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Part I
The southernmost territory of imperial Spain turns into the Argentine Nation
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Latin Americaâs Spanish heritage has been valuable in many respects; but, it is clear that it did not leave a great legacy in economic matters. Argentina, like all Latin American countries colonized by Spain, inherited a highly bureaucratic administration and a backward economic structure.1
This administrative arrangement imposed by the Spanish Empire responded to the Crownâs desire to add new land to its sovereign domain, convert natives2 to Christianity and vassals of the Crown, and increase the wealth of Spain through the exploitation of the new territoriesâ abundant mineral resources.
The Empire had many administrative units, viceroyalties, governments, general captaincies, and courts that required the appointment of a large number of public officials, administrators, tax collectors and judges. Furthermore, defending these territories, which had poorly defined borders, and maintaining domestic law and order required large and complex military forces.
In Argentina, the particular economic structure that the country inherited upon independence stemmed from three key socio-economic phenomena that had been in place for centuries: the exploitation of the silver mines in PotosĂ, the Jesuit missionsâ contribution to human development, and the export-led economy of Buenos Aires based on cattle raising ranches known as estancias.
The exploitation of the silver mines of PotosĂ and its supply chain along the Royal Road to Alto PerĂș was the engine of growth for more than two centuries and provided the bulk of the money that financed civil servants, soldiers and the Church. Its productivity declined, however, during the 18th century and its financial contribution to the United Provinces of RĂo de la Plata ceased with the loss of Alto PerĂș in 1813.
The Jesuits and other Catholic regular orders organized communal settlements of natives, called âreductionsâ or âmissionsâ. The missions became increasingly active and productive in interregional trade. There were missions not only in the cities on the Royal Road but also in those on the RĂo de la Plata waterways and on both sides of the Andes. Unfortunately, the missions had lost their economic role by the time of the creation of the Viceroyalty of RĂo de la Plata. After the expulsion of the Jesuits by King Carlos III, the inhabitants of the old missions migrated to nearby cities or to Buenos Aires to work as artisans and peasants or were recruited by private merchants that were well connected with the government. These same private merchants also purchased most of the land and capital equipment of the old missions, thereby creating a class of large landowners not much different from the class of cattle ranch proprietors then emerging around Buenos Aires.
During the 18th century, the development of cattle ranches and the exports of hides, tallow and grease caused the port of Buenos Aires to become the new engine of growth of the economy that would allow Argentina to join the more open and dynamic world economy of the 19th century.
After Buenos Aires became the capital of the Viceroyalty of the RĂo de la Plata, and legal trade shifted from Lima to the port of Buenos Aires, its political and economic role enlarged significantly. Other European colonial powers became increasingly interested in the RĂo de la Plata area. The British invasions of Buenos Aires and Montevideo in 1806 and 1807 had two effects. First, creoles realized that it was they, not the Spanish Viceroyalty, who were the true defenders of the city. Second, it helped the creoles ponder the value of freer trade similar to that long pursued by the British. These local events together with Napoleonâs invasion of Spain helped trigger the May Revolution.
The Royal Road to Alto PerĂș and the RĂo de la Plata waterways
The Spanish conquerors founded cities and established a European presence in what is today Argentina beginning in the 1530s. In 1532, Adelantado 3 Francisco Pizarro subjugated the Inca Empire and started to expand Spanish control along the west coast of South America. Settlements on the east coast started soon after. In 1536, Adelantado Pedro de Mendoza founded Buenos Aires on the western edge of the RĂo de la Plata. Members of Mendozaâs expedition navigated the ParanĂĄ River and founded the city of AsunciĂłn next to a river that the native inhabitants of those territories, the GuaranĂes, called Paraguay. The Buenos Aires settlement did not survive the attacks of the native people (though AsunciĂłn did), but Juan de Garay re-founded Buenos Aires in 1580.
From the beginning of the conquest, the Adelantados searched for the mines from which the natives obtained the gold and the silver that they wore as ornaments and used as ceremonial implements. In fact, the name RĂo de la Plata comes from the first explorers who believed that the river would take them to rich mines in the Andes. Even the name Argentina, first used in a poem by Martin Del Barco Centenera published in Lisbon in 1602, comes from argentum, the Latin name for silver. Argentine was used as a poetic synonym for an inhabitant of RĂo de la Plata. Despite this optimistic nomenclature, the conquerors did not find silver in the territory of Argentina, which limited the areaâs Spanish population for more than two centuries.
During the colonial era, the population clustered around the richest mines or in places endowed with human and natural resources. In these areas the indigenous populations were enslaved and forced to provide goods and labour for the mines. Around 1540 the conquerors discovered Cerro Chico, one of the richest mines in Spanish America, and founded PotosĂ nearby in 1545. By the mid-17th century, PotosĂ was one of the biggest cities in the world with a population of 150,000.
To exploit the natural and human resources of the newly conquered territories, the Spanish Crown used an institution called encomienda. The encomendero was given charge of a certain number of natives who were obliged to pay tribute in money or in labour. When appropriate for his productive activities, the encomendero was also given licenses to extract minerals or develop land either for cultivation or to raise horses, mules, or cattle. The natives, having no money to pay the tributes, provided the much-needed labour. The Inca had used a similar institution, the mita, long before the arrival of the Spaniards. The mita provided them labour to extract gold and silver from the mines of PerĂș and Alto PerĂș.
