Xin chào!Hello from Vietnam
Elsa Chung is an international student from Ho Chi Minh City, Vietnam. She is currently a senior pursuing a double-major degree in International Business and Marketing. Coming to the U.S. from the other side of the globe, she was beyond excited, yet nervous, to begin her new journey as a university student four years ago. Years passed, Elsa now finds herself to grow into a much more independent and matured girl, which she is really proud of, after being far away from home.
Moreover, she is a true advocate of self-love and always seeks to spread positivity. In her free time, you will find her either dancing to K-pop songs or hanging out with friends. On top of that, Elsa’s pleasurable pastime is traveling and exploring as many fascinating sites as possible throughout the nation or across the world. With that being said, you wouldn’t be surprised seeing her taking pictures of every single thing on the go. For her, photos serve to be a precious remembrance of all expeditions.
Commercial Trade Between US and Spain
The United States of America is widely known for being the “melting pot” of various cross-cultural affiliations due to its huge effect on the immigration system. Immigrants across the globe came to the nation with the visualization of “American dreams” in their heart and mind, hoping to indulge themselves in the thriving essence of the most powerful country.
Among all of the diverse cultural implications, the Spanish invasion and settlement of the US have contributed significantly to the historical, economical, societal, political,.., aspects giving rise to an immense influence upon the initial exploration and establishment. Today, Spanish heritage continues to remain as a strong and dominant legacy in the nation. It’s a matter of fact that the Spanish have left substantial marks on the economic aspect of the United States, especially the early transfer of cattle and livestock.
Agricultural Aspect: Cattle and Livestock Management
The early Spaniards brought tremendous quantities of cattle, sheep, and horses which later created a basis for American cattle and sheep industries, alongside the horse supplying its own kind of significance in this market.
At the very end of the Spanish regime, the Americans had successfully obtained acquisition over these hundred of thousands of farm animals. Particularly, Texas became home to the cattle industry, holding nearly 400,000 cattle with an estimated value of $1,500,000. (“Material Heritage – Google Arts & Culture”) This was for the first time in the history that Texas held such affluent wealth, making its cattle industry flourish concurrently with the whole economic, political, and social growth of the State.
During the 10-year-period between 1846 and 1855, the value of cattle and horses skyrocketed from $2,929,322 to $16,916,833 with an equivalent to 1,603,146 in quantities. Hence, it was reasonable to assume that the market value of cattle and the wealth acquired to the later American were actually inherited from the Spanish settlement and procedure. In reality, the Americans indeed were functioning under the Spanish with all the fixed title, land, limits, and range rights.
Of all the cattle elements brought by the Spaniards the outstanding component that highly boosted the performance of both the Indian economy and whiteman’s history was the horse- a familiar economic unit that served as a transportation and communication mode, contributing huge profits. This animal then became the fundamental medium of exchange with white traders.
US Trade Patterns with the Spanish Empire
During the neutrality years of 1793-1808, it was brought to attention that the United States derived its prosperity from the nation’s double role as both supplier and middleman to European nations to cope with the ongoing war and colonies matter. (“Western Colonialism – Spain’s American Empire | Britannica”). To fulfill the demand, an extensive amount of silver and ships from Spanish America were necessary to finance the penetrating trade.
Numbers and figures emphasized the merit of commodity exchange with the Spanish “Indies”, yielding favorable earnings and profits to the nation. There were numerous economic factors that contributed to the impressive gains during the neutrality periods and following turns to net deficit positions afterward. Some of the determinants were associated with the climatic and geographical conditions, forming the direction and distribution of trade under the spur of profit maximization.
During the naval warfare happening between the UK and Spain, North American manufacturers charged higher prices when in fact tropical goods that were no longer shipped to Spain turned out to be comparably plentiful. It was already predicted that the Spanish war with England (1812-1815) would drive the import prices much higher than domestic exports. Hence, moderately pleasant trade terms were inadequate to outweigh the structural deficits in the equilibrium of trade volumes.
Nevertheless, the merchandise balances with Spain were in good favor of the US during the years of peace. It was indeed held nearly neutral in the late 1810s. (Esteban, 527) The reason for that was due to the fundamental elements framing the balances of cargo and fixed value per ton. Moreover, it’s important to note that climatic and geographical conditions distinctive to the translation with the Indies enabled proficient use of cargo space within a predominantly bilateral exchange of tropical products between the domestic and foreign manufacturers.
