Extracts of Two Letters from the Conde de Monterrey
The merchants of the corporation of the city of Los Reyes, Peru, declare that, in the commerce between that kingdom and this one of [Nueva?] España, they regard it as so necessary, that should it cease, it would mean complete destruction. On this account it must be preserved, and to this end all the means possible must be sought out.
Further, they declare that the merchandise brought to the kingdom of Peru from China is not the cause of this decline of commerce between the Yndias and España, but the inadequate regulation of the war and merchant fleets, and the winter seasons, which are the utter ruin and destruction of the merchants. This is plainly evident, since before the wars with Ynglatierra, when this matter was properly attended to, the commerce was extensive and profitable—although there was no need of so much merchandise as there is now, when the population of Peru is so much larger than at that time—and the merchants not only of España but of Peru were amassing wealth. But now they are not doing so, for the reason that is here named. All is going to destruction: payments cannot be met when due; and duties are excessive, for in order to send money to España, the shippers pay seven and one-half per cent for the galleons to guard the money, and when goods are shipped from Sevilla, they pay as much as three and one-half per cent. The principal cause of this loss is the time [required to transact business]; for from the day when the money leaves Callao (the port of Lima) until it returns in merchandise to the same point there is an interval of at least three years, counting the winters; and before they can secure returns from the merchandise another year, or even a year and one-half, must pass, for not all the merchandise can be sold for cash. Consequently this money can gain its profit only once in four years, when it could, as formerly, be thus handled twice in that time. And however great the amount of the profit, it cannot approach that of the two profits [in the four years], especially with the loss involved in the aforesaid duties for the fleets, and the new impositions of duty for the armed vessels that carry, in the South Sea, the money from Lima to Panama—and this is in addition to the duties paid to his Majesty. Thus it results that the merchants of Lima, who were formerly very rich and had ample credit, have become debtors; and this is the reason why the merchants of Sevilla do not make the same profits as formerly. Therefore there is a cry against Chinese goods, as they imagine that to be the cause of their loss. This is evident likewise, because the commerce existing formerly between Peru and Nueva España was very slight and now has increased greatly, and the Peruvian merchants prefer to go to Nueva España to make their investments rather than to España, because they can make the voyage to Nueva España in one year; and therefore can make many investments with their money. And although it is true that they bring Chinese merchandise in their shipments from that which arrives in that kingdom of Nueva España, still the greater part of the cloth bought by them is from España. Although this costs them more, the shortness of the time is of so great importance to them that they consider it more profitable than going to España, for the reason expressed above regarding the delay in time. Thus, with suitable arrangements regarding galleons and merchant-vessels, commerce is prosperously carried on.
Further, they declare that the kingdom of Peru has greatly increased, during the last twenty years, in its Spanish population, both in Spaniards born there, and in those who have gone thither from España, so that there are at least three times as many people. All these people live very luxuriously. All wear silk, and of the most fine and costly quality. The gala dresses and clothes of the women are so many and so excessive, that in no other kingdom of the world are found such; so that if four merchant-vessels went to Peru annually, all the cloth goods would be sold, as well as everything else of the cargo. Because vessels go there only at long intervals, the people make use of goods from Nueva España and China. However, in the case of the Chinese goods, they are worn only by the very poor, and the negroes and mulattoes (both male and female), sambahigos, [9] many Indians, and half-breeds, and this in great number. The silks of China are much used also in the churches of the Indians, which are thus adorned and made decent; while before, because of inability to buy the silks of España, the churches were very bare. As long as goods come in greater abundance, the kingdom will feel less anxiety, and the cheaper will be the goods. The increase to the royal exchequer will be greater, since the import duties and customs increase in proportion to the merchandise; and this increase cannot take place, if the fleets are laid up for the winter, for by this delay the merchant-vessels cannot be despatched annually—on which, and upon their money not lying idle, depend the profits of the merchants.
Therefore the merchants of Peru declare that commerce should be opened with China, and that they should be permitted to send one million [ducados] annually in two vessels, and that this million bring back merchandise to the same port of Callao. This merchandise will yield six millions, of which ten per cent, paid to his Majesty, will amount to six hundred thousand ducados. And if the license for one million is not given, it should be for one-half, the duties on which would be three hundred thousand ducados.
