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The Years of Hunger: Soviet Agriculture, 1931-1933

Author(s):Wheatcroft, R. W. Davies and Stephen G.
Reviewer(s):Tauger, Mark B.

Published by EH.NET (November 2004)

R. W. Davies and Stephen G. Wheatcroft, The Years of Hunger: Soviet Agriculture, 1931-1933. New York: Palgrave Macmillan, 2004. xvii + 555 pp. $90 (cloth), ISBN: 0-333-31107-8.

Reviewed for EH.NET by Mark B. Tauger, Department of History, West Virginia University.

Popular media and most historians for decades have described the great famine that struck most of the USSR in the early 1930s as “man-made,” very often even a “genocide” that Stalin perpetrated intentionally against Ukrainians and sometimes other national groups to destroy them as nations. The most famous exposition of this view is the book Harvest of Sorrow, now almost two decades old, by the prolific (and problematic) historian Robert Conquest, but this perspective can be found in History Channel documentaries on Stalin, many textbooks of Soviet history, Western and even World Civilization, and many writings on Stalinism, on the history of famines, and on genocide.

This perspective, however, is wrong. The famine that took place was not limited to Ukraine or even to rural areas of the USSR, it was not fundamentally or exclusively man-made, and it was far from the intention of Stalin and others in the Soviet leadership to create such as disaster. A small but growing literature relying on new archival documents and a critical approach to other sources has shown the flaws in the “genocide” or “intentionalist” interpretation of the famine and has developed an alternative interpretation. The book under review, The Years of Hunger, by Robert Davies and Stephen Wheatcroft, is the latest and largest of these revisionist interpretations. It presents more evidence than any previous study documenting the intentions of Soviet leaders and the character of the agrarian and agricultural crises of these years.

This book is the fifth and latest in the series on Soviet history that Edward Carr began in the 1950s (and that ultimately ran to 17 volumes) and that Robert Davies (who collaborated with Carr in the later volumes of his series) continued in the 1980s. Like those studies, its format is chronological and narrative, but unlike most of the previous volumes this one relies very extensively on new archival and published archival sources. In the present volume, Davies and Wheatcroft pick up in the middle of the story that Davies began in volumes one and two (The Socialist Offensive: The Collectivization of Soviet Agriculture, 1929-1930 and The Soviet Collective Farm, 1929-1930), with chapters on the second campaigns of collectivization and dekulakization in 1930-1931. These campaigns were linked: the main means of collectivization was dekulakization, the removal from villages of allegedly “well-off” exploiting peasants and others who opposed too openly the program of collectivization, and officials considered dekulakization necessary to enable collective farms to work. These campaigns involved much less violence than the first such campaigns in early 1930, but also were more “successful”: more than 60 percent of peasant families were in collective farms by late summer 1931, a plateau not surpassed for three years.

The authors then narrate the cycle of agricultural policies and performance: sowing and harvest plans and actual work in 1931, the campaign to procure grain and other crops from the villages after the harvest, and the same cycles in 1932 and 1933. They describe how officials repeatedly projected unrealistically optimistic plans for plowing, crop sowing, and harvests, and how agricultural and peasant realities frustrated these plans to varying degrees, and how officials responded to these realities, in particular years. In 1931 the leadership projected the largest increase in sowings up to that time, and this plan was mostly fulfilled, but a severe drought in spring and summer reduced or destroyed much of the potential harvest, reflected in steadily declining estimates of the harvest on the part of government statistical personnel and increasing reports of starving villagers. Nonetheless, the regime projected high procurements and attempted to impose them, with the result that more regions of the country were left without food, causing millions of peasants, especially from Ukraine and Kazakhstan, to flee their homes seeking food and work. Similar conditions caused massive labor turnover in factories during this period, which Davies discusses in the preceding volume in the series (Crisis and Progress in the Soviet Economy). Meanwhile the government (exercising the foreign trade monopoly it had instituted in the early 1920s) exported some four million tons of grain to pay for massive imports of machinery, including tractors.

Agricultural planning and work in 1932 took place under much worse conditions than in 1931, with significant shortages and starvation in many regions. The authors narrate the high-level disputes and decision-making that led to emergency distributions of seed and food to shortage areas, the May laws of 1932 that legalized private trade (after three years of uncertain status), and in general a relaxation of policies. Farmers did not fulfill the sowing plans, however, and the harvest decreased even relative to that of 1931 by a complex mix of natural disasters and mismanagement. While official projections of the harvest dropped substantially, however, Soviet leaders refused to believe that another catastrophe like 1931 had occurred, and pressed forward with only a moderately reduced procurement plan. Implementing this plan, however, brought a tremendous struggle between regime and peasants, simultaneous with a disastrous decline in food supplies for the towns, and widespread theft and attempted theft at all stages of distribution. In response, Stalin wrote a law issued on 7 August that imposed death penalties or 10-year exile for theft of “socialist property.” The authors provide valuable detail about the alteration of harshness and moderation at different levels and in different periods in enforcement of this decree.

By the beginning of 1933, the procurement plan had not been fulfilled, and authorities at all levels received continuous reports documenting a massive famine, widespread deaths from starvation, and desperate demands from officials at all levels for food allotments from diminishing reserves. Peasants and workers around the country fled their homes seeking food and survival, and the authorities issued several additional laws attempting to prevent this movement, including the reestablishment of an internal passport system, harsh penalties for workers who left their jobs without authorization, and apprehension and return to their homes of peasants from the southern grain regions, most severely struck by famine. It was in this context of great economic crisis that the regime again undertook to plan and guide farm work. This time they lowered their targets, provided extensive albeit insufficient relief in food, seed, and forage, and dispatched more than 20,000 industrial workers, all Communist Party members, to eliminate opposition in the collective farms and mobilized them for the year’s work. The result, however, despite the horrible conditions, was a very successful harvest in 1933 that ended the famine in most regions.

The book then goes on to present capsule narratives of specific aspects of agricultural production and particular sectors. So production of crops besides grain, including potatoes, sugar beets, and fiber crops generally followed the same pattern as grain, and thus were directly or indirectly affected by the famine. Livestock breeding underwent a “disaster” because of losses from the process of collectivization, from crop failures that reduced forage, from mismanagement in the farms, from high procurements, and finally from the famine itself, as peasants slaughtered animals (ignoring laws prohibiting it) to survive. The worst region of the livestock crisis was Kazakhstan, where Soviet collectivization policies aimed initially to settle in villages the majority nomadic population (a policy similar to that employed in some colonial countries and in some developing countries since independence). In the face of a searing famine in the region and the flight (to China) or death of more than one-third of the population, the regime in 1933 relaxed its policies, but the effects of the famine were not overcome for years.

The authors also examine the two main socialist sectors. The state farms (sovkhozy), which were large, ideally mechanized specialized farms that held more than 10 percent of the sown area, had tremendous difficulties in these years after limited success in 1929-1930. In 1931-1932 these farms suffered catastrophic declines in production, from causes that included natural disaster, mismanagement, and shortages of equipment and supplies because of the overall Soviet economic crisis of the time. From 1933 on, the sovkhozy began a recovery, facilitated by the government’s transfer of land from these farms to land-short collectives. On the collective farms (kolkhozy) the authors examine in some detail labor organization and remuneration, which were difficult managerial problems to solve in these almost unprecedented institutions. The regime in these years moved from a network of varied farms following diverse policies to a system in which the main organizational structures and remuneration procedures were prescribed from central government agencies with the intent of insuring the proper mix of incentives and obligations.

The final chapter examines the 1931-1933 famine in comparison to the two most noted recent famines in Russian history, those of 1891 and 1918-1922. The authors describe how these earlier famines resulted from natural disaster and (in 1918-21) the difficulties the Bolshevik government had in moving food from villages to towns through requisitions. They then analyze the 1931-1933 crisis in three categories: the urban food crisis of 1928-1933; the famine in Kazakhstan; and the rural famine of 1932-1933. They discuss different estimates of mortality, questioning the highest estimates but acknowledging the uncertainties in the population data. They estimate that mortality from the famine was in the range of four to six million deaths.

This chapter concludes with their explanation of the causes of the famine. They argue on the basis of the available data on food production and mortality that this was a famine caused by shortage, or “food availability decline” [FAD], in which “entitlements” or distribution factors played a contributory role (p. 417, using the terms employed by Amartya Sen). They emphasize, however, that the crisis of which the famine was the culmination began with the economic disruption caused by the massive investments of the first five-year plan and the simultaneous food supply difficulties of 1927-1929, the so-called “grain crisis.” By means of the first five-year plan and collectivization, Soviet leaders intended clearly to increase food production, but two years of natural disasters and agricultural disruption lowered harvests drastically and forced the government to ration food in insufficient quantities to all but the limited groups whom the authorities considered absolutely necessary to supply.

The authors attribute the small harvests in the crisis years to four factors. The intense sowing plans that demanded increased areas under crops disrupted the crop rotations left from the 1920s and thereby brought soil exhaustion. Draft forces declined, despite the import, production, and provision to agriculture of increasing numbers of tractors, because lack of forage (from both procurements and crop failures) and collectivization (which facilitated the spread of epizootics) brought massive deaths of horses. This draft situation in turn, combined with disaffection of the peasants, brought a decline in cultivation quality. Finally, exceptionally bad weather caused serious declines in output independently of all the other factors.

They conclude the main text with a brief summary of their discussion of the Soviet government’s confused and ambivalent responses to the famine. The authorities overestimated harvests and tried to impose high procurement quotas, but they also reduced those quotas when difficulties developed, and returned procured grain to villages for food and seed; they decided in the face of crisis to feed the cities as well as possible, but they also made significant efforts to support agricultural recovery, though this failed for millions of people. In response to intentionalist arguments (citing Conquest), they conclude that Soviet leaders, even if their actions contributed to the famine crisis, found it unexpected and extremely undesirable. They connect the famine crisis in larger terms to the Russian past, to the earlier agrarian crises, but most of all to the decision to industrialize at “breakneck speed” (p. 441). The book concludes with an appendix on grain harvest data, and 49 tables on farm production, food distribution, population, and certain other topics.

With its extensive use and intensive examination of archival and published sources on high-level policy discussion and decisions in this crisis, including the formerly secret records of the Politburo (the special files or osobie papki) and the now published correspondence of Stalin with some of his top lieutenants like Kaganovich and Molotov, this study decisively refutes intentionalist explanations of the 1931-1933 famine. None of these sources contain any evidence indicating that Stalin or his officials intended or wanted to create a genocidal famine to suppress Ukrainian nationalism or any other such objective. The decisions that these officials made, such as the impositions and then reductions of procurement quotas, or the lowering of rations for certain sectors of the population, represented short term, desperate, and often mistaken responses to the developing emergencies of these years, and not components of an overarching destructive intent. Even the underlying fact of the overly rapid industrialization program and the disruptions it caused reflected not destructive but constructive aims, even if the implementation of these plans by ill-educated fanatics in various state agencies had disastrous consequences. This study, therefore, documents that great Soviet famine of 1931-1933 was a complex economic event first of all, rooted in environmental conditions as well as in Soviet policies.

Given this, however, and given the enormous amount of work that went into this study, like all of Davies’ previous work, nonetheless the authors make a number of important problematic assertions and leave certain crucial issues unresolved. I will focus on two of these.

First, the authors assert at the end of their chapter on the collective farms (p. 397) that because the kolkhozy transferred a large part of their produce to the state, these farms represented a throwback to serfdom, with the state as the serf owner. This point actually does not support the connection they make between the kolkhoz system and serfdom, in particular because they also document the fact, which has been clear from other sources as well, that ordinarily peasants received a significant share of their food supplies from the crops they grew on the collective farms’ fields, in addition to the crops they grew on their “private plots.” Under serfdom, the peasants received only the food they grew on their own lands; what they produced on the demesne lands went to the pomeshchiki (the Russian noble landlord), with the exception of famines when pomeshchiki by Russian law were expected to share some of the reserves with the peasants. One of the main points of this book (and of previous studies) is that the procurements took most or all of kolkhoz grain reserves in 1931 and 1932 because of the crop failures of those years, and did not represent the usual pattern: in all other years farms had substantial portions of their crops left over after procurements for their own use, as in 1933. It makes more sense economically and institutionally to interpret the high procurement quotas as combining elements of taxation and rent rather than exclusively as atavisms.

Furthermore, in the same section the authors show that the farms had significant incomes from their sales of crops and other products, even at the low state purchase prices as well as on the free market legalized in 1932, which they used to pay the peasant-members for their work, and to purchase new equipment and supplies, albeit in very limited amounts in 1931-1932. Under serfdom, peasants were not paid for their produce on demesne. Even given the situation in these crisis years, the kolkhozy were not recreated serf villages, but can be better understood as semi-autonomous production units highly subsidized by the government. The authors also document the significant movement of peasants from the farms by “otkhod,” labor migration, a process that was one of the objectives of collectivization and that the regime encouraged and relied on for industrial labor. The government did attempt to control this movement by means of the internal passport system, but that system was not imposed until 1933, in response to the famine crisis, and as earlier research has shown, the passport system restrained peasant movement, both temporary and permanent, from villages to towns very little.

Further, serfdom in early modern Russia was part of a whole complex of controls over the population that had the goal of limiting not only the geographical but also the economic and social mobility of almost the entire population, rural and urban, as for example in the elaborate regulations of the 1649 law code. The Soviet system of the 1930s, by contrast, was oriented toward social mobility, promoting and educating workers and peasants to responsible posts. For example, no Russian peasant ever came close to becoming a Russian emperor before 1917, but under the Soviet regime four men of peasant origin came to rule that country: Stalin, Khrushchev, Brezhnev, and Gorbachev. Many other former peasants and workers moved up to high positions; while some tragically ended up victims of the great Communist witch hunts of the 1930s to the 1950s, most did not, and held positions that they would never have attained under the servile system. Even those who stayed in the farms in many cases attained technical knowledge and skills (despite the influence of Lysenko) and used it to bring about a significant increase in farm production in the 1950s to 1970s. To describe the kolkhoz as a revival of serfdom as Davies and Wheatcroft do here is a substantial distortion of historical fact.

Second, the book still does not satisfactorily explain why the famine took place when it did and especially why it ended. The authors’ chapters on agriculture and procurements in 1933, which was of course the crucial agricultural year because this was when the famine basically ended, are substantially shorter than those on 1931 and 1932 and have a certain “rushed” quality. Davies and Wheatcroft identify several objective factors to which they attribute the declines in food production in 1931-1933 that in great part caused the famine. Most of those factors that they identify for 1932, however, still prevailed or were even worse in 1933. The decline in livestock numbers and draft forces, for example, continued into 1933 and possibly 1934 (depending on how one calculates the value of a tractor); the disorder in crop rotation was not overcome even by the reduced sowing plans of 1933, or for some years thereafter. Most important, famine conditions were much worse. The authors cite a few sources claiming that peasants somehow knew in 1933 that they had to work hard (p. 238), but they also acknowledge in another context that at least some peasants worked hard in 1932 as well (p. 418). In any case, all evidence about peasants’ resistance is anecdotal and can be shown not to be representative of their views and actions generally (see my article “Soviet Peasants and Collectivization: Resistance and Adaptation”). Without any doubt, however, working conditions for peasants in 1933, because of the more severe famine conditions, were much worse in 1933 than in 1932.

Given these inconsistencies, there remains one factor in explaining the cause of the small harvest of 1932 that can account for the improved harvest in 1933, and that is the complex of environmental factors in 1932. As I documented in a recent publication, the USSR experienced an unusual environmental disaster in 1932: extremely wet and humid weather that gave rise to severe plant disease infestations, especially rust. Ukraine had double or triple the normal rainfall in 1932. Both the weather conditions and the rust spread from Eastern Europe, as plant pathologists at the time documented. Soviet plant pathologists in particular estimated that rust and other fungal diseases reduced the potential harvest in 1932 by almost nine million tons, which is the largest documented harvest loss from any single cause in Soviet history (Natural Disaster and Human Action, p. 19). One Soviet source did estimate higher rust losses in 1933 than 1932 for two provinces in the Central Blackearth Region, which is a small region of the country (approximately 5 percent of the total sown area). Davies and Wheatcroft cite this and imply that it applied to the rest of the country (p. 131-132 fn. 137), but that source does not document larger losses from rust in 1933 anywhere else. Further, the exceptional weather and agricultural conditions of 1932 did not generally recur in 1933. Consequently I would still argue, against Davies and Wheatcroft, that the weather and infestations of 1932 were the most important causes of the small harvest in 1932 and the larger one in 1933. I would also like to point out for the record here that the criticism they make (p. 444-445) of my harvest data is invalid and represents an unjustified statistical manipulation of what are in fact the only genuine harvest data for 1932 (see “The 1932 Harvest”).

And this leads to my main complaint about their work. It is true that this volume represents considerable work on their part. But it is also true that several other scholars, including the present reviewer, reached the same or similar conclusions that they reached, using some of the same sources and arguments that they did, years before them, and Davies and Wheatcroft were familiar with this earlier work. In my publications I also cited several other publications of other scholars and observers that reached or suggested similar conclusions. Yet they do not acknowledge anywhere in this book that their conclusions agree with those of earlier work. When they cite such earlier work, they almost always criticize it on some small point but never acknowledge that work’s contribution to the argument they are making. The fact that they reached conclusions similar to other sources does not absolve them of the responsibility of acknowledging their agreement with previous scholarship.

In making this complaint, however, I do not seek to minimize the enormous contribution that this study makes. The Years of Hunger represents a major step toward a more complete and unbiased understanding of this catastrophic event in Soviet and world history. While it adds conclusive evidence to refute intentionalist interpretations of the famine, however, it still leaves us with fundamental uncertainties about why the famine happened and why it ended when and in the way it did.

References:

Robert Conquest, The Harvest of Sorrow: Soviet Collectivization and the Terror-Famine, Oxford University Press 1986.

R. W. Davies, The Industrialization of Soviet Russia: v. 1: The Socialist Offensive: The Collectivization of Soviet Agriculture, 1929-1930, Harvard University Press 1980. v. 2: The Soviet Collective Farm, 1929-1930, Harvard University Press, 1980. v. 3: The Soviet Economy in Turmoil, 1929-1930, Macmillan 1989 (revised edition 1998). v. 4: Crisis and Progress in the Soviet Economy, Macmillan 1996.

Mark Tauger, “Soviet Peasants and Collectivization: Resistance and Adaptation,” Journal of Peasant Studies 31 no. 3-4, April-July 2004.

Mark Tauger, “Natural Disaster and Human Action in the Soviet Famine of 1931-1933,” Carl Beck Papers in Russian and East European Studies, no. 1506, 2001.

Mark Tauger, “The 1932 Harvest and the Famine of 1933,” Slavic Review 50 no. 1, Spring 1990.

Mark Tauger has published several articles and short monographs on the 1931-1933 famine and other famines in Soviet history, Soviet agriculture, and recently on Amartya Sen’s theories and the Bengal famine of 1943 (Journal of Peasant Studies 31 no. 1, October 2003)

Subject(s):Economic Planning and Policy
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII

The Peasants of Languedoc

Author(s):Ladurie, Emmanuel Le Roy
Reviewer(s):McCants, Anne E.C.

Project 2001: Significant Works in Economic History

Emmanuel Le Roy Ladurie, The Peasants of Languedoc.

Review Essay by Anne E.C. McCants, Department of History, Massachusetts Institute of Technology.

There and Back Again: The Great Agrarian Cycle Revisited

It has been thirty-six years since the original publication of Le Roy Ladurie’s now classic Les Paysans de Languedoc, whose English translation appeared only eight years later. This work of “total” regional history (p. 8), grounded in the climate and topography of its fixed place, narrated around a loving reconstruction of time series data drawn from land tax registers, grain (and other commodity) prices, population registers and communicant lists, and ultimately nuanced by an anthropologist’s sensitivity to the social impact of even small changes in literacy and spiritual affiliation, is in many respects the crowning achievement of the Annales school for the post-Braudelian generation.1 It takes for its subject a place close to the heart of Braudel himself, the Mediterranean French province of Languedoc, and the people who tilled its fields and nurtured its vines, mostly in the small family holdings which so captured the historical imagination of French scholars of the inter- and post-war periods. It also takes as its time period those in-between centuries so favored by Braudel, following the dramatic collapse of the fourteenth century, but well before the acceleration of change brought on by industrialization in the late eighteenth century and thereafter. Despite the poverty and hardship, not to mention the periodic bouts of starvation and insanity, which cross the pages of this book, it retains nonetheless a bucolic vision of the French countryside, only superficially touched by the affairs of men, at least in anything but the very long run. Finally, it attends most fully to the natural and human processes characterized best by an ebb and flow of cyclical change: climate, the productivity of the soil, and population. In all of these respects the intellectual debts to Marc Bloch, Fran?ois Simiand, and of course Fernand Braudel are immediately obvious.

Yet in important ways Le Roy Ladurie also deviates from what had by the time of this publication become the normative format for a major work of Annales history. Instead of dividing his subject into the classic, and fundamentally non-sequential, tri-part formula of structure, conjuncture, et ?v?nement, Le Roy Ladurie instead follows the older norm of telling his story in time. He begins with the tailings of the fourteenth century crisis, what he calls “the low-water mark of a society.” He then traces the effects of the so-called “wage and price scissors” of the long sixteenth century, culminating once again with population collapse and economic depression in the seventeenth century. The self-proclaimed “protagonist” of this book is “a great agrarian cycle, lasting from the end of the fifteenth century to the beginning of the eighteenth, studied in its entirety” (p. 289). While as heroes go this is still a far cry from the kings and generals of old-fashioned history, it is clearly less fixed in time and space than Braudel’s mountains and seas with their capacity for geologic movement only. The Peasants of Languedoc is thus a narrative, and like all good narratives it is susceptible to accidental interventions in the plot and to their concomitant unanticipated outcomes. And so Le Roy Ladurie’s ‘great agrarian cycle’ turns out to have embedded in it a hint of something more linear, a harbinger of the demise of his otherwise so carefully crafted longue dur?e, and what he himself calls “the seeds of true growth” (p. 302). Yet his own lingering ambivalence about what others have been tempted to call progress is underscored by his choice of metaphor to describe it. In the same breath in which he invokes “incandescent particles in the darkest hours” he also speaks of the “contagion of true growth” (p. 303). Is economic growth (that is the “increase of individual wealth” (p. 303) in his definition) good or bad, or both simultaneously? This question, which seems so easily answered by anyone trained in neo-classical economics, lingers unresolved by La Roy Ladurie. Indeed, it perhaps remains to the present unanswered by those who have followed him in the French historical school, particularly as it has turned increasingly back towards the study of culture and in the process adopted many of the methodologies and proclivities of the anthropologist.2

What then are these (insidious?) interventions that push the great agrarian (read Malthusian) cycle off course? Perhaps somewhat surprisingly they are phenomena which Max Weber would have recognized even if their shading is not exactly that of a Protestant ethic. They include the spread of viticulture and sericulture to the detriment of the subsistence grain; the gradual appearance of an “industrial mentality,” admittedly never well defined but seemingly linked with the increase in production of exportable commodities; the spread of remedial education and its powerful accompaniment literacy; and finally, the most nebulous of all, “a certain psychological transfiguration and a general improvement in behavior,” that is best characterized by the “virtue of self-control” (p. 307). Le Roy Ladurie cites the decline of dueling, spontaneous knife fights, and religious fanaticism as just the most obvious evidence of the shift towards a more “intellectual” and “composed” life (p. 309). The link from this reform of manners to real (that is sustainable) economic growth is only inferred, but presumably those who can refrain from emotional outbursts of violence will also be better able to defer consumption gratification in order to invest for the future. Without these (overwhelmingly cultural) interventions the peasant smallholder might have been doomed to an endless Malthusian repetition of the great agrarian cycle of expansion — characterized by population growth, downward pressure on family farm size, the cultivation of marginal lands, the impoverishment of heirs, and rising subsistence prices — and retreat, in which all of the above signs would reverse. As long as subsistence agriculture remained the dominant activity of the agrarian economy population won the race over bread every time (p. 73). Malthus would have been right, if he had not been born too late. Certainly for La Roy Ladurie Malthus was the true prophet of the age that just preceded his own (p. 311)

Yet not many scholars remain unabashed Malthusians or even slightly watered-down neo-Malthusians these days. We have learned well from Ester Boserup that population pressure could and did drive human societies to greater intensity of work effort and the concomitant technological modifications suited to natural resource scarcity and labor abundance. We have learned from Adam Smith and his many followers the productivity advantages of specialization, encouraged as it was by the rise of urban places and the increasingly dense networks of trade among them. We have learned as well from the Marxists of Robert Brenner=s tribe that power relationships between and among individuals and social groups (dare I call them classes?) could powerfully impact the nature of economic response to demographic catastrophe, both on the individual level and for societies as a whole. And of course, we also know from the body of theory built up over the last century in mainstream economics departments that markets are capable of clearing an amazing range of commodities, and that they often did so even in the somewhat murky pre-industrial past. Finally, the “New” Institutional Economics has taught us that social and political institutions had a lot to do with how well markets were actually able to perform their pure function. What then is there for the Anglo-speaking economic historian (most likely trained in the neo-classical tradition) to take from this book and its larger research agenda nearly four decades out?

Fortunately lots. To begin with there is the terrific data series reconstructed over a substantially long period of time to allow for serious study of the macro-dynamics of a pre-industrial economy. For even if Le Roy Ladurie “confuses rent with profits” as Douglas North pointed out long ago, we do not have to follow in that confusion.3 We can read the rent series for what it really is, using it in tandem with price and wage series as a base for understanding the changing profitability of subsistence agriculture, particularly as it varied by the scale of the farm operation. For as La Roy Ladurie rightly emphasizes throughout his exposition, it is far too simplistic to speak only of booms and depressions in the agrarian economy overall. If you had a surplus to sell, falling grain prices induced hardship; but the story was very different for those forced onto the market to ensure sufficient quantities of bread for survival. For them agrarian depressions could be a time of relative plenty. Thus the macro-dynamics that inhere in his great agrarian cycle could produce both winners and losers simultaneously, depending on the distribution of property, and the larger social structure in which farming took place. It is always good for us to be reminded of this complication.

The Peasants of Languedoc also provides a model for the integration of cultural history into economic history which is still relevant today. Despite La Roy Ladurie’s now outdated reliance on Malthus for the structure within which his narrative operates, he nonetheless discerns the cultural forces which were at work in eighteenth-century Languedoc (and in nascent form even earlier) to disrupt the Malthusian paradigm. To the claim on this side of the Atlantic that ‘institutions matter’ a fresh reading of Le Roy Ladurie offers the reminder that mentalit? matters too. Adequate labor and capital resources may have been necessary conditions for economic growth of the modern variety, but they were hardly sufficient. Their application in new ways required whole new modes of thought and behavior. Thus, as any Frenchman would surely understand in the widest possible sense that we are what we eat, La Roy Ladurie would also have us understand that we produce what we think.

Finally this book remains the most accessible to the American student (of all ages) of all the major works to come out of the Annales school. It is neither geologic in its movement, nor overwhelming in its scope. Yet it achieves its stated goal to be “total” in its comprehension of its own subject. The barren mountain reaches, rolling fields of grain and vine, and scrub filled blessedly with chestnut trees; the long cycles of climate change, and the violent bursts of climatic extremes; the struggling peasant with too many children, the upstart coqs de village, and the emerging bourgeois of Montpellier; “Huguenot carders and Papist peasants” (p. 158); all of these characters come alive on the pages of this book. Their multiple, often conflicting, stories are woven together seamlessly by La Roy Ladurie into a complicated whole that looks remarkably like real human experience. If the master economic narrative sometimes goes astray or suffers from lapses of logical explanation, this seems a forgivable fault to this enthusiastic reader. There is much indeed for us to learn, not only about the agrarian economy of a Mediterranean province before industrialization, but about historical storytelling as well.

Notes:

1. All quotes from the text are taken from the English translation by John Day, published in paperback by the University of Illinois Press in 1976.

2. See Peter Burke, The French Historical Revolution: The Annales School 1929-89, Stanford, 1990, especially pp. 79-93.

3. Douglass North, AComment@ in Journal of Economic History, Vol. 31, no. 1, 1978, p. 80.

Anne McCants is the author of Civic Charity in a Golden Age: Orphan Care in Early Modern Amsterdam, University of Illinois Press, 1997, and numerous articles on living standards, migration, and marriage patterns in northern Europe. She teaches in history, economics and women’s studies at MIT.

Subject(s):Historical Demography, including Migration
Geographic Area(s):Europe
Time Period(s):Medieval

From British Peasants to Colonial American Farmers

Author(s):Kulikoff, Allan
Reviewer(s):Rothenberg, Winifred B.
, Winifre

Published by EH.NET (August 2002)

Allan Kulikoff, From British Peasants to Colonial American Farmers.

Chapel Hill, NC: University of North Carolina Press, 2000. xiii + 484 pp.

$59.95 (cloth), ISBN: 0-8078-2569-7; $22.50 (paper), ISBN: 0-8078-4882-4.

Reviewed for EH.NET by Winifred B. Rothenberg, Department of Economics, Tufts

University.

