thagena, and then at Porto-Bello. To the former, the merchants of Santa Martha, Carracas, the New Kingdom of Granada, and several other provinces, resort. The latter is the great mart for the rich commerce of Peru and Chili. At the season when the Galeons are expected, the product of all the mines in these two kingdoms, together with their other valuable commodities, is transported by sea to Panama. From thence, as soon as the appearance of the fleet from Europe is announced, they are conveyed across the isthmus, partly on mules, and partly down the river Chagre to Porto-Bello. This paltry village, the climate of which, from the pernicious union of excessive heat, continual moisture, and the putrid exhalations arising from a rank soil, is more fatal to life than any perhaps in the known world, is immediately filled with people. From being the residence of a few negroes and mulattoes, and of a miserable garrison relieved every three months, Porto-Bello assumes suddenly a very different aspect, and its streets are crowded with opulent merchants from every corner of Peru, and the adjacent provinces. A fair is opened, the wealth of America is exchanged for the manufactures of Europe; and, during its prescribed term of forty days, the richest traffic on the face of the earth is begun and finished, with that simplicity of transaction, and that unbounded confidence, which accompany extensive commerce.* The Flota holds its course to Vera Cruz. The treasures and commodities of New Spain, and the depending provinces, which were deposited at Puebla de los Angeles, in expectation of its arrival, are carried thither; and the commercial operations of Vera Cruz, conducted in the same manner with those of Porto-Bello, are inferior to them only in importance and value. Both fleets, as soon as they have completed their cargoes from America, rendezvous at Havanna, and return in company to Europe.

SXLVI. The trade of Spain with her colonies, while thus fettered and restricted, eame necessarily to be conducted with the same spirit, and upon the same principles, as that of an exclusive company. Being confined to a single port, it was of course thrown into a few hands, and almost the whole of it was gradually engrossed by a small number of wealthy houses, formerly in Seville, and now in Cadiz. These, by combinations which they can easily form, may altogether prevent that competition which preserves commodities at their natural price; and by acting in concert, to which they are prompted by their mutual interest, they may raise or lower the value of them at pleasure. In consequence of this, the price of European goods in America is always high, and often exorbitant. A hundred, two hundred, and even three hundred per cent. are profits not uncommon in the commerce of Spain with her colonies.-From the same engrossing spirit it frequently happens, that traders of the second order, whose warehouses do not contain a complete assortment of commodities for the American market, cannot purebase from the more opulent merchants such goods as they want, at a lower price than that for which they are sold in the colonies. With the same vigilant jealousy that an exclusive company guards against the intrusion of the free trader, those overgrown monopo

See Note LXXHI.

lists endeavour to check the progress of every one whose encroach. ments they dread.* This restraint of the American commerce to one port not only affects its domestic state, but limits its foreign operations. A monopolist may acquire more, and certainly will hazard less, by a confined trade which yields exorbitant profit, than by any extensive commerce in which he recieves only a moderate return of gain. It is often his interest not to enlarge, but to eircumscribe the sphere of his activity; and, instead of calling forth more vigorous exertions of commercial industry, it may be the object of his attention to check and set bounds to them By some such maxim, the mercantile policy of Spain seems to have regulated its intercourse with America. Instead of furnishing the colonies with European goods in such quantity as might render both the price and the profit moderate, the merchants of Seville and Cadiz seem to have supplied them with a sparing hand, that the eagerness of competition amongst customers, obliged to purchase in a scanty market, night enable the Spanish factors to dispose of their eargoes with exorbitant gain. About the middle of the last century, when the exclusive trade to America from Seville was in its most flourishing state, the burden of the two united squadrons of the Galeons and Flota did not exceed twenty-seven thousand five hundred tons. The supply which such a fleet could carry must have been very inadequate to the demands of those populous and extensive colonies, which depended upon it for all the luxuries, and many of the necessaries of life.

