Was Spanish Law the Problem? Mining Legislation and Economic Development in Colonial Mexico

Economic historians have long suggested that Spanish law held back economic development in America. They contend that, unlike English law, it failed to protect private property and imposed stifling regulations that discouraged investment and innovation. This view, I argue, is in fact an untested assumption ultimately derived from black legends of Spanish absolutism. My paper analyzes the 1586 Ordinances that governed silver mining in New Spain. This statute remained in force until the 1780s, when a new mining code was enacted with the creation of the Mining Tribunal, a guild-like organization for Mexico’s silver miners. In my paper, I argue that the original sixteenth-century law performed exactly as good institutions should, according to the institutionalist perspective of many economists and economic historians. The statute established a framework that encouraged participation and investment in the industry and rewarded risk-taking through the protection of property, including intellectual property rights. When European mining experts began to arrive in Mexico in the late 1770s, they found the Mexican industry far more productive and innovative than they had imagined. Recent legal historiography of colonial Latin America has highlighted how people from all social ranks participated in legal processes. My paper suggests another area due for revision: the assumed deficiency of Spanish law in establishing the conditions for economic development.