“Men make their own history but they do not make it as they please; they do not

make it under circumstances chosen by themselves, but under circumstances

directly encountered, given and transmitted from the past.”1

Marx’s famous dictum might well serve as the epigraph for Allan Kulikoff’s

study of small (white, incidentally) farmers “in the context of ” the

capitalist transformation. Kulikoff, Baldwin Professor of Humanities at the

University of Georgia, is a prodigiously well-informed scholar of early

American history whose research over the last two decades has been devoted to

understanding the yeoman farmer in early America. Small farmers, it turns out,

left so large and deep a footprint on the American historical landscape, and

one that Kulikoff is able to describe at such an astonishing level of detail,

that he has had to divide this, his capstone work, into two volumes. The first,

From British Peasants to Colonial American Farmers, covers those aspects

of the story that one would call broadly ‘economic.’ Although there is nothing

on colonial fiscal or monetary policy and little on foreign trade, he deals

well with the English background of colonial settlement, the process of

emigration, the acquisition and allocation of land, agricultural developments,

internal migrations, encounters with Indians, and “the relation [that] farm

families forged with the market”(p. 4). The companion volume, The Making of

the American Yeoman Class (forthcoming), will deal more intensively, he

writes, with questions of class identity, kinship, community, ethnicity, and

faith that have long been identified with this author.

Kulikoff calls this book a “master narrative,” by which I understand him to

mean a narrative around which he has braided a commanding interdisciplinary

synthesis that draws from more than 2,000 works from the many proliferating

sub-fields into which history as an academic discipline has splintered since

the Sixties: women’s history, family history, African-American, Native

American, rural, environmental, social, demographic, religious, economic, a bit

of political, and enough of contemporary English, Dutch, German, Irish and

Scottish history to understand their emigrations to the American colonies.2

Kulikoff begins his history with the Black Death and the depopulation of

England that was its consequence. Here, although dense with absorbing detail,

the broad outline of his argument is a familiar one: much of the surviving

peasantry was loosed from the manor lands and wandered into an emerging labor

market. Two centuries later, in the course of the enclosure process, “agrarian

capitalists” threw peasants off the lands they had enjoyed for centuries in

secure tenure, “leaving them and their descendants with a great yearning for

land”(p. 2). In Kulikoff’s telling it was the yearning for land — not for a

New Jerusalem or new markets or empires or geopolitics or trade routes or raw

materials, but for land — that drove the settlement of England’s North

American colonies.

In what sense should American history begin in 1348? To ask that

question is to ask another: what interpretive theme is threading its way

through this story? I can think of three. It can be read as a long-running

dialectic between individualism and communalism. Or as a declension narrative:

from communities (to which Kulikoff attaches a positive valence) to markets. Or

as a redemption narrative: “the same men who evicted peasants financed colonial

ventures that promised land to former peasants” two-thirds of whom, and their

descendants, became landowners in a new Eden. The three interpretations have

this in common: that capitalism is central to all. It motivated the expulsion;

it financed the colonization; it secured the property rights by which peasants

came to hold land in fee-simple tenure. Looked at in any way, says Kulikoff,

“Capitalist transformation, stands at the center of our story” (p. 2).

Once capitalism is made to stand at the center it cannot be ignored, although

— as always — it immediately causes trouble. In the first place, capitalism

— which is here defined as “a society dominated by two classes: capitalists

who own the means of production (banks, factories, tools, and productive land)

and workers who have only their labor to sell” — did not reach our shores,

says Kulikoff on page 2, until after the American Revolution. That is,

until after the book ends! In his 1992 book he had gone even further: he argued

there that even after the Revolution, ‘capitalism’ (so defined) ill serves to

describe an economy of yeomen farmers who themselves owned the means of

production with which they produced a surplus as well as their labor to sell.3

Hence the question, how then can capitalism stand at the center of our story?

Kulikoff replies, “Because Britain had turned capitalist, colonists swam in a

capitalist sea” (p. 2). I find that to be a fascinating and provocative answer,

for it implies — does it not? — that capitalism is not embedded in a

particular material substratum or set of productive relations; it is not even

rooted in the forging of class identities. It is rather a set of behaviors,

responses, incentives, a culture that is learned in the act of ‘swimming’ in

it; a meme, perhaps, carried to these alien shores by the swimmers.4 If that is

so, what happened? Did they shake it off, like a dog, when they reached the

shore? As I said, ‘capitalism’ only causes trouble.

One would also like to engage Kulikoff in a discussion around the origin of

private property rights. I refer to these two statements: “enclosers created

private property” (p. 17); and “private property in land (with the absolute

right of alienation that went with it) was new in seventeenth-century England”

(p. 71). J. H. Baker, in his authoritative Introduction to English Legal

History, explains that a distinction was indeed made in Grenvill’s court

(1290) between the alienability of an acquisition and of a patrimony: “What [a

man] had himself purchased he could alienate without restriction; but what he

had inherited he could only alienate in exceptional circumstances.” But within

a generation that restriction had been abandoned. In Bracton’s time:

“If land were granted to A and his heirs, A received an inheritable fee which

he could alienate in its entirety to B and B’s heirs…[I]f the ancestor

alienated in fee during his lifetime, the heir had nothing to inherit and no

legal standing. The reason given was that the identity of the heir could not be

known until the ancestor’s death. Heirs were made by God not man: solus Deus

facit haeredem. No ascertained individual was therefore cut off by an

alienation inter vivos; an heir apparent or presumptive had an

expectation of inheriting, but not a vested estate. The tenant who was granted

land ‘to himself and his heirs for ever’ thus had something quite different

from a life estate. His estate was of infinite duration and during his lifetime

he could alienate it forever.”

That the privacy of property has its origins in the early fourteenth century,

not the seventeenth, is of immense importance, for it exposes to scrutiny the

association — so often assumed — between capitalism and the emergence of

libertarian institutions. But lest I be carried far beyond my competence I

return now to Kulikoff’s book, a skeleton outline of which he renders as

follows:

A Prologue “examin[es] how English peasants organized their households; how

rich Englishmen got capital to finance colonies; and how others lost their

land, tramped the countryside, and became eager to emigrate. Chapter 1 details

immigrant recruitment in seventeenth century England and patterns of migration

to the colonies. Once they arrived, Chapter 2 shows, colonists faced hostile

Indians, deep forests, and a climate far more extreme than England’s. Despite

the struggle with Indians, most families did get land and made it their own. As

Chapter 3 relates, during the eighteenth century, after coastal lands filled

with settlers, colonists moved to new frontiers, chasing Indians away and

improving more land. Chapter 4 shows who left eighteenth century Britain and

Europe and explains why so many peasants moved east rather than west. Turning

from economic and demographic issues to the process of farm making, Chapter 5

describes the gender division of labor on the farm, exchange between farm

families, and the relation between market and household. The American

Revolution, the epilogue argues, temporarily stopped migration, ended

international trade, thrust families into subsistence production, and ignited

vicious partisan and Indian warfare; after the war internal migration and farm

making resumed and intensified” (p. 4).

This outline does not begin to capture the scale and scope, the density and

complexity of the synthesis he has achieved. His two chapters on medieval and

early modern English rural history do a superb job of fixing the Great

Migration in its historical context. One is grateful for the close attention he

gives to financing the emigration process by means of subsidies, monopolies,

joint stock companies, chartered companies, and trading companies, and for the

penetrating detail he brings to his discussion of the settlement process.

Particularly noteworthy is his treatment of the colonists’ encounters with

Indians. Not having been familiar with these materials, I was struck — as I

have been by Peter Mancall’s work — at the amount of information Native

Americans appear to have left in the historical record. Tribe by tribe Kulikoff

tracks the systematic degradation of Indians from King Philip’s war to their

‘domestication’ through conversion, dispossession, absorption into the labor

force, indebtedness, servitude, and enslavement to other Indian tribes. But

most impressive is Kulikoff’s ability to write with equal authority about every

one of the thirteen colonies. In this field, expertise on one town has

sufficed to build an academic career on. To command, at this level of detail,

an intimate familiarity with the literatures on every colony is really

rather extraordinary. And he remains, as he has always been, acutely sensitive

to the roles women have played in sustaining the worlds that British peasants

and American farmers made.

But it is precisely with respect to “level of detail” that this review pivots

from an encomium to a critique. Let me start with a few of his paragraphs for

purely illustrative purposes.

1. “All but 4 of the first 238 inhabitants of Salem, Massachusetts got land,

and later arrivals fared nearly as well, eleven-twelfths (134 out of 146)

getting land. New England land continued to be widely distributed. In three

towns in Essex County, Massachusetts in the late seventeenth century, half the

men owned land before they were 30, as did 95 percent of men over 36. Before

1660, two-fifths of Connecticut settlers, most of them young men, had no land,

but by the 1690s six-sevenths of all farmers owned land. Similarly high levels

of landownership could be found in the Chesapeake colonies. In 1660 four-fifths

of the white men in Charles County, Maryland were landowners; as the

opportunity for former servants to get land plummeted, the proportion of owners

among taxable men declined to seven-tenths in 1675 and six-tenths in 1690. Most

landless men either moved from the county or died young, before they could

acquire land. In both 1687 and 1704 nearly two-thirds of the household heads in

Surry County, Virginia held land, as did three-quarters of householders in

Talbot County, on Maryland’s Eastern Shore, in 1704. Landownership, moreover,

might have been nearly universal in early Pennsylvania; during the 1690s

eight-ninths of the householders in one Chester County township owned land” (p.

113)

2. “Six-sevenths of Connecticut men held land, and nine-tenths of those between

ages 40 and 70 farmed their own acreage. … [N]early eight-ninths of the [New

Hampshire] householders owned land. But in the ports of Portsmouth and

Newcastle only two-thirds of the householders owned land; most held just enough

for a house lot and small garden. During the Revolutionary era two-thirds of

taxed men in East New Jersey owned land, but four-fifths of men over age 27 —

nearly all the household heads — did” (p. 131).

3. “The proportion of cottagers and wage laborers among household heads grew

from one-quarter before 1560 to two-fifths by 1620, and at the same time the

proportion of small-holding husbandmen dropped from about two-fifths to less

than one-third. During the 1650s only half of the men in three Lancashire

villages worked in agriculture, while two-fifths worked in the textile

industry. By 1688 only a quarter of rural families … leased or owned land.

Half were cottagers, landless farm laborers, or vagrants, and one-seventh

worked exclusively in textiles, mining, and other village industries. At least

a third of late-seventeenth-century rural families lacked even a cottager’s

garden …” (p. 22). And on and on. Most of this could have been put in tables,

charts, graphs, and figures without which it is impossible to make sense of the

numbing superfluity of fractions, the numbing superfluity of ‘fact-lets.’ I put

the blame for this on the editor, and chalk it up to a serious failure on the

Press’s part to identify the book’s target audience. To what readership is it

aimed? For the lay or undergraduate reader the forest is all too often obscured

by the trees, while graduate students and professionals will be excessively

irritated by the absence of even the most elementary processing of quantitative

information: percents are as scarce as hens’ teeth.

I am reminded of the recent review of a biography of Marcel Proust: “Every

conceivable fact about Proust and about Proust’s friends and friends of his

friends, and about what they wrote, read, saw, heard, and loved is literally

stuffed into the Life, usually in very short segments that are, despite

the author’s desire to suggest otherwise, a hasty collage of disconnected

scenes et portraits … Tadie’s insights are almost always surrounded by

innumerable facts that end up clouding a sustained meditation on the inner

Proust. Tadie machine-guns facts with vertiginous dispatch, for he not only

knows everything there is to know about Proust — but he also means us to know

it.”6 In like manner, Kulikoff machine-guns facts with vertiginous dispatch,

for he not only knows everything there is to know about the small farmer in the

colonial period — he means us to know it. But, like a pointilliste painting,

it is meaningless up close, and a blur from a distance.

A still larger question has to do with the presentation of materials across

disciplines. A recent article in the Journal of Economic Literature

provides the hook on which to hang this, the principal point of my critique.7

On the assumption that interdisciplinary conversation contributes to the

diffusion of knowledge, the authors of that article propose that “actual

communication flows” between the various social sciences be measured by the

number of ‘high value’ citations an article garners in other journals. To that

I would add another metric: the authenticity of the translation from origin to

destination across disciplines. Narrative disciplines that import findings from

hypothetico-deductive disciplines (and modern economic history is one) have an

obligation, both to the reader and to the original author, to define

constructed variables, to report the research design as modeled, and the

findings as provisional.8 An example of successful ‘translation’ is McCusker

and Menard’s Economy of British America, which throughout treats early

American economic history as “a laboratory containing sufficient diversity to

encourage analysis but enough similarity to allow control of at least some

variables.”9 In Kulikoff’s book, on the other hand, I find many examples of

what I would consider to be bad ‘translations’:

? Mistaking the size of a study sample for the size of the ‘universe’ from

which it was drawn. Thus, “In 1714 the Massachusetts land bank lent to 110 men

in Middlesex County; two-thirds were farmers, one-third artisans.” And “between

1650 and 1750 Middlesex County residents took out 619 mortgages.” Kulikoff is

citing work of mine here, and in both cases he is confusing the size of a study

sample with the size (unknown) of the ‘universe’ from which it was drawn. When

these two examples are followed by an example from New York State —

“Landholders in two Dutchess County precincts alone took out 329 mortgages

between 1754 and 1770″ (all on p. 219) — one wonders if that too is only the

sample size.

? To explain migration flows within and among the colonies, Kulikoff declares

that the decision to move: a) “was driven by increased land prices in older

areas and cheap frontier land” (p. 148); b) “depended on father’s age, the

number of children at home, opportunities at home or on the frontier, and

previous moves by friends or neighbors” (p. 149); c) depended on prices: “when

prices were good, propertied families risked the peril of moving to a frontier;

during depressions or wars, they stayed put or moved short distances” (p. 145);

d) depended on assets: “only families with assets could move long distances”

(p. 145). This is a regression waiting to happen. Regression analysis was

imported into social-science history just to prevent ‘effects’ from having an

unlimited number of equally plausible ’causes.’

? “Agricultural productivity rose” (p. 170). Kulikoff is too familiar with

economics jargon to use the word ‘productivity’ often, but using it at all

imposes an obligation to define the measure of it, particularly when the

magnitude (total factor productivity) is a construct, and the measure of it in

the original research was proxied, as it so often is, by rents which have data

problems of their own.

? The end-notes — again, perhaps, an editorial decision. The practice of

bundling all references in a paragraph into one footnote (or end-note) is not

uncommon in narrative histories, but in this book virtually every paragraph

carries an end-note, and each end-note bundles together as many as twenty

citations. This impedes the serious scholar who wants to locate a source or

validate the authority of a ‘fact-let.’ In a hypothetico-deductive discipline

where the results are for the most part ‘made,’ not ‘discovered,’ their

provenance deserves to be known.

It would be a great pity if decisions made on the editorial level misjudged the

audience for this book. A more sophisticated treatment of the staggering amount

of quantitative material between its covers might have garnered it the

gratitude and respect it would then deserve.

Notes:

1. Karl Marx, The Eighteenth Brumaire of Louis Bonaparte (1849), quoted

on p. 5.

2. Two thousand is my rough count, approximately four hundred of the two

thousand works were published in the last decade, and I recognized seventy-five

as the works of economic historians.

3. Allan Kulikoff, The Agrarian Origins of American Capitalism

(Charlottesville: University Press of Virginia, 1992), p. 34.

4. A meme — “An idea that seems to have a life of its own,” Edward Rothstein,

“The Mysterious Meme, A Seductive Metaphor,” New York Times (August 2,

2002), p. A15.

5. J.H. Baker, An Introduction to English Legal History, second edition.

(London: Butterworths, 1979), pp. 222-24.

6. Andre Aciman, “Proust Regained,” New York Review of Books, July 18,

2002, p.58.

7. Rik Pieters and Hans Baumgartner, “Who Talks to Whom? Intra- and

Interdisciplinary Communication of Economics Journals,” Journal of Economic

Literature (June 2002), p. 484.

8. This issue is knowingly discussed by John Komlos in “Interdisciplinary

Approaches to Historical Analysis,” in Peter Karsten and John Modell, editors,

Theory, Method and Practice in Social and Cultural History (New York:

New York University Press, 1992).

9. John J. McCusker and Russell R. Menard, The Economy of British America,

1607-1789 (Chapel Hill: University of North Carolina Press, 1985), pp.

31-32.

Winifred B. Rothenberg, Associate Professor of Economics at Tufts University,

is the author of From Market-Places to a Market Economy: The Transformation

of Rural Massachusetts, 1750-1850 (Chicago: University of Chicago Press,

1992).

Subject(s):Social and Cultural History, including Race, Ethnicity and Gender
Geographic Area(s):North America
Time Period(s):18th Century

Making Peasants Backward: Managing Populations in Russian Agricultural Cooperatives, 1861-1914

Author(s):Kotsonis, Yanni
Reviewer(s):Hayward, Oliver

Published by EH.NET (May 2000)

Yanni Kotsonis, Making Peasants Backward: Managing Populations in Russian

Agricultural Cooperatives, 1861-1914. New York: St. Martin’s Press, 1999.

x + 245 pp. $65 (cloth), ISBN: 0-312-22099-5.

Reviewed for EH.NET by Oliver Hayward, Department of History, University of

Wisconsin-Parkside.

This study presents succinctly (188 pages of text) the clearest and most

thorough explanation yet available in the West of the failure of those

ostensibly responsible for the welfare of Russia’s peasantry to assist them

toward the progress enjoyed by many of their contemporaries in Western and

Central Europe.

In developing his analysis, Yanni Kotsonis (Assistant Professor of History,

NYU) has made effective use of extensive archival materials in Moscow and St.

Petersburg, as well as archives in the Archangel section of the Imperial State

Bank and the Agricultural Society of Vologda. He consulted newspapers,

periodicals, and serial publications of several Imperial government and private

agencies operating in the decades up to 1914. Also utilized are many published

monographs and articles on the subject, often by persons involved with

formulating and executing policies ostensibly designed to assist Russia’s

peasantry out of its backwardness.

Following an introductory statement of the theoretical framework within which

he explores various aspects of the peasant situation following the promulgation

of the “Great Reforms,” Kotsonis analyzes the subject in more depth through

chapters utilizing the following periodization: 1. 1861-1895,

during which the “Great Reforms” were set in motion; 2. 1895-1904,as Witte

attempted to strengthen Russia’s peasantry as part of his overall program for

modernizing the economy; and 3. 1906-1914, as first Stolypin and later

Krivoshein made further attempts to enhance the position of Russia’s peasantry.

Chapter 4 (“Citizens: Backwardness and Legitimacy in Agronomy and Economics,

1900-1914″) introduces the new set of forces which descended upon the Russian

countryside: agronomists, economists, and “cooperators,”

the professionals charged with assisting the peasants in establishing

agricultural cooperatives.

The final chapter (“Making Peasants Backward, 1900-1914”), utilizes the various

themes from the first four chapters to explain more precisely why the promising

programs ostensibly designed to assist Russia’s peasants in fact for the most

part conspired to “make peasants backward.” No element in Russian society–the

zemstvo nobility, government ministers and other leaders, the agronomists, and

other professionals sent out presumably to assist the peasants – seems to have

been able to escape the blinders created by their own prejudices and

preconceptions in order to further the peasants’ true interests.

Kotsonis’ brief Epilogue suggests some of the implications of all this for

rural Russia during World War I, especially its impact on the tumultuous years

of 1917-1918.

Permeating the entire book is the overwhelmingly pernicious attitude toward the

peasantry held by almost every group bearing some responsibility to assist the

peasantry. Through extensive quotations from the writings and speeches of

representative individuals, Kotsonis demonstrates this attitude to be a melange

of the following specific assumptions: that Russia’s peasantry were

overwhelmingly illiterate; that they were particularly ignorant in financial

matters; that they were therefore in unceasing danger of being exploited and

misled by unscrupulous and predatory middlemen, and that they therefore must

not be exposed to an impersonal credit market that could only be deleterious to

their interests.

Based on these assumptions, the cooperative movement generally focused on

bringing professionals down to the peasants in order to guide and protect them,

rather than seeking to educate the peasantry and showing them how to more

effectively manage their own agricultural activities. Many in the cooperative

movement viewed capitalism as a form of predatory power that should not be

practiced on or by the peasants except under the close supervision (nadzor) of

agronomists and other professionals.

State officials, zemstvo noblemen, and agronomists and other professionals all

vied to see which among them should conduct the peasants’ affairs for them.

Rarely were the peasants involved in the process even consulted on the chance

that they might have some useful insights regarding how to improve their lot.

Struggles for influence and bureaucratic control took precedence over the

interests of the peasants.

Perhaps most ominous of all, Kotsonis suggests, was the attitude with which the

various groups responsible for overseeing the peasantry in Russia did so, with

attitudes vastly different than those of their counterparts in other parts of

Europe. While there were the familiar references to the backwardness and

barbarism of peasants in European countries as well, there it was often in a

context of the need to mobilize the peasantry into the broader population as a

political nation. In Russia, in contrast, the presumption that peasants could

not measure up to the requisite standards of citizenship, self-reliance,

progress, and rationality produced not only a failure to recognize the

possibility of “dynamic transformation of peasants, but often a caste-like

reification of them and a justification of permanent administration over them,

‘as if by a foreigner'” (p. 134).

In his footnote to this assertion (p. 218, footnote #117), Kotsonis notes that

even in Poland, in stark contrast to Russia, “the integration of peasants into

a national idea was the central issue in political movements from the early

nineteenth century.”

That a mass cooperative movement encompassing by 1914 one-quarter of all

peasant households in Russia could nevertheless achieve so little in mobilizing

the peasantry into a broader political nation is a situation fraught with

ominous implications for post-1917 Russia. Kotsonis has made a significant

contribution to our understanding of how, despite often benevolent intentions

toward the peasantry on the part of many officials,

professionals, and “cooperators,” this dangerous situation was actually

deteriorating still further in the last decades of the Russian Empire.

I would make but one suggestion for improving this study. The specific data on

the extent and distribution of the cooperative movement in Russia that Kotsonis

presents in chapter 5 could have been more helpful if presented much earlier,

for it helps better assess the merits of various proposals to make credit more

readily available to the peasantry and thereby modernize Russian agriculture.

This work is, in any event, a major contribution to augmenting our

understanding of a crucial failure plaguing the troubled history of late

Imperial Russia. Those who might have been able to help formulate a

constructive response to the “Cursed Question” instead compounded and

perpetuated the curse.

Oliver Hayward is completing a study of the life and policies of M.Kh.

Reutern, Minister of Finance under Alexander II. He is currently researching

the periodic flooding of the city of St.Petersburg/Leningrad and efforts to

control that flooding.

Subject: A Geographical Area: 4 Country: Russia Time period: 7, 8

Subject(s):Agriculture, Natural Resources, and Extractive Industries
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII

Peasants, Merchants, and Markets: Inland Trade in Medieval England, 1150-1350

Author(s):Masschaele, James
Reviewer(s):Clark, Gregory

EH.NET BOOK REVIEW

Published by EH.NET (April 1998)

James Masschaele, Peasants, Merchants, and Markets: Inland Trade in Medieval England, 1150-1350. New York: St Martin’s Press, 1997. xii + 275 pp. $45.00 (cloth), ISBN: 0-312-16035-6.

Reviewed for EH.Net by Gregory Clark, Department of Economics, University of California, Davis.

Medieval Commerce: Too Much of a Good Thing

You have got to feel sorry for our colleagues in medieval economic history. This bright and energetic group – Richard Britnell, Bruce Campbell, Christopher Dyer, Derek Keene, Maryanne Kowaleski, John Langdon, Mavis Mate, Larry Poos, Ambrose Raftis, to name just a few – are model scholars. To practice their craft they master Latin and paleography, they learn the subtleties of the documents, they spend the time in the archives. And the archives themselves are glorious: a mine of economic information so much richer than even what we find for eighteenth century England. But what reward do they get for all this effort and all this erudition? The more we learn about medieval England, the more careful and reflective the scholarship gets, the more prosaic does medieval economic life seem. The story of the medieval economy in some ways seems to be that there is no story.

Back in the bad old days, when the scholarship was less careful, the medieval economy was mysterious and exciting. Marxists, neo-Malthusians, Chayanovians, and other exotics debated vigorously their pet theories of a pre-capitalist economic world in a wild speculative romp. But little by little, as the archives have been systematically explored, and the hypotheses subject to more rigorous examination, medieval economic historians have been retreating from their exotic Eden back to a mundane world alarmingly like our own.

This book, by James Masschaele, a historian at Rutgers University, is a nice piece of scholarship which constitutes a few more steps in this long retreat from paradise. His book is really a collection of essays exploring various aspects of the English medieval market before the Black Death. In successive chapters, through skilled and convincing use of tax records and other sources Masschaele shows that the medieval economy was thoroughly permeated by markets and market activities.

Thus the occupants of medieval towns engaged in a wide variety of specialized commodity production, of which the main were victualling, leather making, textiles, clothing, vending, metal working, and building. Those in towns were all engaged in the market. Some peasants were able to produce a substantial surplus of grain and animal products which must normally have been sold on the market. Many peasants were thus also in the market. Much, and perhaps even most, of the great cash crop of medieval England, wool, was produced on peasant holdings and not on the lay and clerical estates.

Those with the right to hold markets defended that right vigorously and tried to limit competition. But the English courts generally interpreted this right as excluding only other markets held on the same day within 6.7 miles. Thus in the East Midland counties of Northampton and Bedford we see even before 1250 many markets within 6.7 miles of their neighbors. Indeed it seems from the map given in the book that the average location in these counties would about 5 miles from a market by 1250. By 1690 I know from other sources that the average distance to market in these counties had shrunk to 3.3 miles. But this seems a very modest gain in the prevalence of markets over these years. If the monopoly right to hold a market exercised much restriction on the medieval economy, then markets should have generated significant incomes for their owners through market tolls. In fact toll rates were generally seldom more than 1% of the value of goods traded, and there were many who were by one custom or another exempted from toll. Thus goods bought for household consumption typically did not pay toll. Similarly small goods such as apples, or butter in earthen pots, produced by peasant households were also apparently often exempt.

Towns similarly seem to display an expected urban hierarchy, with a few major trade and manufacturing centers and a large array of smaller places with very little evidence of commercial or manufacturing activity. Using records of disputes over toll payments and toll exemptions Masschaele shows that there were significant trade relations between towns that could be quite distant from each other. Thus, for example, in 1315 the town of Sandwich seized the almonds, figs and raisins of a merchant refusing to pay toll, where the merchant was from London, 63 miles away.

Using again records of toll disputes Masschaele is also able to get some information about the marketing activities of rural producers. By the early thirteenth century English kings, as pious acts, had granted exemption from toll in all markets to most major ecclesiastical corporations. This exemption was held to apply to their manorial tenants also. The exemption was meant to apply to rural produce sold by the tenants to meet their rent payments to the houses. Tenants on the royal demesne had by custom a similar privilege. Tenants of both types, however, seem to have availed themselves of the exemption to further general trade activities. Thus even in the fourteenth century many court cases appear where rural tenants of religious orders or of the king are alleged to be buying goods with intent to resell, or selling goods they had bought.

In one of the later chapter Masschaele documents carrying costs by land and water per ton-mile in Cambridgeshire and Huntingdonshire between 1305 and 1346. These costs suggest, for example, that if wheat was transported by water is would cost about 1.4% of its final value per additional ten miles carried. These costs seem relatively modest.

The concluding chapter begins with the statement, “By the end of the thirteenth century, England had developed a sophisticated commercial economy that embraced all levels of society” (p. 227). There is no doubt that this statement is well supported by the evidence of the book. But if medieval England was just a low-tech version of Kansas, why would anyone be interested in its economy? The early economy had, I believe, some very interesting features. But focused as this tradition is on the existence and extent of the market, I fear that further excellent scholarship such as this can only provide more compelling evidence of the utter dullness of the medieval economy. For this erudition to be more interestingly employed, at least as far as economic historians are concerned, it needs to be directed at a richer set of issues than just the existence of the market.

Gregory Clark Department of Economics University of California- Davis

Among Gregory Clark’s recent publications are “The Political Foundations of Modern Economic Growth: England, 1540-1800,” Journal of Interdisciplinary History, 26 (Spring, 1996), “Commons Sense: Common Property Rights, Efficiency, and Institutional Change,” Journal of Economic History, 58 (March, 1998) and “Land Hunger: Land as a Commodity and as a Status Good in England, 1500-1914,” Explorations in Economic History, 35 (1), (Jan., 1998).

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Subject(s):Markets and Institutions
Geographic Area(s):Europe
Time Period(s):Medieval

Stefano Fenoaltea

Deirdre McCloskey, Richard Sylla and Gianni Toniolo contributed information and personal recollections to this In Memoriam. Christopher Hanes wrote it and bears responsibility for errors. McCloskey’s own obituary of Fenoaltea has been published in the PSL Quarterly Review (2020). Journal articles and books by Stefano Fenoaltea are listed at the end and referred to in the text by number in the list. References to publications by other people are given in the ordinary way.

            Stefano Fenoaltea died unexpectedly in Rome on September 14, 2020 of a previously undiagnosed cardiac condition, at the age of 77. He stood out for his brilliance and cheerful pugnacity in a generation of economic historians who did great work and were not averse to scholarly dispute.

