It is rather curious to remark that at the very height of her colonial commerce, when the riches of South America were pouring at the greatest rate into her coffers, how little actual wealth was accumulated by the Mother Country.  Indeed, a monumental proof of the inefficiency of her organization is that, although she bled the filial nations with an almost incredible enthusiasm, Spain remained in debt.  The influx of gold from her colonies demoralized and ruined such industries as she had possessed, and such goods as she sent out to South America and elsewhere were now almost devoid of any proportion of her own manufactures.  The merchandise which she sent to the New World she purchased from other countries, principally from Great Britain, and the English merchants saw to it that their profit was no small one.  Thus Spain at this period, from a mercantile point of view, was very reluctantly serving as a general benefactor to Europe.

All this, of course, was in spite of most extraordinary efforts to effect the contrary.  As early as 1503 the Casa de Contratacion de las Indias had been established in Spain.  This institution was practically the governing body of the colonies.  It possessed numerous commercial privileges, since it held the monopoly of the colonial trade.  These privileges were continued until as late as 1790.

The Casa de Contratacion, although in many respects a purely mercantile body, was endowed with special powers.  So wide was its authority that to be associated with this body was wont to prove of enormous financial benefit.  Thus, it was entitled to make its own laws, and it was specially enacted by Royal Decree that these were to be obeyed by all Spanish subjects as implicitly as any others of the nation.

So far as the commercial world was concerned, the powers of the Casa de Contratacion were sheerly autocratic.  The institution, in fact, held the fortunes of all the colonials in its hand.  It possessed, in the first place, the privilege of naming the price which the inhabitants of the New World should pay for the manufactured goods of the Old.  In addition to this, it lay within its domain to arrange the rates at which the produce sent from the colonies was to be sold in the Spanish markets.  From this it will be evident that, commercially speaking, its powers were feudal.

It was inevitable that frequent evils should have sprung from the inauguration of a system such as this.  It became almost a religion to every Spanish official and trader to batten upon the unfortunate colonial, quite regardless of the fact that the pioneer settler was being strangled during the process.  Since the hapless dweller in South America was not allowed to bargain or haggle, and was forced to take whatever was graciously sent out to him at a rate condescendingly fixed, it frequently happened that this latter was five or ten times the legitimate price.