Guatemala - Colonial Economy
From Spain's viewpoint, the colonies were a business venture and were expected to support the mother country. As a consequence, the colonial economic system was tightly controlled. Central America was no exception, although it was not one of the Crown's favored possessions. The area had little gold and silver, the colonial definition of wealth, and this was depleted in a short while. In lieu of minerals, the colonists sought crops which could be profitably traded.
Farming and grazing became large enterprises, and the Spanish were soon growing cacao, indigo, cotton, and tobacco. The first two, both indigenous products, became Guatemala's largest exports, especially to surrounding colonies when the ban against intercolony trade was lifted. Guatemala also exported balsam, sarsaparilla, quinine, gums, and resins. Some products were brought from Spain, both for profit and to remind the colonists of home. The mother country, however, was watchful of its own economy and wanted no competition from Spanish America. Laws prohibited the cultivation of mulberry trees, flax, and the production of wine within the colonies.
Agriculture had always been the mainstay of Guatemala's economy. In early colonial days, the principal commercial crops were indigo, côcoa, sugar, cereals, and cotton. Exports of hides and live cattle, however, far surpassed exports of crops in the early years, and sarsaparilla root was also a valuable foreign trade item. Indigo declined in importance after coal dyes were discovered.
The basic food items in colonial Guatemala were corn and beans, as they had been before the arrival of the Spaniards. These had been supplemented in the Indian diet by a wide variety of fruits and vegetables, small game animals, and domesticated turkeys. To this the Spaniards added wheat, rice, sugarcane, many European fruits and vegetables hitherto unknown in the New World, and various domesticated animals. The preconquest crops of cotton and tobacco were produced in greater quantity, and bees were raised for honey. Leading exports during most of the colonial period were cacao and indigo, a vegetable dye. Other vegetable and forest products were exported in smaller quantities as dyes or for medicinal and industrial use.
In keeping with mercantilist theory, the crown sought to maintain strict regulation of foreign trade. Trade with the colonies as a whole was controlled by the Casa de Contratación in Seville, which was the only port legally authorized for use in shipping to and from the Americas. Some products were traded only for the benefit of the crown; others were monopolized by specific guilds. The production of some items was specifically forbidden in the colonies so that they would not compete with the products of the mother country — for example, flax, wine, and mulberry trees for the raising of silkworms.
Under the mercantilist system, the colonial economy stagnated, providing an appropriate substructure for a static social order. Indians worked their own communal lands or lands of the haciendas at more or less a subsistence level. A small class of artisans — working in silver, wood, stone, and iron - made household utensils, building materials, and furniture. At the top of the system, the great landowners produced cacao and indigo or raised cattle. A few. intermarried. leading families monopolized power in the name of Spain, holding both office and titles of nobility.
Besides discouraging foreign settlement, the Spanish Government also legally forbade any trade with other countries. Originally this law included commerce with neighboring provinces and made Spain the only market for exports. This restriction on intercolonial trade was eliminated in 1774. Laws against foreign trade, however, were never enforced, and in some areas the quantity of smuggled goods became greater than that of legal trade.
Of course. there were substantial monetary incentives to violate the legal monopoly of trade, and a great deal of smuggling went on. Pirate raids were a continual problem for colonial administrations, starting with French buccaneers in 1536. The Atlantic coast was molested more than the Pacific. The most famous of the raiders was Sir Francis Drake, who reputedly fathered a son during one of his raids into the country. Some Guatemalans today claim to be his descendants.
The major sources of contact with foreigners were the pirates who ravaged the coastal cities. Guatemala, as a center of judicial, military, and governmental power, was obligated to provide protection against these raids. Poor communications, however, usually prevented knowledge of an attack from reaching the capital in time for effective action. Furthermore, the people within Guatemala made determined efforts to prevent the military force from leaving the capital unprotected. This contributed to deepened provincial separation in Central America.
The Indians played a very small role in the political process. In the early years of the colony, groups of Indians had been awarded to conquistadores in grants called encomiendas. Under these grants the Spaniards, or encomenderos, promised to convert the natives in exchange for labor or monetary tribute. This system was greatly abused and was officially abolished in 1542. In practice, however, it continued throughout the colonial era, and became the model for forced labor systems imposed on the Indians by succeeding governments.
The encomiendas were officially replaced by a labor system called repartimiento which alloted a number of Indians to specific tasks, usually public works. Laws against malpractices existed but were seldom enforced, and the system became, in practice, slave labor. Women and children were not exempt from the forced-labor systems, and the Guatemalans were notorious for their exploitation of these two groups.
Those Indians who were not part of an encomienda grant were forced to move into towns around 1550. Both the Church and the Government preferred to have the Indian population under stricter control in these centralized locations. Some of these towns have since remained predominantly Indian even in the 20th century.
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