            Fenoaltea was born in Italy and educated in European schools. He was graduated at Georgetown University (first in his class) in 1963 and received a PhD in Economics from Harvard in 1968. In the first two decades of his career he wrote several papers on the related topics of medieval manors and servile labor. In 1975 he published “The Rise and Fall of a Theoretical Model: The Manorial System” (4), a response to a paper by North and Thomas (1971) titled “The Rise and Fall of the Manorial System: A Theoretical Model.” North and Thomas had argued that serfs provided their labor to lords in an implicit contractual exchange for “the public good of protection and justice” (North and Thomas 1971, p. 778). Fenoaltea examined their argument and concluded that it was “empirically untenable…Their account of later developments is equally unsatisfactory, since it draws on a dubious interpretation of demographic and political history, and appeals to institutional constraints to an extent that is both empirically unjustified and analytically alarming” (pp 408-409). A few months later Fenoaltea published “Authority, Efficiency, and Agricultural Organization in Medieval England and Beyond: A Hypothesis” (5), which presented his own argument about the manorial system: “the advantages of demesne agriculture were attached specifically to the exercise of authority over the labor force” to “increase output by imposing the use of a superior technique” and reenforce “social roles and hierarchy” (p. 695). In 1976 came “Risk, Transaction Costs, and the Organization of Medieval Agriculture” (7). Here Fenoaltea attacked the argument of McCloskey (1975) that medieval peasants farmed scattered small plots in open fields in order to diversify plot-specific risk. McCloskey published a reply (1977); Fenoaltea replied to the reply (10). Both scholars appeared to enjoy themselves, and McCloskey “was driven to write” (in McCloskey’s words) an article that provided further evidence for his original proposition (McCloskey 1984). In “The Slavery Debate: A Note from the Sidelines,” published in 1981, Fenoaltea ran through the no-man’s land in the battle between Fogel and Engerman (1974) and their critics (David et. al., 1976), taking well-aimed shots at both sides. 

            In 1984 Fenoaltea published “Slavery and Supervision in Comparative Perspective: A Model” (15), perhaps his best-known work among English-speaking economic historians, which won the Cole Prize for the best article in the Journal of Economic History that year, and also the Economic History Association’s Fritz Redlich Prize for the best article in economic history worldwide in the past two years. In it, Fenoaltea hypothesizes that the “pain incentives” applied to slaves by the master’s threats of physical punishment could elicit great effort but not carefulness, giving slave labor a competitive advantage in “extremely land- and effort-intensive activities (for example, moving stones from here to there)” (p. 639). He shows how his hypothesis and related ideas can account for many otherwise-puzzling features of slavery from ancient times through the nineteenth century.

            Even better, in my opinion, is “Europe in the African Mirror: The Slave Trade and the Rise of Feudalism” (24) written in 1988 but not published until 1999.[1] Fenoaltea begins by developing a model to explain a puzzle about the transatlantic trade in African slaves. The puzzle is that the trade transported, at great cost, labor to a region with a high land-labor ratio and concomitantly high physical product of labor (the Americas) from another region with a high, perhaps higher land-labor ratio and physical product of labor (Africa). “The challenge is thus to develop a model capable of producing an efficient trade even though the population density is lower and the physical marginal product of labor higher at the source” (p. 124). The explanation proposed by Fenoaltea is that African elites had a demand for European-produced goods, while extremely high transportation costs within Africa prevented African elites from buying European goods with raw materials produced by slaves exploited at home in Africa. Thus, “Even if the backward area is relatively underpopulated,…it may export people to pay for the advanced products its elite wishes to consume but cannot obtain from domestic sources.” Meanwhile, “the profitability of slave exports means that the source area will tend to lapse into endemic petty warfare and lose the benefits of comparatively peaceful exploitation through taxes or tribute” (p. 124). After developing the model for Africa, Fenoaltea applies it to slave trades in Europe from classical times through the medieval era, and speculates that in “the early Middle Ages, when Christian Europe was itself backward relative to the Byzantine and Islamic worlds…. Europeans may thus have tended to export human beings to pay for advanced manufactures: the anarchy that plagued the West may have been due in primis to raids undertaken for the sake of obtaining captives” (p. 125).

            Fenoaltea’s papers in these areas are exemplars of a style once common, now rare in economic history, in which the author takes generally-accepted historical facts, presenting little if any further empirical evidence, and presents a model to explain the facts in words – no math – as the result of transactions costs and other fundamental economic forces along the lines of University of Chicago “Price Theory.” A paper in this style lives or dies on the author’s rhetorical skill and the originality and strength of his argument. If the paper succeeds, it is fun for the reader as well as the author.

            But these papers made up the smaller portion of Fenoaltea’s scholarship. Most of his career was devoted to a different kind of work. Starting with his PhD dissertation (1), Fenoaltea studied Italy’s economic development in the era between the formation of the Italian state in the 1860s and the First World War. For this he needed historical statistics on Italian output. At the time Fenoaltea started out reliable statistics of this type had already been constructed for the United States (Frickey [1947], Gallman [1960, 1966]). But the ones available for Italy were not as good, due partly to a dearth of the historical source material for Italy that was available for the U.S.[2] In order to study Italy’s economy, therefore, Fenoaltea constructed his own series on Italian output: first, indexes of industrial production; eventually, measures of GDP components. Fenoaltea continued this work through the rest of his life in cooperation with excellent scholars in the Bank of Italy as well as Italian academic institutions. He was still constructing new series and improving old ones when he died.

            The reader may wonder how well this work suited the author of “Slavery and Supervision in Comparative Perspective.” For most economic historians the construction of statistical series is not fun – perhaps not as bad as moving stones from here to there, but requiring an unpleasant combination of effort and care. Why did Fenoaltea keep at it?

            Certainly, it gave him opportunities for satisfying, not to say epic scraps, with some of the other scholars working on Italian statistics. It provided foundations for papers challenging existing views of Italian development which Fenoaltea published in prominent English- and Italian-language economic history journals (see list below) and several books (71, 72, 73, 74, 75). In “International Resource Flows and Construction Movements in the Atlantic Economy: The Kuznets Cycle in Italy, 1861-1913” (20, 1988), Fenoaltea used series he had constructed on construction in Italy to test an important hypothesis about the nineteenth-century development of America, Argentina and other new countries. It had been observed that construction, immigration and international capital inflows  in new countries were correlated with each other, and negatively correlated with construction in Britain, in “long swings” or “Kuznets cycles.” It had been hypothesized that the ultimate causal factor in these patterns was the migration flows: capital followed labor across the Atlantic. Italy was a natural experiment to test this. It was a capital-importer like the new countries but a country of emigration. It lost more population at times when new-country immigration was high. Fenoaltea showed that in Italy emigration was positively correlated with construction; construction was “tied to changes in the supply of foreign capital, and thus to British foreign investment – themselves attributable, it would appear, less to variations in domestic British investment opportunities than to changes in investors’ perception of the relative safety of investment in Britain and abroad” (20, p.607). “The Italian experience is thus not merely an exception to, and therefore destructive of, the unified interpretation of the Atlantic economy which attributes construction to migration and capital flows to construction. It suggests an alternative and equally unified interpretation, in which capital flows caused construction, and construction..caused migration” (p. 634). This paper has frequently been cited by economic historians interested in American development and international flows of labor and capital.[3]

            It is clear, however, that for Fenoaltea the construction of statistical series was not a dull task. It was an intellectual exercise that drew on all his knowledge of economic theory and of history – economic, political and technological. According to Gianni Toniolo, Fenoaltea believed:

quantitative reconstruction of the past is practically an unbounded task, even when limited in time and space. To him, the task was particularly challenging given the relative paucity of the original statistics. As a result of his work, Italy’s historical statistics for the years 1861-1913 are undoubtedly the most refined and complete of those for any country I know something about. The level of disaggregation by sector and area is extremely fine, the information about production technologies impressive.

Fenoaltea’s last book begins with a disquisition on the construction of historical economic statistics which “should be compulsory reading for all graduate students in economic history (even more so in economics!)” (Toniolo).[4] In it Fenoaltea lays out his method:

Invent the series you seek to construct, your initial best guess; but don’t stop there, the starting point matters little only if you move beyond it. Draw out the implications of your series as an applied economist would, recognizing technical relationships, the impact of trade, the substitution effects that can be inferred from the typically abundant evidence on relative prices, the income effects, where appropriate, that influence consumption; and set those implications next to the corpus of surviving “data,”  as best you can master it, as an historian would. You will soon enough find that your initial estimates violate “data” constraints, constraints that may be distant but are effective constraints all the same. Revise, rinse, and repeat; at the end of the process you will have a production series, for the “undocumented” industry at hand, that is reasonably tightly constrained by (the application of economic logic to) the historical evidence.

            So much for Fenoaltea’s work. What was the man like?

            Stefano was admirably slender and always appropriately dressed, una bella figura, often in a somewhat country-gentleman mode. It is impossible to imagine him fat and sloppy.[5] He was mischievous. He could not resist needling officious, smug or easy-to-offend people. He did not like to follow rules. He did not respect authority. In fact, he could barely tolerate it. He was entertaining in conversation, an excellent companion for dinner or a walk. He relished wit: like most academics he liked to hear himself talk; unlike many academics he liked to hear other people talk too. He was given to epigrams and prepared jokes, which could be forgiven because they were almost always good, and to amateur sociology (what economic historian isn’t?). A favorite topic was national characteristics, especially differences between Italians on the one hand and Americans, Canadians or Britons on the other.[6] A hint of his conversational style can be found in his articles and books:

Italy’s provinces are the rough equivalent of France’s departements; but where the latter are named after natural features, more barbarico, the former bear the proud names of their principal cities (59, p. 58).

The heirs of the Ancona group continue however to this day to analyse the cyclical fluctuations of the original Vitali series, either out of filial piety  or – in the absence of comprehensive alternative estimates – a Nelsonian talent for exploiting a blind eye; see most recently Delli Gatti et al. (2005) (36, fn. 6).

 In estimating times series, as in love and war, the most important thing is luck (29, p. 726).

Another [problem] is that the sources are opaque…that their hidden defects surface, rather like those of our former spouses, only with extended cohabitation” (75, p. 13)

            Amateur sociologists will want to trace Stefano’s character to his family background and upbringing. He was the son of Sergio Fenoaltea, an opponent of Italian fascism who spent time in Mussolini’s prisons and, after Mussolini’s fall, was a member of an important committee (Italy’s National Liberation Committee) that coordinated resistance to the Germans and cooperation with the allies. After the war Sergio Fenoaltea entered the Italian diplomatic service and eventually served in its top job, ambassador to the United States, from 1961 to 1967, during which Stefano was in college at Georgetown and graduate school at Harvard.[7] Stefano always spoke of his father with great respect and affection.[8] Sergio Fenoaltea remained resolutely pro-American even in the late 1960s when the Vietnam War was raging.[9] Stefano was just as pro-American. You could get him to criticize our clothing, manners and food but not our morals or institutions.

            While his father moved through the diplomatic service, Stefano was educated in French-language schools on the French national curriculum, which is strictly standardized, allowing easy transfers from school to school, and is highly regarded outside English-speaking countries. McCloskey says that Stefano “told me once that his high culture – novels, poetry, and so forth – was French.” Certainly, Stefano shared the French attitude that culture and education were virtues to be displayed rather than (as they are to Americans) sources of embarrassment. He was as fluent in Latin, French and of course Italian as he was in English, which may account for the frequency in his English-language publications of phrases in the other languages. However baffling, even annoying to the monoglot American reader, to Stefano these were simply le mot juste.

            Stefano’s lack of respect for authority was perhaps a form of instinctive anti-fascism, hence an act of filial piety, but his friends agree that whatever its source it was a hindrance to his career. At Harvard, his PhD advisor was not the famous Alexander Gerschenkron though Stefano’s dissertation was directly related to Gerschenkron’s research. According to Fenoaltea’s fellow graduate student Richard Sylla this was because “Stefano had a falling out with Gerschenkron. I never quite understood it, but apparently it had something to do with Stefano challenging some of Gerschenkron’s interpretations of Italian industrialization in the late 19th century, which led Gerschenkron to suggest/demand that he find another dissertation advisor.” According to Deirdre McCloskey, another Harvard student at the time, Gerschenkron “refused to work with him when Stefano questioned The Master’s views on the rate and sources of Italian industrialization. Doubtless Stefano was less than diplomatic about the disagreement.” This incident is a worse reflection on Gerschenkron than on Stefano, of course. Stefano appeared to hold no grudge.[10] When Stefano had himself become a senior scholar he was (in my experience) interested and helpful, rather than defensive, when challenged by a youngster.[11]

            However, it is an unfortunate fact that in academic life it is sometimes necessary to suck up. Stefano could not do that any more than he could turn his head around 360 degrees. Getting tenure was a problem. Stefano’s scholarship won him try-outs in many excellent American economics departments (including among others Penn and Duke) and a stint at the Institute for Advanced Study in Princeton. But as of the mid-1990s “Stefano was the greatest economic historian of our cohort who had never gotten tenure” (Sylla).

            Then things took a happy turn. “In 1996, Stefano moved permanently to Italy, to chairs first at the University of Cassino, then at Brescia and finally, in 2003, at the University of Roma Tor Vergata…. He retired in 2013 and took up a visiting professorship at the prestigious Collegio Carlo Alberto (University of Torino)” (Toniolo). About the time Stefano moved to Italy he inherited a house his father had built on a hill outside Marino above the Alban Lake. He lived there for many years with his wife Maria Angela Pieche and their three children. His last book was dedicated to his recently-born grand-daughter.

Journal articles published by Stefano Fenoaltea

1. “Public Policy and Italian Industrial Development, 1861-1913,” Journal of Economic History XXIX, no. 1 (March 1969), pp. 176-179.

2. “Railroads and Italian Industrial Growth, 1861-1913,” Explorations in Economic History IX, no. 4 (Summer 1972), pp. 325-352.

3. “The Discipline and They: Notes on Counterfactual Methodology and the ‘New Economic History’,” Journal of European Economic History II, no. 3 (Winter 1973), pp. 724-746.

4. “The Rise and Fall of a Theoretical Model: The Manorial System,” Journal of Economic History XXXV, no. 2 (June 1975), pp. 386-409.

5. “Authority, Efficiency, and Agricultural Organization in Medieval England and Beyond: A Hypothesis,” Journal of Economic History XXXV, no. 4 (December 1975), pp. 693-718.

6. “Real Value Added and the Measurement of Industrial Production,” Annals of Economic and Social Measurement V, no. 1 (Winter 1976), pp. 111-137.

7. “Risk, Transaction Costs, and the Organization of Medieval Agriculture,” Explorations in Economic History XIII, no. 2 (April 1976), pp. 129-151

8. “On a Marxian Model of Enclosures,” Journal of Development Economics III, no. 2 (June 1976), pp. 195-198.

9. “Real Value Added Once Again,” Annals of Economic and Social Measurement VI, no. 1 (Winter 1977), pp. 133-134.

10. “Fenoaltea on Open Fields: A Reply,” Explorations in Economic History XIV, no. 4 (October 1977), pp. 405-410.

11. “The Slavery Debate: A Note from the Sidelines,” Explorations in Economic History XVIII, no. 3 (July 1981), pp. 304-308.

12. “The Growth of the Utilities Industries in Italy, 1861-1913,” Journal of Economic History XLII, no. 3 (September 1982), pp. 601-627.

13. “The Organization of Serfdom in Eastern Europe: A Comment,” Journal of Economic History XLIII, no. 3 (September 1983), pp. 705-708.

14. “Railway Construction in Italy, 1861-1913,” Rivista di storia economica I, International issue (1984), pp. 27-58, and “Le costruzioni ferroviarie in Italia, 1861-1913,” Rivista di storia economica I, no. 1 (giugno 1984), pp. 61-94.

15. “Slavery and Supervision in Comparative Perspective: A Model,” Journal of Economic History XLIV, no. 3 (September 1984), pp. 635-668.

16. “Public Works Construction in Italy, 1861-1913,” Rivista di storia economica III, International issue (1986), pp. 1-33, and “Le opere pubbliche in Italia, 1861-1913,” Rivista di storia economica II, no. 3 (ottobre 1985), pp. 335-369.

17. “Construction in Italy, 1861-1913,” Rivista di storia economica IV, International issue (1987), pp. 21-53, and “Le costruzioni in Italia, 1861-1913,” Rivista di storia economica IV, no. 1 (febbraio 1987), pp. 1-34.

18. “The Extractive Industries in Italy, 1861-1913: General Methods and Specific Estimates,” Journal of European Economic History XVII, no. 1 (Spring 1988), pp. 117-125.

19. “Transaction Costs, Whig History, and the Common Fields,” Politics & Society XVI, no. 2-3 (June-September 1988), pp. 171-240.

20. “International Resource Flows and Construction Movements in the Atlantic Economy: The Kuznets Cycle in Italy, 1861-1913,” Journal of Economic History XLVIII, no. 3 (September 1988), pp. 605-638.

21. “The Growth of Italy’s Silk Industry, 1861-1913: A Statistical Reconstruction,” Rivista di storia economica V, no. 3 (ottobre 1988), pp. 275-318.

22. “Servi e schiavi,” Rivista di storia economica IX, no. 1-2 (giugno 1992), pp. 45-48.

23. “Politica doganale, sviluppo industriale, emigrazione: verso una riconsiderazione del dazio sul grano,” Rivista di storia economica X, no. 1 (febbraio 1993), pp. 65-77.

24. “Europe in the African Mirror: The Slave Trade and the Rise of Feudalism,” Rivista di storia economica XV, no. 2 (agosto 1999), pp. 123-165.

25. “The Growth of Italy’s Wool Industry, 1861-1913: A Statistical Reconstruction,” Rivista di storia economica XVI, no. 2 (agosto 2000), pp. 119-145.

26. “The Growth of Italy’s Cotton Industry, 1861-1913: A Statistical Reconstruction,” Rivista di storia economica XVII, no. 2 (agosto 2001), pp. 139-171.

27. “Textile Production in Italy, 1861-1913,” Rivista di storia economica XVIII, no. 1 (aprile 2002), pp. 3-40.

28. “Production and Consumption in Post-Unification Italy: New Evidence, New Conjectures,” Rivista di storia economica XVIII, no. 3 (dicembre 2002), pp. 251-298.

29. “Notes on the Rate of Industrial Growth in Italy, 1861-1913,” Journal of Economic History LXIII, no. 3 (September 2003), pp. 695-735.

30. “Peeking Backward: Regional Aspects of Industrial Growth in Post-Unification Italy,” Journal of Economic History LXIII, no. 4 (December 2003), pp. 1059-1102.

31. “La formazione dell’Italia industriale: consensi, dissensi, ipotesi,” Rivista di storia economica XIX, no. 3 (dicembre 2003), pp. 341-356.

32. “Contro tre pregiudizi,” Rivista di storia economica XX, no. 1 (aprile 2004), pp. 87-106.

33. “Textile Production in Italy’s Regions, 1861-1913,” Rivista di storia economica XX, no. 2 (agosto 2004), pp. 145-174.

34. “Einaudi commentatore e protagonista della politica economica: aspetti dell’età giolittiana,” Rivista di storia economica XX, no. 3 (dicembre 2004), pp. 301-308.

35. “La crescita economica dell’Italia postunitaria: le nuove serie storiche,” Rivista di storia economica XXI, no. 2 (agosto 2005), pp. 91-121.

36. “The Growth of the Italian Economy, 1861-1913: Preliminary Second-Generation Estimates,” European Review of Economic History IX, no. 3 (December 2005), pp. 273-312.

37. “Economic Decline in Historical Perspective: Some Theoretical Considerations,” Rivista di storia economica XXII, no. 1 (aprile 2006), pp. 3-39.

38. “Mining Production in Italy, 1861-1913: National and Regional Time Series” (with Carlo Ciccarelli), Rivista di storia economica XXII, no. 2 (agosto 2006), pp. 141-208.

39. “The Chemical, Coal and Petroleum Products, and Rubber Industries in Italy, 1861-1913: A Statistical Reconstruction,” Rivista di storia economica XXIII, no. 1 (aprile 2007), pp. 33-80.

40. “Business Fluctuations in Italy, 1861-1913: The New Evidence” (with Carlo Ciccarelli), Explorations in Economic History XLIV, no. 3 (July 2007), pp. 432-451.

41. “I due fallimenti della storia economica: il periodo post-unitario,” Rivista di politica economica XCVII, no. 3-4 (marzo-aprile 2007), pp. 341-358.

42. “The Chemical, Coal and Petroleum Products, and Rubber Industries in Italy’s Regions, 1861-1913: Time Series Estimates” (with Carlo Ciccarelli), Rivista di storia economica XXIV, no. 1 (aprile 2008), pp. 3-59.

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43. “A proposito del PIL, “ Italianieuropei, 2008, no. 1, pp. 165-169.

44. “The Growth of the Utilities Industries in Italy’s Regions, 1861-1913” (with Carlo Ciccarelli), Rivista di storia economica XXIV, no. 2 (agosto 2008), pp. 175-205.

45. “Social-Overhead Construction in Italy’s Regions, 1861-1913” (with Carlo Ciccarelli), Research in Economic History XXVI (2008), pp. 1-80.

46. “Construction in Italy’s Regions, 1861-1913” (with Carlo Ciccarelli), Rivista di storia economica XXIV, no. 3 (dicembre 2008), pp. 303-340.

47. “Shipbuilding in Italy, 1861-1913: The Burden of the Evidence” (with Carlo Ciccarelli), Historical Social Research XXXIV (2009), no. 2, pp. 333-373.

48. “Luigi Einaudi storico economico dell’età liberale,” Rivista di storia economica XXV, no. 3 (dicembre 2009), pp. 321-330

49. “Metalmaking in Italy, 1861-1913: National and Regional Time Series” (with Carlo Ciccarelli), Rivista di storia economica XXVI (2010), no. 1, pp. 121-153.

50. “The Reconstruction of Historical National Accounts: The Case of Italy,” PSL Quarterly Review LXIII (2010), no. 252, pp. 77-96.

51. “The Effects of Unification: Markets, Policy, and Cyclical Convergence in Italy, 1861-1913” (with Carlo Ciccarelli and Tommaso Proietti), Cliometrica IV (2010), no. 3, pp. 269-292.

52. “On the Structure of the Italian Economy, 1861-1913,” Rivista di storia economica XXVII (2011), no. 1, pp. 61-72.

53. “L’industria e l’economia nelle province dell’Italia liberale: tra storia e geografia” (with Carlo Ciccarelli), Semestrale di Studi e Ricerche di Geografia XXIII (2011), no. 2, pp. 31-46.

54 “Lo sviluppo economico italiano dal Risorgimento alla Grande Guerra,” Annali della Fondazione Giuseppe di Vittorio, 2011, pp. 213-227.

55. “The Rail-guided Vehicles Industry in Italy, 1861-1913: The Burden of the Evidence” (with Carlo Ciccarelli), Research in Economic History XXVIII (2012), pp. 43-115.

56. “The Growth of the Italian Economy, 1861-1913: The Expenditure Side Re- (and De-) constructed,” Rivista di storia economica XXVIII (2012), no. 2, pp. 285-318.

57 “La cliometria e l’unificazione italiana: bollettino dal fronte” (with Carlo Ciccarelli), Meridiana. Rivista di storia e scienze sociali, no. 73-74 (2012), pp. 258-266.

58 “La cantieristica in Italia, 1861-1913: una ricostruzione quantitativa” (with Carlo Ciccarelli), Bollettino dell’Associazione Italiana Documentazione Marittima e Navale, no. 26 (2012), pp. 129-154.

59. “Through the Magnifying Glass: Provincial Aspects of Industrial Growth in Post- Unification Italy” (with Carlo Ciccarelli), Economic History Review LXVI (2013), no. 1, pp. 57-85.

60. “The Non-metallic Mineral Products Industries in Italy, 1861-1913: National and Regional Time Series” (with Carlo Ciccarelli), Rivista di storia economica XXIX (2013), no. 3, pp. 267-317.

61. “The Measurement of Production Movements: Lessons from the General Engineering Industry in Italy, 1861-1913,” Explorations in Economic History 57 (2015), pp. 19-37.

62. “Industrial Employment in Italy, 1911: The Burden of the Census Data,” Rivista di storia economica XXXI (2015), no. 2, pp. 225-246.

63. “The Measurement of Production: Lessons from the Engineering Industry in Italy, 1911,” Research in Economic History XXXII (2016), pp. 73-145.

64. “Fenoaltea on Industrial Employment in 1911: A Rejoinder,” Rivista di storia economica XXXI I (2016), no. 1, pp. 113-117.

65. “Understanding the Ancient Near Eastern Economy: A Note from the Sidelines,” Rivista di storia economica XXXII (2016), no. 3, pp. 403-415.

66. “The Engineering Industry in Italy’s Regions, 1861-1913: A Statistical Reconstruction”, Rivista di storia economica XXXIII (2017), no. 2, pp. 159-246.

67. “The Growth of Italy’s Apparel Industry, 1861-1913: A Statistical Reconstruction,” Rivista di storia economica XXXIII (2017), no. 3, pp. 315-350.

68. “The Backlash to Globalization: Some Further Thoughts,” Annals of the Fondazione Luigi Einaudi LII (2018), no. 1, pp. 15-20.

69. “Italy in the Market for Seagoing Vessels, 1861-1913: Domestic production, Imports, and Exports,” Rivista di storia economica (in press).

70. “Spleen: The Failures of the Cliometric School,” Annals of the Fondazione Luigi Einaudi (forthcoming).

Books published by Stefano Fenoaltea

71. L’economia italiana dall’Unità alla Grande Guerra, pp. viii, 339 (Rome-Bari: Laterza, 2006; ISBN: 88-420-7925-1).

72. La produzione industriale delle regioni d’Italia, 1861-1913: una ricostruzione quantitativa. 1. Le industrie non manifatturiere (with Carlo Ciccarelli), pp. xlviii, 499 (Rome: Banca d’Italia, 2009).

73. The Reinterpretation of Italian Economic History: from Unification to the Great War, pp. xxi, 296 (New York: Cambridge University Press, 2011; ISBN: 978-0-521-19238-5).

74. La produzione industriale delle regioni d’Italia, 1861-1913: una ricostruzione quantitativa. 2. Le industrie estrattivo-manifatturiere (with Carlo Ciccarelli), pp. vi, 677 (Rome: Banca d’Italia, 2014).

75. Reconstructing the Past: Revised Estimates of Italy’s Product, 1861-1913. (Turin: Fondazione Luigi Einaudi, 2020.

Other references

David, Paul A. , Herbert G. Gutman, Richard Sutch, Peter Temin and Gavin Wright. Reckoning with Slavery. New York: Oxford University Press, 1976.

Fogel, Robert William and Engerman, Stanley L. Time on the Cross: the Economics of American Negro Slavery. Boston: Little, Brown 1974.

Frickey, Edwin. Production in the United States, 1860-1914. Cambridge, MA: Harvard University Press, 1947.

Gallman, Robert E. “Commodity Output, 1839-1899.” In William N. Parker, ed. Trends in the American Economy in the Nineteenth century. Studies in Income and Wealth, Volume 24. Princeton: Princeton Univesity Press for NBER, 1960.

— “Gross National Product in the United States, 1834-1909.” In Conference on Research in Income and Wealth, Output, Employment and Productivity in the United States after 1800. New York: Columbia University Press for NBER, 1966.

Gerschenkron, Alexander. ‘Notes on the Rate of Industrial Growth in Italy, 1881-1913.” Journal of Economic History, December 1955, 15 (4): 360-375.

McCloskey, D.N. “The Persistence of English Common Fields.” In William N. Parker and E.L. Jones, Eds., European Peasants and Their Markets. Princeton: Princeton University Press, 1975.

— “Fenoaltea on Open Fields: A Comment.” Explorations in Economic History, 1977, 14 (4): 402-404.

— and John Nash.”Corn at Interest: The Extent and Cost of Grain Storage in Medieval England.”

American Economic Review, March 1984, 74(1): 174-187

— “Stefano Fenoaltea (1943-2020).” PSL Quarterly Review, December 2020, 73(5).

Morgenstern, Oskar. On the Accuracy of Economic Observations. Princeton: Princeton University Press, 1963.

North, Douglass and Robert Thomas. “The Rise and Fall of the Manorial System: A Theoretical Model.” Journal of Economic History, December 1971, 31 (4): 777-803.


[1] In a footnote to the 1999 publication Fenoaltea explains that the article is the same as the 1988 paper and “unforeseen commitments have delayed both the publication of the volume developing the analysis of the African slave trade and, perhaps sine die, the intended further research on early medieval Europe” (p. 123). According to Gianni Toniolo, editor of the journal in which the paper was eventually published (Rivista di Storia Economica), Stefano had signed a contract for the book with Cambridge University Press but “had hardly even begun to write” it.

[2] Fenoaltea describes the development of Italian historical production and GDP statistics in 73 (chapter 1) and  75 (chapter 3). Late-nineteenth century America was full of institutions that gathered economic information, such as active state and local governments, trade associations and business-oriented newspapers, not to mention the U.S. Bureau of the Census. Britain resembled the U.S. to some degree in this respect. Italy, along with most other continental countries, did not.  

[3]It was required reading in graduate economic history classes taught by Peter Lindert and Jeffrey Williamson, at least.

[4]I agree with Toniolo. In my fantasies, it and Morgenstern (1963) are readings in a half-semester graduate economics core course called “Data.” 

[5]Think of a cheetah.  Try to imagine a fat, sloppy cheetah. You can’t. That is what I mean.

[6] A rough quote on the subject of litter in parks: “In America, public property is everyone’s property; in Italy, public property is no one’s property.”  Claiming to speak from personal experience, Stefano said that Italian high-school soccer players took showy shots whether or not they had a realistic chance of scoring, while British/American/ Canadian kids passed the ball to guys in good positions.

[7] Here is the place for an excellent story about Stefano told by Richard Sylla, who was in graduate school with Stefano. “I invited him to have dinner one weekend with my wife and me at our apartment….He said “I’m not sure about my plans for the weekend. I haven’t decided yet whether I should stay in Cambridge and socialize with my intellectual equals, or go to Washington and intellectualize with my social equals.”

[8] Soon after I first met Stefano he showed me, with pride, his library of classic economics books from the 1880s-1930s (think Edgeworth, Marshall, Pigou, Keynes). Stefano said it had been collected by his father “who had a degree in economics.” That was all he told me about his father at the time but I got the impression that from Stefano’s point of view  the connection between his father and economics conferred dignity on economics.  

