To what extent was the economic system of Colonial Latin America superior to that of British North America?
To what extent was the economic system of Colonial Latin America superior to that of British North America? This essay will demonstrate how the economic system of Colonial Latin America was slightly superior to that of British North America during the 18th century, due to several factors. In particular, the abundance of natural resources and the amount of political organization proved to be major influences.
The economy of Spanish America was strengthened by the export of goods to European markets. However, this was not the only source of wealth to the Spanish Empire. In 1545, in Peru, the mines of Potosi were discovered, containing an immense wealth of silver (Gale 2). A cheap labor system, known as the encomienda, helped to retain these profits. During the initiation of the silver trade, Spain had a favorable trade balance, due to the exchange of silver for manufactured goods. Over time, this had become lesser profitable, resulting in insignificant monetary gains.
However, the economic structure was not alone in driving the economy. Spain’s political structure, created by the Council of the Indies, created viceroyalties (or jurisdictions of the Spanish Empire), which were dependent on the local audiencias, corrigidores, and cabildos (Gale 2) The main role of the viceroy was to carry out the instructions of the Hapsburg monarchy. This monarchy led to the weakening of the Spanish Empire, due to corruption. By the 1700s, the Bourbons had replaced the Hapsburgs, creating reforms that would increase the amount of trade. In particular, more ports were opened inside the colonies, allowing for faster exchange of silver for manufactured good (Keen 144). However, it also placed limitations on local trade, although it was not as important as the exchange of silver for produced goods (Gale 4). Overall, the economic and political systems of Spain were the antithesis of today’s system, as will be seen through British North America.
British North America was first settled by the London Company in 1607, long after the settlements of Spain and other European countries in the Atlantic World. This led to an early disadvantage in finding profitable natural resources, and the lack of a great center of capital made these problems even worse (Rad 65). Before 1750, the colonies were largely dependent on the sale of agricultural products to the rest of the Atlantic World, resulting in undeveloped economies (Rad 65). However, the production of tobacco helped to change that, until it was overproduced. Because of soil contamination, tobacco production only created a paltry sum of revenue, until the colonists gained tools from the Natives (Brinkley 40). Moreover, the lack of natural resources led to a need of importation, resulting in a negative trade balance. This system lasted until the mid-1700s. Consequently, the success of the...