Economic Growth and the Convergence of Grain Markets
at the End of the Middle Ages:
The South-Eastern Iberian Peninsula in the XV and XVI Centuries[1]
Jorge Ortuño Molina
University of Murcia (Spain)
The reign of the Catholic Monarchs culminated with the union of allthe Iberian, peninsular kingdoms except Portugal. As a result of the Catholic Monarchs’ unification campaign, centuries of violence and fragmentation in the Iberian Peninsula, caused by endless wars between Christians and Muslims and between Christian themselves, came to an end. The relative peace created by the Catholic kings and their centralizing campaign led to a golden age of justice, security, and peace in the peninsula, according to contemporary testimonials, which in turn allowed for an economic growth (Casado Alonso, 2002: 91). 1480 was a crucial year in this process. It marks the year Isabel, together with her husband Fernando, crowned king of Aragon the year before, overcame the Castilian nobles who did not recognize her legitimacy, which means that togetherruled the majority of the Iberian Peninsula. The first measures adopted by the monarchs in the parliament of Toledo, also held in 1480, sought to facilitate commercial ties between the newly unified realms[2]. An analysis of the new institutional frameworks adopted by the Catholic Kings allows us the opportunity to verify if a decrease in the coordination failures markets, characterized by an excess of jurisdictions and inter-realm violence, did in fact occur. As the capacity of state intervention plays a decisive element in the development of the economy, thus these new measures undertaken by the Catholic kings to favor trade between their realms (commerce always existed between the realms, but it increased in the 16th century) need to be thoroughly studied, as well as those measures continued by the first Hapsburg monarchs.
This paper examines, through commerce and custom records, the effects of urban demand and the institutional framework created by the monarchy as a successful tool to improve their preindustrial economy.To accomplish this, attention shall be centered in the situation experienced by the internal frontier regions of the peninsula, specifically, the relationship between the regions of Murcia, belonging to Castile, and Valencia, belonging to the Crown of Aragon, during the 15th and 16th centuries (see illustration 2). Although I am fully aware of the limitations of concentrating on only one geographic region of the peninsula, I believe that the specific conclusions obtained from this area shall provide us with a solid understanding of the consequences of the monarchy’s administrative and economic policies in one of the great frontier areas of the Iberian Peninsula, offering us hypothesis that exceeds the regional scope of the study. The study’s relatively micro vision, for example, offers us an understanding of the macro explications of the pull of demand. At the same time, it allows us to compare the stagnation of peninsular agriculture to more dynamic European regions beginning in the 16th century.The study’s spatial scope is further justified by the shifting characteristics of the region during this period. By the end of the 15th century, the monarchy’s actions incorporated a large number of seigniorial lands into realm, as well as the union of different kingdoms, which in turn altered the jurisdictional map of the Iberian Peninsula easier. The relationship between Murcia and Valencia, which had at times been hostile during the late Middle Ages, transformed into one characterized by deeper cooperation. With this we observe the positive value of the unification and which produced an increase in royal rents and commercial trade between the regions, especially between the capitol cities of Valencia and Murcia, both important centers of consumption and redistribution. As a consequence of this, the northern region of Murcia, known as the Marquesate of Villena (see illustration 1), witnessed an increase in the cultivation of cereal and the raising of cattle for the supply of bread and meat to Valencia. The postures adopted by the monarchy to face a duality confronting the kingdom of Murcia (the integration of markets or the protection demanded by Murcia, which saw its supply endangered by the demands of Valencia) allows us to approach the limits (benefits but also damages) of market convergence in the Early modern Iberian Peninsula.
The evidence analyzedin this study derives from state and municipal archives, especially the General Archive of Simancas (Cámara de Castilla, Patronato Real, Registro General del Sello), the National Historical Archive, the municipal archives of Murcia, and the provincial archive of Albacete. The chronological fragmentation of the extant sources madethe datavery difficult to quantify, which is particularly unfortunate, because the nature of the sources allows for a plausible approximation. It would require, however, a long and immense search of the documents containing information on the monarchy’s fiscal policy housed in the in the Escribanía Mayor de Rentas section of the Gerneral Arcive of Simancas. For this reason, I have resorted to a qualitative analysis of the economic activity in the frontier regions between the kingdoms of Murcia and Valencia. Many of the conclusions reached in the following pages are based on memorials and reports redacted for the monarchy, which in turn tended to influence the monarchy’s customs policies.
