New Spain - Economy

Economy

In order to pay off the debts incurred by the conquistadors and their companies, the new Spanish governors awarded their men grants of native tribute and labor, known as encomiendas. In New Spain these grants were modeled after the tribute and corvee labor that the Mexica rulers had demanded from native communities. This system came to signify the oppression and exploitation of natives, although its originators may not have set out with such intent. In short order the upper echelons of patrons and priests in the society lived off the work of the lower classes. Due to some horrifying instances of abuse against the indigenous peoples, Bishop Bartolomé de las Casas suggested bringing black slaves to replace them. Fray Bartolomé later repented when he saw the even worse treatment given to the black slaves. The other discovery that perpetuated this system was extensive silver mines discovered at Potosi and other places that were worked for hundreds of years by forced native labor and contributed most of the wealth flowing to Spain. The Viceroyalty of New Spain was the principal source of income for Spain among the Spanish colonies, with important mining centers like Guanajuato, San Luis Potosí and Hidalgo. Cacao and indigo were also important exports for the New Spain, but was used through rather the vice royalties rather than contact with European countries due to piracy, and smuggling. The indigo industry in particular also helped to temporarily unite communities throughout the Kingdom of Guatemala due to the smuggling.

There were several major ports in New Spain. There were the ports of Veracruz the viceroyalty's principal port on the Atlantic, Acapulco on the Pacific, and Manila near the South China Sea. The ports were fundamental for overseas trade, stretching a trade route from Asia, through the Manila Galleon to the Spanish mainland.

These were ships that made voyages from the Philippines to Mexico, whose goods were then transported overland from Acapulco to Veracruz and later reshipped from Veracruz to Cádiz in Spain. So then, the ships that set sail from Veracruz were generally loaded with merchandise from the East Indies originating from the commercial centers of the Philippines, plus the precious metals and natural resources of Mexico, Central America, and the Caribbean. During the 16th century, Spain held the equivalent of US$1.5 trillion (1990 terms) in gold and silver received from New Spain.

However, these resources did not translate into development for the Metropolis (mother country) due to Spanish Roman Catholic Monarchy's frequent preoccupation with European wars (enormous amounts of this wealth were spent hiring mercenaries to fight the Protestant Reformation), as well as the incessant decrease in overseas transportation caused by assaults from companies of British buccaneers, Dutch corsairs and pirates of various origin. These companies were initially financed by, at first, by the Amsterdam stock market, the first in history and whose origin is owed precisely to the need for funds to finance pirate expeditions, as later by the London market. The above is what some authors call the "historical process of the transfer of wealth from the south to the north."