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Monopoly Trade

During the 17th Century, the legal trade decreases, since it was subject to taxes and arrived to the Peninsula through the Casa de la Contratación. The reasons were the lack of traffic at the Carrera de Indias -an established route to trade-, the reduction on precious metals as shipments due to the production of the Potosi mines; the drop of demography and, as consequence, of fees. The abundant and inefficient viceroyalty administration that uses great part of the income among the people was another reason that showed the economical and political autonomy of the American territories.

The trade with the Indies starts under the centralist and monopolist management of Seville´s Casa de la Contratación. Until the Free Trade Agreements of 1778, the creoles will enjoy of a certain monopoly through the consulates of Cargadores to Indies.

The Agreement did not established free trade, but did fomented trade between the King´s subjects and favour peninsular Spanish products as well as Indian products that were not competition to the Spanish ones. They also taxed foreign merchandise and attacked smuggling especially with the United Kingdom.

This agreement will complement itself with a series of measures that will be implemented along the years: lowering prices, tax reunification, the end of Cadiz and Seville´s monopoly, the opening of a series of Spanish and American ports to commerce, as well as a widen permit for a free slavery trade in 1789. The Crowns benefits increase but not for overseas territories.

After the reforms, the great entry of European manufactured products sink the colonial market that will not be able to deal with such a big surplus. This weakens even more Quito and Mexicos handwork as well as Chileans tool manufacture or Argentinas wine among others. Inside the inter-American trade, a merchandise flow will take place, with agricultural products of Quito and Guayaquil coming to Nueva España. Caracas will widen its cocoa merchandise with disembarkation in Mexican, Central America and Antillean ports. This trade becomes a hard competition for developing economies. In Rio de la Plata, textiles will suffer a set back in front of Buenos Airess imports. Veracruz will supply Cuba with wheat flour in front of Cadiz exportations.

The free trade will have traders like Cadiz and Seville as opponents due to their unwillingness to quit to their monopoly.

The American economy divides itself between the need for trade freedom with agricultural products and also some protection to their manufactured products. The bases of the regions economy will be set out for the following centuries.

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