The chronological scope of the study is more than justifiable.Economic historians are increasingly examining the 14th-17th centuries in order to understand the extraordinary development of the European economies in the modern period, by seeking evidence in premodern economies that could explain the great divergence beyond the technological development (Maddison, 2004: 262). No doubt, from all explanatory concepts, the role of demand emerges as capable of incentivizing and promoting the diffusion of preindustrial, and later industrial, technology. The lack of mercantile integration motivated by the endogenous fluctuations of nations was responsible for the absence of sustained growth, not a technological tope or demographic trap (Grantham, 1999: 225-226). Following this line of thought, a number of publications of a collective character seek to stress the agrarian transformation motivated by the market’s adequate stimuliduring the Ancient Regime (Allen 2009, Pinilla, 2009). A good part of these stimuli were facilitated by the emergence of monarchic states, which established favorable conditions for the growth and development of agrarian and commercial economies. Monarchic states accomplished this by promoting security, jurisdictional union, and property rights, which facilitated secure economies and integrated markets provoking an increase in demand by urban communities that in turn lead to important transformations and improvements in the agricultural sphere (Epstein, 2001: 45).Nevertheless, the seminal, structural changes implemented in the 16th century in some regions of Europe, like Spain, were limited whether they are compared with England or Holland (Allen, 2000: 23). Spain with institutional conditions that could have favored the integration of interior markets, rich foreign colonies, and a tightly run authoritarian monarchy saw its privileged position in Europe decrease by suffering a period of economic stagnation.
Spanish economic stagnation in 16th and 17th centuries has received much attention and made significant progress since the 1970s. The first scholars to deal with this subject were the hispanists who focused on Spain’s military campaigns and the fiscal demands they produced. The burden of two centuries of imperial campaigns had created a devastating debt on Spain’s economy that was not overcome until the 19th century (Elliott, 1973). However,I.A.A. Thompson verified the relative economic impact of foreign military campaigns on the GDP during the 17th century (Yun Casalilla, 1992: 550). Yet, as García Sanz (1985: 13) argues, the Spanish economy for better or worse was tied to the imperial ambitions of the Hapsburgs.There existsan almost natural tendency to equate the entire realm of the Spanish economy to New and Old Castile. While it is true that the economic situation in these regions stagnated during the period at hand, other Castilian regions like Andalucía, Murcia, and the Eastern peninsular lands(Levante) showed opposite tendencies. An analysis of the entire spectrum of Spanish economies during the Ancient Regime offers a more varied picture of the distinctions between Spain’s economy and those of other European nations than the more traditional studies focused solely on Old and New Castile. Álvarez Nogal and Prados de la Escosura, for instance, argue that when Spain’s regional plurality is taken into account, Spain’s economy was only behind those of England and Holland during the 17th and 18th centuries (2007: 322). My work centers precisely on Spain’s Levante, one of the more dynamic regions of Spain in the 15th and 16th centuries, and the stress the monarchy places on rents there to finance its projects. The conclusions I reach indicate that Spain’s economic stagnation in 17th could be partially explained by the mismanagement of the Hapsburg monarchs, who constrained the market and ended the nascent policies of the Catholic kings. The persistence of customs into the Hispanic Monarchy, which acted as a commonwealth of realms more than a unique jurisdiction and a changing and unsettled economic policy from the court limited the benefits that urban supply created over land production. Nevertheless, the demand could stimulate the economic growthof many regions of the Iberian Peninsula (the closer ones to the big urban centers as Valencia). Yet, it would be unfair blame institutionsfor the economic limits because some of the actions adopted by the Crown were totally justified.Fromthe standpoint of 16th century, thateconomic growth forged on the demand, generated a higher inequality incomes distribution that forced monarchy to limit that market convergence by preventing major social disorders, which are just sketched here and fully developed in coming papers.
