Learning from History (17th Century Spain)

17th Century Spanish Swordsmen

“In Spain, repeated bankruptcies between 1557 and 1647 were coupled with desperate measures to stave off disaster.  War, the church, and administering the complex bureaucratic system provided the major organizational opportunities in Spain and in consequence the military, priesthood, and the judiciary were rewarding occupations.  The expulsion of the Moors and Jews, rent ceilings on land and price ceilings on wheat, confiscation of silver remittances to merchants in Seville (who were compensated with relatively worthless bonds called juros) were symptomatic of the disincentives to productive activity…

“The most telling evidence of the increasing returns feature of the Spanish institutional fabric was the inability of the crown and its bureaucracy to alter the direct of the Spanish path in spite of their awareness of the decay and decline overcoming the country.  In a century – the seventeenth – Spain declined from the most powerful nation in the Western world since the Roman empire to a second-rate power…

“Jan De Vries in his study (1976) of Europe in the age of crisis describes the effort to reverse the decline as follows:

“But this was not a society unaware of what was happening.  A whole school of economic reformers…wrote mountains of tracts pleading for new measures…Indeed, in 1623, a Junta de Reformacion recommended to the new King, Phillip IV, a series of measure including taxes to encourage earlier marriage (and, hence, population growth), limitations on the number of servants, the establishment of a bank, prohibitions on the import of luxuries, the closing of brothels, and the prohibition of the teaching of Latin in small towns (to reduce the flight from agriculture of peasants who had acquired a smattering of education).  But no willpower could be found to follow through on these recommendations…It is said that the only accomplishment of the reform movement was the abolition of the ruff collar, a fashion which had imposed ruinous laundry bills on the aristocracy.” -- Douglass C. North, Institutions, Institutional Change, and Economic Performance

Learning from History (17th Century Spain)