[9] According to Sergio Fenoaltea’s New York Times obituary, he resigned as ambassador to America in 1967 at a time when he “seemed to disagree with his Government, particularly with what he felt was Foreign Minister Amintore Fanfani’s lukewar commitment to the North American  Treaty Organization.”

[10]Presumably, one of the reasons Gerschenkron refused to oversee Fenoaltea’s dissertation was that Fenoaltea was constructing an index of Italian industrial production for 1861-1913. Gerschenkron had already constructed such an index. Fenoaltea’s index pointed to different conclusions about Italian development. According to Toniolo, “Gerschenkron did not take it lightly and Stefano had to find himself new dissertation supervisors.” Gerschenkron’s index had been published it in 1955 in an article titled “Notes on the Rate of Industrial Growth in Italy,1881-1913′ (Gerschenkron 1955). In 2005 Stefano published an article with exactly the same title in the same journal (29). In it he wrote “The title of this piece is of course a recent copy of an Old Master…. Alexander Gerschenkron’s classic article,” and counted the years that “have passed since the present writer began unwarily to tread in his teacher’s footsteps…. As my contemporaries will recall, the footsteps I stepped in had not quite been vacated by Gerschenkron’s own feet.”

[11] When I was an assistant professor, about 1990, one of the first papers I wrote presented a hypothesis to explain the distribution of slave labor across occupations and economic sectors. It was different from, and could have been seen as opposed to, Stefano’s argument in “Slavery and Supervision in Comparative Perspective” (15).  Despite my appalling ignorance on the subject Stefano talked to me about it for many days, apparently with pleasure. Without him the paper would have been much worse.

Dark Matter Credit: The Development of Peer-to-Peer Lending and Banking in France

Author(s):Hoffman, Philip T.
Postel-Vinay, Gilles
Rosenthal, Jean-Laurent
Reviewer(s):Trivellato, Francesca

Published by EH.Net (November 2019)

Philip T. Hoffman, Gilles Postel-Vinay, and Jean-Laurent Rosenthal, Dark Matter Credit: The Development of Peer-to-Peer Lending and Banking in France. Princeton: Princeton University Press, 2019. vii + 320 pp. $40 (hardback), ISBN: 978-0-691-18217-9.

Reviewed for EH.Net by Francesca Trivellato, Institute for Advanced Study, Princeton.

 
We have come to expect superb work from the collaboration between Gilles Postel-Vinay (professor emeritus at the Paris School of Economics), Philip Hoffman, and Jean-Laurent Rosenthal (the latter two both faculty at the California Institute of Technology), and their latest book only confirms our expectations. A sequel to Priceless Markets: The Political Economy of Credit in Paris, 1660-1870 (2000), Dark Matter Credit pursues the same topic but expands the analysis across all of France and through the interwar period — and once again makes the subject relevant for all social scientists and economic historians.

The book’s aim is to rebuff the widespread belief that “banks are necessary for industrialization and economic growth,” and that because banks “were slow to spread” (p. 148) in France, the nation industrialized more slowly than Britain. By contrast, the authors claim that “banks diffused slowly in France because of what traditional lending intermediaries — notaries — could do” (p. 174). They demonstrate that “financial deepening does not require the intermediation by banks and centralization” (p. 49) and that “notaries cannot simply be dismissed as archaic financial intermediaries who were unable to survive when faced with competition from modern banks” (p. 193). They conclude that “economic historians’ neglect of all the lending that transited through notaries’ offices has led them to misread the financial history of France” (p. 192), and offer an alternative and persuasive history according to which until World War I, information (not interest rates) determined the course of French credit markets and was the notaries’ purview.

“Dark matter,” a phrase frequently uttered across the Caltech campus, is used here to describe the vast amount of loans that have thus far remained unobserved and unaccounted for. In the authors’ estimation, the stock of debt arranged by notaries totaled 16% of French GDP in 1740, 23% in 1780, a peak of 27% in 1840, and 24% in 1899 (p. 3). Overall, these numbers represent “a phenomenal achievement, particularly for a credit market that has long remained hidden” (p. 217).

I am hard pressed to think of a book that combines “the economist’s thirst for systematic data with the historian’s desire to tap a wide variety of quantitative and qualitative sources” (p. 231) to an equal degree. The core evidence comes from a massive database of loans registered by notaries in 99 French locations (cities and towns of different sizes) in six sampled years: 1740, 1780, 1807, 1840, 1865, and 1899. Chapter 1 and Appendix D explain the archival records from which this information is extracted. Additional documentation includes supplementary notarial deeds gathered for specific years and regions (Chapters 2, 5, and 8), court decisions published in legal periodicals (Chapter 5), data on wholesale merchants and bankers collected from nineteenth-century commercial directories (Chapter 6), and more.

Neither before nor after the French Revolution were private lenders or borrowers required to turn to notaries to draw their contracts, but in return for a small fee, notaries delivered them invaluable services: they offered illiterate or semi-literate private parties a technology they lacked, produced “legally binding written records of agreements,” “certified the legality of the contracts individuals entered into” (p. 53), and facilitated those contracts’ execution. Moreover, “notaries provided one other important service as well: they were matchmakers” (p. 54). They knew more than anyone else about the value of collateral, a lender’s liens on his pledge, and a borrower’s solvency. A striking finding of this book is that notaries remained “the informational lynchpin of the peer-to-peer lending system” (p. 107) even after the 1840s, when the government completed the survey of French real estate (Cadastre) and introduced a new, albeit voluntary, lien registry service (Hypothèques). One of the reasons for the notaries’ continued influence is that they adopted a system of referrals that enhanced their ability to match clients (Chapter 4).

Notaries registered two main types of medium- and long-term loans: mortgage-like annuities extended primarily on real estate property and obligations that did not specify collateral. In the course of the eighteenth century, obligations grew in size and duration and began to include a pledge. Chapter 2 describes the process by which this transition occurred as well as its spatial and stratified dimension across the kingdom.

Chapters 3 and 5 examine the long-term institutional novelties introduced by the Revolution and by Napoleon, and challenge the view according to which the civil law’s presumed rigidity impeded innovation. In the 1820s, a new credit instrument (the notarized letter of exchange) emerged in the southern regions of the country to meet the credit demand of peasants who were often illiterate. Neither the Commercial nor the Civil Code mentioned this instrument, but judges deemed it legitimate.

Chapter 6 illustrates the emergence of banks in the course of the nineteenth century, their institutional make-up, functions, and geographical distribution, and compares these features to the contemporary British banking system. Chapter 7 elucidates why, with the exception of the Crédit Foncier, the government-backed mortgage bank, until the 1920s banks specialized in short-term commercial loans and therefore complemented rather than replaced notaries. Chapter 8, the last in the book, reconstructs the “silent revolution” (p. 195) through which interest rates became the clearing mechanism of French credit markets. Not included in loan agreements during the Old Regime because of anti-usury laws and remarkably stable at 5% through much of the nineteenth century, interest rates after 1899 became as variable as we now know them to be.

Dark Matter Credit is highly recommended for anyone interested in economic history, regardless of their disciplinary backgrounds and areas of specialization. Its methodological contributions are manifold and transcend the topic under investigation. The authors take the core lesson of the New Institutional Economics to heart, but reveal the pitfalls of its practitioners’ tendency to assume that the institutions which matter to economic growth are state-run or central banks. In the process, they also reveal that secure property rights without transparent information markets have little impact, and that more attention should be paid to information systems. Finally, they disprove the oft-touted superiority of common law over Roman law for the development of financial markets. Curiously, the map on p. 26 not only shows the capillary presence of the royal administration in the provinces of the kingdom in 1740, but also suggests that by then, notaries were not, as generally assumed, more prevalent in the southern regions (where Roman law had deeper roots) than in the north (the area of customary law).

Economic historians trained in economics and political scientists with a historical bent will find in this book a signal that their job markets today rarely send: investment in demanding archival research generates genuine discoveries. Traditional historians may be intimidated by some of the statistical tests, or feel that they lack the time and resources to undertake a project of this scale. But I hope they will appreciate not only the book’s empirical results, but also the authors’ decision to walk readers through testable hypotheses, including those that are eventually discarded. Graduate students, at the very least, will benefit greatly from familiarizing themselves with a writing style that, in contrast to narrative history, elucidates the process by which authors formulate causal arguments.

Missing in the book is a sharper sociological characterization of lenders and borrowers. In the eighteenth century, mortgage-like credit coexisted alongside commercial credit, which was mobilized by international merchants on the basis of their reputation and without collateral. As noted in the conclusion, whether and how these two markets connected remains a mystery because the volume of bills of exchange (the quintessential instrument of commercial credit) is not measurable. One may nonetheless ask: Who owned real estate and for what purposes was it mortgaged? To what extent did credit circulate across socio-economic groups? How did the economic hierarchies between merchant-bankers, landowners, and manufacturers change across time and space? Who gained and who lost from using notaries and banks? These questions are peripheral to the overall inquiry in spite of the fact that they are central to the history of modern France and the rise of its bourgeoisie. Dark Matter Credit closes by stating that “inequality seemed to have no effect” on credit markets and their rate of growth (p. 233). To accept the authors’ suspicion that “high levels of wealth inequality are inimical to mortgage markets” is not to deny that the social profile and gender composition of lenders and borrowers can be important attributes of these credit markets.

 
Francesca Trivellato is Andrew W. Mellon Professor of Early Modern European History at the Institute for Advanced Study, Princeton. She recently published The Promise and Peril of Credit: What a Forgotten Legend about Jews and Finance Tells Us about the Making of European Commercial Society (Princeton: Princeton University Press, 2019).

Copyright (c) 2019 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (November 2019). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Europe
Time Period(s):18th Century
19th Century

The Medieval Clothier

Author(s):Lee, John S.
Reviewer(s):Brown, Alex

Published by EH.Net (April 2019)

John S. Lee, The Medieval Clothier. Woodbridge, UK: Boydell Press, 2018. xix + 365 pp. £25 (hardcover), ISBN: 978-1-78327-317-1.

Reviewed for EH.Net byAlex Brown, Department of History, Durham University.

 
John S. Lee’s The Medieval Clothier is an excellent first volume in Boydell’s new series Working in the Middle Ages, which aims “to provide authoritative, accessible guides to medieval trades, offering surveys of their origins and development, alongside the practicalities of the occupation,” under James Davis as series editor. As such, The Medieval Clothier is a hugely successful opening book to the series, providing a meticulous examination of the late medieval cloth industry in England. Lee demonstrates his mastery of the topic by taking the reader from the detailed world of cloth production and its many quirks through to the aggregate national picture, while similarly grounding in-depth case studies of prominent families in the larger trends that effected medieval clothiers as an occupational group. In doing so, we see not just the economic roles that clothiers played in medieval England but also their social, religious and political importance through a range of source material that includes national statistics and accounts, contemporary literature and visual material. This is reflected in the book’s beautiful presentation of ten color illustrations, twenty further black and white images and a range of accompanying figures, maps, tables and appendices.

The cloth industry itself was hugely important in late medieval England, with the number of cloths produced increasing from an estimated 163,900 in 1311-15 to some 308,100 by 1541-45, a growth which saw the pounds of cloth produced per capita increase from 1.3 to 7.0 across this period. But how were such increases achieved? Who were the clothiers driving these changes? And can they truly be described as early capitalists? In order to answer these questions, The Medieval Clothier proceeds logically from the production process of cloth in the opening chapter, moving on to explore the marketing of cloth, the regional identity of clothiers themselves, their relationship with the government through legislation, and their role in medieval society, before finally exploring some case studies of famous clothiers.

In Chapter 1, we learn of the world of medieval cloth production, showing how technological developments aided the growth of the industry. Productivity probably trebled at several stages of the cloth production process because of changes introduced in the late Middle Ages: spinning by wheel instead of by distaff and spindle; weaving using a horizontal loom as opposed to a vertical one; and fulling in a mill rather than by foot. Although some clothiers did develop a factory-style of production, the majority of cloth production was made through the widespread adoption of the putting-out system. Moving from production to marketing, Chapter 2 explores how this cloth was sold, what marketing networks the industry utilized, and who participated in the trade. Some individuals did build up their own regional, national, or even international networks, but the majority sold their cloth wholesale to merchants. And as might be expected, it was the Londoners who came to dominate this trade, especially the Merchant Adventurers who came to monopolize cloth exports.

In Chapter 3, Lee explores why the cloth industry came to be based in small towns and villages as the Late Middle Ages progressed rather than the cities and boroughs of medieval England. In some ways this is a product of topics discussed in the preceding chapters, with clothiers flourishing in areas with ready access to labor, capital and markets. After all, the putting-out system on which cloth production was based required little capital on the part of the worker, who in turn could work part-time around the demands of the agricultural seasons. In Chapter 4, we see some of the consequences of disturbances in the cloth industry because clothiers were creatures of credit: by providing delivery of cloth before payment, clothiers were particularly vulnerable to trade crises. This in turn meant they could not pay their workers and Lee shows how a sudden shock could produce serious short-term problems for workers in the putting-out system, who might join a local rebellion to express their discontent.

Chapter 5 shows how medieval clothiers as an occupation tended to transcend many of the traditional social status groupings that we associate with the Middle Ages and could include merchants, craftsmen, gentry or peasants. Clothiers were every bit as obsessed with death and remembrance as other groups in late medieval society, but perhaps most interestingly “clothiers and woolmen displayed the tools of their trade to a prodigious extent not generally found in other occupations,” suggesting a level of pride in their work. In Chapter 6, Lee tackles some of the wealthiest and most famous clothiers of the period: men like Thomas Paycocke who bequeathed money in his will that may have been intended for between 80 and 240 workers; Thomas Spring II whose bequest may have supported 220 to 3,900 workers; Jack of Newbury who may have employed over 1,000 workers; and, of course, William Stumpe who has been seen as a “manufactory-capitalist” by previous historians because of his work at Malmesbury Abbey.

Bringing the book together, Lee concludes that clothiers were a product of their time, emerging in the economic conditions that followed the Black Death of 1348-50 and the subsequent mid-fifteenth-century crisis. He convincingly argues that clothiers cannot truly be seen as early capitalists because — short of a few extraordinary individuals — the majority did not own capital assets and did not employ labor themselves. Instead they relied upon the putting-out system, which, although it left workers particularly vulnerable to trade slumps, did not constitute an economic relationship that could be defined as that of employer and employee.

The Medieval Clothier, therefore, is a highly successful book that provides an interesting, compelling and at all times authoritative survey of one of the most important trades in late medieval England, making it a must read for students and scholars alike.

 
Alex Brown is an assistant professor at Durham University. He has published on the late medieval and early modern economic and social history of England, including a recent monograph on Rural Society and Economic Change in County Durham: Recession and Recovery, c.1400-1640 (Boydell, 2015).

Copyright (c) 2019 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (April 2019). All EH.Net reviews are archived at http://www.eh.net/BookReview.

Subject(s):Business History
Industry: Manufacturing and Construction
Markets and Institutions
Geographic Area(s):Europe
Time Period(s):Medieval

The Economic History of Mexico

The Economic History of Mexico

Richard Salvucci, Trinity University

 

Preface[1]

This article is a brief interpretive survey of some of the major features of the economic history of Mexico from pre-conquest to the present. I begin with the pre-capitalist economy of Mesoamerica. The colonial period is divided into the Habsburg and Bourbon regimes, although the focus is not really political: the emphasis is instead on the consequences of demographic and fiscal changes that colonialism brought.  Next I analyze the economic impact of independence and its accompanying conflict. A tentative effort to reconstruct secular patterns of growth in the nineteenth century follows, as well as an account of the effects of foreign intervention, war, and the so-called “dictatorship” of Porfirio Diaz.  I then examine the economic consequences of the Mexican Revolution down through the presidency of Lázaro Cárdenas, before considering the effects of the Great Depression and World War II. This is followed by an examination of the so-called Mexican Miracle, the period of import-substitution industrialization after World War II. The end of the “miracle” and the rise of economic instability in the 1970s and 1980s are discussed in some detail. I conclude with structural reforms in the 1990s, the North American Free Trade Agreement (NAFTA), and slow growth in Mexico since then. It is impossible to be comprehensive and the references appearing in the citations are highly selective and biased (where possible) in favor of English-language works, although Spanish is a must for getting beyond the basics. This is especially true in economic history, where some of the most innovative and revisionist work is being done, as it should be, by historians and economists in Mexico.[2]

 

Where (and What) is Mexico?

For most of its long history, Mexico’s boundaries have been shifting, albeit broadly stable. Colonial Mexico basically stretched from Guatemala, across what is now California and the Southwestern United States, and vaguely into the Pacific Northwest.  There matters stood for more than three centuries[3]. The big shock came at the end of the War of 1847 (“the Mexican-American War” in U.S. history). The Treaty of Guadalupe Hidalgo (1848) ended the war, but in so doing, ceded half of Mexico’s former territory to the United States—recall Texas had been lost in 1836. The northern boundary now ran on a line beginning with the Rio Grande to El Paso, and thence more or less west to the Pacific Ocean south of San Diego. With one major adjustment in 1853 (the Gadsden Purchase or Treaty of the Mesilla) and minor ones thereafter, because of the shifting of the Rio Grande, there it has remained.

Prior to the arrival of the Europeans, Mexico was a congeries of ethnic and city states whose own boundaries were unstable. Prior to the emergence of the most powerful of these states in the fifteenth century, the so-called Triple Alliance (popularly “Aztec Empire”), Mesoamerica consisted of cultural regions determined by political elites and spheres of influence that were dominated by large ceremonial centers such as La Venta, Teotihuacán, and Tula.

While such regions may have been dominant at different times, they were never “economically” independent of one another. At Teotihuacan, there were living quarters given over to Olmec residents from the Veracruz region, presumably merchants. Mesoamerica was connected, if not unified, by an ongoing trade in luxury goods and valuable stones such as jade, turquoise and precious feathers. This was not, however, trade driven primarily by factor endowments and relative costs. Climate and resource endowments did differ significantly over the widely diverse regions and microclimates of Mesoamerica. Yet trade was also political and ritualized in religious belief. For example, calling the shipment of turquoise from the (U.S.) Southwest to Central Mexico the outcome of market activity is an anachronism. In the very long run, such prehistorical exchange facilitated the later emergence of trade routes, roads, and more technologically advanced forms of transport. But arbitrage does not appear to have figured importantly in it.[4]

In sum, what we call “Mexico” in a modern sense is not of much use to the economic historian with an interest in the country before 1870, which is to say, the great bulk of its history. In these years, specificity of time and place, sometimes reaching to the village level, is an indispensable prerequisite for meaningful discussion. At the very least, it is usually advisable to be aware of substantial regional differences which reflect the ethnic and linguistic diversity of the country both before and after the arrival of the Europeans. There are fully ten language families in Mexico, and two of them, Nahuatl and Quiché, number over a million speakers each.[5]

 

Trade and Tribute before the Europeans

In the codices or deerskin folded paintings the Europeans examined (or actually commissioned), they soon became aware of a prominent form of Mesoamerican economic activity: tribute, or taxation in kind, or even labor services. In the absence of anything that served as money, tribute was forced exchange. Tribute has been interpreted as a means of redistribution in a nonmonetary economy. Social and political units formed a basis for assessment, and the goods collected included maize, beans, chile and cotton cloth. It was through the tribute the indigenous “empires” mobilized labor and resources. There is little or no evidence for the existence of labor or land markets to do so, for these were a European import, although marketplaces for goods existed in profusion.

To an extent, the preconquest reliance on barter economies and the absence of money largely accounts for the ubiquity of tribute. The absence of money is much more difficult to explain and was surely an obstacle to the growth of productivity in the indigenous economies.

The tribute was a near-universal attribute of Mesoamerican ceremonial centers and political empires. The city of Teotihuacan (ca. 600 CE, with a population of 125,000 or more) in central Mexico depended on tribute to support an upper stratum of priests and nobles while the tributary population itself lived at subsistence. Tlatelolco (ca 1520, with a population ranging from 50 to 100 thousand) drew maize, cotton, cacao, beans and precious feathers from a wide swath of territory that broadly extended from the Pacific to Gulf coasts that supported an upper stratum of priests, warriors, nobles, and merchants. It was this urban complex that sat atop the lagoons that filled the Valley of Mexico that so awed the arriving conquerors.

While the characterization of tribute as both a corvée and a tax in kind to support nonproductive populations is surely correct, its persistence in altered (i.e., monetized) form under colonial rule does suggest an important question. The tributary area of the Mexica (“Aztec” is a political term, not an ethnic one) broadly comprised a Pacific slope, a central valley, and a Gulf slope. These embrace a wide range of geographic features ranging from rugged volcanic highlands (and even higher snow-capped volcanoes) to marshy, humid coastal plains. Even today, travel through these regions is challenging. Lacking both the wheel and draught animals, the indigenous peoples relied on human transport, or, where possible, waterborne exchange. However we measure the costs of transportation, they were high. In the colonial period, they typically circumscribed the subsistence radius of markets to 25 to 35 miles. Under the circumstances, it is not easy to imagine that voluntary exchange, particularly between the coastal lowlands and the temperate to cold highlands and mountains, would be profitable for all but the most highly valued goods. In some parts of Mexico–as in the Andean region—linkages of family and kinship bound different regions together in a cult of reciprocal economic obligations. Yet absent such connections, it is not hard to imagine, for example, transporting woven cottons from the coastal lowlands to the population centers of the highlands could become a political obligation rather than a matter of profitable, voluntary exchange. The relatively ambiguous role of markets in both labor and goods that persisted into the nineteenth century may perhaps derive from just this combination of climatic and geographical characteristics. It is what made voluntary exchange under capitalistic markets such a puzzlingly problematic answer to the ordinary demands of economic activity.

 

[See the relief map below for the principal physical features of Mexico.]

image1

http://www.igeograf.unam.mx/sigg/publicaciones/atlas/anm-2007/muestra_mapa.php?cual_mapa=MG_I_1.jpg

[See the political map below for Mexican states and state capitals.]

image2

 

 

Used by permission of the University of Texas Libraries, The University of Texas at Austin.

 

“New Spain” or Colonial Mexico: The First Phase

Mexico was established by military conquest and civil war. In the process, a civilization with its own institutions and complex culture was profoundly modified and altered, if not precisely destroyed, by the European invaders. The catastrophic elements of conquest, including the sharp decline of the existing indigenous population, from perhaps 25 million to fewer than a million within a century due to warfare, disease, social disorganization and the imposition of demands for labor and resources should nevertheless not preclude some assessment, however tentative, of its economic level in 1519, when the Europeans arrived.[6]

Recent thinking suggests that Spain was far from poor when it began its overseas expansion. If this were so, the implications of the Europeans’ reactions to what they found on the mainland of Mexico (not, significantly in the Caribbean, and, especially, in Cuba, where they were first established) is important. We have several accounts of the conquest of Mexico by the European participants, of which Bernal Díaz del Castillo is the best known, but not the only one. The reaction of the Europeans was almost uniformly astonishment by the apparent material wealth of Tenochtitlan. The public buildings, spacious residences of the temple precinct, the causeways linking the island to the shore, and the fantastic array of goods available in the marketplace evoked comparisons to Venice, Constantinople, and other wealthy centers of European civilization. While it is true that this was a view of the indigenous elite, the beneficiaries of the wealth accumulated from numerous tributaries, it hardly suggests anything other than a kind of storied opulence. Of course, the peasant commoners lived at subsistence and enjoyed no such privileges, but then so did the peasants of the society from which Bernal Díaz, Cortés, Pedro de Alvarado and the other conquerors were drawn. It is hard to imagine that the average standard of living in Mexico was any lower than that of the Iberian Peninsula. The conquerors remarked on the physical size and apparent robust health of the people whom they met, and from this, scholars such as Woodrow Borah and Sherburne Cook concluded that the physical size of the Europeans and the Mexicans was about the same. Borah and Cook surmised that caloric intake per individual in Central Mexico was around 1,900 calories per day, which certainly seems comparable to European levels.[7]

Certainly, the technological differences with Europe hampered commercial exchange, such as the absence of the wheel for transportation, metallurgy that did not include iron, and the exclusive reliance on pictographic writing systems. Yet by the same token, Mesoamerican agricultural technology was richly diverse and especially oriented toward labor-intensive techniques, well suited to pre-conquest Mexico’s factor endowments. As Gene Wilken points out, Bernardino de Sahagún explained in his General History of the Things of New Spain that the Nahua farmer recognized two dozen soil types related to origin, source, color, texture, smell, consistency and organic content.  They were expert at soil management.[8] So it is possible not only to misspecify, but to mistake the technological “backwardness” of Mesoamerica relative to Europe, and historians routinely have.

The essentially political and clan-based nature of economic activity made the distribution of output somewhat different from standard neoclassical models. Although no one seriously maintains that indigenous civilization did not include private property and, in fact, property rights in humans, the distribution of product tended to emphasize average rather than marginal product. If responsibility for tribute was collective, it is logical to suppose that there was some element of redistribution and collective claim on output by the basic social groups of indigenous society, the clans or calpulli.[9] Whatever the case, it seems clear that viewing indigenous society and economy as strained by population growth to the point of collapse, as the so-called “Berkeley school” did in the 1950s, is no longer tenable. It is more likely that the tensions exploited by the Europeans to divide and conquer their native hosts and so erect a colonial state on pre-existing native entities were mainly political rather than socioeconomic. It was through the assistance of native allies such as the Tlaxcalans, as well as with the help of previously unknown diseases such as smallpox that ravaged the indigenous peoples, that the Europeans were able to place a weakened Tenochtitlan under siege and finally defeat it.

 

Colonialism and Economic Adjustment to Population Decline

With the subjection first of Tenochtitlan and Tlatelolco and then of other polities and peoples, a process that would ultimately stretch well into the nineteenth century and was never really completed, the Europeans turned their attention to making colonialism pay. The process had several components: the modification or introduction of institutions of rule and appropriation; the introduction of new flora and fauna that could be turned to economic use; the reorientation of a previously autarkic and precapitalist economy to the demands of trade and commercial exploitation; and the implementation of European fiscal sovereignty. These processes were complex, required much time, and were, in many cases, only partly successful. There is considerable speculation regarding how long it took before Spain (arguably a relevant term by the mid-sixteenth century) made colonialism pay. The best we can do is present a schematic view of what occurred. Regional variations were enormous: a “typical” outcome or institution of colonialism may well have been an outcome visible in central Mexico. Moreover, all generalizations are fragile, rest on limited quantitative evidence, and will no doubt be substantially modified eventually. The message is simple: proceed with caution.

The Europeans did not seek to take Mesoamerica as a tabula rasa. In some ways, they would have been happy to simply become the latest in a long line of ruling dynasties established by decapitating native elites and assuming control. The initial demand of the conquerors for access to native labor in the so-called encomienda was precisely that, with the actual task of governing be left to the surviving and collaborating elite: the principle of “indirect rule.”[10] There were two problems with this strategy: the natives resisted and the natives died. They died in such large numbers as to make the original strategy impracticable.

The number of people who lived in Mesoamerica has long been a subject of controversy, but there is no point in spelling it out once again. The numbers are unknowable and, in an economic sense, not really important. The population of Tenochtitlan has been variously estimated between 50 and 200 thousand individuals, depending on the instruments of estimation.  As previously mentioned, some estimates of the Central Mexican population range as high as 25 million on the eve of the European conquest, and virtually no serious student accepts the small population estimates based on the work of Angel Rosenblatt. The point is that labor was abundant relative to land, and that the small surpluses of a large tributary population must have supported the opulent elite that Bernal Díaz and his companions described.

By 1620, or thereabouts, the indigenous population had fallen to less than a million according to Cook and Borah. This is not just the quantitative speculation of modern historical demographers. Contemporaries such as Jerónimo de Mendieta in his Historia eclesiástica Indiana (1596) spoke of towns formerly densely populated now witness to “the palaces of those former Lords ruined or on the verge of. The homes of the commoners mostly empty, roads and streets deserted, churches empty on feast days, the few Indians who populate the towns in Spanish farms and factories.” Mendieta was an eyewitness to the catastrophic toll that European microbes and warfare took on the native population. There was a smallpox epidemic in 1519-20 when 5 to 8 million died. The epidemic of hemorrhagic fever in 1545 to 1548 was one of the worst demographic catastrophes in human history, killing 5 to 15 million people. And then again in 1576 to 1578, when 2 to 2.5 million people died, we have clear evidence that land prices in the Valley of Mexico (Coyoacán, a village outside Mexico City, as the reconstructed Tenochtitlán was called) collapsed. The death toll was staggering. Lesser outbreaks were registered in 1559, 1566, 1587, 1592, 1601, 1604, 1606, 1613, 1624, and 1642. The larger point is that the intensive use of native labor, such as the encomienda, had to come to an end, whatever its legal status had become by virtue of the New Laws (1542). The encomienda or the simple exploitation of massive numbers of indigenous workers was no longer possible. There were too few “Indians” by the end of the sixteenth century.[11]

As a result, the institutions and methods of economic appropriation were forced to change. The Europeans introduced pastoral agriculture – the herding of cattle and sheep – and the use of now abundant land and scarce labor in the form of the hacienda while the remaining natives were brought together in “villages” whose origins were not essentially pre- but post-conquest, the so-called congregaciones, at the same time that the titles to now-vacant lands were created, regularized and “composed.”[12] (Land titles were a European innovation as well). Sheep and cattle, which the Europeans introduced, became part of the new institutional backbone of the colony. The natives would continue to rely on maize for the better part of their subsistence, but the Europeans introduced wheat, olives (oil), grapes (wine) and even chickens, which the natives rapidly adopted. On the whole, the results of these alterations were complex. Some scholars argue that the native diet improved even in the face of their diminishing numbers, a consequence of increased land per person and of greater variety of foodstuffs, and that the agricultural potential of the colony now called New Spain was enhanced. By the beginning of the seventeenth century, the combined indigenous, European immigrant, and new mixed blood populations could largely survive on the basis of their own production. The introduction of sheep lead to the introduction and manufacture of woolens in what were called obrajes or manufactories in Puebla, Querétaro, and Coyoacán. The native peoples continued to produce cottons (a domestic crop) under the stimulus of European organization, lending, and marketing. Extensive pastoralism, the cultivation of cereals and even the incorporation of native labor then characterized the emergence of the great estates or haciendas, which became a characteristic rural institution through the twentieth century, when the Mexican Revolution put an end to many of them. Thus the colony of New Spain continued to feed, clothe and house itself independent of metropolitan Spain’s direction. Certainly, Mexico before the Conquest was self-sufficient. The extent to which the immigrant and American Spaniard or creole population depended on imports of wine, oil and other foodstuffs and textiles in the decades immediately following the conquest is much less clear.

