Silver, Trade, and War

Since the days of Karl Marx and his examination of English industrialization, historians have routinely asked why England, and not France (or Spain)? Instead, we are routinely treated to tales of Spanish socioeconomic backwardness. Just as numerous are the explorations into the writings of Spanish arbitristas who steadfastly, and perhaps misguidedly, believed in and thus repeatedly sought to overcome their nation’s shortcomings from the sixteenth onward. During the past 30 years, these perceptions have become like the pillars of the house of the lords of Gaza. Stanley Stein’s most recent book, Silver Trade and War, does little in the way of playing Samson to bring down this architecture of conventional wisdom.By all accounts, this work is three decades in the making. I have heard tales of its depth, breadth, and meticulousness since my undergraduate days at Berkeley in the late 1980s, from Borah and Salvucci, and at Cambridge, from Brading. I have witnessed first-hand the paper trail of photocopy and microfilm requests left by Stein throughout hundreds of legajos in the Archivo de Indias in Seville. It was thus with some trepidation that I read and reread what is the first of four volumes under contract with Johns Hopkins Press. What could one say of the beginnings of a Chaunu-like magnum opus other than to highlight its demonstration of a great depth of reading and research and the profound learning behind it? In fact, this is perhaps the most comprehensive, detailed examination in English of Spain and empire since Haring took up the subject during World War I.Therein lies the rub, as they say. For if this first volume had emerged in the 1960s when the project first began, one could easily imagine the stir and impact it might have had in an era when economic, political, and institutional studies were still numerous, fashionable, and firmly grounded in solid archival research. Beginning as it does with a lengthy traditional summary of Spain’s plight before the Bourbon ascension and an in-depth examination of the trials and failures of Geronymo de Ustaríz, in particular, during the second half of the volume, brings us back without innovative answers to our opening question: Why England, not Spain?For the general reader interested in Spanish history, but with little in-depth understanding, one is led to conclude from this volume that Spain was weak, unable to defend her own trade system, and limited in courses of corrective action by a number of circumscribing treaties from Westphalia to Utrecht and beyond. One might also conclude that she was backward in all things throughout the early modern period; so much so that she was virtually doomed from the beginnings of the imperial era under Charles V to fall further and further behind such luminary examples of progressiveness and development as the Dutch, French, and English. At the same time, the general reader, bringing some or other traditional bias to a reading of this book, will surely come away with further confirmation of long-held beliefs in Spanish governmental incompetence, rampant corruption, indifference to the enforcement of her own laws on trade and navigation, and a general malaise with regard to issues of economic development and competition.This is particularly true of the trade issue. With regard to seventeenth-century trade, specifically, and the roles of foreign merchants (especially the French), the text relies heavily on Morineau and Everaert and their “estimates.” Accordingly, in the tradition of TePaske, Klein, and Garner, we are led down a path of understanding insistent that Spanish American silver production and the subsequent international flow of bullion for luxuries experienced little significant downturn during the 1600s. Publication determines neither truth nor fact, and Morineau and company have left few footnotes from the Dutch gazettes or comprehensible guides to the significance or true identity (let alone utility) of the cartas cuentas that might facilitate a closer look, if not a complete reexamination, of their findings. Perhaps for this reason, TePaske has taken some steps in the last decade to distance himself from his early interpretations of the caja summaries, such as in his essay in the collection honoring Charles Gibson at his passing. The same cannot be said of the other members of this “school.”In any event, if Mexican silver production was at best moribund during the mid-seventeenth century, as Bakewell’s numbers and graphs clearly indicate, and Potosi’s production declined steadily and unrelentingly after 1610 (again, from Bakewell), where is all of Morineau and company’s silver coming from (and with it the foundations of Stein’s book)? Fraudulent underregistration and contraband have been, and continue to be here, easy answers to this dilemma. However, there is little concrete evidence that the Rio de la Plata was much of a diversion for Potosí