Bourbon Economic Reforms: Industry and Trade in 18th Century Spain

Bourbon Economic Reforms in Spain

The reformist spirit of the Bourbons extended to the economy and contributed to overcoming the economic crisis that had affected Spain during the seventeenth century. However, these reforms were not able to definitively resolve the serious shortcomings and deficiencies that plagued the Spanish economy.

Industry Under the Bourbon Dynasty

The industrial sector presented three outstanding features:

• Dominance of Artisanal Production: Production remained largely artisanal and little advanced. It was supported by urban guilds and rural crafts. The guilds, however, were a significant problem for development. Home work allowed cheaper production, but not necessarily better quality. Consequently, Spanish industry's ability to compete with foreign products was poor.
• State Efforts to Create a National Base: The deeply rooted mercantilist economic ideas during the reign led the Crown to create royal factories (Reales Fábricas) to supplement the lack of private initiative, reduce dependency, and promote economic development. Despite state investment and a protectionist trade policy, the results fell far short of achieving the objectives.
• Limited Private Initiative: Private industrial initiative centered primarily on textiles and steel. Catalonia, in particular, established one of the most important commercial centers.

Industrial Reforms Undertaken

Among the reforms undertaken in this area were:

• Protectionist measures applied to the textile and steel sectors.
• Tax cuts for producers in order to reduce manufacturing costs and help lower prices.
• Elimination of guild rules that hindered improved and increased production.

Within private industry, the Catalan cotton industry was particularly highlighted.

Trade and Commercial Expansion

This period constituted an expansion in business activity compared to the previous century. Domestic trade aimed at establishing a national market. However, weak domestic demand, the existence of internal customs, and the lack of a communications network made market integration difficult. The reforms sought to solve these shortcomings, but the configuration of a unified domestic market was not achieved until well into the twentieth century. Domestic trade was intertwined with foreign trade.

Key Measures for Commercial Growth

Among the measures taken by the Crown to achieve this growth, two stand out:

• Creation of Commercial Companies: These companies aimed to control imports and exports.
• Free Trade: Although these measures allowed a boom in trade, they failed to completely eliminate economic shortcomings, such as:

Persistent Economic Shortcomings

• The chronic shortage in Spain's trade balance, which was covered by silver imported from America.
• The inability to fully control the American trade monopoly, which was an important setback for the Royal Treasury and for the Spanish economy in general.