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Mercantilism in New Spain (CEC)

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In short, New Spain was operated for the benefit of Spain. As such, an impressive set of laws restricted trade and manufacturing with producers in Spain getting preference to the point of having monopolies over certain aspects of the economy, and people living in the colonies serving as consumers and producers of raw materials.

Items imported from Spain to colonial Mexico included:
• Olive and other vegetable oils
• Wine
• Clothing
• Tools
• Building Materials
• Household Goods

In addition, the Spanish crown exclusively controlled trade is these items:
• Gunpowder and Firearms
• Pulque (a fermented drink made from agave sap)
• Mercury (used to refine silver, hence the name “quick-silver”)
• Tobacco
• Salt

Trade and industries not specifically addressed by mercantile laws still faced restrictive taxes that influenced how goods flowed through the empire. The Alcabala tax was a sales tax ranging from two to fourteen percent on items purchased in colonial Mexico. The Almojarifazgo was an import and export tariff on particular items distribution networks.

In theory, Mercantilism created a closed economy within the empire with prices and access heavily regulated. As with many colonial economies, however, trade in and out of Mexico also included large amounts of smuggling to avoid taxes. Piracy, too, disrupted mercantilism in New Spain.

Smuggling and piracy became such a problem that Spain had to react. To get a better grip on the system, officials restricted the trade between Mexico, the Philippines (also part of New Spain), and Europe by creating a convoy system whereas trading vessels would gather in great fleets before being shepherded across the vast oceans under escort of Spanish warships. This discouraged pirates in the Caribbean, but also caused an import and export bottleneck as this fleet only sailed to and from Spain once a year. Prices in the colonies rose due to this artificially imposed scarcity.

Vera Cruz, and Acapulco, became the authorized trade ports and flourished.