138 CHAPTER 7 THE BOURBON REFORMS AND SPANISH AMERICA
in a report made to Charles III by a royal commis-
sion in 1765. The shock of Spain’s defeat in the
Seven Years’ War, which cost it the loss of Florida
and almost the loss of Cuba, provided impetus for a
program of imperial reorganization and reform.
In this period, the trading monopoly of Cádiz
was gradually eliminated. In 1765 commerce with
the West Indies was thrown open to seven other
ports besides Cádiz and Seville; this reform, coming
at a time when Cuban sugar production was begin-
ning to expand, gave a sharp stimulus to the island’s
economy. This privilege was gradually extended to
other regions until, by the famous decree of free
trade of 1778, commerce was permitted between
all qualifi ed Spanish ports and all the American
provinces except Mexico and Venezuela. In 1789,
New Spain and Venezuela were thrown open to
trade on the same terms.^2 The burdensome duties
levied on this trade were also replaced by simple ad
valorem duties of 6 or 7 percent. Restrictions on
intercolonial trade were also progressively lifted,
but this trade was largely limited to non-European
products. A major benefi ciary of this change was
the Río de la Plata area, which in 1776 was opened
for trade with the rest of the Indies. Meanwhile, the
Casa de Contratación, a symbol of the old order,
steadily declined in importance until it closed its
doors in 1789. A similar fate overtook the vener-
able Council of the Indies. As a consultative body
it lasted on into the nineteenth century, but most
of its duties were entrusted to a colonial minister
appointed by the king.
The success of the “free-trade” policy was re-
fl ected in a spectacular increase in the value of
Spain’s commerce with Spanish America, an in-
crease said to have amounted to about 700 per-
cent between 1778 and 1788. The entrance of
new trading centers and merchant groups into
the Indies trade, the reduction of duties, and the
(^2) It must be stressed, however, that these reforms did not
seriously weaken the dominant role of the Cádiz monopo-
lists and their American agents in colonial trade. As late as
1790, more than 85 percent of the trade moved through
Cádiz, thanks to its superior facilities for shipping, insur-
ance, warehousing, and communication.
removal of irksome restrictions had the effect of in-
creasing the volume of business, reducing prices,
and perhaps diminishing contraband (although
one cannot speak with certainty here, for the eas-
ing of restrictions inevitably facilitated the activity
of smugglers).
But the achievements of the Bourbon com-
mercial reform must not be overestimated. The
reform ultimately failed in its aim of reconquering
colonial markets for Spain for two basic reasons:
fi rst, Spain’s industrial weakness, which the best
efforts of the Bourbons were unable to overcome,
and second, Spain’s closely related inability to keep
its sea-lanes to America open in time of war with
England, when foreign traders again swarmed
into Spanish-American ports. Indeed, the Spanish
government openly confessed its inability to sup-
ply the colonies with needed goods in time of war
by lifting the ban against foreign vessels of neutral
origin (which meant United States ships, above all)
during the years from 1797 to 1799 and again in
the years from 1805 to 1809. This permission to
trade with neutrals gave rise to spirited commerce
between the United States and the Caribbean area
and the Río de la Plata.
INCREASED ECONOMIC ACTIVITY
Perhaps the most signifi cant result of the Bourbon
commercial reform was the stimulus it gave to eco-
nomic activity in Spanish America. It is uncertain
how much this increased economic activity is owed
to the benefi cial effects of the Bourbon reform or to
the general economic upsurge in western Europe
in the eighteenth century. What is certain is that
the latter part of the century saw a rising level of
agricultural, pastoral, and mining production in
Spanish America. Stimulated by the Bourbon re-
form and the growing European demand for sugar,
tobacco, hides, and other staples, production of
these products rose sharply in this period. There
developed a marked trend toward regional special-
ization and monoculture in the production of cash
crops. After 1770, coffee, grown in Venezuela and
Cuba, joined cacao and sugar as a major export
crop of the Caribbean area. The gradual increase in
population also stimulated the production of food