SXLVII. Spain early became sensible of her declension from her former prosperity; and many respectable and virtuous citizens employed their thoughts in devising methods for reviving the decaying industry and commerce of their country. From the violence of the remedies proposed, we may judge how desperate and fatal the malady appeared. Some, confounding a violation of police with criminality against the state, contended that, in order to check illicit commerce, every person convicted of carrying it on should be punished with death, and confiscation of all his effects. Others, forgetting the distinction between civil offences and acts of impiety, insisted, that contraband trade should be ranked among the crimes reserved for the coguisance of the Inquisition; that such as were guilty of it might be tried and punished, according to the secret and summary form in which that dreadful tribunal exercises its jurisdiction. Others uninstructed by observing the pernicious effects of monopolies in every country where they have been established, have proposed to vest the trade with America in exclusive companies, which interest would render the most vigilant guardians of the Spanish commerce against the encroachment of the interlopers.

Besides these wild projects, many schemes, better digested and more beneficial, were suggested. But under the feeble monarchs with whom the reign of the Austrian line in Spain closed, incapaci ty and indecision are conspicuous in every department of govern went. Instead of taking for their model the active administratio of Charles V. they affected to imitate the cautious procrastinatio visdom of Philip II. and destitute of his talents, they deliberate

*Smith's Inquiry, ii. 171.

perpetually, but determined nothing. No remedy was applied to the evils under which the national commerce, domestic as well as foreign, languished. These evils continued to increase; and Spain, with dominions more extensive and more opulent than any European state possessed neither vigour, nor money, nor industry. At length, the violence of a great national convulsion roused the slumbering genius of Spain. The efforts of the two contending parties in the civil war, kindled by the dispute concerning the succession of the crown at the beginning of this century, called forth, in some degree, the ancient spirit and vigour of the nation. While men were thus forming, capable of adopting sentiments more liberal than those which had influenced the councils of the monarchy during the course of a century, Spain derived from an unexpected source the means of availing itself of their talents. The various powers who favoured the pretensions either of the Austrian or Bourbon candidate of the Spanish throne sent formidable fleets and armies to their support; France, England, and Holland, remitted immense sums to Spain. These were spent in the provinces which became the theatre of war. Part of the American treasure, of which foreigners had drained the kingdom, flowed back thither. From this era, one of the most intelligent Spanish authors dates the revival of the monarchy; and, however humiliating the truth may be, he acknowledges, that it is to her enemies his country is indebted for the acquisition of a fund of circulating specie, in some measure adequate to the exigencies of the public.

SXLVIII. As soon as the Bourbons obtained quiet possession of the throne, they discerned this change in the spirit of the people, and in the state of the nation, and took advantage of it; for although that family has not given monarchs to Spain remarkable for superiority of genius, they have all been beneficent princes, attentive to the happiness of their subjects, and solicitous to promote it. It was, accordingly, the first object of Philip V. to suppress an innovation which had crept in during the course of the war, and had overturned the whole system of the Spanish commerce with America. The English and Dutch, by their superiority in the naval power, having acquired such command of the sea, as to cut off all intercourse between Spain and her colonies, Spain, in order to furnish her subjects in America those necessaries of life, without which they could not exist, and as the only means of receiving from thence any part of their treasure, departed so far from the usual rigour of its maxims as to open the trade with Peru to her allies the French. The merchants of St. Malo, to whom Louis XIV. granted the privilege of this lucrative commerce, engaged in it with vigour, and carried it on upon principles very different from those of the Spaniards. They supplied Peru with European commodities at a moderate price, and not in stinted quantity. The goods which they imported were conveyed to every province of Spanish America, in such abundance as had never been known in any former period. If this intercourse had been continued, the exportation of European commodities from Spain must have ceased, and the dependence of the colonies on the mother country have been at an end. The most peremptory injune

See Note LXXIV.

tions were therefore issued, prohibiting the admission of foreign vessels into any port of Peru or Chili, and a Spanish squadron was employed to clear the South Sea of intruders, whose aid was no longer necessary.

