local manufacture did not suffice for the country’s needs. A series of decrees by Charles III endeavored also to reduce the coinage to systematic order, but the multiplicity of coins and the retention of provincial moneys militated against complete success. The prohibition against the export of coin was maintained, but licenses to take out certain quantities were granted on payment of a three per cent duty. Practically, the prohibition was a dead letter, owing to the prevalence of smuggling, and it served as a hindrance to commerce. An ineffectual attempt was made in 1801 to unify the system of weights and measures. Lack of an adequate merchant marine and an insufficiency of good ports, despite the efforts to remedy the situation in both cases, were still further obstacles to Spanish trade, whereas such an excellent port as Vigo had no suitable highway to connect it with the interior. Bands of mules continued to be used as the principal carrying agency in land commerce. Improper methods of keeping books were a handicap, but the paternalistic nature of the government made itself felt, requiring business men to employ a good method of accounting, and specifying the precise way in which they should do it. Finally, trading had usually been considered incompatible with nobility. The stigma was in a measure removed, although only in the case of business on a large scale, and some of the nobles became merchants.

Mercantile machinery found its highest official expression in the Junta de Comercio y Moneda. This was reorganized in 1705, at which time it was provided that the Councils of Castile, the Indies and Finance (Hacienda) should be represented respectively by three, five, and two members, the Casa de ContrataciÓn by one, and the French nation by two, besides one of the royal secretaries. The importance of the American and French trades was clearly manifested in this arrangement. This body served as a court with jurisdiction in all matters concerning trade. In 1730 it was succeeded by the Junta de Moneda (Junta, or Council, of Coinage), to which was added jurisdiction in matters concerning mines (1747), foreigners (1748), and the “five greater guilds of Madrid” (1767 and 1783). Regional juntas were also created. The consulados, though of private origin, occupied an intermediate position between the other private and the official bodies, owing to the intervention of the state and to the reorganization of the consulados in the middle and later eighteenth century. In addition to their functions as a mercantile court they acquired a vast number of duties of a public character, such as the care of ports and the creation of schools of navigation. Certain consulados had special functions,—for example, the consulado of CÁdiz attended to supplying the province with grain and flour, and had charge of the establishment of tariffs and lotteries. The consulados were repaid for these services by a grant of a portion of the customs duties, a right worth 6,000,000 reales ($375,000) a year in CÁdiz and one third of that amount in Alicante. They compromised their wealth by making loans to the crown, which brought about their ruin. At the end of the eighteenth century there were fourteen consulados in Spain, each differing from the others but all following rather closely the new ordinances (1737) for the consulado of Bilbao as a type. In the smaller cities and towns local officials were wont to appoint two men as diputados de comercio (commercial deputies) to act for that neighborhood in the capacity of a consulado. There were various other mercantile groups of a more clearly private character, and their associations were encouraged by the government. The so-called “five greater guilds of Madrid,” including dealers in jewelry, silks, gold and silver ware, cloths, linens, spices (and groceries?), and drugs, was the most important of these organizations. Its business was so enormous that it extended beyond Madrid to other cities, and put up factories for the manufacture of the goods it sold. In 1777 there were 375 merchants in this corporation, with a capital of some 210,000,000 reales ($13,125,000). Other associations were formed for special objects, such as to buy goods in great quantities and therefore more cheaply, or to carry merchandise in their own ships. Many companies were organized specifically for trading with the Americas. In the fluctuations of commerce one fact stood out consistently: the balance of trade was heavily against Spain. In 1789 exports were valued at 289,973,980 reales (about $18,000,000) as against imports of 717,397,388 (nearly $45,000,000). Internal commerce amounted to an estimated 2,498,429,552 reales (about $156,000,000). The wars of the reign of Charles IV almost destroyed Spanish commerce. CÁdiz in particular was a heavy loser.

The intervention of foreigners in the commerce of Spain, which had given so much concern in the previous era, was an even greater problem under the Bourbons. Many factors contributed to make this the case: the industrial decline of the seventeenth century, which favored the importation of foreign goods; the eighteenth century efforts for an economic revival, which led to the seeking out of foreign models and foreign teachers or workmen; the encouragement given to Frenchmen as a result of the Bourbon entry into Spain; and defeats in war, which necessitated Spain’s submission to the exactions of her opponents (many of whom insisted upon commercial privileges) or the legalization of trade usurpations which they had indulged in without right. In the Americas the English were the most prominent element, but in Spain the French were. The leading French merchants established themselves in CÁdiz, the gateway of the Americas, whence they proceeded to absorb a great part of Spain’s profits from the new world. In 1772 there were seventy-nine French wholesale houses in CÁdiz, making an estimated annual profit of 4,600,000 reales (nearly $300,000). In 1791 there were 2701 Frenchmen in that city out of a total foreign population of 8734. Numerically, the Italians were more in evidence, for there were 5018 of them, mostly Genoese. There were some Englishmen, too, whose aggregate capital made up for their small number. In general the legislation of the era was favorable to foreigners. Their knowledge and labor were so greatly desired that they were even granted special privileges or exemptions to take up their residence in Spain, and the religious bar was ameliorated or utterly withdrawn. Popular opinion was against them, however, and the laws were not wholly free from this influence. Men complained, as formerly, that the foreigners were making immense profits and stifling Spanish competition, while the hatreds engendered by the wars with England and France and by the scant respect and haughty manners which some foreigners displayed for the laws and customs of Spain tended to increase the feeling of opposition. Foreigners were often ill-treated, although the acts were rarely official. Even the government did not recognize consuls as having any special rights or immunities differentiating them from others of their nation. A further accusation against foreigners was that they engaged in contraband trade. This was true, although as a rule it was done in complicity with corrupt Spanish officials. Foreigners justified themselves on the ground that unless they were willing to make gifts to Spaniards in authority they were obliged to suffer a thousand petty annoyances. “Money and gifts,” said the French ambassador, Vaulgrenant, “have always been the most efficacious means of removing the difficulties which can be raised, on the slightest pretext, against foreign merchants. That has been the recourse to which the English have always applied themselves, with good results.” The fact remains, however, that the French, English, and others had entered the commercial field in Spain and Spanish America to stay.