Bourbon Reforms and State Capacity in the Spanish Empire

Abstract

Understanding the factors that affect the state’s ability to fulfill its various duties has been a perennial topic of interest in the social sciences. Raising tax revenues ranks among the most important foundations to develop these abilities. Still, there is no consensus on the ultimate determinants of fiscal capacity. Plus some of the most salient explanations originally conceived to understand European state formation (war making, in particular) fail to extrapolate to other settings, such as the Americas. By delving into the historical origins of state capacity in the Americas, this paper seeks to understand the fundamental role, and potential persistence, of the fiscal institutions put in place during the centuries-long Spanish colonial rule. We rely on the extensive records kept by the network of Royal Treasuries (Cajas Reales) created in the Spanish empire during the XVI-XVIII centuries. Particularly, we consolidate and harmonize the available information, building on the titanic work of Tepaske and Klein (1982, 1990) and complementing this with information for the viceroyalty of New Granada from Pinto (2016). We present a detailed description of the data to revisit our understanding of the treasuries themselves, stressing: 1. the importance of inter-treasury transfers relative to revenue for the Crown, 2. the likely effects of windfall revenues from particular economic activities and from other treasuries on tax effort, and 3. the distinctive characteristics of Cajas located in or near other institutions of local power (i.e. provincial capitals) compared to those farther away from these centers. In our empirical analyses we plan exploit both the spatial and time series nature of the data.