Further they declare that, if this be not conceded to them, they should be permitted to buy and carry to Peru the merchandise taken from China to Nueva España. There the duties on this merchandise would be imposed, and they would pay seven per cent on them, notwithstanding that only five per cent is paid in Nueva España. Paying seven per cent on the merchandise from China bought in Mexico, it will be seen of what little importance the four to six millions of ducados that Sevilla pays to his Majesty are to the royal estate, because it does not consent that goods from China may enter Peru.
And I assert that, should his Majesty ask me for my opinion, I would tell him that, if it is true that the Chinese merchandise can in no way injure the commerce of España, while its benefit to Peru is certain—especially to the poor and common people, of whom there is a great number—and since it seems desirable, for the adornment of the churches of the Indians, that there should be goods from China, my opinion would be that license should be given for only one-half million (ordering under heavy penalties that this sum be not exceeded), to be used in the following manner: Four hundred thousand ducados' worth of merchandise should be brought, and one hundred thousand worth of gold bullion. The latter is likewise merchandise in China; but traders do not like to take it as it yields them no more than fifty per cent, while on the other merchandise they make five hundred per cent and upward. Thus if this silver should be allowed to them, they would obtain gold, and this one-half million would yield three millions in Peru from merchandise which will be worth three hundred thousand ducados in import duties to his Majesty, besides the other dues imposed on the aforesaid goods. Thus the customs will increase, and, as said, these five hundred thousand ducados need not to be considered, as it is thought that this amount cannot diminish the commerce with España; for every year the merchandise of Peru yields six or seven millions, and if the trading fleets and armed galleys are sent at the same time, much more money will go to España, which on this account does not go there. These five hundred thousand ducados have, in previous years, always gone from China to Peru by way of Mexico; and as the merchants say truly, the winterings and increased duties and expenses of the winterings are causing the commerce to deteriorate. This is proved by the above arguments of the merchants, evidently cited from actual facts. Thus, if the merchants were provided with money, and were able to dispose of their cargoes every two years, and with the proceeds thereof begin new commercial enterprises, they would not be only exhausted and ruined, but rather they would be placed in easy circumstances and the country would be relieved from its difficulties by the gains thus made. With more goods, it is evident that the royal exchequer would benefit more as aforesaid. Therefore it would not be advisable to prohibit all commerce with China.
And at the very least, the five hundred thousand ducados should be granted, so that the merchandise taken to Mexico from China can be purchased in Mexico. Collecting in Peru the customs on these Chinese goods purchased in Mexico, seven per cent would be levied thereon, which plus the five per cent paid in Mexico, makes twelve per cent. The kingdom would feel greatly aggrieved if they were deprived entirely of this commerce. And if Mexico continues to have trade with China, a considerable quantity of Chinese goods will, however many precautions will be taken, be hidden in the Mexican ships for Peru; while but very little of it will be seized, and his Majesty will lose almost four hundred thousand ducados, because the goods do not enter publicly. Therefore it would be advisable that this license be granted perpetually, with the above limitation.
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A great lack of money has made itself felt in this colony; and, after having thoroughly investigated the cause thereof, it has been ascertained that it proceeds in part from the very great sum taken out annually for China. It is also attributed in part to the issue of the money from the treasury—not that it has been less than in other years, but it has always been much more limited than it might be, and than is advisable for a commerce that is increasing in extent and value so much as is that of this kingdom. And since it would be greatly to the advantage of the treasurer to coin more money, they impute to him that, by not spending something at present, he is thus niggardly in making the necessary provision, and that by this he loses much and the state more. These two difficulties are reënforced by another—that since there have hitherto been, for various reasons, very few traders who were inclined to buy silver from private persons and send it to the mint to have it coined on their account, it has resulted that four or five men have made themselves the masters of this traffic; consequently there has been a great increase this year in the loss incurred by those who sell their silver in order to be furnished with coin. All this has been observed at the time of the vessels and trading fleet; and it is a matter of much moment, in which it has seemed best to me to inform your Majesty, inasmuch as I have undertaken to institute a reform. This, please God, will be made with energy, as in breaking open a package. When the correctives usual in this region (which are mild) do not suffice, I will propose to your Majesty other and more severe measures, which might be adopted by the Council, and one might be of sufficient advantage to your Majesty. However, it were not advisable to discuss this, but that the necessity of the public government demands it and invokes it, since only at such times can it be called just or used as an argument.