Illustration 1
Source: Ortuño (2008: 27)
Institutions and Smithian Growth
The system of settlements that surged alongside the Reconquistain the Iberian Peninsula, especially from the 12th century onwards, sparkedeconomic growth. As Castile gained territory from its Muslim neighbors in central and southern Spain, it was forced to grantgenerousprivileges and concessions to the colonizers who settled inthe newly conquered areas. The colonization mechanism fostered by the monarchy and the settlers, for security, financial and political purposes revolved around urban centers rather than ruralsettings. The economic impact of these urban centers can be appreciated even more if we take into account that their population distribution created concentration of population in a few settlements, generating a profound unbalanced urban pattern colonization. That pattern of Castilian colonization resulted in the rise of multiple centers with their own charts and privileges that favored self-governing cities in order to be populated, which paradoxically weakened the monarchy because the latter had to respect the city grants and negotiate with municipalities to carry out its royal policies. At the end of the 15th century, Murcia city had around 8,000 inhabitants, a tenth of the population of Murcia Kingdom, which contained dozens of urban centers in a region of 17,000 km2. Similarly, around 75,000 people lived the city of Valencia in 1483, while the kingdom had a population 350,000 inhabitants, many of them livingin hundreds of cities across23,000 km2 of land.
Figure 1. Urban population rates. 16th century
Annual population growth rate (%) / Urban population rate (% total pop.)1530 / 1591
Valencia / 0,45 / 16,3 / 19,8
Murcia / 0,71 / 19,3 / 22
Castilla La Nueva / 1,02 / 6,7 / 24,2
Spain / 0,58 / 9,9 / 14,5
Source: Álvarez Nogal, Prados de lal Escosura (2007: 329,338)
Large population centers[3] (see figure 1) facilitated capital investments in the agricultural sector, forgingimportant ties between agricultural production and urban centers. Urbanites’ increased investment in the agricultural sector led to the development of infrastructures that allowed farmers to enlarge and maximize their lands. In the case of SoutheasternSpain, for example, projects were created to facilitate the dispersion of water between small basins. Furthermore, urbanites began getting involved directly in the administration of agriculture through land purchases, which they did to exploit the demand of goods in urban markets(Casado Alonso, 1987: 457-507).
To foment consumption and guarantee cities supplythe monarchy encouraged the marketsnecessary forthem to thrive. The high transaction costs derived from the political atomization made the investment risky and reduced market actions in the face of coordination faults and socio-political instability. For this reason monarchs and landlords, both seigniorial and ecclesiastical, allowedthe proliferation of fairs and markets in their respective territories to assist an incipient, althoughunsubstantial integration of markets to respond to a growing demand of concentrated populations[4]. The impact of these markets and fairs reflected the coming together of town and country for the production, storage, and exportation of yields that exceeded local demands. These fairs and markets, moreover, benefited smaller cites over larger ones, whose unquestioned mercantile activity did not need such privileges (Igual Luis, 2009: 180).
Isabel and Ferdinand’s ascent to the thrown brought with it important nuances to the kingdom of Murcia. The monarchs incorporated a good part of the northern kingdom, until this time part of the lordship of Villena, after their victory over the marquis of Villena in the civil war (1476-1480). Even though the monarchs ratified the area’s ancient privileges, which allowed it to maintain a high degree of autonomy, they substantially reformed thejurisdictional system and increased royal arbitrary powers. Together with the ratification of existing fairs in the lordship, additional free markets were conceded to the villages of Yecla, Hellín, Tobarra, Villena, Albacete y Chinchilla. Market days were held between Tuesday and Thursday following a pattern that prevented market days from coinciding in localities within 60 kilometers (a two-day trip). This allowed traveling vendors to complete their weekly round. Local councils in this area repeatedly petitioned for concessions of these free markets, both for necessity and profit. They needed to insure supplies for their local taverns, butcher shops, bakeries, etc, which served the townsfolk. And since markets were under municipal jurisdiction, the local councils charged rents on taverns, butcher shops, and bakeries. This way market concessions served a double function: on the one hand, they assured supply, while on the other hand, they provided an important source for municipal income. (Rodríguez Llopis, 1985; 266-276).