At the same time, other profound changes accompanied the introduction of Europeans, their crops and their diseases into what they termed the “kingdom” (not colony, for constitutional reasons) of New Spain.[13] Prior to the conquest, land and labor had been commoditized, but not to any significant extent, although there was a distinction recognized between possession and ownership.  Scholars who have closely examined the emergence of land markets after the conquest—mainly in the Valley of Mexico—are virtually unanimous in this conclusion. To the extent that markets in labor and commodities had emerged, it took until the 1630s (and later elsewhere in New Spain) for the development to reach maturity. Even older mechanisms of allocation of labor by administrative means (repartimiento) or by outright coercion persisted. Purely economic incentives in the form of money wages and prices never seemed adequate to the job of mobilizing resources and those with access to political power were reluctant to pay a competitive wage. In New Spain, the use of some sort of political power or rent-seeking nearly always accompanied labor recruitment. It was, quite simply, an attempt to evade the implications of relative scarcity, and renders the entire notion of “capitalism” as a driving economic force in colonial Mexico quite inexact.

 

Why the Settlers Resisted the Implications of Scarce Labor

The reasons behind this development are complex and varied. The evidence we have for the Valley of Mexico demonstrates that the relative price of labor rose while the relative price of land fell even when nominal movements of one or the other remained fairly limited. For instance, the table constructed below demonstrates that from 1570-75 through 1591-1606, the price of unskilled labor in the Valley of Mexico nearly tripled while the price of land in the Valley (Coyoacán) fell by nearly two thirds. On the whole, the price of labor relative to land increased by nearly 800 percent. The evolution of relative prices would have inevitably worked against the demanders of labor (Europeans and increasingly, creoles or Americans of largely European ancestry) and in favor of the supplier (native labor, or people of mixed race generically termed mestizo). This was not of course what the Europeans had in mind and by capture of legal institutions (local magistrates, in particularly), frequently sought to substitute compulsion for what would have been costly “free labor.” What has been termed the “depression” of the seventeenth century may well represent one of the consequences of this evolution: an abundance of land, a scarcity of labor, and the attempt of the new rulers to adjust to changing relative prices. There were repeated royal prohibitions on the use of forced indigenous labor in both public and private works, and thus a reduction in the supply of labor. All highly speculative, no doubt, but the adjustment came during the central decades of the seventeenth century, when New Spain increasingly produced its own woolens and cottons, and largely assumed the tasks of providing itself with foodstuffs and was thus required to save and invest more.  No doubt, the new rulers felt the strain of trying to do more with less.[14]

 

Years Land Price Index Labor Price Index (Labor/Land) Index
1570-1575 100 100 100
1576-1590 50 143 286
1591-1606 33 286 867

 

Source: Calculated from Rebecca Horn, Postconquest Coyoacan: Nahua-Spanish Relations in Central Mexico, 1519-1650 (Stanford: Stanford University Press, 1997), p. 208 and José Ignacio Urquiola Permisan, “Salarios y precios en la industria manufacturer textile de la lana en Nueva España, 1570-1635,” in Virginia García Acosta, (ed.), Los precios de alimentos y manufacturas novohispanos (México, DF: CIESAS, 1995), p. 206.

 

The overall role of Mexico within the Hapsburg Empire was in flux as well. Nothing signals the change as much as the emergence of silver mining as the principal source of Mexican exportables in the second half of the sixteenth century. While Mexico would soon be eclipsed by Peru as the most productive center of silver mining—at least until the eighteenth century—the discovery of significant silver mines in Zacatecas in the 1540s transformed the economy of the Spanish empire and the character of New Spain’s as well.

 

 

 

Silver Mining

While silver mining and smelting was practiced before the conquest, it was never a focal point of indigenous activity. But for the Europeans, Mexico was largely about silver mining. From the mid- sixteenth century onward, it was explicitly understood by the viceroys that they were to do all in their power to “favor the mines,” as one memorable royal instruction enjoined. Again, there has been much controversy of the precise amounts of silver that Mexico sent to the Iberian Peninsula. What we do know certainly is that Mexico (and the Spanish Empire) became the leading source of silver, monetary reserves, and thus, of high-powered money. Over the course of the colonial period, most sources agree that Mexico provided nearly 2 billion pesos (dollars) or roughly 1.6 billion troy ounces to the world economy. The graph below provides a picture of the remissions of all Mexican silver to both Spain and to the Philippines taken from the work of John TePaske.[15]

page16

Since the population of Mexico under Spanish rule was at most 6 million people by the end of the colonial period, the kingdom’s silver output could only be considered astronomical.

This production has to be considered in both its domestic and international dimensions. From a domestic perspective, the mines were what a later generation of economists would call “growth poles.” They were markets in which inputs were transformed into tradable outputs at a much higher rate of productivity (because of mining’s relatively advanced technology) than Mexico’s other activities. Silver thus became Mexico’s principal exportable good, and remained so well into the late nineteenth century.  The residual claimants on silver production were many and varied.  There were, of course the silver miners themselves in Mexico and their merchant financiers and suppliers. They ranged from some of the wealthiest people in the world at the time, such as the Count of Regla (1710-1781), who donated warships to Spain in the eighteenth century, to individual natives in Zacatecas smelting their own stocks of silver ore.[16] While the conditions of labor in Mexico’s silver mines were almost uniformly bad, the compensation ranged from above market wages paid to free labor in the prosperous larger mines  of the Bajío and the North to the use of forced village  labor drafts in more marginal (and presumably less profitable) sites such as Taxco. In the Iberian Peninsula, income from American silver mines ultimately supported not only a class of merchant entrepreneurs in the large port cities, but virtually the core of the Spanish political nation, including monarchs, royal officials, churchmen, the military and more. And finally, silver flowed to those who valued it most highly throughout the world. It is generally estimated that 40 percent of Spain’s American (not just Mexican, but Peruvian as well) silver production ended up in hoards in China.

Within New Spain, mining centers such as Guanajuato, San Luis Potosí, and Zacatecas became places where economic growth took place rapidly, in which labor markets more readily evolved, and in which the standard of living became obviously higher than in neighboring regions. Mining centers tended to crowd out growth elsewhere because the rate of return for successful mines exceeded what could be gotten in commerce, agriculture and manufacturing. Because silver was the numeraire for Mexican prices—Mexico was effectively on a silver standard—variations in silver production could and did have substantial effects on real economic activity elsewhere in New Spain. There is considerable evidence that silver mining saddled Mexico with an early case of “Dutch disease” in which irreducible costs imposed by the silver standard ultimately rendered manufacturing and the production of other tradable goods in New Spain uncompetitive. For this reason, the expansion of Mexican silver production in the years after 1750 was never unambiguously accompanied by overall, as opposed to localized prosperity. Silver mining tended to absorb a disproportional quantity of resources and to keep New Spain’s price level high, even when the business cycle slowed down—a fact that was to impress visitors to Mexico well into the nineteenth century. Mexican silver accounted for well over three-quarters of exports by value into the nineteenth century as well. The estimates vary widely, for silver was by no means the only, or even the most important source of revenue to the Crown, but by the end of the colonial era, the Kingdom of New Spain probably accounted for 25 percent of the Crown’s imperial income.[17] That is why reformist proposals circulating in governing circles in Madrid in the late eighteenth century fixed on Mexico. If there was any threat to the American Empire, royal officials thought that Mexico, and increasingly, Cuba, were worth holding on to. From a fiscal standpoint, Mexico had become just that important.[18]

 

“New Spain”: The Second Phase                of the Bourbon “Reforms”

In 1700, the last of the Spanish Hapsburgs died and a disputed succession followed. The ensuring conflict, known as the War of Spanish Succession, came to an end in 1714. The grandson of French king Louis XIV came to the Spanish throne as King Philip V. The dynasty he represented was known as the Bourbons. For the next century of so, they were to determine the fortunes of New Spain. Traditionally, the Bourbons, especially the later ones, have been associated with an effort to “renationalize” the Spanish empire in America after it had been thoroughly penetrated by French, Dutch, and lastly, British commercial interests.[19]

There were at least two areas in which the Bourbon dynasty, “reformist” or no, affected the Mexican economy. One of them dealt with raising revenue and the other was the international position of the imperial economy, specifically, the volume and value of trade. A series of statistics calculated by Richard Garner shows that the share of Mexican output or estimated GDP taken by taxes grew by 167 percent between 1700 and 1800. The number of taxes collected by the Royal Treasury increased from 34 to 112 between 1760 and 1810. This increase, sometimes labelled as a Bourbon “reconquest” of Mexico after a century and a half of drift under the Hapsburgs, occurred because of Spain’s need to finance increasingly frequent and costly wars of empire in the eighteenth century. An entire array of new taxes and fiscal placemen came to Mexico. They affected (and alienated) everyone, from the wealthiest merchant to the humblest villager. If they did nothing else, the Bourbons proved to be expert tax collectors.[20]

The second and equally consequential change in imperial management lay in the revision and “deregulation” of New Spain’s international trade, or the evolution from a “fleet” system to a regime of independent sailings, and then, finally, of voyages to and from a far larger variety of metropolitan and colonial ports. From the mid-sixteenth century onwards, ocean-going trade between Spain and the Americas was, in theory, at least, closely regulated and supervised. Ships in convoy (flota) sailed together annually under license from the monarchy and returned together as well. Since so much silver specie was carried, the system made sense, even if the flotas made a tempting target and the problem of contraband was immense. The point of departure was Seville and later, Cadiz. Under pressure from other outports in the late eighteenth century, the system was finally relaxed. As a consequence, the volume and value of trade to Mexico increased as the price of importables fell. Import-competing industries in Mexico, especially textiles, suffered under competition and established merchants complained that the new system of trade was too loose. But to no avail. There is no measure of the barter terms of trade for the eighteenth century, but anecdotal evidence suggests they improved for Mexico. Nevertheless, it is doubtful that these gains could have come anywhere close to offsetting the financial cost of Spain’s “reconquest” of Mexico.[21]

On the other hand, the few accounts of per capita real income growth in the eighteenth century that exist suggest little more than stagnation, the result of population growth and a rising price level. Admittedly, looking for modern economic growth in Mexico in the eighteenth century is an anachronism, although there is at least anecdotal evidence of technological change in silver mining, especially in the use of gunpowder for blasting and excavating, and of some productivity increase in silver mining. So even though the share of international trade outside of goods such as cochineal and silver was quite small, at the margin, changes in the trade regime were important. There is also some indication that asset income rose and labor income fell, which fueled growing social tensions in New Spain. In the last analysis, the growing fiscal pressure of the Spanish empire came when the standard of living for most people in Mexico—the native and mixed blood population—was stagnating. During periodic subsistence crisis, especially those propagated by drought and epidemic disease, and mostly in the 1780s, living standards fell. Many historians think of late colonial Mexico as something of a powder keg waiting to explode. When it did, in 1810, the explosion was the result of a political crisis at home and a dynastic failure abroad. What New Spain had negotiated during the Wars of Spanish Succession—regime change– provide impossible to surmount during the Napoleonic Wars (1794-1815). This may well be the most sensitive indicator of how economic conditions changed in New Spain under the heavy, not to say clumsy hand, of the Bourbon “reforms.”[22]

 

The War for Independence, the Insurgency, and Their Legacy

The abdication of the Bourbon monarchy to Napoleon Bonaparte in 1808 produced a series of events that ultimately resulted in the independence of New Spain. The rupture was accompanied by a violent peasant rebellion headed by the clerics Miguel Hidalgo and José Morelos that, one way or another, carried off 10 percent of the population between 1810 and 1820. Internal commerce was largely paralyzed. Silver mining essentially collapsed between 1810 and 1812 and a full recovery of mining output was delayed until the 1840s. The mines located in zones of heavy combat, such as Guanajuato and Querétaro, were abandoned by fleeing workers. Thus neglected, they quickly flooded.

At the same time, the fiscal and human costs of this period, the Insurgency, were even greater.[23] The heavy borrowings in which the Bourbons engaged to finance their military alliances left Mexico with a considerable legacy of internal debt, estimated at £16 million at Independence. The damage to the fiscal, bureaucratic and administrative structure of New Spain in the face of the continuing threat of Spanish reinvasion (Spain did not recognize the Independence of Mexico (1821)) in the 1820s drove the independent governments into foreign borrowing on the London market to the tune of £6.4 million in order to finance continuing heavy military outlays. With a reduced fiscal capacity, in part the legacy of the Insurgency and in part the deliberate effort of Mexican elites to resist any repetition Bourbon-style taxation, Mexico defaulted on its foreign debt in 1827. For the next sixty years, through a serpentine history of moratoria, restructuring and repudiation (1867), it took until 1884 for the government to regain access to international capital markets, at what cost can only be imagined. Private sector borrowing and lending continued, although to what extent is currently unknown. What is clear is that the total (internal plus external) indebtedness of Mexico relative to late colonial GDP was somewhere in the range of 47 to 56 percent.[24]

This was, perhaps, not an insubstantial amount for a country whose mechanisms of public finance were in what could be mildly termed chaotic condition in the 1820s and 1830s as the form, philosophy, and mechanics of government oscillated from federalist to centralist and back into the 1850s.  Leaving aside simple questions of uncertainty, there is the very real matter that the national government—whatever the state of private wealth—lacked the capacity to service debt because national and regional elites denied it the means to do so. This issue would bedevil successive regimes into the late nineteenth century, and, indeed, into the twentieth.[25]

At the same time, the demographic effects of the Insurgency exacted a cost in terms of lost output from the 1810s through the 1840s. Gaping holes in the labor force emerged, especially in the fertile agricultural plains of the Bajío that created further obstacles to the growth of output. It is simply impossible to generalize about the fortunes of the Mexican economy in this period because of the dramatic regional variations in the Republic’s economy. A rough estimate of output per head in the late colonial period was perhaps 40 pesos (dollars).[26] After a sharp contraction in the 1810s, income remained in that neighborhood well into the 1840s, at least until the eve of the war with the United States in 1846. By the time United States troops crossed the Rio Grande, a recovery had been under way, but the war arrested it. Further political turmoil and civil war in the 1850s and 1860s represented setbacks as well. In this way, a half century or so of potential economic growth was sacrificed from the 1810s through the 1870s. This was not an uncommon experience in Latin America in the nineteenth century, and the period has even been called The Stage of the Great Delay.[27] Whatever the exact rate of real per capita income growth was, it is hard to imagine it ever exceeded two percent, if indeed it reached much more than half that.

 

Agricultural Recovery and War

On the other hand, it is clear that there was a recovery in agriculture in the central regions of the country, most notably in the staple maize crop and in wheat. The famines of the late colonial era, especially of 1785-86, when massive numbers perished, were not repeated. There were years of scarcity and periodic corresponding outbreaks of epidemic disease—the cholera epidemic of 1832 affected Mexico as it did so many other places—but by and large, the dramatic human wastage of the colonial period ceased, and the death rate does appear to have begun to fall. Very good series on wheat deliveries and retail sales taxes for the city of Puebla southeast of Mexico City show a similarly strong recovery in the 1830s and early 1840s, punctuated only by the cholera epidemic whose effects were felt everywhere.[28]

Ironically, while the Panic of 1837 appears to have at least hit the financial economy in Mexico hard with a dramatic fall in public borrowing (and private lending), especially in the capital,[29] an incipient recovery of the real economy was ended by war with the United States. It is not possible to put numbers on the cost of the war to Mexico, which lasted intermittently from 1846 to 1848, but the loss of what had been the Southwest under Mexico is most often emphasized. This may or may not be accurate. Certainly, the loss of California, where gold was discovered in January 1848, weighs heavily on the historical imaginations of modern Mexicans. There is also the sense that the indemnity paid by the United States–$15 million—was wholly inadequate, which seems at least understandable when one considers that Andrew Jackson offered $5 million to purchase Texas alone in 1829.

It has been estimated that the agricultural output of the Mexican “cession” as it was called in 1900, was nearly $64 million, and that the value of livestock in the territory was over $100 million. The value of gold and silver produced was about $35 million. Whether it is reasonable to employ the numbers in estimating the present value of output relative to the indemnity paid is at least debatable as a counterfactual, unless one chooses to regard this as the annuitized value on a perpetuity “purchased” from Mexico at gunpoint, which seems more like robbery than exchange.  In the long run, the loss may have been staggering, but in the short run, much less so. The northern territories Mexico lost had really yielded very little up until the War. In fact, the balance of costs and revenues to the Mexican government may well have been negative.[30]

Whatever the case, the decades following the war with the United States until the beginning of the administration of Porfirio Díaz (1876) are typically regarded as a step backward. The reasons are several. In 1850, the government essentially went broke. While it is true that its financial position had disintegrated since the mid-1830s, 1850 marked a turning point. The entire indemnity payment from the United States was consumed in debt service, but this made no appreciable dent in the outstanding principal, which hovered around 50 million pesos (dollars).  The limits of debt sustainability had been reached: governing was turned into a wild search for resources, which proved fruitless. Mexico continued to sell of parts of its territory, such as the Treaty of the Mesilla (1853), or Gadsden Purchase, whose proceeds largely ended up in the hands of domestic financiers rather than foreign creditors’.[31] Political divisions, if anything, terrible before the war with the United States, turned catastrophic. A series of internal revolts, uprisings and military pronouncements segued into yet another violent civil war between liberals and conservatives—now a formal party—the so-called Three Years’ War (1856-58). In 1862, frustrated by Mexico’s suspension of foreign debt service, Great Britain, Spain and France seized Veracruz. A Hapsburg prince, Maximilian, was installed as Mexico’s second “emperor.” (Agustín de Iturbide was the first). While only the French actively prosecuted the war within Mexico, and while they never controlled more than a very small part of the country, the disruption was substantial. By 1867, with Maximillian deposed and the French army withdrawn, the country required serious reconstruction. [32]

 

Juárez, Díaz and the Porfiriato: authoritarian development.

To be sure, the origins of authoritarian development in nineteenth century Mexico were not with Porfirio Díaz, as is often asserted. Their beginnings actually went back several decades earlier, to the last presidency of Santa Anna, generally known as the Dictatorship (1853-54). But Santa Anna was overthrown too quickly, and now for the last time, for much to have actually occurred. A ministry for development (Fomento) had been created, but the Liberal revolution of Ayutla swept Santa Anna and his clique away for good. Serious reform seems to have begun around 1870, when the Finance Minister was Matías Romero. Romero was intent on providing Mexico with a modern Treasury, and on ending the hand-to- mouth financing that had mostly characterized the country’s government since Independence, or at least since the mid-1830s. So it is appropriate to pick up with the story here. Where did Mexico stand in 1870?[33]

The most revealing data that we have on the state of economic development come from various anthropometric and cost of living studies by Amilcar Challu, Aurora Gómez Galvarriato, and Moramay López Alonso.[34] Their research overlaps in part, and gives a fascinating picture of Mexico in the long run, from 1735 to 1940. For the moment, let us look at the period leading up to 1867, when the French withdrew from Mexico. If we look at the heights of the “literate” population, Challu’s research suggests that the standard of living stagnated between 1750 and 1840. If we look at the “illiterate” population, there was a consistent decline until 1850. Since the share of the illiterate population was clearly larger, we might infer that living standards for most Mexicans declined after 1750, however we interpret other quantitative and anecdotal evidence.

López Alonso confines her work to the period after the 1840s. From 1850 through 1890, her work generally corroborates Challu’s. The period after the Mexican War was clearly a difficult one for most Mexicans, and the challenge that both Juárez and Díaz faced was a macroeconomy in frank contraction after 1850. The regimes after 1867 were faced with stagnation.

The real wage study of by Amilcar Challu and Aurora Gómez Galvarriato, when combined with the existing anthropometric work, offers a pretty clear correlation between movements in real wages (down) and height (falling). [35]

It would then appear growth from the 1850s through the 1870s was slow—if there was any at all—and perhaps inferior to what had come between the 1820s and the 1840s. Given the growth of import substitution during the Napoleonic Wars, roughly 1790-1810, coupled with the commercial opening brought by the Bourbons’   post-1789 extension of “free trade” to Mexico, we might well see a pattern of mixed performance (1790-1810), sharp contraction (the 1810s), rebound and recovery, with a sharp financial shocks coming in the mid-1820s and mid -1830s (1820s-1840s), and stagnation once more (1850s-1870s). Real per capita output oscillated, sometimes sharply, around an underlying growth rate of perhaps one percent; changes in the distribution of income and wealth are more or less impossible to identify consistently, because studies conflict.

Far less speculative is that the foundations for modern economic growth were laid down in Mexico during the era of Benito Juárez. Its key elements were the creation of a secular, bourgeois state and secular institutions embedded in the Constitution of 1857. The titanic ideological struggles between liberals and conservatives were ultimately resolved in favor of a liberal, but nevertheless centralizing form of government under Porfirio Diáz. This was the beginning of the end of the Ancien Regime. Under Juárez, corporate lands of the Church and native villages were privatized in favor of individual holdings and their former owners compensated in bonds. This was effectively the largest transfer of land title since the late sixteenth century (not including the war with the United States) and it cemented the idea of individual property rights. With the expulsion of the French and the outright repudiation of the French debt, the Treasury was reorganized along more modern lines. The country got additional breathing room by the suspension of debt service to Great Britain until the terms of the 1825 loans were renegotiated under the Dublán Convention (1884). Equally, if not more important, Mexico now entered the railroad age in 1876, nearly forty years after the first tracks were laid in Cuba in 1837. The educational system was expanded in an attempt to create at least a core of literate citizens who could adopt the tools of modern finance and technology. Literacy still remained in the neighborhood of 20 percent, and life expectancy at birth scarcely reached 40 years of age, if that. Yet by the end of the Restored Republic (1876), Mexico had turned a corner. There would be regressions, but the nineteenth century had finally arrived, aptly if brutally signified by Juárez’ execution of Maximilian in Querétaro in 1867.[36]

Porfirian Mexico

Yet when Díaz came to power, Mexico was, in many ways, much as it had been a century earlier. It was a rural, agrarian nation whose primary agricultural output per person was maize, followed by wheat and beans. These were produced on haciendas and ranchos in Jalisco, Guanajuato, Michoacán, Mexico, Puebla as well as Oaxaca, Veracruz, Aguascalientes, Chihuahua and Sonora. Cotton, which with great difficulty had begun to supply a mechanized factory regime (first in spinning, then weaving) was produced in Oaxaca, Yucatán, Guerrero and Chiapas as well as in parts of Durango and Coahuila. Domestic production of raw cotton rarely sufficed to supply factories in Michoacán, Querétaro, Puebla and Veracruz, so imports from the Southern United States were common. For the most part, the indigenous population lived on maize, beans, and chile, producing its own subsistence on small, scattered plots known as milpas. Perhaps 75 percent of the population was rural, with the remainder to be found in cities like Mexico, Guadalajara, San Luis Potosí, and later, Monterrey. Population growth in the Southern and Eastern parts of the country had been relatively slow in the nineteenth century. The North and the center North grew more rapidly.  The Center of the country, less so. Immigration from abroad had been of no consequence.[37]

It is a commonplace to see the presidency of Porfirio Díaz (1876-1910) as a critical juncture in Mexican history, and this would be no less true of economic or commercial history as well. By 1910, when the Díaz government fell and Mexico descended into two decades of revolution, the first one extremely violent, the face of the country had been changed for good. The nature and effect of these changes remain not only controversial, but essential for understanding the subsequent evolution of the country, so we should pause here to consider some of their essential features.

While mining and especially, silver mining, had long held a privileged place in the economy, the nineteenth century had witnessed a number of significant changes. Until about 1889, the coinage of gold, silver, and copper—a very rough proxy for production given how much silver had been illegally exported—continued on a steadily upward track. In 1822, coinage was about 10 million pesos. By 1846, it had reached roughly 15 million pesos. There was something of a structural break after the war with the United States (its origins are unclear), and coinage continued upward to about 25 million pesos in 1888. Then, the falling international price of silver, brought on by large increases in supply elsewhere, drove the trend after 1889 sharply downward. By 1909-10, coinage had collapsed to levels previously unrecorded since the 1820s, although in 1904 and 1905, it had skyrocketed to nearly 45 million pesos.[38]

It comes as no surprise that these variations in production corresponded to sharp changes in international relative prices. For example, the market price of silver declined sharply relative to lead, which in turn encountered a large increase in Mexican production and a diversification into other metals including zinc, antinomy, and copper. Mexico left the silver standard (for international transactions, but continued to use silver domestically) in 1905, which contributed to the eclipse of this one crucial industry, which would never again have the status it had when Díaz became president in 1876, when precious metals represented 75 percent of Mexican exports by value. By the time he had decamped in exile to Paris, precious metals accounted for less than half of all exports.

The reason for this relative decline was the diversification of agricultural exports that had been slowly occurring since the 1870s. Coffee, cotton, sugar, sisal and vanilla were the principal crops, and some regions of the country such as Yucatán (henequen) and Durango and Tamaulipas (cotton) supplied new export crops.

 

Railroads and Infrastructure

None of be of this would have occurred without the massive changes in land tenure that had begun in the 1850s, but most of all, without the construction of railroads financed by the migration of foreign capital to Mexico under Díaz. At one level, it is a well-known story of social savings, which were substantial in Mexico because the terrain was difficult and the alternative modes of carriage few. One way or another, transportation has always been viewed as an “obstacle” to Mexican economic development. That must be true at some level, although recent studies (especially by Sandra Kuntz) have raised important qualifications. Railroads may not have been gateways to foreign dependency, as historians once argued, but there were limits to their ability to effect economic change, even internally. They tended to enlarge the internal market for some commodities more than others. The peculiarities of rate-making produced other distortions, while markets for some commodities were inevitably concentrated in major cities or transshipment points which afforded some monopoly power to distributors even as a national market in basic commodities became more of a reality. Yet, in general, the changes were far reaching.[39]

Conventional figures confirm conventional wisdom. When Díaz assumed the presidency, there were 660 km (410 miles) of track. In 1910, there were 19,280 km (about 12,000 miles). Seven major lines linked the cities of Mexico, Veracruz, Acapulco, Juárez, Laredo, Puebla, Oaxaca. Monterrey and Tampico in 1892. The lines were built by foreign capital (e.g., the Central Mexicano was built by the Atchison, Topeka and Santa Fe), which is why resolving the long-standing questions of foreign debt service were critical. Large government subsidies on the order of 3,500 to 8,000 pesos per km were granted, and financing the subsidies amounted to over 30 million pesos by 1890. While the railroads were successful in creating more of a national market, especially in the North, their finances were badly affected by the depreciation of the silver peso, given that foreign liabilities had to be liquidated in gold.

As a result, the government nationalized the railroads in 1903. At the same time, it undertook an enormous effort to construct infrastructure such as drainage and ports, virtually all of which were financed by British capital and managed by “Don Porfirio’s contactor,” Sir Weetman Pearson.  Between railroads, ports, drainage works and irrigation facilities, the Mexican government borrowed 157 million pesos to finance costs.[40]

The expansion of the railroads, the build-out of infrastructure and the expansion of trade would have normally increased output per capita. Any data we have prior to 1930 are problematic, and before 1895, strictly speaking, we have no official measures of output per capita at all. Most scholars shy away from using levels of GDP in any form, other than for illustrative purposes.  Aside from the usual problems attending national income accounting, Mexico presents a few exceptional challenges. In peasant families, where women were entrusted with converting maize into tortilla, no small job, the omission of their value added from GDP must constitute a sizeable defect in measured output. Moreover, as the commercial radius of Mexican agriculture expanded rapidly as railroads, roads, and later, highways spread extensively, growth rates represented increased commercialization rather than increased growth. We have no idea how important this phenomenon was, but it is worth keeping in mind when we look at very rapid growth rates after 1940.

There are various measures of cumulative growth during the Porfiriato. By and large, the figure from 1900 through 1910 is around 23 percent, which is certainly higher than rates achieved during the nineteenth century, but nothing like what was recorded after 1940. In light of declining real wages, one can only assume that the bulk of “progress” flowed to the recipients of property income. This may well have represented a reversal of trends in the nineteenth century, when some argue that property income contracted in the wake of the Insurgency[41].