From the 16th to the 18th centuries, the economy of todayâs Argentina slowly developed along two main northâsouth axes: the Royal Road to Alto PerĂș connecting PotosĂ with Buenos Aires and the RĂo de la Plata waterways connecting Buenos Aires with AsunciĂłn. To the west of the Royal Road to Alto PerĂș, the Spaniards founded cities that connected to the Captain Generalcy of Chile across the Andes. To the east of the RĂo de la Plata waterways, the Spaniards founded cities and native missions in an attempt to block Portuguese occupation of the same territories. During the 17th and 18th centuries, the Portuguese expanded their sovereign domains westward from their first locations on the eastern coast. Primitive nomadic tribes, native to the area, populated the territory between the two northâsouth settlement axes.
Connecting these two axes from west to east, the Europeans controlled two slices of territory: the areas surrounding the road from Santa Fe to CĂłrdoba and the lands north of a line of fortines (small forts) that went from Buenos Aires to San Rafael in Mendoza across the south of todayâs provinces of CĂłrdoba and San Luis.
Coins minted in PotosĂ supported trade along the Royal Road to Alto PerĂș and the RĂo de la Plata waterways. CĂłrdoba, Salta and Jujuy provided mules, horses, oxen and carts; TucumĂĄn provided sugar; Mendoza and San Juan produced wines; and Paraguay produced a herbal tea called yerba mate.
Unlike the Alto PerĂș, the territories that would later become Argentina did not have silver or gold and the Spanish empire was not interested in cultivating the fertile pampas. Furthermore, the native population (with the exception of the guaranĂes of Paraguay) preferred to move from their lands or die rather than become virtual slaves on an encomienda.
All trade between the colonies and the outside world was under a Spanish-controlled mercantile monopoly. All shipments in and out of the Viceroyalty of PerĂș, incredibly including todayâs territory of Argentina, went through Lima and other ports on the Pacific. This continued until the creation of the Viceroyalty of RĂo de la Plata in 1776. The long distances that people and merchandise had to move in Argentine territory was a large barrier to Argentinaâs human and economic development.
Between the second half of the 16th century and the second half of the 18th century the bulk of government revenue came, directly or indirectly, from the mines of PotosĂ. The government also collected custom duties and other internal taxes but these revenues represented less than one-third of total government revenue. Silver coins and, to a lesser extent gold coins, minted in PotosĂ were the only means used in non-barter transactions. Many of the exchanges did not involve the use of money.
Only the encomenderos, the public officers, and religious authorities received income that allowed them to accumulate wealth. The bulk of the population earned incomes that barely allowed them to subsist and many did not even participate in the monetary economy, bartering just as they had in pre-Spanish colonial era.
The Jesuit missions
A concession by the Pope expressed in several bulls granted the Spanish Crown rights that previously were the exclusive privilege of the Church. The Crown could organize the presence of the Catholic Church in the Americas, receive the Diezmo,4 organize and distribute missionaries in the new territories, decide on the location of churches and cathedrals, and select candidates for clerical positions in the Americas. These rights and responsibilities were defined under the rules of royal patronage and the Vicariato Regio which granted the Spanish Crown the right to supervise and the obligation to protect the Catholic Church in the region.
The first religious orders that arrived in America were the Dominicans and the Franciscans. The Mercedarians and the Augustinians followed with the Jesuits the last to arrive, towards the end of the 16th century. The encomienda and the mita functioned in places where there was a strong concentration of natives. The Crown wanted to secure the evangelization of the natives that lived dispersed or in small communities that were not useful for the encomenderos. To assist with evangelization, the crown decided that the natives were to be âcongregated and reduced in comfortable and convenient locationsâ called reductions or missions. The missions were religious and socio-cultural institutions created and administered by religious orders, the Jesuits and Franciscans being the most prominent. The GuaranĂ missions in Paraguay played an important role in the 17th and 18th centuries.
The nativesâ reductions were a social and economic development experiment that stood out from the rest of the social and economic structures that emerged from the interaction of the public officers, the encomenderos, and the private landowners. Once the missionaries set up the first reductions at the beginning of the 17th century, the majority of the natives that up until then had resisted the encomiendas voluntarily chose to abandon their communities and join the missions. At the missions, they received land to produce their food and accepted the rules imposed by the missionaries. The natives in the missions were well treated; they participated in the life of the community, received religious instruction, and learned more advanced European agricultural techniques to cultivate the land.
The most successful Jesuit reductions were located around the ParanĂĄ, Paraguay and Uruguay rivers in territories that today belong to Argentina, Paraguay and Brazil, but they also played an important role in almost all the cities on the Royal Road to Alto PerĂș. The Jesuits first settled in CĂłrdoba in 1599 which became their headquarters in the region. There were six missions scattered throughout CĂłrdoba. They were called estancias because they were agricultural and trade centres. In CĂłrdoba, the Jesuits created the first University. In fact, in the 17th century, the city of CĂłrdoba, the heart of the former Jesuit Province of Paraguay, was bigger and more important than Buenos Aires.
In the GuaranĂ missions, the main product produced was yerba mate, a herbal tea that the GuaranĂ natives had been cultivating for centuries. They supplied yerba mate to all the cities on the Royal Road to Alto PerĂș and the RĂo de la Plata waterways, down to Buenos Aires, and to places as distant as Alto PerĂș and Chile. Contrary to the practice of the encomenderos, the missions reinvested the surplus produced by the commercial activities. They invested in common facilities for the communities and churches and financed armies. These armies played an important role in the wars that the governments of AsunciĂłn and Buenos Aires fought against the expansionary ambitions of the Portuguese, not only on the territories occupied by the missions, but also along the east coast of the RĂo de la Plata in todayâs Uruguay.
Throughout the 17th century, the GuaranĂes continued migrating to the reductions, attracted by the opportunity to receive an education and attracted by a higher standard of living. They also loo...