Together with market and fair concessions, the crown promoted peninsular commerce through its customs openingbetween the lands of the Crown of Aragon and Castile. Valencia city’s size and supply needs prompted the purchase of grain from all of their immediate neighbors. The high demand for grain increased dramatically the price of cereals compared to Murcia and its adjacent regions (Rubio Vela, 2002: 34-35). Wheat from Majorca, Sardinia, and Sicily, all regions belonging to the Crown of Aragon, supplied most of Valencia’s demands until the Catholic Kings united their realms in 1480. According to a memorial from 1583, all of the Castilian lands bordering Aragon, from Molina to Murcia,cultivated grain destined for Valencia[5].
Illustration 2. Crop land Specialization in the Kingdom of Murcia
Source: own making on Rodriguez Llopis and Martínez Carrion (2007: 184)
Periodically after 1480, the frontiers between Aragon and Castile opened and merchandise was able to circulate freely. A tax known as the customs tithe was levied on merchandise imported and exported. As its names suggests, the tithe taxed around 10% of the merchandises’ value throughout the Middle Ages. Figure 2 illustrates a subtle rise in the value of rents received from the customs house in Murcia directly related to the increase in commerce between the kingdoms of Murcia and Valencia. The crown’s market concessions as well as its open border policy were responsible for this increase in trade. Much of the increase in volume revolved around cereal, which as we have seen, began to circulate from Castile to Valencia because of the latter’s high demands.
figure 2. Aggregate rent value of the Murcia Customs (1465=100)
Source: Rodríguez Llopis (1996: 97)
Paradoxically, the remaining jurisdictional differences between the kingdoms helped the flow of commerce. The Spanish Crown adopted a Commonwealth form, where instead of acting as a united kingdom, frontier regions continued to possess a large measure of autonomy in the economic and judicial spheres. Although there was an abundance of Castilianwheat,the existence of fixed grain price policy fostered by the monarchy prompted the smuggle of crops to Valencia where the prices were higher. This activity together with the storage of crops by buyers and producers waiting for rising prices because of dearth generated scarcity of grains in periods of abundance. In 1503, the Catholic Kings set a maximum price for wheat at 110 maravedis per fanega(=55,5 litres), while in Valencia, the price per fanega could reach 24-30 sueldos (450-600 maravedis[6]) in normal harvests. In cereal crises, however, the price of wheat per fanegacould rais above 600 maravedis in Murcia and above 120 sueldos in Valencia (SeeLadero Quesada y González Jiménez, 1978: 91 and Guiral-Hadziiossif, 1989: 374-375). Even though the monarchy eliminated fixed prices because of its failures and complaints of injustice by the municipalities, in the 16th century, Charles I and Phillip II would consider the possibility to fix prices in the face of excessive increases in prices provoked by commercial speculation, as we shall see. During the 16th century, a steady rise in prices occurredthroughout the peninsula, except in Valencia, because of its coastal position and the arrival of wheat from the interior (Reher, 2001: 549-550). Higher prices and increased demand must have been especially appealing to the areas bordering Valencia Kingdoms, like La Mancha (in New Castile) and Murcia, which intended to trade the bulk of the output in Valencia, generating constant dearths and price instability in those producer areas. (see figure 3). With the customs opening, alesser reliance on the black market for profit discouraged corruption, although it still existed. But the possibility of free trade and high benefits allowed traders to affordthe costs derived from the misuse of public offices[7]. The natural answer to the fluidity of wheat prices to the east was the gradual increase of prices in Murcia to offer vendors more favorable conditions. Although these reforms provided mild improvements, prices never converged. Ferdinand the Catholic was particularly interested in Valencia’s supply needs. But after his death in 1516, the rebellions against Charles V in both Castile and Valencia (between 1519-1523) aggravated the supply and prices with the customs closing The situation reverses itself in the middle of the 16th century, possibly motivated by American silver and the inflation generated in Castile that led to a price convergence with Valencia. The tendency of Castilian-Murcian cereal sales to Valencia, despite occasional prohibitions, produced a slight price convergence in the last quarter of the 16th century as well. In 1583, Castilians priest demanded that the price of cereals increase to match those of Valencia in order to stop the export of cereals prompted by the open borders[8]. Yet, it is not until the 18th century that a lesser variation of prices, attributed to a better integration of peninsular markets, occurred. To a certain extent, prices were helped by the liberalizing policies of internal and foreign grain commerce fostered during 18th century. (Llopis y Sotoca, 2005: 249-20).