1 - Introducing the Mexican economy

Summary

With the accession to the Spanish throne of the House of Bourbon, a slow but profound transformation of the philosophy and purpose of the new ruling monarchy got underway. The so-called Bourbon Reforms that began to take shape in the Americas by the 1770s had a political component, to secure the political and economic supremacy of the Crown over its colonies around the world, and economic, to increase the Crown’s revenues for the benefit of the metropolis in Spain at the expense of the colonies. The consequences for New Spain, which would become Mexico, were many in both respects (Pérez Herrero 1992). Criollos, children of Spaniards or of pure European origin, which had played an active role in political affairs for centuries under the Habsburgs, lost much of their access to power and influence on public matters. Even the Viceroy lost much of its power as the administrative structure shifted towards “intendancies”, whose head reported directly to the king. On the economy, taxes were raised from all contributors, including the “Indian republics” and some subsidies were provided for the mining sector. Most monopolies were abolished, and “free” trade was declared, although some state “estancos” or monopolies were reinforced, in particular the tobacco monopoly, which at the beginning of the nineteenth century hired 15 per cent of the economically active population, produced 130 million cigarettes and 6 million cigars a year, and generated between 3–4 million pesos of income to the Crown, a figure similar to that of mining (Deans Smith 1992).

All these measures expanded production and trade, especially silver mining which reached 21.6 million pesos a year on average (Soetbeer 1879), increased taxes and the tithe for the Catholic Church, and prompted rural migration to the major cities, which grew in size and complexity. Inequality, however, continued and was evident in terms of wages and a divide of social classes. It was a nation of paradoxes at that time: it saw a larger increase in population than in Europe, but less prosperity for most; an increase in commercial food production, but starvation in some rural regions; great palaces and urban development in the cities, but low wages for workers (Van Young 1985).