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Conspiracy Nation -- Vol. 1 Num. 23
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("Quid coniuratio est?")
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SPAIN: OUR NEIGHBOR TO THE PAST
This is not dealing with conspiracy *per se*. But it is
tangentially related.
In *The Great Reckoning*, authors James Dale Davidson and Lord
William Rees-Mogg show how world economic dominance has moved
from Spain, to Holland, to Great Britain, and finally to the
United States. Speaking of the glory days of old Spain (approx.
1525 to 1625 A.D.), they write:
There is no better example of a nation that underwent an
imperial crisis of costs and spent itself into oblivion
than Spain, the great power of the early modern period.
Leadership of the Spanish government was totally
dominated by tax-consuming interests: the military, the
bureaucracy, the church, and the nobility. Long after it
became obvious that the Spanish economy was in trouble,
Spain's leaders resisted every effort to cut costs. Like
American politicians today, they could not believe that
the money would ever run out. Each new setback to the
economy was treated as an occasion to launch a grand new
program. Taxes were tripled between 1556 and 1577.
Spending went up even faster... By 1600, interest on the
national debt took 40 percent of the budget. Spain
descended into bankruptcy and never recovered.
This period of Spain's economic dominance is known as the "Siglo
de oro," the "Century of gold." One result of its exploration and
colonization of the New World was that Spain began to import a
- lot* of gold. What follows will give you more details on Spain,
our neighbor to the past.
+ + + + + + + + + + + + + + + + + + + + + +
[From *La civilizacion espanola* by Diego Marin. Edicion
revisada. New York: Holt, Rinehart and Winston, 1969. Translation
by Brian Francis Redman, Editor-in-chief, Conspiracy Nation.]
The Economic Crisis
-------------------
One of the most significant paradoxes of the Spanish empire
during the *siglo de oro* is the chronic state of economic crisis
in which it lived, beneath its grandiose splendor. In spite of
the gold and the silver coming in from the Indies, the Exchequer
was always in debt to foreign bankers and the national economy
became less and less productive. The military obligations of the
empire brought with them an increase of expenses in excess of
revenues, so that the preoccupation of the government became that
of obtaining money at whatever cost, using urgent means that in
the long run ruined commerce and industry -- all the while never
comprehending that the true cure of economic woes lies in
increasing national production. That was the price paid by Spain
upon converting itself into an imperial monarchy and keeping its
own material interests subordinated to interests not always
national.
The financial difficulties had begun already under the reign of
Carlos V and they kept increasing during subsequent reigns, up
until the point where Felipe II declared bankruptcy three times.
The economic protectionism that had been initiated with so much
success by the Catholic kings had to be abandoned in order to
satisfy foreign capitalists that had approved loans to the
Emperor, who gave them as security for the loans the collection
of future taxes, the privilege of buying raw goods (such as wool,
iron, etc.), and of selling their manufactured products in Spain.
With this foreign competition, the development of local commerce
and industry was diminished, as it was also in other European
countries.
The other factor that contributed the most to the weakening of
the Spanish economy was precisely the gold and the silver so
providentially discovered in the Indies during the formation of
the empire, but which served only to pay back the foreigners that
had loaned money to the Crown or that sold manufactured goods to
the Spaniards. The sudden arrival of those precious metals
produced an inflation that revolutionized prices in all of Europe
by increasing the amount of money in circulation in greater
proportion than the amount of disposable goods. But the rise in
prices began first and rose most in Spain which had converted
itself into a country with the unfavorable balance of importing
more than it exported (because they had the money to pay well),
but where the prices were too high for them to be able to export
their own products. This slowed down even more the development of
the nascent Spanish industry. (The salaries in Spain were double
those in France and England. Thus, products produced in foreign
lands could be sold more cheaply than products produced in Spain.
Thereby, industrial development in these foreign lands was
favored -- at a cost to industrial development in Spain.) Even
the commerce from the Indies, the main source of income for the
Spanish, was diminishing since the second half of the 16th
century and was passing into foreign hands, either legally or as
contraband, until the supposed Spanish monopoly of colonial
commerce represented only 5 percent of the commerce of the Indies
at the end of the 17th century. For its own part, the greater
portion of the American treasure never even made it to Spain,
decreasing in little more than half a century from 35 million
pesos to 3 million pesos.
In the 17th century, faced with the failure of previous financial
remedies, other means were sought. Instead of new loans that only
increased the national debt and which were, at any rate, harder
and harder to obtain due to falling confidence in the state...
instead of imposing new taxes on a population already taxed to
the limit... Spain resorted to the expedient of devaluing the
money, giving to its copper coins the value that, of old, was
given to its silver coins. The treasury increased more than 100%
by this operation, but the gold and the silver disappeared from
circulation and the economy suffered from renewed inflation that
increased the cost of production. And when, to halt the
inflation, the nominal value of the money was lowered, that only
served to increase the economic disorder. The insecurity felt by
such fluctuations in the value of the money tended to paralyze
the economy even more, until around 1680 there was a complete
collapse of prices and a depression that left businesses with
neither merchandise nor money and the royal family without the
financial resources to take its summer vacation. In the end the
government could do nothing, which resulted in being the best
possible policy because at least it wasn't disturbing the
economic life.
Finally, we ought not to forget that the Spanish mentality of the
time contributed to this economic decadence. As a Florentine
ambassador observed at the beginning of the 16th century, the
Spanish "do not dedicate themselves to commerce, considering it
to be beneath them, because all of them have in their heads
certain airs of nobility." This prejudice against mercantile and
industrial labor was not just limited to the nobility, as in
other nations, but was spread to the other classes. The bourgeois
saw in the noble his social ideal and tried to obtain royal
titles for his children (not only for vanity, but for the
extension of taxes and other privileges.) As a proverbial phrase
from those times indicates -- *Iglesia, mar o casa real* (Church,
sea or royal house) -- the Spaniard aspired to be either priest,
conqueror or bureaucrat, not businessman or factory owner. That
is to say, he preferred to gain riches and honors by the effort
of his sword, or to live by a salary that, although modest, gave
prestige. At the end of the 17th century, the government, alarmed
by the decrease in industry, tried to rehabilitate the social
concept of work, declaring that the making of fabrics was not
incompatible with nobility; but such a revolutionary idea did not
begin to produce effects until a century later under the new
Bourbon regime.
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Aperi os tuum muto, et causis omnium filiorum qui pertranseunt.
Aperi os tuum, decerne quod justum est, et judica inopem et
pauperem. -- Liber Proverbiorum XXXI: 8-9