Canary Islands Free Ports: Fiscal Reforms 1822-1900

Free Ports in the Canary Islands (1822-1900)

The necessity to establish a new trade and fiscal framework prompted the search for a method to alleviate the islands' poverty and hardship. Free ports emerged as this solution, following a long process:

• 1822: Murphy promoted a reduction in tariffs.
• 1830: Establishment of the Canary Islands Development Board to promote tobacco and cochineal development.
• 1845: Tax Reform approved the instructions from the mainland tariff.
• Grueling fiscal effects occurred.
• A wave of death and emigration ensued again.
• From 1851: A powerful campaign demanded commercial freedoms.
• Protests, council discussions, and the unsustainable situation were acknowledged by the government of Juan Bravo Murillo, enacting the free ports in 1852.

A free port, in most cases, is tax-free, meaning it does not charge entry fees for ships. The free port status disqualifies the same rules or administrative system; it was declared to eliminate the burdensome fees affecting Canary crafts, aiming to become a focal point for communication between continents.

Royal Decree of 1852 Establishing Free Ports

The Royal Decree of July 11, 1852, promulgated the free ports. The fundamental principles of this decree were:

1. General customs tariffs were deleted.
2. Supply ships (bunkering, oil, etc.) were exempted from payment.
3. Internal taxes were suppressed, with some exceptions.
4. Exports to the mainland were treated as cabotage (only for island products).
5. Inland transport freedom was established.
6. The imposition of monopolies (e.g., the snuff monopoly) would not be accepted.

Guiding Principles of the Free Ports Decree

The guiding principles of the Royal Decree regarding Free Ports focused on franchises:

1. It established certain import duties (for tobacco and grain-meal). It also established a 1 per mille ad valorem tax on imports, plus port and lighthouse rights.
2. A 2% surcharge on property tax and 50% of the business contribution were applied to compensate for lost business income.
3. It further provided that the Canary Islands would serve as a storage area for goods from Spanish possessions.

The Act of July 22, 1870

The Act of July 22, 1870, reflected:

• The confirmation of the decree, making the exemption permanent.
• Extension of validity to the Port of Valverde and local ports whose City Councils covered the costs.
• Changes to cereal import duties for imports coming from the mainland.

Peripheral Model Features

The strategy aimed to control port activities (shipbuilding, shipping, and guaranteed coal plants). Foreign trade not only sought control but also major investment (banking, shipping). By the late nineteenth century, the English converted the Canaries into a colonial trade training ground, bringing in Indian, Pakistani, and other goods.

Key features of this peripheral model included:

1. British Presence.
2. Strong influence of capital: taking over ports, financing operations, etc.
3. The economy required a growing workforce for the ports, creating an urban enclave. The economy was centered in the port area and distributed across Gran Canaria (Toscal, flat areas, etc.).