The Colonial Economy of Spanish America

Throughout the colonial period of Spanish America, the main focus of the Spanish Crown was on developing the mining industry at the expense of agricultural production for export. Agricultural development was not consistent within or between the various viceroyalties and with the exception of Venezuela and Cuba, most agriculture was on a subsistence level or developed independently of the Crown. The clear objective of the conquistadors was acquiring precious metals such as gold and silver, and this objective also suited the Crown who saw vast sums of silver flow into its coffers.

In Columbia, officially sanctioned trade focused mainly on exporting gold, to the detriment of all other economic activities such as agriculture. As a result, the economy turned inward and agriculture was on a largely subsistence level, which was responsible for the lack of urban centers in Columbia. In Ecuador, in places like Quito there was enough agricultural trade to keep some landowners wealthy, but in the highlands it was again subsistence agriculture. In Peru, commercial agriculture was limited mainly to the coastal regions. In the Platine area of Argentina, the main export was cattle hides, although the majority of the profits went to Buenos Aires merchants and not to the producers. It appears only Venezuela and Cuba developed a strong export market independent of mining, but in the majority of South America mining for exports and agriculture for local markets remained the trend under colonial rule

There were times when the Spanish Crown encouraged agricultural development in its American colonies, although it appears the motivation for doing so was generally based on self-interest. In Paraguay they were encouraged to plant tobacco crops in an attempt to combat Brazilian tobacco imports. There was also a special project to improve commercial agriculture by producing hemp. This product was needed to supply cordage for the Spanish navy. One of the main problems in expanding commercial activity in agriculture appears to be lack of manpower. Urban dwellers were not interested in working the land primarily because of the perceived primitiveness of farm work and the Spanish emphasis on wealth through mining. There were late colonial reforms that targeted export economies based on agriculture, but it appears the reforms had more of a positive effect on imports rather than exports . Given the increase in income for the Spanish Crown from exports to Spanish America one must again question their intentions in the reforms to encourage the agricultural economy.

In Brazil, agricultural development appears to have followed a different path, perhaps because the Portuguese Crown maintained lesser control over its colonial dominions. Sugar production played a significant role in the commercial activities of Brazil and although the sugar industry began a gradual decline at the end of the 17th century, it dominated the export market for the majority of the colonial period. In 1760, gold made up 2.2 million pounds, while sugar exports came to a total of 2.4 million. Brazil was more successful in diversifying its export market to include agricultural products than was the Spanish colonies, a pattern that appears to have continued until today.

The Spanish Crown’s desire for precious metals existed at the expense of agricultural development within Spanish America. For the most part, colonial economic activity was focused primarily on the mines and extracting silver and gold to export to back to Europe. Agriculture was not actively encouraged by the Crown until centuries after conquering America, and until then had mainly existed on a subsistence basis. Even in colonies where there were agricultural exports, Spanish merchants took much of the profit. In Buenos Aires, landowners did not achieve their political and economic power until after independence. As precious metals began to dwindle, there was little other export income for Latin Americans and they became increasingly frustrated with the Spanish monarchy until they fought the wars of independence. Given their lack of interest in developing the Spanish American economy beyond the mining industry, it is not surprising that the colonies opted for independence.