The following ideas, then, lumped together, may be called mercantilism.
(1) Bullionism was the belief that the economic health of a nation
could be measured by the amount of precious metal, gold, or silver,
which it possessed. The rise of a money economy, the stimulation
produced by the influx of bullion from America, the fact that
taxes were collected in money, all seemed to support the view
that hard money was the source of prosperity, prestige, and strength.
(2) Bullionism dictated a favorable balance of trade. That is,
for a nation to have gold on hand at he end oft he year, it must
export more than it imports. Exports were later defined to include
money spent on freight, or insurance, or travel.
(3) Each nation tried to achieve economic self-sufficiency. Those
who founded new industries should be rewarded by the state.
(4) Thriving agriculture should be carefully encouraged. Domestic
production not only precluded imports of food, but farmers also
provided a base for taxation.
(5) Regulated commerce could produce a favorable balance of trade.
In general, tariffs should be high on imported manufactured goods
and low on imported raw material.
(6) Sea power was necessary to control foreign markets. A powerful
merchant fleet would obviate the necessity of using the ships
of another nation and becoming dependent on foreign assistance.
In addition, a fleet in being could add to a nation's prestige
and military power.
(7) Colonies could provide captive markets for manufactured goods
and sources of raw material.
(8) A large population was needed to provide a domestic labor
force to people colonies.
(9) Luxury items were to be avoided because they took money out
of the economy unnecessarily.
(10) state action was needed to regulate and enforce the above
policies. One might add that there was nothing logical or consistent
about mercantilism, and that it displayed, in fact, enormous variation.
Spain exercised rigid control of her empire's commerce and
industry. England also tried to do so. Mercantilist policies adopted
during the reign of Elizabeth were continued in the seventeenth
century under the Stuarts and Oliver Cromwell. Elizabethan laws
were passed to discourage idleness, to reward industrial enterprise
with monopolies, and to control the commerce by means of Navigation
Acts. Elizabeth gave her justices of the peace the authority to
fix prices, regulate hours, and compel every able-bodied subject
to work at some useful trade.
German mercantilism was concerned primarily with increasing the
economic power of the state by internal regulation. It heralded
later attempts at economic nationalism and a planned society.
Because they aimed primarily at increasing national revenue, German
mercantilists were known as cameralists, from Kammer, the royal
treasury.
France displayed perhaps the most thoroughgoing mercantilism.
Jean Baptiste Colbert, chief minister of Louis XIV from 1661 to
1683, was a great exponent of economic regulation. However, Colbert
was a practical politician intent on the welfare of the middle
class to which he belonged, not a doctrinaire theorist; for him
mercantilism was the most convenient method of attaining his end.
He prohibited the export of money, levied high tariffs on foreign
manufactures, and gave liberal bounties to encourage French shipping.
He purchased Martinique and Guadeloupe in the West Indies, encouraged
settlement in Santo Domingo, Canada, and Louisiana, and established
trading "factories" (armed commercial posts) in India
and Africa.
Colbert also tried to make certain that French manufacturers purchased
raw materials from French or French colonial sources only, and
provided France with a merchant marine of nearly three hundred
vessels. He sought to promote the rapid growth of population by
discouraging young people from taking holy orders, and made families
of ten or more children exempt from taxation. One can notice the
striking similarity of such comprehensive control to latter-day
fascism. Both the mercantilist and the fascist would chain the
economic system to national power. Both make a fetish of self-sufficiency.
One outstanding difference was that the fascists rejected the
bullionist theory of wealth often espoused by the mercantilists.
England was late in joining the competition for Asian trade,
but England also reached out. In the New World England and Spain
were bound to come in conflict. England had participated little
in the process of exploration yet insisted that its occupation
provided a legitimate claim to title. Of course, Spain claimed
that discovery provided the claim to title. The Spanish not only
desired to monopolize the trade of their colonies, but the also
wished to prevent the English from establishing a foothold which
would constitute a base for penetration of Spanish territory.