§ XLIX. But though, on the cessation of the war, which was terminated by the treaty of Utrecht, Spain obtained relief from one encroachment on her commercial system, she was exposed to another, which she deemed hardly less pernicious. As an inducement that might prevail with Queen Anne to conclude a peace, which France and Spain desired with equal ardour, Philip V. not only conveyed to Great Britain the Assiento, or contract for supplying the Spanish colonies with negroes, which had formerly been enjoyed by France, but granted it the more extraordinary privilege of sending annually to the fair of Portobello a ship of five hundred tons, laden with European commodities. In consequence of this, British factories were established at Carthagena, Panama, Vera Cruz, Buenos Ayres, and other Spanish settlements. The veil with which Spain had hitherto covered the state and transactions of her colonies was removed. The agents of a rival nation, residing in the towns of most extensive trade, and of chief resort, had the best opportunities of becoming acquainted with the interior condition of the American provinces, of observing their stated and occasional wants, and of knowing what commodities might be imported into them with the greatest advantage. In consequence of information so authentic and expeditious, the merchants of Jamaica and other English colonies who traded to the Spanish main, were enabled to assort and proportion their cargoes so exactly to the demands of the market, that the contraband commerce was carried on with a facility and to an extent unknown in any former period. This, however, was not the most fatal consequence of the Assiento to the trade of Spain. The agents of the British South Sea Company, under cover of the importation which they were authorized to make by the ship sent annually to Portobello, poured in their commodities on the Spanish continent, without limitation or restraint. Instead of a ship of five hundred tons, as stipulated in the treaty, they usu ally employed one which exceeded nine hundred tons in burden. She was accompanied by two or three smaller vessels, which mooring in some neighbouring creek, supplied her clandestinely with fresh bales of goods, to replace such as were sold. The inspectors of the fair, and officers of the revenue, gained by exorbitant presents, connived at the fraud. Thus, partly by the operations of the company, and partly by the activity of private interlopers, almost the whole trade of Spanish America was engrossed by foreigners. The immense commerce of the Galeons, formerly the pride of Spain, and the envy of other nations, sunk to nothing,t and the squadron itself reduced from fifteen thousand to two thousand tons, served hardly any purpose but to fetch home the royal revenue arising from the fifth on silver.

SL. While Spain observed those encroachments, and felt so sensibly their pernicious effects, it was impossible not to make some efforts to restrain them. Her first expedient was to station ships of

force under the appellation of Guarda Costas, upon the coasts of those provinces to which interlopers most frequently resorted. As private interest concurred with the duty which they owed to the public, in rendering the officers who commanded those vessels vigilant and active, some check was given to the progress of the contraband trade; though in dominions so extensive, and so accessible by sea, hardly any number of cruisers was sufficient to guard against its inroads in every quarter. This interruption of an intercourse, which had been carried on with so much facility, that the merchants in the British colonies were accustomed to consider it almost as an altowable breach of commerce, excited murmurs and complaints, These authorized, in some measure, and rendered more interesting, by several unjustifiable acts of violence committed by the captains of the Spanish Guarda Costas, precipitated Great Britain into a war with Spain; in consequence of which the latter obtained a final release from Assiento, and was left at liberty to regulate the commerce of her colonies, without being restrained by any engagement with a foreign power.

SLI. As the formidable encroachment of the English on their American trade, had discovered to the Spaniards the vast consumption of European goods in their colonies, and taught them the advantage of accommodating their importations to the occasional demand of the various provinces, they perceived the necessity of devising some method of supplying their colonies, different from their ancient one of sending thither periodical fleets. That mode of communication had been found not only to be uncertain, as the departure of the Galeons and Flota was sometimes retarded by various accidents, and often prevented by the wars which raged in Europe; but long experience had shown it to be ill adapted to afford America a regular and timely supply of what it wanted. The scarcity of European goods in the Spanish settlements frequently became excessive; their price rose to an enormous height; the vigilant eye of mercantile attention did not fail to observe this favourable opportunity; an ample supply was poured in by interlopers from the English, the French and Dutch islands; and when the Galeons at length arrived, they found the markets so glutted by this illicit commerce, that there was no demand for the commodities with which they were loaded. In order to remedy this, Spain has permitted a considerable part of her commerce with America to be carried on by register ships. These are fitted out, during the intervals between the stated seasons when the Galeons and Flota sail, by merchants in Seville or Cadiz, upon obtaining a license from the council of the Indies, for which they pay a very high premium, and are destined for those ports in America where any extraordinary demand is foreseen or expected. By this expedient, such a regular supply of the commodities, for which there is the greatest demand, is conveyed to the American market, that the interloper is no longer allured by the same prospect of excessive gain, or the people in the colonies urged by the same necessity to engage in the hazardous adventures of contraband trade.

§ LII. In proportion as experience manifested the advantages of