R. Nisbet Bain - The Cambridge Modern History

Under ordinary circumstances the increase in the price of food would have been merely injurious to industry; it would necessitate a larger outlay in the expenses of production, and would leave less margin for profit, and no opportunity for the formation of capital. Ultimately, this seems to have been the effect on Spanish manufactures, and the high cost of production in the peninsula rendered it possible for other European countries, where the range of prices was lower, to undersell the Spanish producer in the home market. No serious attempt was made by the government to check this tendency, as the policy pursued was in the main that of favouring the consumer, and protective tariffs were not introduced.

The circumstances which prevailed in Spain at the opening of the sixteenth century were, however, quite exceptional, and as a matter of fact there seems to have been a considerable, though short-lived, development of industry. The colonists not only imported their food, but manufactures as well; there was a sudden increase in the demand both for textile goods and for hardware, to meet the American requirements, and of course there was a great rise of prices. The small independent masters, working on the old industrial system, were unable to cope with this new state of affairs; but the foreign capitalists saw their opportunity. Manufacturing of every kind was organised on a large scale at Toledo and other centres; wages rose enormously, and a great influx of population was attracted into the city. This was doubtless drawn to some extent from the rural districts; but the stream must have been considerably augmented by the immigration of French and Italians. Hence it appears that this rapid industrial development was merely an excrescence, which had no very deep attachment to the country; the Spaniards themselves appear to have regarded it as an intrusion, and to have resented it accordingly. The Spanish gentry had no means of paying the increased prices which the colonial demand had occasioned, for natural economy was still in vogue in many rural districts, Indeed, this revolution in industry must have given rise to many social grievances; the craftsman of the old school would suffer from the competition of the capitalist in his own trade, while the great rise of prices to consumers was attributed to the greed of the foreigner. The government was persuaded to pass measures which imposed disabilities on foreign capitalists; it succeeded in forcing the withdrawal of the French and Italian workmen, as well as in expelling the Moriscos. As these changes ensued, the foreign capitalists were doubtless successful in transferring large portions of their capital to other lands; but the decline of alien competition on Spanish soil did riot enable native manufacturers to take their place or to recover the lost ground. With the new scale of outlay they had little opportunity for forming capital, and the bourgeois class may not have had the skill for organising business on the new lines. On the whole it appears that the large colonial demands for food on the one hand, and the large supplies of foreign manufactures on the other, prevented a healthy reaction of commercial on agricultural and industrial development; Spain was left •exhausted by the feverish activity which had been temporarily induced, and which passed away.

The Spanish government was firmly convinced that the best means of promoting the power of the country was by hoarding the large share of the produce of the mines which came into their possession, and they made frequent efforts to prevent the export of any bullion into other parts of Europe, though the Genoese and German capitalists had special licenses which allowed them to transmit it. It is obviously impossible that the government could have succeeded in enforcing this prohibition, under the existing conditions of trade; most of the bullion which arrived at Seville belonged to the merchants and manufacturers who were concerned in supplying the colonial demand for goods. The ingots which were not taken to the mint may have been hoarded for a time; but the foreign capitalists would not allow their money to lie idle, and much of it must have been exported, in spite of all laws to the contrary, to pay for the cheaper manufactures which were coming in from abroad. Comparatively little coin could have passed into general circulation in Spain itself; payments from the towns for agricultural produce would scarcely overbalance the payments due from the country for the dearer manufactured goods.

The Spanish rulers had ignorantly and unintentionally pursued the precise course of policy recommended by Machiavelli. They had sought to accumulate treasure in the coffers of the State, and they had by their mistaken measures allowed the subjects to continue poor. The wealth which passed into the country had no steady and persistent reaction on industrial and agricultural life; and when the military exigencies of Philip’s policy reduced him to bankruptcy, it became obvious to the world that the Spaniards had completely misused the unique opportunities which lay within their grasp. They had sacrificed everything else to the accumulation of treasure by the Crown, and they had completely failed to attain the one object on which they had concentrated all their efforts.

The permanent gain from the treasure imported into Europe went to those countries which were able to employ it as capital for industrial or agricultural improvement, and Spain could do neither. There was every prospect, at one time, that the greatest advantage would be reaped by Spanish subjects in the Netherlands. The policy of the government, however, and the failure of the Duke of Alva to recognise the importance of trading interests, rendered this impossible. The War in the Low Countries not only caused the migration of industry from that part of Spanish territory, but tended to bring about the collapse of the great capitalists who had allied themselves to the Spanish interest. The foreigners were being gradually excluded from taking any direct part in the new industrial developments in Spain; they confined themselves more and more to banking business, and to financial operations in the government service. But the persistent failure of the Spanish and imperial policy in one country after another had the effect of crippling several of the great Genoese and German houses, and at length drained the resources even of such millionaires as the Fuggers. The decline of these bankers proved that the control of the treasure of the New World was passing into other hands; as a matter of fact it was shifting more and more into the possession of the Dutch, who were making their country a harbour of refuge for persons expelled from the Spanish Netherlands, and who were building up a great centre of commercial and industrial life at Amsterdam. At the beginning of the seventeenth century the people of Holland had succeeded in winning the greater part of the gains which accrued from the Portuguese discoveries, vchile they had also succeeded in drawing to themselves a large share of the treasure of Spanish America, and in using it as capital in commerce, in shipping, and in industrial pursuits. It was the nemesis of the policy of his Catholic Majesty that his subjects failed to derive real advantage from the much vaunted American possessions, and that the gains which might have enriched the peninsula went to his bitterest enemies.

In the middle of the sixteenth century, England was not a competitor with Spain and France for the sovereignty of the world; her political ambition was far humbler; the dangers that threatened her were so imminent, and her means of defence so insufficient, that it was only by devoting great care to the development of her resources that she could hope to retain political independence. William Cecil found him* self called upon to guide the destinies of the realm, at a time when the $| country was destitute of munitions of war. Elizabeth’s Protestantism seriously interfered with the opportunities of procuring military stores 5 the chief supply of saltpetre and sulphur, which were required for gunpowder, as well as of the metals which were necessary for the making of ordnance, came from ports controlled by the great lioman Catholic Powers. The native mining industries we’re. quite undeveloped, and England could easily have been prevented from purchasing copper and iron from abroad. Woollen cloth was the chief export from the country; but alum, which was used in the processes of dyeing and finishing, was obtained from Ischia, an island which belonged to the Pope. . A hoard of bullion, laid up against possible emergencies, was a political luxury which Cecil could not afford; all the resources that the Crown could dispose of, either as personal possessions, or by influence exercised on loyal subjects, were devoted to the planting of industries which directly subserved the strength of the realm and rendered it less hopelessly unprepared for the struggle that could not be indefinitely postponed. When the storm burst at last, and England had to get ready for meeting the Spanish Armada, it was found that the leeway had been entirely made up, and that English guns and gunners were as good as those of Spain, and better too.