However, in the case of Spain, North American staples like flour, rice, and codfish were actually produced widely across Europe. Additionally, Spanish wines and spirits did have nearby alternatives in its own country and Mediterranean areas. (“Western Colonialism – Spain’s American Empire | Britannica”) In fact, several ships destined to peninsula harbors unfortunately might return home carrying whole Spanish merchandise although the order was one of multilateral exchange.
Therefore, captains whose goals were profit-maximization were prudent to discharge goods with the highest prices. In order to gain the finest possible return, the strategy was to gather returned shipments and attempt to sell their ships in considerably reachable markets at the lowest attainable price. The favored position of ships returning back to the U.S ports with Spanish goods loaded would give rise to the positive estimates of export minus imports.
Moreover, to negate conflicting patterns of relative prices, gigantic re-exports of sugar and coffee guaranteed positive joint balances freight and constant value per ton at all times.
The preceding interpretation has pinpointed a collection of structural patterns in commodity flows and configuration, alongside inferred deviations in relative prices, which helped explain the realized trends in the merchandise balances with both the Indies and Spain, The sequence of current trade values at departure’s ports expressed an explicitly repeating pattern. During war times, a larger corresponding surge in export values made for great surpluses against the Spanish Empire.
As animosity came to an end, trade values declined, leading to the negative balances with the Indies and practically neutral with Spain. Unfortunately, increasing re-exports during hostilities barely bring about positive balances. This was also the same case with the effort of expanding imports to bolster the carrying trade. As a result, a minor correlation between exports and imports values over the cycle would generate nothing but a tautology.
Perhaps the formation of cycles in the trade balance shaped by the divergent rate of change in commodity values is best explained by economic terms. Despite the importance of supply shifts, price and income elasticity of demand have a huge impact on the cycles as well. A successful export happens when consumers are willing to pay reasonable prices to offset the production and delivery costs.
Especially in the markets of the US and Spain, prices dropped with rising import quantities during warfare whereas climbed over as volumes sank during peacetime. Therefore, both upturns and downturns of trade balances were due to a more foreign elastic demand for US products exports than for its domestic imports. The immediate effect of dropping prices in quantity demanded during wartime was thought to be altered by an indirect impact on incomes.
Cheaper imports gave rise to increased purchasing power in the Indies provoked greater fluctuations in demand for income-elastic manufacturers equipped across the northern territory than for agricultural essentiality. On the other hand, declining real incomes resulted in demand falling for commodities.
Even though the influence of price and income both contributed to positive balances against the Indies during warfare, the favorable effect of plunging prices on Spain’s imported goods could have been discouraged by poor purchasing power within the peninsula.
For measuring the standard responsiveness of percentage changes in export quantities respective to price and real income in the Indies, figure 6 displayed the log-linear demand function through several regressions of fixed values on current prices and approximate purchasing power. (Esteban, 531) The coefficients best follow the hypothetical assumption that demand for US exports, especially during wartime, was elastic to changes in prices and fluctuated hand-in-hand with real incomes. Previously anticipated, demand for tropical crops closely followed the rule of price-inelastic to changes in real income. This also applied to key commodities such as sugar and molasses.
Furthermore, current prices at Cadiz and Malaga (southern Spain) were gathered and interpreted into a weighted index from documents of Corredores de Lonja and other resources. Periodically references were standardized by the calendar rather than by fiscal years starting October 1st, in order to grant time lags between entries of home duties and the merchandise sale in Spain.
As can be seen from the top panel of Figure 6, regularly contrary variations in price and volume reveal the presence of eminently elastic demand for home exports from the US to Spain during 1795-1819 (bottom panel of Table 2).
Considering the import perception, the US market’s demand for Spanish products in that same period was in fact less elastic than anticipated for Spanish demand for exports. Domestic prices and volumes expectedly progressed in opposite directions during the reconciliation of Amiens in the initial years of the Spanish War of Independence and at the climax of the Anglo-American combat (1812-1815)
Surprisingly, at the end of the first naval war (1796-1801), import prices increased slightly than declining with climbing volumes, and oscillated at low levels with descending than ascending import volumes throughout the second war (1804-1808). Because of that, the comparative effect of import and export elasticities on the trade balances cannot be analyzed to an explicit extent. Therefore, additional factors shall be brought into consideration.
Roughly constant import prices during 1799-1801 were due to great re-exports of Spanish wines and spirits to the Indies. After that, in 1805-1807, declining import quantities were persistent with a plausible swell in direct transaction between the two nations. Although larger demand for elasticities for exports than imports demonstrate most phases in the merchandise balance with Spain, the whole six years of naval warfare seemingly lie on the abundant demand elasticities capture on export position, as well as fundamental attributes of the acceleration and development of the re-export commerce.