Generally speaking, the English disliked the Spanish. Had not
Spain tried to deprive Elizabeth of her crown, overthrow the English
Church, and extinguish English trade?
All the seamen of western Europe were familiar with the Spanish
traffic between Europe, Africa, and America. In the 1530's English
seamen began to prey upon Spanish vessels. By 1560 the exploits
of Sir John Hawkins were notorious. "Sea dogs" such
as Hawkins, mostly from Devonshire, operating out of Plymouth,
plundered the Spanish galleons laden with precious metal as they
returned from the New World.
Perhaps the most colorful of these buccaneers was Hawkins' kinsman,
Francis Drake, Drake set out from England in 1577 with secret
backing from Queen Elizabeth. He sailed through the Strait of
Magellan in 1578 and up the west coast of North America, plundering
Spanish settlements on the way. Not finding a Northwest Passage,
he struck out across the Pacific, sailed to the Spice Islands,
around the Cape of Good Hope, and back to England, where Elizabeth
dubbed him Sir Francis Drake. The treasure he brought back netted
263,000 pounds sterling to the queen, and a profit of over four
thousand percent to other investors.
The Secret of English success was seamanship. The Spanish conceived
of a naval battle as a contest of armies on floating platforms.
When Philip II decided to put an end to English depredations by
means of the Spanish Armada, he put a soldier in charge. As Philip
II prepared to invade England, English "sea dogs" harried
Spanish shipping. Drake singed the beard of the Spanish king by
sailing boldly into Cadiz Harbor and destroying a number of great
ships. Still in May 1588 the Armada was ready and sailed from
Lisbon. It is true that weather was against the Spanish, but seamanship
and maneuverability saved England, not the winds.
The Spanish Armada has taken on some of the qualities of a myth.
It did not mark the decline of the Spanish Empire and the rise
of the British; that happened much later. Nor did the defeat give
England command of the sea; English sea power in the Atlantic
had usually been superior to the combined strength of Castile
and Portugal, and so it continued to be. Drake and Hawkins had
dreamed of bringing King Philip to his knees by cutting off his
revenue from the New world, yet more American treasure reached
Spain in the fifteen years after the Armada than in any other
comparable period. Some historians have thought that the defeat
of the Armada decided that the Counter Reformation was not to
triumph throughout Europe, but it seems likely that even had the
Spaniards won, the religious picture would not have been much
different. As the Thirty Years' War was to demonstrate, religious
unity could not be reimposed by force on the children of medieval
Christianity.
The first territorial empires of Europe appeared in the New
World, and American Indians could hardly resist European encroachment.
True, there was chronic conflict along frontiers, but as the frontier
advanced, the less technologically-equipped society had to retreat.
European colonies planted in America tended to duplicate the society
of the metropolitan powers. Things were somewhat different in
Asia. There a handful of Europeans dominated native populations
in colonies designed to exploit trade and agriculture, not to
reproduce European society overseas.
The Spanish in America are a good example of how mercantilism
worked itself out in the colonial empires. The Spanish attention
was riveted on the New World because of the gold and silver wrested
from the Aztecs and the Incas. After the initial exploitation
of the mines of Mexico and Peru, land became an equally great
lure. The ambition was to duplicate the great estates of the Castilian
nobility. Where the geography was favorable to stock-raising or
agriculture and there was an indigenous peasantry, a colonial
society arose, dominated by Spanish-born overlords called peninsulares.
This society was based on a native working class, as there was
no Spanish working class in America.
The Spanish Empire in America in 1600 was divided into the governing
units of New Spain and Peru. New Spain included the mainland north
of the Isthmus of Panama, the West Indies, and what is now Venezuela.
The viceroyalty of Peru included all territory south of New Spain
except Brazil and the Venezuela area. Governing each colony was
a viceroy, who was a personal agent of the crown and thus responsible
only to the crown.
