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