There was also significant industrialization in Mexico during the Porfiriato. Some industry, especially textiles, had its origins in the 1840s, but its size, scale and location altered dramatically by the end of the nineteenth century. For example, the cotton textile industry saw the number of workers, spindles and looms more than double from the late 1870s to the first decade of the nineteenth century. Brewing and its associated industry, glassmaking, became well established in Monterrey during the 1890s. The country’s first iron and steel mill, Fundidora Monterrey, was established there as well in 1903. Other industries, such as papermaking and cigarettes followed suit. By the end of the Porfiriato, over 10 percent of Mexico’s output was certainly industrial.[42]

 

From Revolution to “Miracle”

The Mexican Revolution (1910-1940) began as a political upheaval provoked by a crisis in the presidential succession when Porfirio Díaz refused to leave office in the wake of electoral defeat after signaling his willingness to do so in a famous pubic interview of 1908.[43] It was also the result of an agrarian uprising and the insistent demand of Mexico’s growing industrial proletariat for a share of political power. Finally, there was a small (fewer than 10 percent of all households) but upwardly mobile urban middle class created by economic development under Díaz whose access to political power had been effectively blocked by the regime’s mechanics of political control. Precisely how “revolutionary” were the results of the armed revolt—which persisted largely through the 1910s and peaked in a civil war in 1914-1915—has long been contentious, but is only tangentially relevant as a matter of economic history. The Mexican Revolution was no Bolshevik movement (of course, it predated Bolshevism by seven years) but it was not a purely bourgeois constitutional movement either, although it did contain substantial elements of both.

From a macroeconomic standpoint, it has become fashionable to argue that the Revolution had few, if any, profound economic consequences. It seems as if the principal reason was that revolutionary factions were interested in appropriating rather than destroying the means of production. For example, the production of crude oil peaked in Mexico in 1915—at the height of the Revolution—because crude oil could be used as a source of income to the group controlling the wells in Veracruz state. This was a powerful consideration.[44]

Yet in another sense, the conclusion that the Revolution had slight economic effects is not only facile, but obviously wrong. As the demographic historian Robert McCaa showed, the excess mortality occasioned by the Revolution was larger than any similar event in Mexican history other than the conquest in the sixteenth century. There has been no attempt made to measure the output lost by the demographic wastage (including births that never occurred), yet even the effect on the population cohort born between 1910 and 1920 is plain to see in later demographic studies.  [45]

There is also a subtler question that some scholars have raised. The Revolution increased labor mobility and the labor supply by abolishing constraints on the rural population such as debt peonage and even outright slavery. Moreover, the Revolution, by encouraging and ultimately setting into motion a massive redistribution of previously privatized land, contributed to an enlarged supply of that factor of production as well. The true impact of these developments was realized in the 1940s and 1950s, when rapid economic growth began, the so-called Mexican Miracle, which was characterized by rates of real growth of as much as 6 percent per year (1955-1966). Whatever the connection between the Revolution and the Miracle, it will require a serious examination on empirical grounds and not simply a dogmatic dismissal of what is now regarded as unfashionable development thinking: import substitution and inward-oriented growth.[46]

The other major consequence of the Revolution, the agrarian reform and the creation of the ejido, or land granted by the Mexican state to rural population under the authority provided it by the revolutionary Constitution on 1917 took considerable time to coalesce, and were arguably not even high on one of the Revolution’s principal instigators, Francisco Madero’s, list of priorities. The redistribution of land to the peasantry in the form of possession if not ownership – a kind of return to real or fictitious preconquest and colonial forms of land tenure – did peak during the avowedly reformist, and even modestly radical presidency of Lázaro Cárdenas (1934-1940) after making only halting progress under his predecessors since the 1920s. From 1940 to 1965, the cultivated area in Mexico grew at 3.7 percent per year and the rise in productivity in basic food crops was 2.8 percent per year.

Nevertheless, the long-run effects of the agrarian reform and land redistribution have been predictably controversial. Under the presidency of Carlos Salinas (1988-1994) the reform was officially declared over, with no further land redistribution to be undertaken and the legal status of the ejido definitively changed. The principal criticism of the ejido was that, in the long run, it encouraged inefficiently small landholding per farmer and, by virtue of its limitations on property rights, made agricultural credit difficult for peasants to obtain.[47]

There is no doubt these are justifiable criticisms, but they have to be placed in context. Cárdenas’ predecessors in office, Alvaro Obregón (1924-1928) and Plutarco Elías Calles (1928-1932) may well have preferred a more commercial model of agriculture with larger, irrigated holdings. But it is worth recalling that one of the original agrarian leaders of the Revolution, Emiliano Zapata, had an uneasy relationship with Madero, who saw the Revolution in mostly political terms, from the start and quickly rejected Madero’s leadership in favor of restoring peasant lands in his native state of Morelos.  Cárdenas, who was in the midst of several major maneuvers that would require widespread popular support—such as the expropriation of foreign oil companies operating in Mexico in March 1938—was undoubtedly sensitive to the need to mobilize the peasantry on his behalf. The agrarian reform of his presidency, which surpassed that of any other, needs to be considered in those terms as well as in terms of economic efficiency.[48]

Cárdenas’ presidency also coincided with the continuation of the Great Depression. Like other countries in Latin America, Mexico was hard hit by the Great Depression, at least through the early 1930s.  All sorts of consumer goods became scarcer, and the depreciation of the peso raised the relative price of imports. As had happened previously in Mexican history (1790-1810, during the Napoleonic Wars and the disruption of the Atlantic trade), in the medium term domestic industry was nevertheless given a stimulus and import substitution, the subsequent core of Mexico’s industrialization program after World War II, was given a decisive boost. On the other hand, Mexico also experienced the forced “repatriation” of people of Mexican descent, mostly from California, of whom 60 percent were United States citizens. The effects of this movement—the emigration of the Revolution in reverse—has never been properly analyzed. The general consensus is that World War II helped Mexico to prosper. Demand for labor and materials from the United States, to which Mexico was allied, raised real wages and incomes, and thus boosted aggregate demand. From 1939 through 1946, real output in Mexico grew by approximately 50 percent. The growth in population accelerated as well as the country began to move into the later stages of the demographic transition, with a falling death rate, while birth rates remained high.[49]

 

From Miracle to Meltdown: 1950-1982  

The history of import substitution manufacturing did not begin with postwar Mexico, but few countries (especially in Latin America) became as identified with the policy in the 1950s, and with what Mexicans termed the emergence of “stabilizing development.” There was never anything resembling a formal policy announcement, although Raúl Prebisch’s 1949 manifesto, “The Economic Development of Latin America and its Principal Problems” might be regarded as supplying one. Prebisch’s argument, that a directed change in the composition of imports toward capital goods to facilitate domestic industrialization was, in essence, the basis of the policy that Mexico followed. Mexico stabilized the nominal exchange rate at 12.5 pesos to the dollar in 1954, but further movement in the real exchange rate (until the 1970s) were unimportant. The substantive bias of import substitution in Mexico was a high effective rate of protection to both capital and consumer goods. Jaime Ros has calculated these rates in 1960 ranged between 47 and 85 percent, and between 33 and 109 percent in 1980. The result, in the short to intermediate run, was very rapid rates of economic growth, averaging 6.5 percent in 1950 through 1973. Other than Brazil, which also followed an import substitution regime, no country in Latin America experienced higher rates of growth. Mexico’s was substantially above the regional average. [50]

[See the historical graph of population growth in Mexico through 2000 below]

page39

Source: Essentially, Estadísticas Históricas de México (various editions since 1999; the most recent is 2014)

http://dgcnesyp.inegi.org.mx/ehm/ehm.htm (Accessed July 20, 2016)

 

But there were unexpected results as well. The contribution of labor to GDP growth was 14 percent. Capital’s contribution was 53 percent, and the remainder, total factor productivity (TFP) 28 percent.[51] As a consequence, while Mexico’s growth occurred through the accumulation of capital, the distribution of income became extremely skewed. The ratio of the top 10 percent of household income to the bottom 40 percent was 7 in 1960, and 6 in 1968. Even supporters of Mexico’s development program, such as Carlos Tello, conceded that it probable that it was the organized peasants and workers experienced an effective improvement of their relative position. The fruits of the Revolution were unevenly distributed, even among the working class.[52]

By “organized” one means such groups as the most important labor union in the country, the CTM (Confederation of Mexican Workers) or the nationally recognized peasant union, the CNC, both of which formed two of the three organized sectors of the official government party, the PRI, or Party of the Institutional Revolution that was organized in 1946. The CTM in particular was instrumental in supporting the official policy of import substitution, and thus benefited from government wage setting and political support. The leaders of these organizations became important political figures in their own right. One, Fidel Velázquez, as both a federal senator and the head of the CTM from 1941 to his death in 1997. The incorporation of these labor and peasant groups into the political system offered the government both a means of control and a guarantee of electoral support. They became pillars of what the Peruvian writer Mario Vargas Llosa famously called “the perfect dictatorship” of the PRI from 1946 to 2000, during which the PRI held a monopoly of the presidency and the important offices of state. In a sense, import substitution was the economic ideology of the PRI.[53]

Labor and economic development during the years of rapid growth is, like many others, a debated subject. While some have found strong wage growth, others, looking mostly at Mexico City, have found declining real wages. Beyond that, there is the question of informality and a segmented labor market. Were workers in the CTM the real beneficiaries of economic growth, while others in the informal sector (defined as receiving no social security payments, meaning roughly two-thirds of Mexican workers) did far less well? Obviously, the attraction of a segmented labor market model can address one obvious puzzle: why would industry substitute capital for labor, as it obviously did, if real wages were not rising? Postulating an informal sector that absorbed the rapid influx of rural migrants and thus held nominal wages steady while organized labor in the CTM got the benefit of higher negotiated wages, but in so doing, limited their employment is an attractive hypothesis, but would not command universal agreement. Nothing has been resolved, at least for the period of the “Miracle.” After Mexico entered a prolonged series of economic crises in the 1980s—here labelled as “meltdown”—the discussion must change, because many hold that the key to relative political stability and the failure of open unemployment to rise sharply can be explained by falling real wages.

The fiscal basis on which the years of the Miracle were constructed was conventional, not to say conservative.[54] A stable nominal exchange rate, balanced budgets, limited public borrowing, and a predictable monetary policy were all predicated on the notion that the private sector would react positively to favorable incentives. By and large, it did. Until the late 1960s, foreign borrowing was considered inconsequential, even if there was some concern on the horizon that it was starting to rise. No one foresaw serious macroeconomic instability. It is worth consulting a brief memorandum from Secretary of State Dean Rusk to President Lyndon Johnson (Washington, December 11, 1968) –to get some insight into how informed contemporaries viewed Mexico. The instability that existed was seen as a consequence of heavy-handedness on the part of the PRI and overreaction in the security forces. Informed observers did not view Mexico’s embrace of import-substitution industrialization as a train wreck waiting to happen. Historical actors are rarely so prescient.[55]

 

Slowing of the Miracle and Echeverría

The most obvious problems in Mexico were political. They stemmed from the increasing awareness that the limits of the “institutional revolution” had been reached, particularly regarding the growing democratic demands of the urban middle classes. The economic problem, which was far from obvious, was that import substitution had concentrated income in the upper 10 per cent of the population, so that domestic demand had begun to stagnate. Initially at least, public sector borrowing could support a variety of consumption subsidies to the population, and there were also efforts to transfer resources out of agriculture via domestic prices for staples such as maize. Yet Mexico’s population was also growing at the rate of nearly 3 percent per year, so that the long term prospects for any of these measures were cloudy.

At the same time, growing political pressures on the PRI, mostly dramatically manifest in the army’s violent repression of student demonstrators at Tlatelolco in 1968 just prior to the Olympics, had convinced some elements in the PRI, people like Carlos Madrazo, to argue for more radical change. The emergence of an incipient guerilla movement in the state of Guerrero had much the same effect. The new president, Luis Echeverría (1970-76), openly pushed for changes in the distribution of income and wealth, incited agrarian discontent for political purposes, dramatically increased government spending and borrowing, and alienated what had typically been a complaisant, if not especially friendly private sector.

The country’s macroeconomic performance began to deteriorate dramatically. Inflation, normally in the range of about 5 percent, rose into the low 20 percent range in the early 1970s. The public sector deficit, fueled by increasing social spending, rose from 2 to 7 percent of GDP. Money supply growth now averaged about 14 percent per year. Real GDP growth had begun to slip after 1968 and in the early 1970s, in deteriorated more, if unevenly. There had been clear convergence of regional economies in Mexico between 1930 and 1980 because of changing patterns of industrialization in the northern and central regions of the country.  After 1980, that process stalled and regional inequality again widened. [56]

While there is a tendency to blame Luis Echeverria for all or most of these developments, this forgets that his administration coincided with the First OPEC oil shock (1973) and rapidly deteriorating external conditions. Mexico had, as yet, not discovered the oil reserves (1978) that were to provide a temporary respite from economic adjustment after the shock of the peso devaluation of 1976—the first change in its value in over 20 years. At the same time, external demand fell, principally transmitted from the United States, Mexico’s largest trading partner, where the economy had fallen into recession in late 1973. Yet it seems reasonable to conclude that the difficult international environment, while important in bring Mexico’s “miracle” period to a close, was not helped by Echeverría’s propensity for demagoguery, of the loss of fiscal discipline that had long characterized government policy, at least since the 1950s. The only question to be resolved was to what sort of conclusion the period would come. The answer, unfortunately, was disastrous.[57]

 

Meltdown: The Debt Crisis, the Lost Decade and After

In contemporary parlance, Mexico had passed from “stabilizing” to “shared” development under Echeverría. But the devaluation of 1976 from 12.5 to 20.5 pesos to the dollar suggested that something had gone awry. One might suppose that some adjustment in course, especially in public spending and borrowing, would have occurred. But precisely the opposite occurred. Between 1976 and 1979, nominal federal spending doubled. The budget deficit increased by a factor of 15. The reason for this odd performance was the discovery of crude oil in the Gulf of Mexico, perhaps unsurprising in light of the spiking prices of the 1970s (the oil shocks of 1973-74, 1978-79), but nevertheless of considerable magnitude. In 1975, Mexico’s proven reserves were 6 billion barrels of oil. By 1978, they had increased to 40 billion. President López Portillo set himself to the task of “administering abundance” and Mexican analysts confidently predicted crude oil at $100 a barrel (when it stood at $37 in current prices in 1980). The scope of the miscalculation was catastrophic. At the same time, encouraged by bank loan pushing and effectively negative real rates of interest, Mexico borrowed abroad. Consumption subsidies, while vital in the face of slowing import substitution, were also costly, and when supported by foreign borrowing, unsustainable, but foreign indebtedness doubled between 1976 and 1979, and even further thereafter.

Matters came to a head in 1982. By then, Mexico’s foreign indebtedness was estimated at over $80 billion dollars, an increase from less than $20 billion in 1975. Real interest rates had begun to rise in the United States in mid-1981, and with Mexican borrowing tied to international rates, debt service rapidly increased. Oil revenue, which had come to constitute the great bulk of foreign exchange, followed international crude prices downward, driven in large part by a recession that had begun in the United States in mid-1981. Within six months, Mexico, too, had fallen into recession. Real per capital output was to decline by 8 percent in 1982.  Forced to sharply devalue, the real exchange rate fell by 50 percent in 1982 and inflation approached 100 percent. By the late summer, Finance Minister Jesus Silva Herzog admitted that the country could not meet an upcoming payment obligation, and was forced to turn to the US Federal Reserve, to the IMF, and to a committee of bank creditors for assistance. In late August, in a remarkable display of intemperance, President López Portillo nationalized the banking system. By December 20, 1982, Mexico’s incoming President, Miguel de la Madrid (1982-88) appeared, beleaguered, on the cover of Time Magazine framed by the caption, “We are in an Emergency.”  It was, as the saying goes, a perfect storm, and with it, the Debt Crisis and the “Lost Decade” in Mexico had begun. It would be years before anything resembling stability, let alone prosperity, was restored. Even then, what growth there was a pale imitation of what had occurred during the decades of the “Miracle.”

 

The 1980s

The 1980s were a difficult decade.[58]  After 1981, annual real per capita growth would not reach 4 percent again until 1989, and in 1986, it fell by 6 percent. In 1987, inflation reached 159 percent. The nominal exchange rate fell by 139 percent in 1986-1987. By the standards of the years of stabilizing development, the record of the 1980s was disastrous. To complete the devastation, on September 19, 1985, the worst earthquake in Mexican history, 7.8 on the Richter Scale, devastated large parts of central Mexico City and killed 5 thousand (some estimates run as high as 25 thousand), many of whom were simply buried in mass graves. It was as if a plague of biblical proportions had struck the country.

Massive indebtedness produced a dramatic decline in the standard of living as structural adjustment occurred. Servicing the debt required the production of an export surplus in non-oil exports, which in turn, required a reduction in domestic consumption. In an effort to surmount the crisis, the government implemented an agreement between organized labor, the private sector, and agricultural producers called the Economic Solidarity Pact (PSE). The PSE combined an incomes policy with fiscal austerity, trade and financial liberalization, generally tight monetary policy, and debt renegotiation and reduction. The centerpiece of the “remaking” of the previously inward orientation of the domestic economy was the North American Free Trade Agreement (NAFTA, 1993) linking Mexico, the United States, and Canada. While average tariff rates in Mexico had fallen from 34 percent in 1985 to 4 percent in 1992—even before NAFTA was signed—the agreement was generally seen as creating the institutional and legal framework whereby the reforms of Miguel de la Madrid and Carlos Salinas (1988-1994) would be preserved. Most economists thought its effects would be relatively larger in Mexico than in the United States, which generally appears to have been the case. Nevertheless, NAFTA has been predictably controversial, as trade agreements are wont to be. The political furor (and, in some places, euphoria) surrounding the agreement have faded, but never entirely disappeared. In the United States in particular, NAFTA is blamed for deindustrialization, although pressure on manufacturing, like trade liberalization itself, was underway long before NAFTA was negotiated. In Mexico, there has been much hand wringing over the fate of agriculture and small maize producers in particular. While none of this is likely to cease, it is nevertheless the case that there has been a large increase in the volume of trade between the NAFTA partners. To dismiss this is, quite plainly, misguided, even where sensitive and well organized political constituencies are concerned. But the legacy of NAFTA, like most everything in Mexican economic history, remains unsettled.  As a result, the agreement was subject to a controversial renegotiation in 2018, largely fueled by protectionist sentiment in the Trump administration. While the intent was to increase costs in the Mexican automobile industry so as to price labor in the United Stats back into the industry, the long
term effect of the measure—not to say its ratification—remains to be seen.

 

Post Crisis: No Miracles

Still, while some prosperity was restored to Mexico by the reforms of the 1980s and 1990s, the general macroeconomic results have been disappointing, not to say mediocre. The average real compensation per person in manufacturing in 2008 was virtually unchanged from 1993 according to the Instituto Nacional De Estadística  Geografía e Informática, and there is little reason to think the compensation has improved at all since then. It is generally conceded that per capita GDP growth has probably averaged not much more than 1 percent a year. Real GDP growth since NAFTA according to the OECD has rarely reached 5 percent and since 2010, it has been well below that.

 

 

Source: http://www.worldbank.org/en/country/mexico (Accessed July 21, 2016). The vertical scale cuts the horizontal axis at 1982

 

For virtually everyone in Mexico, the question is why, and the answers proposed include virtually any plausible factor: the breakdown of the political system after the PRI’s historic loss of presidential power in 2000; the rise of China as a competitor to Mexico in international markets; the explosive spread of narcoviolence in recent years, albeit concentrated in the states of Sonora, Sinaloa, Tamaulipas, Nuevo León and Veracruz; the results of NAFTA itself; the failure of the political system to undertake further structural economic reforms and privatizations after the initial changes of the 1980s, especially regarding the national oil monopoly, Petroleos Mexicanos (PEMEX); the failure of the border industrialization program (maquiladoras) to develop substantive backward linkages to the rest of the economy. This is by no means an exhaustive list of the candidates for poor economic performance. The choice of a cause tends to reflect the ideology of the critic.[59]

Yet it seems that, at the end of the day, the reason why post-NAFTA Mexico has failed to grow comes down to something much more fundamental: a fear of growing, embedded in the belief that the collapse of the 1980s and early 1990s (including the devastating “Tequila Crisis” of 1994-1995, which resulted in a another enormous devaluation of the peso after an initial attempt to contain the crisis was bungled)  was so traumatic and costly as to render event modest efforts to promote growth, let alone the dirigisme of times past, as essentially unwarranted. The central bank, the Banco de México (Banxico) rules out the promotion of economic growth as part of its remit—even as a theoretical proposition, let alone as a goal of macroeconomic policy– and concerns itself only with price stability. The language of its formulation is striking. “During the 1970s, there was a debate as to whether it was possible to stimulate economic growth via monetary policy.  As a result, some governments and central banks tried to reduce unemployment through expansive monetary policy.  Both economic theory and the experience of economies that tried this prescription demonstrated that it lacked validity. Thus, it became clear that monetary policy could not actively and directly stimulate economic activity and employment. For that reason, modern central banks have as their primary goal the promotion of price stability” (translation mine). Banxico is not the Fed: there is no dual mandate in Mexico.[60]  This may well change during the new presidential administration of Andrés Manuel López Obrador (known colloquially in Mexico as AMLO).

The Mexican banking system has scarcely made things easier. Private credit stands at only about a third of GDP. In recent years, the increase in private sector savings has been largely channeled to government bonds, but until quite recently, public sector deficits were very small, which is to say, fiscal policy has not been expansionary. If monetary and fiscal policy are both relatively tight, if private credit is not easy to come by, and if growth is typically presumed to be an inevitable concomitant to economic stability for which no actor (other than the private sector) is deemed responsible, it should come as no surprise that economic growth over the past two decades has been lackluster.  In the long run, aggregate supply determines real GDP, but in the short run, nominal demand matters: there is no point in creating productive capacity to satisfy demand that does not exist. And, unlike during the period of the Miracle and Stabilizing Development, attention to demand since 1982 has been limited, not to say off the table completely. It may be understandable, but Mexico’s fiscal and monetary authorities seem to suffer from what could be termed, “Fear of Growth.” For better or worse, the results are now on display. After its current (2016) return to a relatively austere budget, it remains to be seen how the economic and political system in contemporary Mexico handles slow economic growth.

The response of the Mexican public to a generation of stagnation in living standards, as well as to rising insecurity and the perception of widespread public corruption, was the victory of AMLO in the presidential election of July 2018.

AMLO had previously run for President with a different party. After two unsuccessful attempts, he started a new one, called MORENA. He then proceeded to win 53 percent of the vote, virtually obliterating the opposition parties, the incumbent PRI, and the PAN. MORENA also won majorities in both houses of Congress. To most observers, this signified that AMLO would be a potentially strong president, assuming his congressional party remained loyal to him. His somewhat checkered “leftist” past guaranteed that not everyone was thrilled at the prospect of a strong AMLO presidency.

Expectations for AMLO’s presidency are thus high, perhaps unrealistically so. While his initial budget has been generally well received by the financial markets, there is little question as to where AMLO’s priorities lie. He has advocated increases in spending on infrastructure, has moved to restore the real minimum wage to its level in 1994, and pledged to revitalize domestic agriculture. Whether these and a number of other reforms that AMLO has somewhat paradoxically labelled “Republican Austerity” will restore the country to its pre-1982 growth path now constitutes one of the most watched economic experiments in Latin America. [61]

[1] I am grateful to Ivan Escamilla and Robert Whaples for their careful readings and thoughtful criticisms.

[2] The standard reference work is Sandra Kuntz Ficker, (ed), Historia económica general de México. De la Colonia a nuestros días (México, DF: El Colegio de Mexico, 2010).

[3] Oscar Martinez, Troublesome Border (rev. ed., University of Arizona Press: Tucson, AZ, 2006) is the most helpful general account in English.

[4] There are literally dozens of general accounts of the pre-conquest world. A good starting point is Richard E.W. Adams, Prehistoric Mesoamerica (3d ed., University of Oklahoma Press: Norman, OK, 2005). More advanced is Richard E.W. Adams and Murdo J. Macleod, The Cambridge History of the Mesoamerican Peoples: Mesoamerica. (2 parts, New York: Cambridge University Press, 2000).

[5] Nora C. England and Roberto Zavala Maldonado, “Mesoamerican Languages” Oxford Bibliographies http://www.oxfordbibliographies.com/view/document/obo-9780199772810/obo-9780199772810-0080.xml

(Accessed July 10, 2016)

[6] For an introduction to the nearly endless controversy over the pre- and post-contact population of the Americas, see William M. Denevan (ed.), The Native Population of the Americas in 1492 (2d rev ed., Madison: University of Wisconsin Press, 1992).

[7] Sherburne F Cook and Woodrow Borah, Essays in Population History: Mexico and California (Berkeley, CA: University of California Press, 1979), p. 159.

[8]Gene C. Wilken, Good Farmers Traditional Agricultural Resource Management in Mexico and Central America (Berkeley: University of California Press, 1987), p. 24.

[9] Bernard Ortiz de Montellano, Aztec Medicine Health and Nutrition (New Brunswick, NJ: Rutgers University Press, 1990).

[10] Bernardo García Martínez, “Encomenderos españoles y British residents: El sistema de dominio indirecto desde la perspectiva novohispana”, in Historia Mexicana, LX: 4 [140] (abr-jun 2011), pp. 1915-1978.

[11] These epidemics are extensively and exceedingly well documented. One of the most recent examinations is Rodofo Acuna-Soto, David W. Stahle, Matthew D. Therrell , Richard D. Griffin,  and Malcolm K. Cleaveland, “When Half of the Population Died: The Epidemic of Hemorrhagic Fevers of 1576 in Mexico,” FEMS Microbiology Letters 240 (2004) 1–5. (http:// femsle.oxfordjournals.org/content/femsle/240/1/1.full.pdf, accessed July 10, 2016.) See in particular the exceptional map and table on pp. 2-3.

[12] See in particular, Bernardo García Martínez. Los pueblos de la Sierrael poder y el espacio entre los indios del norte de Puebla hasta 1700 (Mexico, DF: El Colegio de México, 1987) and Elinor G.K. Melville, A Plague of Sheep: Environmental Consequences of the Conquest of Mexico (New York: Cambridge University Press, 1997).

[13] J. H. Elliott, “A Europe of Composite Monarchies,” Past & Present 137 (The Cultural and Political Construction of Europe): 48–71; Guadalupe Jiménez Codinach, “De Alta Lealtad: Ignacio Allende y los sucesos de 1808-1811,” in Marta Terán and José Antonio Serrano Ortega, eds., Las guerras de independencia en la América Española (La Piedad, Michoacán, MX: El Colegio de Michoacán, 2002), p. 68.

[14] Richard Salvucci, “Capitalism and Dependency in Latin America,” in Larry Neal and Jeffrey G. Williamson, eds., The Cambridge History of Capitalism (2 vols.), New York: Cambridge University Press, 2014), 1: pp. 403-408.

[15] Source: TePaske Page, http://www.insidemydesk.com/hdd.html (Accessed July 19, 2016)

[16]  Edith Boorstein Couturier, The Silver King: The Remarkable Life of the Count of Regla in Colonial Mexico (Albuquerque, NM: University of New Mexico Press, 2003).  Dana Velasco Murillo, Urban Indians in a Silver City: Zacatecas, Mexico, 1546-1810 (Stanford, CA: Stanford University Press, 2015), p. 43. The standard work on the subject is David Brading, Miners and Merchants in Bourbon Mexico, 1763-1810 (New York: Cambridge University Press, 1971) But also see Robert Haskett, “Our Suffering with the Taxco Tribute: Involuntary Mine Labor and Indigenous Society in Central New Spain,” Hispanic American Historical Review, 71:3 (1991), pp. 447-475. For silver in China see http://afe.easia.columbia.edu/chinawh/web/s5/s5_4.html (accessed July 13, 2016). For the rents of empire question, see Michael Costeloe, Response to Revolution: Imperial Spain and the Spanish American Revolutions, 1810-1840 (New York: Cambridge University Press, 1986).

[17] This is an estimate. David Ringrose concluded that in the 1780s, the colonies accounted for 45 percent of Crown income, and one would suppose that Mexico would account for at least about half of that. See David R. Ringrose, Spain, Europe and the ‘Spanish Miracle’, 1700-1900 (New York: Cambridge University Press, 1996), p. 93; Mauricio Drelichman, “The Curse of Moctezuma: American Silver and the Dutch Disease,” Explorations in Economic History 42:3 (2005), pp. 349-380.

[18] José Antonio Escudero, El supuesto memorial del Conde de Aranda sobre la Independencia de América) México, DF: Universidad Nacional Autónoma de México, 2014) (http://bibliohistorico.juridicas.unam.mx/libros/libro.htm?l=3637, accessed July 13, 2016)

[19] Allan J. Kuethe and Kenneth J. Andrien, The Spanish Atlantic World in the Eighteenth Century. War and the Bourbon Reforms, 1713-1796 (New York: Cambridge University Press, 2014) is the most recent account of this period.

[20] Richard J. Salvucci, “Economic Growth and Change in Bourbon Mexico: A Review Essay,” The Americas, 51:2 (1994), pp. 219-231; William B Taylor, Magistrates of the Sacred: Priests and Parishioners in Eighteenth Century Mexico (Palo Alto: Stanford University Press, 1996), p. 24; Luis Jáuregui, La Real Hacienda de Nueva España. Su Administración en la Época de los Intendentes, 1786-1821 (México, DF: UNAM, 1999), p. 157.

[21] Jeremy Baskes, Staying AfloatRisk and Uncertainty in Spanish Atlantic World Trade, 1760-1820 (Stanford, CA: Stanford University Press, 2013); Xabier Lamikiz, Trade and Trust in the Eighteenth-century Atlantic World: Spanish Merchants and their Overseas Networks (Suffolk, UK: The Boydell Press., 2013). The starting point of all these studies is Clarence Haring, Trade and Navigation between Spain and the Indies in the Time of the Hapsburgs (Cambridge, MA: Harvard University Press, 1918).