During the early stages of the naval warfare between England and Spain, the US merchants enjoyed high profit levels because of the scarcity of importable goods in contrast to the abundance of exportable goods. However, with the rebound to harmony, a reverse effect was performed upon the competition from Spain followed by Britain.
Similarly, commerce earnings with Spain flourished in war and dwindled in peace. However, not until the middle years of the Peninsular War of Independence did the non-merchandise sector reach its summit. (Costeloe, 15)
Although shipment costs on longer journeys were supposedly higher, taking into account the carrying expenses, the critical element that yielded higher earnings was apparently the tonnage unit of freight cost. Specifically, the transport rate arrived at its climax amid the peninsula.
Noticeably, during 1808-1813, there seemed to be a rising trend of rates, yet still not much higher compared to the previous decade. Furthermore, a vital impact on earnings during eras of high trade values was credited to insurance premiums on the way to Spain. Nonetheless, these premiums plunged after 1808 and stayed at a relatively low level until 1813. Conversely, there prevailed a surge in export volumes during the three years 1810-1813. It was most likely the result of hunger relief in the settled peninsula.
Though profits derived from net earnings were not easily determined, evaluation for five major export staples approximately revealed an average annual return on the larger share as part of the total export to Spain. (middle panel). In a nutshell, the non-merchandise section of net earnings from Spain sufficiently enhanced the overall returns when most needed to either fund re-export transactions or resolve deficits.
In general, trading with Spain was beneficial and thought to be an essential remedy amid a high probability that international indebtedness would rise to a default. Realistically, actual benefits were not enough to compensate for potential gains. The lingering effect of carrying trade was significant that acted as boundaries set by periodic restoration in Spanish colonial commerce.
During the mid-1790s, home exports were in an unfavorable position as a consequence of lagging responses in the food supply. The unhidden reasons were due to long gestation periods and a substantial rise in domestic freight rates. Therefore, commercial trade with the Indies deteriorated because of the high import values per consignment ton. Consequently, there was a cut in surpluses with Spain due to falling transaction courses. Exceptionally, these downfalls worsened during the period of the strengthening of foreign elastic demand for smaller exports, resulting in lower gains on cargo, insurance, and profit. Without an extensive manufacturing headquarter at home, foreign greatest earnings were deemed to come from the sale of cotton grown on previously Spanish lands.
On a final note, the US economy was heavily influenced by the foreign sector, especially while trading with Spain. Major factors that contributed to the local wealth national income were certainly thanks to the high feasibility of exports of agricultural products and the shipbuilding movement. Financial status against the Spanish Empire was more valuable than estimated net commodity flows. Although profits from the Indies eventually became losses after, growing surpluses from Spain during the Peninsular War of Independence secured pleasing net balances with the Empire.
Taking everything into account, the US’s unfavorable debtor position to the rest of the world wouldn’t have been resolved without positive earnings affiliated with these foreign trades. In particular, high inflows of precious metals with the Spanish Empire have stimulated financing greater levels of imports and re-exports.
“Material Heritage – Google Arts & Culture.” Google Arts & Culture, Google Arts & Culture, 2013, artsandculture.google.com/story/uQUxRjQQjwAA8A.
Esteban, Javier Cuenca. “Trends and Cycles in U.S. Trade with Spain and the Spanish Empire, 1790-1819.” The Journal of Economic History, vol. 44, no. 2, 1984, pp. 521–543, www.jstor.org/stable/pdf/2120728.pdf.
Webster, Richard. “Western Colonialism – Spain’s American Empire | Britannica.” Encyclopædia Britannica, 2022, www.britannica.com/topic/Western-colonialism/Spains-American-empire.
Yun-Casalilla, Bartolomé. “The American Empire and the Spanish Economy: An Institutional and Regional Perspective.” Revista de Historia Económica / Journal of Iberian and Latin American Economic History, vol. 16, no. 1, Mar. 1998, pp. 123–156, www.cambridge.org/core/journals/revista-de-historia-economica-journal-of-iberian-and-latin-american-economic-history/article/abs/american-empire-and-the-spanish-economy-an-institutional-and-regional-perspective/7BB53B9368658E5C897A77FE8A6E1593#access-block, 10.1017/s0212610900007072.
Costeloe, Michael. “Spain and the Latin American Wars of Independence: The Free Trade Controversy, 1810-1820 on JSTOR.” Jstor.org, 2017, www.jstor.org/stable/2513829?seq=1.