The chief administratrive body for colonial affairs was the Council
of the Indies. Its commercial counterpart was the Casa de Contratacion,
a maritime council located in Seville, which licensed and administered
all colonial trade, shipping and navigation, and rant he postal
service. The Council of the Indies advised the crown on pending
colonial legislation, handled all colonial correspondence, and
served as an appellate court for decisions of the Casa de Contratacion.
Staffed by lawyers, nobles, and old colonial hands, the council
became the model for colonial offices of the nineteenth and twentieth
centuries. It was powerful and informed, although it suffered
from inflexibility and a tendency of becoming mired in red tape.
One of the main weaknesses of this governing system was the attempt
to resolve every matter by a special regulation.
Land in the colonies was organized into large feudal estates called
encomiendas, grants which allowed the recipient to demand the
labor of the natives as tribute tot he crown. Actually, later
kings came to dislike the encomienda system because it led to
the abuse of the natives and gave more independence to the encomiendero
than was desirable. efforts to improve working conditions of Indians
were made, but their abuse and enslavement continued. It was easy
for the local gentry to keep them permanently in debt and to reduce
them to little more than serfs. Agriculture prospered as the Spanish
introduced many European plants and animals, although colonists
were prohibited from raising olives, grapes, and hep, which would
have competed with Spanish produce.
In 1503 African Black slaves were first brought to the Caribbean
and later were introduced tot he mainland in 1510. Black slavery
spread rapidly because the Indians collapsed physically when subjected
to forced labor. The hardiness of the Blacks may have been due
to a natural immunity to malaria. In Mexico natives performed
most of the hard labor. Only the South American highlands proved
difficult for the Black; African slaves were used extensively
in Cuba, Haiti, Puerto Rico, and elsewhere. The Spaniards did
not participate directly in the slave trade. Instead, the king
granted contracts known as the asiento which gave monopoly rights
in the slave traffic to private traders. The monopoly ran from
seven to ten years, and a tax was levied on each slave landed.
Spanish vessels were used for transporting the slaves, but at
one time or another the ships were Flemish, Genoese, Portuguese,
Dutch, French, or English. The effect was to limit the number
of slaves imported, to keep their price high, and to encourage
slave smuggling.
The Spanish used three mercantilist devices to protect their commercial
monopoly in the New World.
(1) They prohibited foreign ships from entering Spanish colonial
ports, and no foreigner could send goods to the colonies or take
gold bullion out of Spain in payment for goods sold to Spanish
merchants without having a special license. Thus, the Spaniards
gained the middleman's profit on all European goods going to their
colonies, since such goods had to be funnelled through Spain.
(2) Theoretically, the colonies were designed to be economically
complementary to Spain. Manufacturing was forbidden in certain
colonies to keep the market open for imports. The economic health
oft he colony was always a secondary consideration.
(3) All colonial trade was channeled through a single port, first
Seville until 1720, and then Cadiz. After 1765 this policy was
relaxed to allow trade by other Spanish ports.
Spain's mercantilist regulation was extreme almost to the point
of absurdity. Smuggling could not be controlled, since it was
in the interest of too many Spaniards on both sides of the Atlantic
to participate in illicit trade. During the eighteenth century,
the Spanish relaxed their colonial restrictions somewhat, not
because they were converted from mercantilism, but because they
realized that the old system was by then outmoded and unenforceable.
By 1789 licensed ships could sail to most Spanish ports in America,
and by the end of the century the asiento was abolished and slaves
were imported freely.
Spanish colonial policy had obvious shortcomings. The interests
of the colonists were sacrificed to those of the home country;
the colonists had little to say in their own government; and the
Indians were exploited without mercy. But one should remember
that no colonial commercial system was liberal in the eighteenth
century, and that in its ability to function, the Spanish Empire
was more impressive than any other of its time. Spanish colonial
society was more sophisticated than that produced abroad by either
Britain or France. Spain was the leading colonial power as late
as the eighteenth century, as Britain was to become after 1815.