before the mid-eighteenth century, Moutakias’s overemphasis notwithstanding. When, after all, did colonial Argentina really begin to grow in significance? Further to the north, Mexico lacked any such “back door” for illicit shipments of the necessary magnitude. Strikingly, shipping manifests in Seville indicate that the Dutch records have been grossly misinterpreted. In one such report from the 1650s, for example, hundreds of thousands of pesos were recorded shipped from Veracruz to Seville on the royal account at a time when the mercantile unit of account from Istanbul to London was in reales. Divide the Dutch millions by eight and suddenly they are in exact accord with official registers. So much for official Spanish incompetence, widespread fraud and smuggling?On the Spanish side of the Atlantic, Stein makes note of ship-to-ship transfers of silver and goods as a means of evading tax collection. Both the French and Dutch write of this as common practice. However, we know from Parker’s book on the “Spanish Road,” as well as from Domínguez Ortiz and a host of others, that royal tax revenue from the Americas was typically consigned to foreign (especially Italian and Portuguese) merchant bankers years in advance of actual collection in the colonies. Gold paid the mercenary armies of the sixteenth and seventeenth centuries after all, not silver, and American tax revenue in silver was thus routinely exchanged for the necessary gold. Moreover, this ship-to-ship transfer continued to be practiced throughout the eighteenth century. By the time of the Napoleonic wars (and during Wellington’s Peninsular campaign in particular), American (read, United States) ships are recorded collecting huge sums of Mexican silver pesos (from a revived Mexican mining sector) in both Havana and Veracruz for reshipment to London to underwrite the cost of England’s war against France. How much of this ship-to-ship “evasion” or “smuggling” was simply the conduct of legally contracted and officially sanctioned business, whereby the silver arriving at Spanish ports already belonged to foreigners and exchanges were made in harbors—in plain sight of royal officials—to save on freight and warehousing costs? Or, were the Spanish officials really so much more corrupt then their foreign neighbors? In keeping with tradition, Stein intimates they were.For that matter, how much tax revenue did the Spanish crown itself believe it was losing to contraband and fraud? French and Dutch sources are interpreted to suggest the sums were enormous. However, Spanish officials and popular observers such as the arbitristas are generally silent on the matter. Even Veitia y Linaje’s Norte de la Contratación, a source of singular importance for Stein, remains a celebratory testament to Spanish imperial and commercial achievement. Might we then reinterpret Spanish inaction as a sign of the insignificance of such activities? In other words, did the cost of rigid enforcement of the law (assuming such activities were illegal) exceed the greater benefits resulting from a laissez faire determination to let the “free hand” of the market define the nature, structure and character of exchange in Spanish ports during the two centuries before Adam Smith? Bribes paid, when ferreted out after all, were very small.For Stein, the end of Spain’s mythical “golden age” coincides with a traditional view of American-silver-based prosperity and its applications for foreign wars and foreign trade. This, in turn, depleted the Castillian economy because of heavy domestic taxation to meet domestic royal expenditure (domestic taxes, after all, were paid in copper and copper did not buy either mercenaries or silk). Thus the diversion of silver away from Spain facilitated economic stagnation. More than one historian, however, has posited that if the silver stayed in Spain, rampant inflation would have ensued, thereby undermining whatever domestic governmental investment may have rendered. To be fair, Coatsworth has taken a decidedly different view with regard to silver exports and Mexican development. Yet another interpretation might be that Spain possessed an excess of capital (recall the vellon coinage). One might therefore argue, in contrast to Stein’s conclusions in the third chapter, that Spain simply lacked the Weberian entrepreneurial zeal of its Protestant competitors (to lump France in with the rest). Both France and England, however, conducted the bulk of their domestic trade and investment in copper (or more simply in “money of account”). Gold and silver were unrelentingly shipped abroad in contravention of numerous French and English laws intended to stem the flow. The Dutch followed a similar path, as well. So much for a comparatively weak Spanish state?As for the eighteenth century, and the second half of Silver, Trade and War, the French, Dutch, and English sources and historians repeatedly emphasized that they enjoyed a virtual free