THE SEVENTEENTH CENTURY

During the seventeenth century, the pace of change slowed. In both the seventeen and eighteenth centuries, though, Spanish technology continued to permeate more deeply into the warp and woof of Mexican society.26

The encomienda ceased to be the dominant social institution. By the middle of the century, commerce, northern mines, and sugar refineries furnished considerably more revenue than the best encomiendas. This shift in the source of wealth led historian P. J. Bakewell to comment:

In the sixteenth century, the white community lived on the surplus produced by a vast number of Indians working in a very primitive economic system. In the seventeenth, Spaniards lived on the product, broadly and ultimately, of their own enterprise and of an economy that was in its general outline of contemporary European design.27

Mexicans invested more capital locally, leading to an increase in production for Mexican use. This benefited the colony and led to greater economic diversity and autonomy. Given the high cost of land transportation, New Spain remained a patchwork of regional economies stitched together by trade and government. High taxes, piracy, privateering, and insecurity resulting from European wars limited trans-Atlantic trade.28

Between 1628 and 1724, silver production increased at an annual rate of 1.2 percent. At the same time, much to the chagrin of the Spanish, Mexicans appropriated more silver to finance their own production, administration, and defense, leaving less for the mother country. Due to increased smuggling, tax collection declined, further reducing remittances to Spain. In 1660, colonial authorities estimated that untaxed silver accounted for one-third more production than registered shipments. In the Philippines, merchants made purchases with Mexican silver. Finally, since Mexicans produced more goods for their own use, they sent less silver to Spain to purchase goods there.29

It is hardly surprising that Mexican economic growth proceeded at a snail’s pace during the seventeenth century, since that was the prevalent condition in the world to which Mexico had been linked by the Conquest. Up to the beginning of the industrial revolution in the eighteenth century, growth was so slow that it might not be noticed within a lifetime. By one estimate, world per capita income only increased from $133 to $164 between ad 1000 and 1700. This imperceptible growth resulted from a very gradual increase in human population and from improvements in technology coming very slowly (by modern standards).30