page_title: Economic history of Mexico
section_title: Crown policy and economic development
hierarchical_section_title: Economic history of Mexico / Economy of New Spain, 1521–1821 / Crown policy and economic development
caption_attribution_description: Portrait of Gaspar Melchor de Jovellanos at his desk
context_page_description: Mexico's economic history has been characterized since the colonial era by resource extraction, agriculture, and a relatively underdeveloped industrial sector. Economic elites in the colonial period were predominantly Spanish born, active as transatlantic merchants and silver mine owners and diversifying their investments with the landed estates. The largest sector of the population was indigenous subsistence farmers, who lived mainly in the center and south.
  New Spain was envisioned by the Spanish crown as a supplier of wealth to Iberia, which huge silver mines accomplished. A colonial economy to supply foodstuffs and products from ranching as well as a domestic textile industry meant that the economy supplied much of its own needs. Crown economic policy rattled American-born elites’ loyalty to Spain when in 1804 it instituted a policy to make mortgage holders pay immediately the principal on their loans, threatening the economic position of cash-strapped land owners. Independence in Mexico in 1821 was economically difficult for the country, with the loss of its supply of mercury from Spain in silver mines.
context_section_description: Crown policies generally impeded entrepreneurial activity in New Spain, through laws and regulations that were disincentives to the creation of new enterprises. There was no well-defined or enforceable set of property rights, but the crown claimed rights over subsoil resources, such as mining.  The crown's lack of investment in a good system of paved roads made moving products to market insecure and expensive, so enterprises had a narrower reach for their products, particularly bulky agricultural products.
  Although many enterprises, such as merchant houses and mining, were highly profitable, they were often family firms. The components of Roman Catholic Church had a considerable number of landed estates and the Church received income from the tithe, a ten percent tax on agricultural output. However, there were no laws that promoted "economies of scale through joint stock companies or corporations."  There were corporate entities, particularly the Church and indigenous communities, but also corporate groups with privileges (fueros), such as miners and merchants who had separate courts and exemptions.
  There was no equal standing before the law, given the exemptions of corporate entities (including indigenous communities) and legal distinctions between races. Only those defined as Spaniards, either peninsular- or American-born of legitimate birth had access to a variety of elite privileges such as civil office holding, ecclesiastical positions, but also entrance of women into convents, which necessitated a significant dowry. A convent for Indian women of "pure blood" was established in the eighteenth century. Indian men from the mid-sixteenth century had been barred from the priesthood, not only excluding them from empowerment in the spiritual realm, but also depriving them of the honor, prestige, and income that a priest could garner.
  
  In the eighteenth century the Bourbon administrative reforms began restricting the number of American-born men appointed to office, which was not only a diminution of their own and their families’ status, but also excluded them from the revenues and other benefits that flowed from office holding. The benefits were not merely the salary, but also the networks of useful connections to do business.
  The interventionist and pervasively arbitrary nature of the institutional environment forced every enterprise, urban or rural, to operate in a highly politicized manner, using kinship networks, political influence, and family prestige to gain privileged access to subsidized credit, to aid various stratagems for recruiting labor, to collect debts or enforce contracts, to evade taxes or circumvent courts, and to defend titles to land.
  The most closely controlled commodity from New Spain (and Peru) was the production and transportation of silver. Crown officials monitored each step of the process, from licensing on those who developed mines, to transportation, to minting of uniform size and quality silver bars and coins.
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  The crown established monopolies in other commodities, most importantly mercury from Almadén, the key component in silver refining. But the crown also established monopolies over tobacco production and manufacturing. Guilds (gremios) restricted the practice of certain professions, such as those engaged in painting, gilded framer makers, music instrument makers, and others. Indians and mixed–race castas were considered a threat, producing quality products far more cheaply.
  The crown sought to control trade and emigration to its overseas territories via the House of Trade (Casa de Contratación), based in Seville. Officials in Seville registered ships’ cargoes and passengers bound for the Indies (as the crown to the end of the colonial era called its territories) and upon arrival in New World ports, other crown officials inspected cargo and passengers. In Mexico, the Gulf Coast port of Veracruz, New Spain's oldest Spanish city and main port, and the Pacific coast port of Acapulco, the terminus of the Manila Galleon were busy when ships were in port, but they did not have large numbers of
caption: Gaspar Melchor de Jovellanos, who proposed a major land reform in Spain that also influenced Mexico. Portrait by Francisco de Goya.
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