[22] The best, and indeed, virtually unique starting point for considering these changes in their broadest dimensions   are the joint works of Stanley and Barbara Stein: Silver, Trade, and War (2003); Apogee of Empire (2004), and Edge of Crisis (2010), All were published by Johns Hopkins University Press and do for the Spanish Empire what Laurence Henry Gipson did for the First British Empire.

[23] The key work is María Eugenia Romero Sotelo, Minería y Guerra. La economía de Nueva España, 1810-1821 (México, DF: UNAM, 1997)

[24] Calculated from José María Luis Mora, Crédito Público ([1837] México, DF: Miguel Angel Porrúa, 1986), pp. 413-460. Also see Richard J. Salvucci, Politics, Markets, and Mexico’s “London Debt,” 1823-1887 (NY: Cambridge University Press, 2009).

[25] Jesús Hernández Jaimes, La Formación de la Hacienda Pública Mexicana y las Tensiones Centro Periferia, 1821-1835  (México, DF: El Colegio de México, 2013). Javier Torres Medina, Centralismo y Reorganización. La Hacienda Pública Durante la Primera República Central de México, 1835-1842 (México, DF: Instituto Mora, 2013). The only treatment in English is Michael P. Costeloe, The Central Republic in Mexico, 1835-1846 (New York: Cambridge University Press, 1993).

[26] An agricultural worker who worked full time, 6 days a week, for the entire year (a strong assumption), in Central Mexico could have expected cash income of perhaps 24 pesos. If food, such as beans and tortilla were added, the whole pay might reach 30. The figure of 40 pesos comes from considerably richer agricultural lands around the city of Querétaro, and includes as an average income from nonagricultural employment as well, which was higher.  Measuring Worth would put the relative historic standard of living value in 2010 prices at $1.040, with the caveat that this is relative to a bundle of goods purchased in the United States. (https://www.measuringworth.com/uscompare/relativevalue.php).

[27]The phrase comes from Guido di Tella and Manuel Zymelman. See Colin Lewis, “Explaining Economic Decline: A review of recent debates in the economic and social history literature on the Argentine,” European Review of Latin American and Caribbean Studies, 64 (1998), pp. 49-68.

[28] Francisco Téllez Guerrero, De reales y granos. Las finanzas y el abasto de la Puebla de los Angeles, 1820-1840 (Puebla, MX: CIHS, 1986). Pp. 47-79.

[29]This is based on an analysis of government lending contracts. See Rosa María Meyer and Richard Salvucci, “The Panic of 1837 in Mexico: Evidence from Government Contracts” (in progress).

[30] There is an interesting summary of this data in U.S Govt., 57th Cong., 1 st sess., House, Monthly Summary of Commerce and Finance of the United States (September 1901) (Washington, DC: GPO, 1901), pp. 984-986.

[31] Salvucci, Politics and Markets, pp. 201-221.

[32] Miguel Galindo y Galindo, La Gran Década Nacional o Relación Histórica de la Guerra de Reforma, Intervención Extranjera, y gobierno del archiduque Maximiliano, 1857-1867 ([1902], 3 vols., México, DF: Fondo de Cultura Económica, 1987).

[33] Carmen Vázquez Mantecón, Santa Anna y la encrucijada del Estado. La dictadura, 1853-1855 (México, DF: Fondo de Cultura Económica, 1986).

[34] Moramay López-Alonso, Measuring Up: A History of Living Standards in Mexico, 1850-1950 (Stanford, CA: Stanford University Press, 2012);  Amilcar Challú and Auroro Gómez Galvarriato, “Mexico’s Real Wages in the Age of the Great Divergence, 1730-1930,” Revista de Historia Económica 33:1 (2015), pp. 123-152; Amílcar E. Challú, “The Great Decline: Biological Well-Being and Living Standards in Mexico, 1730-1840,” in Ricardo Salvatore, John H. Coatsworth, and Amilcar E. Challú, Living Standards in Latin American History: Height, Welfare, and Development, 1750-2000 (Cambridge, MA: Harvard University Press, 2010), pp. 23-67.

[35]See Challú and Gómez Galvarriato, “Real Wages,” Figure 5, p. 101.

[36] Luis González et al, La economía mexicana durante la época de Juárez (México, DF: 1976).

[37] Teresa Rojas Rabiela and Ignacio Gutiérrez Ruvalcaba, Cien ventanas a los países de antaño: fotografías del campo mexicano de hace un siglo) (México, DF: CONACYT, 2013), pp. 18-65.

[38] Alma Parra, “La Plata en la Estructura Económica Mexicana al Inicio del Siglo XX,” El Mercado de Valores 49:11 (1999), p. 14.

[39] Sandra Kuntz Ficker, Empresa Extranjera y Mercado Interno: El Ferrocarril Central Mexicano (1880-1907) (México, DF: El Colegio de México, 1995).

[40] Priscilla Connolly, El Contratista de Don Porfirio. Obras públicas, deuda y desarrollo desigual (México, DF: Fondo de Cultura Económica, 1997).

[41] Most notably John Tutino, From Insurrection to Revolution in Mexico: Social Bases of Agrarian Violence, 1750-1940 (Princeton, NJ: Princeton University Press, 1986). p. 229. My growth figures are based on the INEGI, Estadísticas Historicas de México, 2014) (http://dgcnesyp.inegi.org.mx/cgi-win/ehm2014.exe/CI080010, Accessed July 15, 2016).

[42] Stephen H. Haber, Industry and Underdevelopment: The Industrialization of Mexico, 1890-1940 (Stanford, CA: Stanford University Press, 1989); Aurora Gómez-Galvarriato, Industry and Revolution: Social and Economic Change in the Orizaba Valley (Cambridge, MA: Harvard University Press, 2013).

[43] There are literally dozens of accounts of the Revolution. The usual starting point, in English, is Alan Knight, The Mexican Revolution (reprint ed., 2 vols., Lincoln, NE: 1990).

[44] This argument has been made most insistently in Armando Razo and Stephen Haber, “The Rate of Growth of Productivity in Mexico, 1850-1933: Evidence from the Cotton Textile Industry,” Journal of Latin American Studies 30:3 (1998), pp. 481-517.

[45]Robert McCaa, “Missing Millions: The Demographic Cost of the Mexican revolution,” Mexican Studies/Estudios Mexicanos 19:2 (Summer 2003): 367-400; Virgilio Partida-Bush, “Demographic Transition, Demographic Bonus, and Ageing in Mexico, “ Proceedings of the United Nations Expert Group Meeting on Social and Economic Implications of Changing Population Age Structures. (http://www.un.org/esa/population/meetings/Proceedings_EGM_Mex_2005/partida.pdf) (Accessed July 15, 2016), pp. 287-290.

[46] An implication of the studies of Alan Knight, and of Clark Reynolds, The Mexican Economy: Twentieth Century Structure and Growth (New Haven, CT: Yale University Press, 1971).

[47] An interesting summary of revisionist thinking on the nature and history of the ejido appears in Emilio Kuri, “La invención del ejido, Nexos, January 2015.

[48]Alan Knight, “Cardenismo: Juggernaut or Jalopy?” Journal of Latin American Studies, 26:1 (1994), pp. 73-107.

[49] Stephen Haber, “The Political Economy of Industrialization,” in Victor Bulmer-Thomas, John Coatsworth, and Roberto Cortes-Conde, eds., The Cambridge Economic History of Latin America (2 vols., New York: Cambridge University Press, 2006), 2:  537-584.

[50]Again, there are dozens of studies of the Mexican economy in this period. Ros’ figures come from “Mexico’s Trade and Industrialization Experience Since 1960: A Reconsideration of Past Policies and Assessment of Current Reforms,” Kellogg Institute (Working Paper 186, January 1993). For a more general study, see Juan Carlos Moreno-Brid and Jaime Ros, Development and Growth in the Me3xican Economy. A Historical Perspective (New York: Oxford University Press, 2009). A recent Spanish language treatment is Enrique Cárdenas Sánchez, El largo curso de la economía mexicana. De 1780 a nuestros días (México, DF: Fondo de Cultura Económica, 2015). A view from a different perspective is Carlos Tello, Estado y desarrollo económico. México 1920-2006 (México, DF, UNAM, 2007).

[51]André A. Hoffman, Long Run Economic Development in Latin America in a Comparative Perspective: Proximate and Ultimate Causes (Santiago, Chile: CEPAL, 2001), p. 19.

[52]Tello, Estado y desarrollo, pp. 501-505.

[53] Mario Vargas Llosa, “Mexico: The Perfect Dictatorship,” New Perspectives Quarterly 8 (1991), pp. 23-24.

[54] Rafael Izquierdo, Política Hacendario del Desarrollo Estabilizador, 1958-1970 (México, DF: Fondo de Cultura Económica, 1995. The term stabilizing development was itself termed by Izquierdo as a government minister.

[55]See Foreign Relations of the United States, 1964-1968. Mexico and Central America http://2001-2009.state.gov/r/pa/ho/frus/johnsonlb/xxxi/36313.htm (Accessed July 15, 2016).

[56] José Aguilar Retureta, “The GDP Per Capita of the Mexican Regions (1895:1930): New Estimates, Revista de Historia Económica, 33: 3 (2015), pp. 387-423.

[57] For a contemporary account with a sense of the immediacy of the end of the Echeverría regime, see “Así se devaluó el peso,” Proceso, November 13, 1976.

[58] The standard account is Stephen Haber, Herbert Klein, Noel Maurer, and Kevin Middlebrook, Mexico since 1980 (New York: Cambridge University Press, 2008). A particularly astute economic account is Nora Lustig, Mexico: The Remaking of an Economy (2d ed., Washington, DC: The Brookings Institution, 1998).  But also Louise E. Walker, Waking from the Dream. Mexico’s Middle Classes After 1968 (Stanford, CA: Stanford University Press, 2013).

[59] See, for example, Jaime Ros Bosch, Algunas tesis equivocadas sobre el estancamiento económico de México (México, DF: El Colegio de México, 2013).

[60] La Banca Central y la Importancia de la Estabilidad Económica  June 16, 2008.  (http://www.banxico.org.mx/politica-monetaria-e-inflacion/material-de-referencia/intermedio/politica-monetaria/%7B3C1A08B1-FD93-0931-44F8-96F5950FC926%7D.pdf, Accessed July 15, 2016.). Also see Brian Winter, “This Man is Brilliant: So Why Doesn’t Mexico’s Economy Grow Faster?” Americas Quarterly (http://americasquarterly.org/content/man-brilliant-so-why-doesnt-mexicos-economy-grow-faster) (Accessed July 21, 2016)

[61]   For AMLO in his own words, see his A New Hope For Mexico: Saying No to Corruption, Violence, and Trump’s Wall. Translated by Natascha Uhlman (New York: O/R Books, 2018).

Citation: Salvucci, Richard . “Mexico: Economic History” EH.Net Encyclopedia, edited by Robert Whaples. December 27, 2018. URL http://eh.net/encyclopedia/the-economic-history-of-mexico/

 

Economic History of Portugal

Luciano Amaral, Universidade Nova de Lisboa

Main Geographical Features

Portugal is the south-westernmost country of Europe. With the approximate shape of a vertical rectangle, it has a maximum height of 561 km and a maximum length of 218 km, and is delimited (in its north-south range) by the parallels 37° and 42° N, and (in its east-west range) by the meridians 6° and 9.5° W. To the west, it faces the Atlantic Ocean, separating it from the American continent by a few thousand kilometers. To the south, it still faces the Atlantic, but the distance to Africa is only of a few hundred kilometers. To the north and the east, it shares land frontiers with Spain, and both countries constitute the Iberian Peninsula, a landmass separated directly from France and, then, from the rest of the continent by the Pyrenees. Two Atlantic archipelagos are still part of Portugal, the Azores – constituted by eight islands in the same latitudinal range of mainland Portugal, but much further west, with a longitude between 25° and 31° W – and Madeira – two islands, to the southwest of the mainland, 16° and 17° W, 32.5° and 33° N.

Climate in mainland Portugal is of the temperate sort. Due to its southern position and proximity to the Mediterranean Sea, the country’s weather still presents some Mediterranean features. Temperature is, on average, higher than in the rest of the continent. Thanks to its elongated form, Portugal displays a significant variety of landscapes and sometimes brisk climatic changes for a country of such relatively small size. Following a classical division of the territory, it is possible to identify three main geographical regions: a southern half – with practically no mountains and a very hot and dry climate – and a northern half subdivided into two other vertical sub-halves – with a north-interior region, mountainous, cool but relatively dry, and a north-coast region, relatively mountainous, cool and wet. Portugal’s population is close to 10,000,000, in an area of about 92,000 square kilometers (35,500 square miles).

The Period before the Creation of Portugal

We can only talk of Portugal as a more or less clearly identified and separate political unit (although still far from a defined nation) from the eleventh or twelfth centuries onwards. The geographical area which constitutes modern Portugal was not, of course, an eventless void before that period. But scarcity of space allows only a brief examination of the earlier period, concentrating on its main legacy to future history.

Roman and Visigothic Roots

That legacy is overwhelmingly marked by the influence of the Roman Empire. Portugal owes to Rome its language (a descendant of Latin) and main religion (Catholicism), as well as its primary juridical and administrative traditions. Interestingly enough, little of the Roman heritage passed directly to the period of existence of Portugal as a proper nation. Momentous events filtered the transition. Romans first arrived in the Iberian Peninsula around the third century B.C., and kept their rule until the fifth century of the Christian era. Then, they succumbed to the so-called “barbarian invasions.” Of the various peoples that then roamed the Peninsula, certainly the most influential were the Visigoths, a people of Germanic origin. The Visigoths may be ranked as the second most important force in the shaping of future Portugal. The country owes them the monarchical institution (which lasted until the twentieth century), as well as the preservation both of Catholicism and (although substantially transformed) parts of Roman law.

Muslim Rule

The most spectacular episode following Visigoth rule was the Muslim invasion of the eighth century. Islam ruled the Peninsula from then until the fifteenth century, although occupying an increasingly smaller area from the ninth century onwards, as the Christian Reconquista started repelling it with growing efficiency. Muslim rule set the area on a path different from the rest of Western Europe for a few centuries. However, apart from some ethnic traits legated to its people, a few words in its lexicon, as well as certain agricultural, manufacturing and sailing techniques and knowledge (of which the latter had significant importance to the Portuguese naval discoveries), nothing of the magnitude of the Roman heritage was left in the peninsula by Islam. This is particularly true of Portugal, where Muslim rule was less effective and shorter than in the South of Spain. Perhaps the most important legacy of Muslim rule was, precisely, its tolerance towards the Roman heritage. Much representative of that tolerance was the existence during the Muslim period of an ethnic group, the so-called moçárabe or mozarabe population, constituted by traditional residents that lived within Muslim communities, accepted Muslim rule, and mixed with Muslim peoples, but still kept their language and religion, i.e. some form of Latin and the Christian creed.

Modern Portugal is a direct result of the Reconquista, the Christian fight against Muslim rule in the Iberian Peninsula. That successful fight was followed by the period when Portugal as a nation came to existence. The process of creation of Portugal was marked by the specific Roman-Germanic institutional synthesis that constituted the framework of most of the country’s history.

Portugal from the Late Eleventh Century to the Late Fourteenth Century

Following the Muslim invasion, a small group of Christians kept their independence, settling in a northern area of the Iberian Peninsula called Asturias. Their resistance to Muslim rule rapidly transformed into an offensive military venture. During the eighth century a significant part of northern Iberia was recovered to Christianity. This frontier, roughly cutting the peninsula in two halves, held firm until the eleventh century. Then, the crusaders came, mostly from France and Germany, inserting the area in the overall European crusade movement. By the eleventh century, the original Asturian unit had been divided into two kingdoms, Leon and Navarra, which in turn were subdivided into three new political units, Castile, Aragon and the Condado Portucalense. The Condado Portucalense (the political unit at the origin of future Portugal) resulted from a donation, made in 1096, by the Leonese king to a Crusader coming from Burgundy (France), Count Henry. He did not claim the title king, a job that would be fulfilled only by his son, Afonso Henriques (generally accepted as the first king of Portugal) in the first decade of the twelfth century.

Condado Portucalense as the King’s “Private Property”

Such political units as the various peninsular kingdoms of that time must be seen as entities differing in many respects from current nations. Not only did their peoples not possess any clear “national consciousness,” but also the kings themselves did not rule them based on the same sort of principle we tend to attribute to current rulers (either democratic, autocratic or any other sort). Both the Condado Portucalense and Portugal were understood by their rulers as something still close to “private property” – the use of quotes here is justified by the fact that private property, in the sense we give to it today, was a non-existent notion then. We must, nevertheless, stress this as the moment in which Portuguese rulers started seeing Portugal as a political unit separate from the remaining units in the area.

Portugal as a Military Venture

Such novelty was strengthened by the continuing war against Islam, still occupying most of the center and south of what later became Portugal. This is a crucial fact about Portugal in its infancy, and one that helps one understand the most important episode in Portuguese history , the naval discoveries, i.e. that the country in those days was largely a military venture against Islam. As, in that fight, the kingdom expanded to the south, it did so separately from the other Christian kingdoms existing in the peninsula. And these ended up constituting the two main negative forces for Portugal’s definition as an independent country, i.e. Islam and the remaining Iberian Christian kingdoms. The country achieved a clear geographical definition quite early in its history, more precisely in 1249, when King Sancho II conquered the Algarve from Islam. Remarkably for a continent marked by so much permanent frontier redesign, Portugal acquired then its current geographical shape.

The military nature of the country’s growth gave rise to two of its most important characteristics in early times: Portugal was throughout this entire period a frontier country, and one where the central authority was unable to fully control the territory in its entirety. This latter fact, together with the reception of the Germanic feudal tradition, shaped the nature of the institutions then established in the country. This was particularly important in understanding the land donations made by the crown. These were crucial, for they brought a dispersion of central powers, devolved to local entities, as well as a delegation of powers we would today call “public” to entities we would call “private.” Donations were made in favor of three sorts of groups: noble families, religious institutions and the people in general of particular areas or cities. They resulted mainly from the needs of the process of conquest: noblemen were soldiers, and the crown’s concession of the control of a certain territory was both a reward for their military feats as well as an expedient way of keeping the territory under control (even if in a more indirect way) in a period when it was virtually impossible to directly control the full extent of the conquered area. Religious institutions were crucial in the Reconquista, since the purpose of the whole military effort was to eradicate the Muslim religion from the country. Additionally, priests and monks were full military participants in the process, not limiting their activity to studying or preaching. So, as the Reconquista proceeded, three sorts of territories came into existence: those under direct control of the crown, those under the control of local seigneurs (which subdivided into civil and ecclesiastical) and the communities.

Economic Impact of the Military Institutional Framework

This was an institutional framework that had a direct economic impact. The crown’s donations were not comparable to anything we would nowadays call private property. The land’s donation had attached to it the ability conferred on the beneficiary to a) exact tribute from the population living in it, b) impose personal services or reduce peasants to serfdom, and c) administer justice. This is a phenomenon that is typical of Europe until at least the eighteenth century, and is quite representative of the overlap between the private and public spheres then prevalent. The crown felt it was entitled to give away powers we would nowadays call public, such as those of taxation and administering justice, and beneficiaries from the crown’s donations felt they were entitled to them. As a further limit to full private rights, the land was donated under certain conditions, restricting the beneficiaries’ power to divide, sell or buy it. They managed those lands, thus, in a manner entirely dissimilar from a modern enterprise. And the same goes for actual farmers, those directly toiling the land, since they were sometimes serfs, and even when they were not, had to give personal services to seigneurs and pay arbitrary tributes.

Unusually Tight Connections between the Crown and High Nobility

Much of the history of Portugal until the nineteenth century revolves around the tension between these three layers of power – the crown, the seigneurs and the communities. The main trend in that relationship was, however, in the direction of an increased weight of central power over the others. This is already visible in the first centuries of existence of the country. In a process that may look paradoxical, that increased weight was accompanied by an equivalent increase in seigneurial power at the expense of the communities. This gave rise to a uniquely Portuguese institution, which would be of extreme importance for the development of the Portuguese economy (as we will later see): the extremely tight connection between the crown and the high nobility. As a matter of fact, very early in the country’s history, the Portuguese nobility and Church became much dependent on the redistributive powers of the crown, in particular in what concerns land and the tributes associated with it. This led to an apparently contradictory process, in which at the same time as the crown was gaining ascendancy in the ruling of the country, it also gave away to seigneurs some of those powers usually considered as being public in nature. Such was the connection between the crown and the seigneurs that the intersection between private and public powers proved to be very resistant in Portugal. That intersection lasted longer in Portugal than in other parts of Europe, and consequently delayed the introduction in the country of the modern notion of property rights. But this is something to be developed later, and to fully understand it we must go through some further episodes of Portuguese history. For now, we must note the novelty brought by these institutions. Although they can be seen as unfriendly to property rights from a nineteenth- and twentieth-century vantage point, they represented in fact a first, although primitive and incomplete, definition of property rights of a certain sort.

Centralization and the Evolution of Property

As the crown’s centralization of power proceeded in the early history of the country, some institutions such as serfdom and settling colonies gave way to contracts that granted fuller personal and property rights to farmers. Serfdom was not exceptionally widespread in early Portugal – and tended to disappear from the thirteenth century onwards. More common was the settlement of colonies, a situation in which settlers were simple toilers of land, having to pay significant tributes to either the king or seigneurs, but had no rights over buying and selling the land. From the thirteenth century onwards, as the king and the seigneurs began encroaching on the kingdom’s land and the military situation got calmer, serfdom and settling contracts were increasingly substituted by contracts of the copyhold type. When compared with current concepts of private property, copyhold includes serious restrictions to the full use of private property. Yet, it represented an improvement when compared to the prior legal forms of land use. In the end, private property as we understand it today began its dissemination through the country at this time, although in a form we would still consider primitive. This, to a large extent, repeats with one to two centuries of delay, the evolution that had already occurred in the core of “feudal Europe,” i.e. the Franco-Germanic world and its extension to the British Isles.

Movement toward an Exchange Economy

Precisely as in that core “feudal Europe,” such institutional change brought a first moment of economic growth to the country – of course, there are no consistent figures for economic activity in this period, and, consequently, this is entirely based on more or less superficial evidence pointing in that direction. The institutional change just noted was accompanied by a change in the way noblemen and the Church understood their possessions. As the national territory became increasingly sheltered from the destruction of war, seigneurs became less interested in military activity and conquest, and more so in the good management of the land they already owned land. Accompanying that, some vague principles of specialization also appeared. Some of those possessions were thus significantly transformed into agricultural firms devoted to a certain extent to selling on the market. One should not, of course, exaggerate the importance acquired by the exchange of goods in this period. Most of the economy continued to be of a non-exchange or (at best) barter character. But the signs of change were important, as a certain part of the economy (small as it was) led the way to future more widespread changes. Not by chance, this is the period when we have evidence of the first signs of monetization of the economy, certainly a momentous change (even if initially small in scale), corresponding to an entirely new framework for economic relations.

These essential changes are connected with other aspects of the country’s evolution in this period. First, the war at the frontier (rather than within the territory) seems to have had a positive influence on the rest of the economy. The military front was constituted by a large number of soldiers, who needed constant supply of various goods, and this geared a significant part of the economy. Also, as the conquest enlarged the territory under the Portuguese crown’s control, the king’s court became ever more complex, thus creating one more demand pole. Additionally, together with enlargement of territory also came the insertion within the economy of various cities previously under Muslim control (such as the future capital, Lisbon, after 1147). All this was accompanied by a widespread movement of what we might call internal colonization, whose main purpose was to farm previously uncultivated agricultural land. This is also the time of the first signs of contact of Portuguese merchants with foreign markets, and foreign merchants with Portuguese markets. There are various signs of the presence of Portuguese merchants in British, French and Flemish ports, and vice versa. Much of Portuguese exports were of a typical Mediterranean nature, such as wine, olive oil, salt, fish and fruits, and imports were mainly of grain and textiles. The economy became, thus, more complex, and it is only natural that, to accompany such changes, the notions of property, management and “firm” changed in such a way as to accommodate the new evolution. The suggestion has been made that the success of the Christian Reconquista depended to a significant extent on the economic success of those innovations.

Role of the Crown in Economic Reforms

Of additional importance for the increasing sophistication of the economy is the role played by the crown as an institution. From the thirteenth century onwards, the rulers of the country showed a growing interest in having a well organized economy able to grant them an abundant tax base. Kings such as Afonso III (ruling from 1248 until 1279) and D. Dinis (1279-1325) became famous for their economic reforms. Monetary reforms, fiscal reforms, the promotion of foreign trade, and the promotion of local fairs and markets (an extraordinarily important institution for exchange in medieval times) all point in the direction of an increased awareness on the part of Portuguese kings of the relevance of promoting a proper environment for economic activity. Again, we should not exaggerate the importance of that awareness. Portuguese kings were still significantly (although not entirely) arbitrary rulers, able with one decision to destroy years of economic hard work. But changes were occurring, and some in a direction positive for economic improvement.

As mentioned above, the definition of Portugal as a separate political entity had two main negative elements: Islam as occupier of the Iberian Peninsula and the centralization efforts of the other political entities in the same area. The first element faded as the Portuguese Reconquista, by mid-thirteenth century, reached the southernmost point in the territory of what is today’s Portugal. The conflict (either latent or open) with the remaining kingdoms of the peninsula was kept alive much beyond that. As the early centuries of the first millennium unfolded, a major centripetal force emerged in the peninsula, the kingdom of Castile. Castile progressively became the most successful centralizing political unit in the area. Such success reached a first climatic moment by the middle of the fifteenth century, during the reign of Ferdinand and Isabella, and a second one by the end of the sixteenth century, with the brief annexation of Portugal by the Spanish king, Phillip II. Much of the effort of Portuguese kings was to keep Portugal independent of those other kingdoms, particularly Castile. But sometimes they envisaged something different, such as an Iberian union with Portugal as its true political head. It was one of those episodes that led to a major moment both for the centralization of power in the Portuguese crown within the Portuguese territory and for the successful separation of Portugal from Castile.

Ascent of John I (1385)

It started during the reign of King Ferdinand (of Portugal), during the sixth and seventh decades of the fourteenth century. Through various maneuvers to unite Portugal to Castile (which included war and the promotion of diverse coups), Ferdinand ended up marrying his daughter to the man who would later become king of Castile. Ferdinand was, however, generally unsuccessful in his attempts to tie the crowns under his heading, and when he died in 1383 the king of Castile (thanks to his marriage with Ferdinand’s daughter) became the legitimate heir to the Portuguese crown. This was Ferdinand’s dream in reverse. The crowns would unite, but not under Portugal. The prospect of peninsular unity under Castile was not necessarily loathed by a large part of Portuguese elites, particularly parts of the aristocracy, which viewed Castile as a much more noble-friendly kingdom. This was not, however, a unanimous sentiment, and a strong reaction followed, led by other parts of the same elite, in order to keep the Portuguese crown in the hands of a Portuguese king, separate from Castile. A war with Castile and intimations of civil war ensued, and in the end Portugal’s independence was kept. The man chosen to be the successor of Ferdinand, under a new dynasty, was the bastard son of Peter I (Ferdinand’s father), the man who became John I in 1385.

This was a crucial episode, not simply because of the change in dynasty, imposed against the legitimate heir to the throne, but also because of success in the centralization of power by the Portuguese crown and, as a consequence, of separation of Portugal from Castile. Such separation led Portugal, additionally, to lose interest in further political adventures concerning Castile, and switch its attention to the Atlantic. It was the exploration of this path that led to the most unique period in Portuguese history, one during which Portugal reached heights of importance in the world that find no match in either its past or future history. This period is the Discoveries, a process that started during John I’s reign, in particular under the forceful direction of the king’s sons, most famous among them the mythical Henry, the Navigator. The 1383-85 crisis and John’s victory can thus be seen as the founding moment of the Portuguese Discoveries.

The Discoveries and the Apex of Portuguese International Power

The Discoveries are generally presented as the first great moment of world capitalism, with markets all over the world getting connected under European leadership. Albeit true, this is a largely post hoc perspective, for the Discoveries became a big commercial adventure only somewhere half-way into the story. Before they became such a thing, the aims of the Discoveries’ protagonists were mostly of another sort.

The Conquest of Ceuta

An interesting way to have a fuller picture of the Discoveries is to study the Portuguese contribution to them. Portugal was the pioneer of transoceanic navigation, discovering lands and sea routes formerly unknown to Europeans, and starting trades and commercial routes that linked Europe to other continents in a totally unprecedented fashion. But, at the start, the aims of the whole venture were entirely other. The event generally chosen to date the beginning of the Portuguese discoveries is the conquest of Ceuta – a city-state across the Straits of Gibraltar from Spain – in 1415. In itself such voyage would not differ much from other attempts made in the Mediterranean Sea from the twelfth century onwards by various European travelers. The main purpose of all these attempts was to control navigation in the Mediterranean, in what constitutes a classical fight between Christianity and Islam. Other objectives of Portuguese travelers were the will to find the mythical Prester John – a supposed Christian king surrounded by Islam: there are reasons to suppose that the legend of Prester John is associated with the real existence of the Copt Christians of Ethiopia – and to reach, directly at the source, the gold of Sudan. Despite this latter objective, religious reasons prevailed over others in spurring the first Portuguese efforts of overseas expansion. This should not surprise us, however, for Portugal had since its birth been, precisely, an expansionist political unit under a religious heading. The jump to the other side of the sea, to North Africa, was little else than the continuation of that expansionist drive. Here we must understand Portugal’s position as determined by two elements, one that was general to the whole European continent, and another one, more specific. The first is that the expansion of Portugal in the Middle-Ages coincides with the general expansion of Europe. And Portugal was very much a part of that process. The second is that, by being part of the process, Portugal was (by geographical hazard) at the forefront of the process. Portugal (and Spain) was in the first line of attack and defense against Islam. The conquest of Ceuta, by Henry, the Navigator, is hence a part of that story of confrontation with Islam.