hand in their dealings with the Spanish government. Stein attributes this to “Unequal Treaties.” Yet, Spanish commentators throughout the period, the arbitristas again, remain almost uniformly focused on domestic policies and concerns. Why the difference? Were the Spanish really so naive and misguided? A case in point is a by-product of the Treaty of Utrecht: the asiento.How important was the asiento in quantitative terms as a drain on Spain and her empire? Or, was productivity enhanced by the addition to the colonial labor force, thus augmenting the output of the empire? It was slave labor, after all, that tended the sugar and tobacco of the Spanish Caribbean and built two-thirds of the West’s second largest navy at Havana, ca. 1762–92. On another related point, was France’s alleged domination of trade with Spain truly a drain on the Spanish economy? For that matter, how significant were Spain’s unending trade deficits? England, after all, experienced a net global trade deficit until the early nineteenth century yet still managed an “Industrial Revolution.”Might it, therefore, be possible to recast the entire conception of Spanish “backwardness” with reference to the underlying dilemma of a predominantly English-defined mercantilist doctrine? It was Spanish activity and success, after all, that spurred the mercantilist writings of England and France during the seventeenth century. What did the Spanish manufacture and export? Bullion. What did France and England want to get their hands on but bullion? By the end of that same century, France had become a nation of high domestic taxation with a nascent export economy (although the work of Warren Scoville and others suggest Morineau overstates French volume, value and role). Conversely, much-smaller England, also increasingly a high-tax nation, found that even trade was not enough to compete with France (or Spain) and virtually invented the “national debt,” then known as “The Sinking Fund.” Spain borrowed throughout the period under consideration, but it repaid its debts in the short-term and at ghastly high rates of interest, even taking into account the debt-restructuring crises of Philip II and Philip III, so often misrepresented as bankruptcies. The British, however, were never able to make significant inroads on the principal they borrowed during the later seventeenth, eighteenth, or early nineteenth centuries.Whatever the structural concerns of Orry, Ustaríz or the Farnese faction, Spain paid its bills, regularly and on time. Compared with France and England, Spanish finances, from a strict accounting perspective, were in much better order. What they did with their tax revenues, however, particularly with regard to military organization and success in war, are much different stories. Nonetheless, by the 1790s, the Spanish had the second or third largest navy in the world; and by most contemporary accounts their ships were of better design and construction than their European competitors (lest the origins of so many of the ships for both sides at Trafalgar be forgotten). Also, there is the fact that they were able to levy a wider range of taxes over a much longer period of time, both at home and in the colonies, than the French, Dutch or English. It was the English, after all, who could not even collect a two-penny tax on a barrel of molasses in its American colonies. And when they tried broader measures after the Seven Years War, they lost the larger part of their North American holdings.If Stein’s work can be faulted for anything, it is perhaps his overreliance on Spanish perceptions of the world in which they themselves lived. Coupled with the now-centuries-old notions of Spanish backwardness vìs-a-vìs England, France, and Holland, one risks being swept away in the negative assessments of Spaniard and foreigner alike. Yet in an era obsessed with “identity” in all its forms, Stein’s greatest contribution might be found in this overreliance. How better to characterize the Spanish, amidst all their accomplishments, than as a people deeply insecure, tormented by a mythical past, forever striving to recapture what never could be and unable to laud, let alone see, their most enduring achievements (Veitia y Linage notwithstanding)? For this the book is remarkable. It is also a testament to the continuing importance of questions now deemed passé by a wider historical “body.” Whether or not this works addresses them in an innovative or enduring fashion is a question for time itself. In the interim, we are reminded that institutional political and economic themes, though largely marginalized by the wider field, remain to be answered. For this, Silver, Trade and War is a relatively lone voice of reason in an otherwise aimless, ahistorical din that continues to dominate our profession. For this reason alone, I eagerly await the imminent publication of additional volumes

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