THE COLONIAL ECONOMY IN THE 17TH CENTURY (VICEROYALTIES) - CULTURE VOCABULARY - 2025

The colonial economy in the seventeenth century was sustained according to mercantilist ideas in the extraction of precious metals and commercial exchange. Trade was subject to two basic principles: monopoly and commercial exclusivism.

Until the universal monopoly was repealed, Spanish America could only trade with the Spanish territories of Europe. For this reason, the so-called Casa de Contratación de Indias in Seville was created in 1503, which was the entity in charge of supervising compliance with the monopoly.

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Additionally, a Consulate Tribunal functioned in each viceroyalty. He exercised control of the entire commercial movement and interceded in everything related to it.

Viceroyalty of New Spain

In the economic aspect, mining and commerce obtained a special relevance in the Viceroyalty of New Spain.

Mining

The discovery of numerous mining quarries attracted the attention of the Crown, which was interested in exploiting them. These mines were supported by the local inhabitants, who were looking for improvements in their quality of life.

Different materials were extracted from these mines, such as silver, gold and copper. Mining towns were created around the mines. This produced the rise of new livestock and agricultural holdings devoted to their supply.

Together with the construction of roads so that what was obtained from the mines could come out, all this generated an important economic boost.

The Crown assigned a tax, called Fifth Real, with which 20% of the material that was extracted was taken. It was based on a succession of bulls issued in 1494 by Pope Alexander VI, which indicated that all the land that was conquered in America belonged to Spain.

Mining had privileges with respect to other productive sections. These privileges were based on the predominant economic discourse of the time, where it was considered that wealth was based on the precious metals that one had.

The main mines exploited in New Spain were Pachuca, Zacatecas, Guanajuato, and Fresnillo.

Commerce

The commercial regulations were in the hands of the Casa de Contratación, whose base was in Seville, Spain. The protectionist policies and the monopoly demanded by the capital, made an optimal development in the economic component of the viceroyalty impossible.

Direct trade with other areas of the empire was prohibited. All these protectionist provisions led to the rise of illegal activities, such as smuggling or piracy.

These actions were promoted both by foreign nations that were looking for new markets, as well as by local businessmen who were seeking to bypass the restrictive and tariff measures imposed by the Crown.

Viceroyalty of Peru

In the 16th century, a monopolistic commercial policy and a set of state control entities were established to be able to export in the most efficient way the largest quantity of the metals extracted to the Spanish peninsula.

Mining

In the Viceroyalty of Peru, mining activity was predominant and one of the economic pillars, at least during the 16th century and much of the 17th century. Although it was not the only economic activity that the colonizers introduced, it was the activity that established the most social, economic and even political changes.

The best mines, for their performance and quality, were owned by the Spanish crown. On the other hand, small mines were exploited by private persons, having as a duty to pay the Fifth Royal as a tax. This corresponded to 20% of the wealth obtained.

The main mining quarries were: Potosí, Huancavelica, Castrovirreyna, Cajabamba, Cerro de Pasco, Carabaya, Hualgayoc and Cayllama, all located in present-day Peru.

Although at that time mining was a risky and disorganized activity, its peak was such that more than 40% of the deposits that are currently operating in Peru, during the viceroyalty period, had already been discovered and exploited.

Commerce

In the viceroyalty, trade was based on monopoly, due to the commercial and exclusive nature that prevailed in the economy.

All this commercial apogee turned the Viceroyalty of Peru into the axis of the commercial movement, and the port of Callao the most important in all of Spanish America. So it is no surprise that at that time he was the victim of attacks by corsairs, pirates and filibusters.

Ships loaded with merchandise left Seville annually, protected by other ships of the Spanish navy. Those who were heading to Peru were galleons and they first arrived at the port of Cartagena de Indias. From there they traveled to the port of Portobelo.

In Portobelo a great fair was held, to which the businessmen of Lima attended. These came to this place through the so-called South Sea Army.

After the sales and purchases were made in Portobelo, the merchants from Lima once again embarked on the Navy of the South Sea to arrive at Callao.

From this port they dispatched the goods by land to the cities and towns of the interior of the viceroyalty, such as Cuzco, Arequipa, Buenos Aires, Charcas, Montevideo and Santiago.

Viceroyalty of the Río de la Plata

The Viceroyalty of the Río de la Plata emerged in 1776, within what was established by the Bourbon Reforms.

In this viceroyalty the economy continued with the extractive-exporter model. Like the Spanish metropolis itself and the other viceroyalties, it was far removed from proto-industrialization, which emerged in the 18th century, and its subsequent evolution.

Mining

Mining was not the main activity, as it was in the other viceroyalties. Mining activity was only limited to a set of deposits that were exploited in present-day Bolivia.

However, huge quantities of silver and gold were exported from the port of Buenos Aires, arriving mainly from Upper Peru.

Commerce

The name of this viceroyalty, Río de la Plata, comes from the most important economic product for its economy, silver. However, this was mainly extracted from mines located in Upper Peru.

This economic activity represented the development of land traffic. This generally circulated following the Camino Real, from Upper Peru to the port of Buenos Aires. Such traffic also generated the breeding of horses, mules and donkeys.

The trade, which focused on the export of silver and gold, cereals, livestock and derivatives, was strongly regulated by the metropolis. This helped the spread of smuggling activities.

A few Spaniards had commercial activity in their hands, who in turn appropriated much of the political power.

Cattle raising

An important economic activity was the cattle ranch, established mainly in Buenos Aires, whose significance in the area is preserved to this day.

References

1. History Classes (2019). The Viceroyalty of New Spain. Taken from: classhistory.com.
2. Wikipedia (2019). Viceroyalty of Peru. Taken from: es.wikipedia.org.
3. History Classes (2019). The Viceroyalty of the Río de la Plata. Taken from: classhistory.com.
4. History of Peru (2019). Economy in the viceroyalty. Taken from: historiaperuana.pe.
5. Wikipedia (2019). Viceroyalty of the Río de la Plata. Taken from: es.wikipedia.org.