140 CHAPTER 7 THE BOURBON REFORMS AND SPANISH AMERICA
The eighteenth century also saw a marked re-
vival of silver mining in the Spanish colonies. Peru
and Mexico shared in this advance, but the Mexi-
can mines forged far ahead of their Peruvian rivals
in the Bourbon era. The mine owners included cre-
oles and peninsulars, but the Spanish merchants
who fi nanced the mining operations received most
of the profi ts. As in the case of agriculture, the in-
crease in silver production was not due primarily to
improved technique; it resulted from the opening
of many new as well as old mines and the growth
of the labor force. The crown, however, especially
under Charles III, contributed materially to the re-
vival by offering new incentives to entrepreneurs
and by its efforts to overcome the backwardness
of the mining industry. The incentives included
reductions in taxes and in the cost of mercury, a
government monopoly.
In New Spain the crown promoted the estab-
lishment of a mining guild (1777), whose activities
included the operation of a bank to fi nance develop-
ment. Under this guild’s auspices was founded the
fi rst school of mines in America (1792). Staffed by
able professors and provided with modern equip-
ment, it offered excellent theoretical and practical
instruction and represented an important source
of Enlightenment thought in Mexico. Foreign and
Spanish experts, accompanied by teams of tech-
nicians, came to Mexico and Peru to show the
mine owners the advantages of new machinery
and techniques. These praiseworthy efforts were
largely frustrated by the traditionalism of the mine
owners, the lack of capital to fi nance changes,
and mismanagement. Yet the production of silver
steadily increased. Supplemented by the gold of
Brazil, it helped spark the Industrial Revolution in
northern Europe and stimulated commercial ac-
tivity on a worldwide scale. In addition, American
silver helped the Bourbons meet the enormous ex-
penses of their chronic wars.
In 1774, José Antonio Areche, the reformist
fi scal (attorney) to Viceroy Antonio María Bucareli
y Ursua of Spain, prepared a report on the state of
the Mexican economy. He described it as a back-
ward economic system, marked by practices and
ideas that offered insuperable obstacles to modern-
ization. People were deserting the countryside for
the city, fi lling the cities with the unemployed and
unemployable. A major cause of this fl ight was an
ineffi cient agriculture whose low productivity and
unprofi tability were due to primitive tilling meth-
ods, heavily indebted estates, and poor working
conditions. Areche complained of landowners who
paid wages in goods rather than in cash, treated
their workers badly, and preferred to concentrate
on production of a few basic commodities rather
than experiment with new products and seek new
markets. Retail trade lagged because of the practice
of paying workers in goods rather than cash and
because too few coins were in circulation. Areche
also criticized merchants who preferred to engage
in the forced sale of goods to indigenous villages
(repartimiento de mercancías), failing to see that
these communities were potential vast markets for
a wide variety of consumer goods. But Areche failed
to see that Spain’s use of Mexico as an “extraction
machine,” in the words of John Coatsworth, that
funneled off a substantial part of the colony’s sil-
ver output (some 500 to 600 million pesos in the
last half-century of Spanish rule) contributed to
Mexico’s lack of capital formation and structural
economic backwardness.
Areche’s report makes it clear that increased
economic activity in the Bourbon era was not ac-
companied by signifi cant qualitative changes in
the colonial economy; the phrase “growth without
development,” often applied to Latin America’s eco-
nomic performance in modern times, applies equally
to the colonial economy in the Bourbon era.
Colonial manufacturing, after a long and fairly
consistent growth, began to decline in the last part
of the eighteenth century, principally because of
the infl ux of cheap foreign wares with which the
domestic products could not compete. The textile
and wine industries of western Argentina fell into
decay as they lost their markets in Buenos Aires
and Montevideo to lower-priced foreign wines
and cloth. The textile producers of the province
of Quito in Ecuador complained of injury from the
same cause. In the Mexican manufacturing center
of Puebla, production of chinaware slumped cata-
strophically between 1793 and 1802. Puebla and
Querétaro, however, continued to be important
centers of textile manufacturing.