Exploration from West Africa to India

The first efforts of Henry along the Western African coast and in the Atlantic high sea can be put within this same framework. The explorations along the African coast had two main objectives: to have a keener perception of how far south Islam’s strength went, and to surround Morocco, both in order to attack Islam on a wider shore and to find alternative ways to reach Prester John. These objectives depended, of course, on geographical ignorance, as the line of coast Portuguese navigators eventually found was much larger than the one Henry expected to find. In these efforts, Portuguese navigators went increasingly south, but also, mainly due to accidental changes of direction, west. Such westbound dislocations led to the discovery, in the first decades of the fifteenth century, of three archipelagos, the Canaries, Madeira (and Porto Santo) and the Azores. But the major navigational feat of this period was the passage of Cape Bojador in 1434, in the sequence of which the whole western coast of the African continent was opened for exploration and increasingly (and here is the novelty) commerce. As Africa revealed its riches, mostly gold and slaves, these ventures began acquiring a more strict economic meaning. And all this kept on fostering the Portuguese to go further south, and when they reached the southernmost tip of the African continent, to pass it and go east. And so they did. Bartolomeu Dias crossed the Cape of Good Hope in 1487 and ten years later Vasco da Gama would entirely circumnavigate Africa to reach India by sea. By the time of Vasco da Gama’s journey, the autonomous economic importance of intercontinental trade was well established.

Feitorias and Trade with West Africa, the Atlantic Islands and India

As the second half of the fifteenth century unfolded, Portugal created a complex trade structure connecting India and the African coast to Portugal and, then, to the north of Europe. This consisted of a net of trading posts (feitorias) along the African coast, where goods were shipped to Portugal, and then re-exported to Flanders, where a further Portuguese feitoria was opened. This trade was based on such African goods as gold, ivory, red peppers, slaves and other less important goods. As was noted by various authors, this was somehow a continuation of the pattern of trade created during the Middle Ages, meaning that Portugal was able to diversify it, by adding new goods to its traditional exports (wine, olive oil, fruits and salt). The Portuguese established a virtual monopoly of these African commercial routes until the early sixteenth century. The only threats to that trade structure came from pirates originating in Britain, Holland, France and Spain. One further element of this trade structure was the Atlantic Islands (Madeira, the Azores and the African archipelagos of Cape Verde and São Tomé). These islands contributed with such goods as wine, wheat and sugar cane. After the sea route to India was discovered and the Portuguese were able to establish regular connections with India, the trading structure of the Portuguese empire became more complex. Now the Portuguese began bringing multiple spices, precious stones, silk and woods from India, again based on a net of feitorias there established. The maritime route to India acquired an extreme importance to Europe, precisely at this time, since the Ottoman Empire was then able to block the traditional inland-Mediterranean route that supplied the continent with Indian goods.

Control of Trade by the Crown

One crucial aspect of the Portuguese Discoveries is the high degree of control exerted by the crown over the whole venture. The first episodes in the early fifteenth century, under Henry the Navigator (as well as the first exploratory trips along the African coast) were entirely directed by the crown. Then, as the activity became more profitable, it was, first, liberalized, and then rented (in totu) to merchants, whom were constrained to pay the crown a significant share of their profits. Finally, when the full Indo-African network was consolidated, the crown controlled directly the largest share of the trade (although never monopolizing it), participated in “public-private” joint-ventures, or imposed heavy tributes on traders. The grip of the crown increased with growth of the size and complexity of the empire. Until the early sixteenth century, the empire consisted mainly of a network of trading posts. No serious attempt was made by the Portuguese crown to exert a significant degree of territorial control over the various areas constituting the empire.

The Rise of a Territorial Empire

This changed with the growth of trade from India and Brazil. As India was transformed into a platform for trade not only around Africa but also in Asia, a tendency was developed (in particular under Afonso de Albuquerque, in the early sixteenth century) to create an administrative structure in the territory. This was not particularly successful. An administrative structure was indeed created, but stayed forever incipient. A relatively more complex administrative structure would only appear in Brazil. Until the middle of the sixteenth century, Brazil was relatively ignored by the crown. But with the success of the system of sugar cane plantation in the Atlantic Isles, the Portuguese crown decided to transplant it to Brazil. Although political power was controlled initially by a group of seigneurs to whom the crown donated certain areas of the territory, the system got increasingly more centralized as time went on. This is clearly visible with the creation of the post of governor-general of Brazil, directly respondent to the crown, in 1549.

Portugal Loses Its Expansionary Edge

Until the early sixteenth century, Portugal capitalized on being the pioneer of European expansion. It monopolized African and, initially, Indian trade. But, by that time, changes were taking place. Two significant events mark the change in political tide. First, the increasing assertiveness of the Ottoman Empire in the Eastern Mediterranean, which coincided with a new bout of Islamic expansionism – ultimately bringing the Mughal dynasty to India – as well as the re-opening of the Mediterranean route for Indian goods. This put pressure on Portuguese control over Indian trade. Not only was political control over the subcontinent now directly threatened by Islamic rulers, but also the profits from Indian trade started declining. This is certainly one of the reasons why Portugal redirected its imperial interests to the south Atlantic, particularly Brazil – the other reasons being the growing demand for sugar in Europe and the success of the sugar cane plantation system in the Atlantic islands. The second event marking the change in tide was the increased assertiveness of imperial Spain, both within Europe and overseas. Spain, under the Habsburgs (mostly Charles V and Phillip II), exerted a dominance over the European continent which was unprecedented since Roman times. This was complemented by the beginning of exploration of the American continent (from the Caribbean to Mexico and the Andes), again putting pressure on the Portuguese empire overseas. What is more, this is the period when not only Spain, but also Britain, Holland and France acquired navigational and commercial skills equivalent to the Portuguese, thus competing with them in some of their more traditional routes and trades. By the middle of the sixteenth century, Portugal had definitely lost the expansionary edge. And this would come to a tragic conclusion in 1580, with the death of the heirless King Sebastian in North Africa and the loss of political independence to Spain, under Phillip II.

Empire and the Role, Power and Finances of the Crown

The first century of empire brought significant political consequences for the country. As noted above, the Discoveries were directed by the crown to a very large extent. As such, they constituted one further step in the affirmation of Portugal as a separate political entity in the Iberian Peninsula. Empire created a political and economic sphere where Portugal could remain independent from the rest of the peninsula. It thus contributed to the definition of what we might call “national identity.” Additionally, empire enhanced significantly the crown’s redistributive power. To benefit from profits from transoceanic trade, to reach a position in the imperial hierarchy or even within the national hierarchy proper, candidates had to turn to the crown. As it controlled imperial activities, the crown became a huge employment agency, capable of attracting the efforts of most of the national elite. The empire was, thus, transformed into an extremely important instrument of the crown in order to centralize power. It has already been mentioned that much of the political history of Portugal from the Middle Ages to the nineteenth century revolves around the tension between the centripetal power of the crown and the centrifugal powers of the aristocracy, the Church and the local communities. Precisely, the imperial episode constituted a major step in the centralization of the crown’s power. The way such centralization occurred was, however, peculiar, and that would bring crucial consequences for the future. Various authors have noted how, despite the growing centralizing power of the crown, the aristocracy was able to keep its local powers, thanks to the significant taxing and judicial autonomy it possessed in the lands under its control. This is largely true, but as other authors have noted, this was done with the crown acting as an intermediary agent. The Portuguese aristocracy was since early times much less independent from the crown than in most parts of Western Europe, and this situation accentuated during the days of empire. As we have seen above, the crown directed the Reconquista in a way that made it able to control and redistribute (through the famous donations) most of the land that was conquered. In those early medieval days, it was, thus, the service to the crown that made noblemen eligible to benefit from land donations. It is undoubtedly true that by donating land the crown was also giving away (at least partially) the monopoly of taxing and judging. But what is crucial here is its significant intermediary power. With empire, that power increased again. And once more a large part of the aristocracy became dependent on the crown to acquire political and economic power. The empire became, furthermore, the main means of financing of the crown. Receipts from trade activities related to the empire (either profits, tariffs or other taxes) never went below 40 percent of total receipts of the crown, until the nineteenth century, and this was only briefly in its worst days. Most of the time, those receipts amounted to 60 or 70 percent of total crown’s receipts.

Other Economic Consequences of the Empire

Such a role for the crown’s receipts was one of the most important consequences of empire. Thanks to it, tax receipts from internal economic activity became in large part unnecessary for the functioning of national government, something that was going to have deep consequences, precisely for that exact internal activity. This was not, however, the only economic consequence of empire. One of the most important was, obviously, the enlargement of the trade base of the country. Thanks to empire, the Portuguese (and Europe, through the Portuguese) gained access to vast sources of precious metals, stones, tropical goods (such as fruit, sugar, tobacco, rice, potatoes, maize, and more), raw materials and slaves. Portugal used these goods to enlarge its comparative advantage pattern, which helped it penetrate European markets, while at the same time enlarging the volume and variety of imports from Europe. Such a process of specialization along comparative advantage principles was, however, very incomplete. As noted above, the crown exerted a high degree of control over the trade activity of empire, and as a consequence, many institutional factors interfered in order to prevent Portugal (and its imperial complex) from fully following those principles. In the end, in economic terms, the empire was inefficient – something to be contrasted, for instance, with the Dutch equivalent, much more geared to commercial success, and based on clearer efficiency managing-methods. By so significantly controlling imperial trade, the crown became a sort of barrier between the empire’s riches and the national economy. Much of what was earned in imperial activity was spent either on maintaining it or on the crown’s clientele. Consequently, the spreading of the gains from imperial trade to the rest of the economy was highly centralized in the crown. A much visible effect of this phenomenon was the fantastic growth and size of the country’s capital, Lisbon. In the sixteenth century, Lisbon was the fifth largest city in Europe, and from the sixteenth century to the nineteenth century it was always in the top ten, a remarkable feat for a country with such a small population as Portugal. And it was also the symptom of a much inflated bureaucracy, living on the gains of empire, as well as of the low degree of repercussion of those gains of empire through the whole of the economy.

Portuguese Industry and Agriculture

The rest of the economy did, indeed, remain very much untouched by this imperial manna. Most of industry was untouched by it, and the only visible impact of empire on the sector was by fostering naval construction and repair, and all the accessory activities. Most of industry kept on functioning according to old standards, far from the impact of transoceanic prosperity. And much the same happened with agriculture. Although benefiting from the introduction of new crops (mostly maize, but also potatoes and rice), Portuguese agriculture did not benefit significantly from the income stream arising from imperial trade, in particular when we could expect it to be a source of investment. Maize constituted an important technological innovation which had a much important impact on the Portuguese agriculture’s productivity, but it was too localized in the north-western part of the country, thus leaving the rest of the sector untouched.

Failure of a Modern Land Market to Develop

One very important consequence of empire on agriculture and, hence, on the economy, was the preservation of the property structure coming from the Middle Ages, namely that resulting from the crown’s donations. The empire enhanced again the crown’s powers to attract talent and, consequently, donate land. Donations were regulated by official documents called Cartas de Foral, in which the tributes due to the beneficiaries were specified. During the time of the empire, the conditions ruling donations changed in a way that reveals an increased monarchical power: donations were made for long periods (for instance, one life), but the land could not be sold nor divided (and, thus, no parts of it could be sold separately) and renewal required confirmation on the part of the crown. The rules of donation, thus, by prohibiting buying, selling and partition of land, were a major obstacle to the existence not only of a land market, but also of a clear definition of property rights, as well as freedom in the management of land use.

Additionally, various tributes were due to the beneficiaries. Some were in kind, some in money, some were fixed, others proportional to the product of the land. This process dissociated land ownership and appropriation of land product, since the land was ultimately the crown’s. Furthermore, the actual beneficiaries (thanks to the donation’s rules) had little freedom in the management of the donated land. Although selling land in such circumstances was forbidden to the beneficiaries, renting it was not, and several beneficiaries did so. A new dissociation between ownership and appropriation of product was thus introduced. Although in these donations some tributes were paid by freeholders, most of them were paid by copyholders. Copyhold granted to its signatories the use of land in perpetuity or in lives (one to three), but did not allow them to sell it. This introduced a new dissociation between ownership, appropriation of land product and its management. Although it could not be sold, land under copyhold could be ceded in “sub-copyhold” contracts – a replication of the original contract under identical conditions. This introduced, obviously, a new complication to the system. As should be clear by now, such a “baroque” system created an accumulation of layers of rights over the land, as different people could exert different rights over it, and each layer of rights was limited by the other layers, and sometimes conflicting with them in an intricate way. A major consequence of all this was the limited freedom the various owners of rights had in the management of their assets.

High Levels of Taxation in Agriculture

A second direct consequence of the system was the complicated juxtaposition of tributes on agricultural product. The land and its product in Portugal in those days were loaded with tributes (a sort of taxation). This explains one recent historian’s claim (admittedly exaggerated) that, in that period, those who owned the land did not toil it, and those who toiled it did not hold it. We must distinguish these tributes from strict rent payments, as rent contracts are freely signed by the two (or more) sides taking part in it. The tributes we are discussing here represented, in reality, an imposition, which makes the use of the word taxation appropriate to describe them. This is one further result of the already mentioned feature of the institutional framework of the time, the difficulty to distinguish between the private and the public spheres.

Besides the tributes we have just described, other tributes also impended on the land. Some were, again, of a nature we would call private nowadays, others of a more clearly defined public nature. The former were the tributes due to the Church, the latter the taxes proper, due explicitly as such to the crown. The main tribute due to the Church was the tithe. In theory, the tithe was a tenth of the production of farmers and should be directly paid to certain religious institutions. In practice, not always was it a tenth of the production nor did the Church always receive it directly, as its collection was in a large number of cases rented to various other agents. Nevertheless, it was an important tribute to be paid by producers in general. The taxes due to the crown were the sisa (an indirect tax on consumption) and the décima (an income tax). As far as we know, these tributes weighted on average much less than the seigneurial tributes. Still, when added to them, they accentuated the high level of taxation or para-taxation typical of the Portuguese economy of the time.

Portugal under Spanish Rule, Restoration of Independence and the Eighteenth Century

Spanish Rule of Portugal, 1580-1640

The death of King Sebastian in North Africa, during a military mission in 1578, left the Portuguese throne with no direct heir. There were, however, various indirect candidates in line, thanks to the many kinship links established by the Portuguese royal family to other European royal and aristocratic families. Among them was Phillip II of Spain. He would eventually inherit the Portuguese throne, although only after invading the country in 1580. Between 1578 and 1580 leaders in Portugal tried unsuccessfully to find a “national” solution to the succession problem. In the end, resistance to the establishment of Spanish rule was extremely light.

Initial Lack of Resistance to Spanish Rule

To understand why resistance was so mild one must bear in mind the nature of such political units as the Portuguese and Spanish kingdoms at the time. These kingdoms were not the equivalent of contemporary nation-states. They had a separate identity, evident in such things as a different language, a different cultural history, and different institutions, but this didn’t amount to being a nation. The crown itself, when seen as an institution, still retained many features of a “private” venture. Of course, to some extent it represented the materialization of the kingdom and its “people,” but (by the standards of current political concepts) it still retained a much more ambiguous definition. Furthermore, Phillip II promised to adopt a set of rules allowing for extensive autonomy: the Portuguese crown would be “aggregated” to the Spanish crown although not “absorbed” or “associated” or even “integrated” with it. According to those rules, Portugal was to keep its separate identity as a crown and as a kingdom. All positions in the Portuguese government were to be attributed to Portuguese persons, the Portuguese language was the only one allowed in official matters in Portugal, positions in the Portuguese empire were to be attributed only to Portuguese.

The implementation of such rules depended largely on the willingness of the Portuguese nobility, Church and high-ranking officials to accept them. As there were no major popular revolts that could pressure these groups to decide otherwise, they did not have much difficulty in accepting them. In reality, they saw the new situation as an opportunity for greater power. After all, Spain was then the largest and most powerful political unit in Europe, with vast extensions throughout the world. To participate in such a venture under conditions of great autonomy was seen as an excellent opening.

Resistance to Spanish Rule under Phillip IV

The autonomous status was kept largely untouched until the third decade of the seventeenth century, i.e., until Phillip IV’s reign (1621-1640, in Portugal). This was a reign marked by an important attempt at centralization of power under the Spanish crown. A major impulse for this was Spain’s participation in the Thirty Years War. Simply put, the financial stress caused by the war forced the crown not only to increase fiscal pressure on the various political units under it but also to try to control them more closely. This led to serious efforts at revoking the autonomous status of Portugal (as well as other European regions of the empire). And it was as a reaction to those attempts that many Portuguese aristocrats and important personalities led a movement to recover independence. This movement must, again, be interpreted with care, paying attention to the political concepts of the time. This was not an overtly national reaction, in today’s sense of the word “national.” It was mostly a reaction from certain social groups that felt a threat to their power by the new plans of increased centralization under Spain. As some historians have noted, the 1640 revolt should be best understood as a movement to preserve the constitutional elements of the framework of autonomy established in 1580, against the new centralizing drive, rather than a national or nationalist movement.

Although that was the original intent of the movement, the fact is that, progressively, the new Portuguese dynasty (whose first monarch was John IV, 1640-1656) proceeded to an unprecedented centralization of power in the hands of the Portuguese crown. This means that, even if the original intent of the mentors of the 1640 revolt was to keep the autonomy prevalent both under pre-1580 Portuguese rule and post-1580 Spanish rule, the final result of their action was to favor centralization in the Portuguese crown, and thus help define Portugal as a clearly separate country. Again, we should be careful not to interpret this new bout of centralization in the seventeenth and eighteenth centuries as the creation of a national state and of a modern government. Many of the intermediate groups (in particular the Church and the aristocracy) kept their powers largely intact, even powers we would nowadays call public (such as taxation, justice and police). But there is no doubt that the crown increased significantly its redistributive power, and the nobility and the church had, increasingly, to rely on service to the crown to keep most of their powers.

Consequences of Spanish Rule for the Portuguese Empire

The period of Spanish rule had significant consequences for the Portuguese empire. Due to integration in the Spanish empire, Portuguese colonial territories became a legitimate target for all of Spain’s enemies. The European countries having imperial strategies (in particular, Britain, the Netherlands and France) no longer saw Portugal as a countervailing ally in their struggle with Spain, and consequently promoted serious assaults on Portuguese overseas possessions. There was one further element of the geopolitical landscape of the period that aggravated the willingness of competitors to attack Portugal, and that was Holland’s process of separation from the Spanish empire. Spain was not only a large overseas empire but also an enormous European one, of which Holland was a part until the 1560s. Holland, precisely, saw the Portuguese section of the Iberian empire as its weakest link, and, accordingly, attacked it in a fairly systematic way. The Dutch attack on Portuguese colonial possessions ranged from America (Brazil) to Africa (Sao Tome and Angola) to Asia (India, several points in Southeast Asia, and Indonesia), and in the course of it several Portuguese territories were conquered, mostly in Asia. Portugal, however, managed to keep most of its African and American territories.

The Shift of the Portuguese Empire toward the Atlantic

When it regained independence, Portugal had to re-align its external position in accordance with the new context. Interestingly enough, all those rivals that had attacked the country’s possessions during Spanish rule initially supported its separation. France was the most decisive partner in the first efforts to regain independence. Later (in the 1660s, in the final years of the war with Spain) Britain assumed that role. This was to inaugurate an essential feature of Portuguese external relations. From then on Britain became the most consistent Portuguese foreign partner. In the 1660s such a move was connected to the re-orientation of the Portuguese empire. What had until then been the center of empire (its Eastern part – India and the rest of Asia) lost importance. At first, this was due to the renewal in activity in the Mediterranean route, something that threatened the sea route to India. Then, this was because the Eastern empire was the part where the Portuguese had ceded more territory during Spanish rule, in particular to the Netherlands. Portugal kept most of its positions both in Africa and America, and this part of the world was to acquire extreme importance in the seventeenth and eighteenth centuries. In the last decades of the seventeenth century, Portugal was able to develop numerous trades mostly centered in Brazil (although some of the Atlantic islands also participated), involving sugar, tobacco and tropical woods, all sent to the growing market for luxury goods in Europe, to which was added a growing and prosperous trade of slaves from West Africa to Brazil.

Debates over the Role of Brazilian Gold and the Methuen Treaty

The range of goods in Atlantic trade acquired an important addition with the discovery of gold in Brazil in the late seventeenth century. It is the increased importance of gold in Portuguese trade relations that helps explain one of the most important diplomatic moments in Portuguese history, the Methuen Treaty (also called the Queen Anne Treaty), signed between Britain and Portugal in 1703. Many Portuguese economists and historians have blamed the treaty for Portugal’s inability to achieve modern economic growth during the eighteenth and nineteenth centuries. It must be remembered that the treaty stipulated tariffs to be reduced in Britain for imports of Portuguese wine (favoring it explicitly in relation to French wine), while, as a counterpart, Portugal had to eliminate all prohibitions on imports of British wool textiles (even if tariffs were left in place). Some historians and economists have seen this as Portugal’s abdication of having a national industrial sector and, instead, specializing in agricultural goods for export. As proof, such scholars present figures for the balance of trade between Portugal and Britain after 1703, with the former country exporting mainly wine and the latter textiles, and a widening trade deficit. Other authors, however, have shown that what mostly allowed for this trade (and the deficit) was not wine but the newly discovered Brazilian gold. Could, then, gold be the culprit for preventing Portuguese economic growth? Most historians now reject the hypothesis. The problem would lie not in a particular treaty signed in the early eighteenth century but in the existing structural conditions for the economy to grow – a question to be dealt with further below.

Portuguese historiography currently tends to see the Methuen Treaty mostly in the light of Portuguese diplomatic relations in the seventeenth and eighteenth centuries. The treaty would mostly mark the definite alignment of Portugal within the British sphere. The treaty was signed during the War of Spanish Succession. This was a war that divided Europe in a most dramatic manner. As the Spanish crown was left without a successor in 1700, the countries of Europe were led to support different candidates. The diplomatic choice ended up being polarized around Britain, on the one side, and France, on the other. Increasingly, Portugal was led to prefer Britain, as it was the country that granted more protection to the prosperous Portuguese Atlantic trade. As Britain also had an interest in this alignment (due to the important Portuguese colonial possessions), this explains why the treaty was economically beneficial to Portugal (contrary to what some of the older historiography tended to believe) In fact, in simple trade terms, the treaty was a good bargain for both countries, each having been given preferential treatment for certain of its more typical goods.

Brazilian Gold’s Impact on Industrialization

It is this sequence of events that has led several economists and historians to blame gold for the Portuguese inability to industrialize in the eighteenth and nineteenth centuries. Recent historiography, however, has questioned the interpretation. All these manufactures were dedicated to the production of luxury goods and, consequently, directed to a small market that had nothing to do (in both the nature of the market and technology) with those sectors typical of European industrialization. Were it to continue, it is very doubtful it would ever have become a full industrial spurt of the kind then underway in Britain. The problem lay elsewhere, as we will see below.

Prosperity in the Early 1700s Gives Way to Decline

Be that as it may, the first half of the eighteenth century was a period of unquestionable prosperity for Portugal, mostly thanks to gold, but also to the recovery of the remaining trades (both tropical and from the mainland). Such prosperity is most visible in the period of King John V (1706-1750). This is generally seen as the Portuguese equivalent to the reign of France’s Louis XIV. Palaces and monasteries of great dimensions were then built, and at the same time the king’s court acquired a pomp and grandeur not seen before or after, all financed largely by Brazilian gold. By the mid-eighteenth century, however, it all began to falter. The beginning of decline in gold remittances occurred in the sixth decade of the century. A new crisis began, which was compounded by the dramatic 1755 earthquake, which destroyed a large part of Lisbon and other cities. This new crisis was at the root of a political project aiming at a vast renaissance of the country. This was the first in a series of such projects, all of them significantly occurring in the sequence of traumatic events related to empire. The new project is associated with King Joseph I period (1750-1777), in particular with the policies of his prime-minister, the Marquis of Pombal.

Centralization under the Marquis of Pombal

The thread linking the most important political measures taken by the Marquis of Pombal is the reinforcement of state power. A major element in this connection was his confrontation with certain noble and church representatives. The most spectacular episodes in this respect were, first, the killing of an entire noble family and, second, the expulsion of the Jesuits from national soil. Sometimes this is taken as representing an outright hostile policy towards both aristocracy and church. However, it should be best seen as an attempt to integrate aristocracy and church into the state, thus undermining their autonomous powers. In reality, what the Marquis did was to use the power to confer noble titles, as well as the Inquisition, as means to centralize and increase state power. As a matter of fact, one of the most important instruments of recruitment for state functions during the Marquis’ rule was the promise of noble titles. And the Inquisition’s functions also changed form being mainly a religious court, mostly dedicated to the prosecution of Jews, to becoming a sort of civil political police. The Marquis’ centralizing policy covered a wide range of matters, in particular those most significant to state power. Internal police was reinforced, with the creation of new police institutions directly coordinated by the central government. The collection of taxes became more efficient, through an institution more similar to a modern Treasury than any earlier institutions. Improved collection also applied to tariffs and profits from colonial trade.

Centralizing power by the government had significant repercussions in certain aspects of the relationship between state and civil society. Although the Marquis’ rule is frequently pictured as violent, it included measures generally considered as “enlightened.” Such is the case of the abolition of the distinction between “New Christians” and Christians (new Christians were Jews converted to Catholicism, and as such suffered from a certain degree of segregation, constituting an intermediate category between Jews and Christians proper). Another very important political measure by the Marquis was the abolition of slavery in the empire’s mainland (even if slavery kept on being used in the colonies and the slave trade continued to prosper, there is no way of questioning the importance of the measure).

Economic Centralization under the Marquis of Pombal

The Marquis applied his centralizing drive to economic matters as well. This happened first in agriculture, with the creation of a monopolizing company for trade in Port wine. It continued in colonial trade, where the method applied was the same, that is, the creation of companies monopolizing trade for certain products or regions of the empire. Later, interventionism extended to manufacturing. Such interventionism was essentially determined by the international trade crisis that affected many colonial goods, the most important among them gold. As the country faced a new international payments crisis, the Marquis reverted to protectionism and subsidization of various industrial sectors. Again, as such state support was essentially devoted to traditional, low-tech, industries, this policy failed to boost Portugal’s entry into the group of countries that first industrialized.

Failure to Industrialize

The country would never be the same after the Marquis’ consulate. The “modernization” of state power and his various policies left a profound mark in the Portuguese polity. They were not enough, however, to create the necessary conditions for Portugal to enter a process of industrialization. In reality, most of the structural impediments to modern growth were left untouched or aggravated by the Marquis’ policies. This is particularly true of the relationship between central power and peripheral (aristocratic) powers. The Marquis continued the tradition exacerbated during the fifteenth and sixteenth centuries of liberally conferring noble titles to court members. Again, this accentuated the confusion between the public and the private spheres, with a particular incidence (for what concerns us here) in the definition of property and property rights. The act of granting a noble title by the crown, on many occasions implied a donation of land. The beneficiary of the donation was entitled to collect tributes from the population living in the territory but was forbidden to sell it and, sometimes, even rent it. This meant such beneficiaries were not true owners of the land. The land could not exactly be called their property. This lack of private rights was, however, compensated by the granting of such “public” rights as the ability to obtain tributes – a sort of tax. Beneficiaries of donations were, thus, neither true landowners nor true state representatives. And the same went for the crown. By giving away many of the powers we tend to call public today, the crown was acting as if it could dispose of land under its administration in the same manner as private property. But since this was not entirely private property, by doing so the crown was also conceding public powers to agents we would today call private. Such confusion did not help the creation of either a true entrepreneurial class or of a state dedicated to the protection of private property rights.

The whole property structure described above was kept, even after the reforming efforts of the Marquis of Pombal. The system of donations as a method of payment for jobs taken at the King’s court as well as the juxtaposition of various sorts of tributes, either to the crown or local powers, allowed for the perpetuation of a situation where the private and the public spheres were not clearly separated. Consequently, property rights were not well defined. If there is a crucial reason for Portugal’s impaired economic development, these are the things we should pay attention to. Next, we will begin the study of the nineteenth and twentieth centuries, and see how difficult was the dismantling of such an institutional structure and how it affected the growth potential of the Portuguese economy.

Suggested Reading:

Birmingham, David. A Concise History of Portugal. Cambridge: Cambridge University Press, 1993.

Boxer, C.R. The Portuguese Seaborne Empire, 1415-1825. New York: Alfred A. Knopf, 1969.

Godinho, Vitorino Magalhães. “Portugal and Her Empire, 1680-1720.” The New Cambridge Modern History, Vol. VI. Cambridge: Cambridge University Press, 1970.

Oliveira Marques, A.H. History of Portugal. New York: Columbia University Press, 1972.

Wheeler, Douglas. Historical Dictionary of Portugal. London: Scarecrow Press, 1993.

Citation: Amaral, Luciano. “Economic History of Portugal”. EH.Net Encyclopedia, edited by Robert Whaples. March 16, 2008. URL http://eh.net/encyclopedia/economic-history-of-portugal/