The Asientos which paid for Spanish fleets and armies in the Mediterranean, Italy, Germany, France, above all Flanders, were not the only drain on American silver: much of it never set out for Seville at all. Not even the Casa de Contratacion would expect Indies silver for the payment of Indies officials to be checked in first at Seville, and this was an increasing charge as administration extended beyond the littorals and the core mining areas, and became more diversified. Colonial defence costs were constantly rising, and the Indies took an increasing direct share of them—indeed, while the Armada de Barlovento or Windward Fleet was paid for by the Indies and nominally stationed in the Caribbean, it often took over trans-Atlantic export duties and some of its ships served in European waters.^[85] From the days of Drake and John Hawkins onwards, the Caribbean was obviously vulnerable, and its fortification a major charge. In the Pacific there were of course flurries of anxiety after the raids of Oxenham, Drake, and Cavendish; counter-measures included Sarmiento's attempt, costly in lives as well as money, to seal the Straits. There was a lull after Richard- 201 -Hawkins's defeat (1594), and Dutch attacks did not become serious on this side of the Pacific until after 1615; the heavy costs of the five-galleon Armada de la Mar del Sur, based on Callao, were then supplemented by expensive fortification at Acapulco, Panama, Callao, and Valdivia. Acapulco of course was a charge on New Spain, the others on Peru, where ‘by 1650 defence costs alone absorbed about 20 per cent of total viceregal revenue’; and as Lynch points out, this expenditure amounted to reinvestment in local industries and ancillary services. There were also situados, subsidies to less-developed provinces such as Chile. Over the period 1651–1739, under 21 per cent of the Lima Treasury's receipts were remitted to Spain; the rest went on local defence and administration. The regular annual silver shipment to Panama was dropped, until in the 1680s–90s two or three sailings in a decade became the rule. ‘In general Spain's loss was Peru's gain…The colony had become in some degree its own metropolis.’^[86]

As for New Spain, that colony also was a metropolis—for the Philippines, which except for thirty years (1701–30) were heavily dependent on situados of over 500,000 pesos a year; exceptionally, in 1639–40, over 1,000,000.^[87] Military costs came to 40 or 50 per cent of total expenses, and in some years a third of the receipts of the Manila Treasury went on the upkeep of the clergy. Conversely, 90 per cent of customs duties at Acapulco were paid on the Galleon's cargo. To the situados must of course be added the private silver sent from Acapulco to pay for imports, mostly from China, which as we have seen greatly exceeded the permitted 500,000 pesos a year. The drain was real, but vastly exaggerated by Sevillean enemies of the Galleon and the New Spain-Peru trade. One critic said picturesquely that ‘The King of China could build a palace with the silver bars from Peru which have been carried to his country’;^[88] Chaunu comments no less picturesquely that if by some miracle the alleged total of silver had been loaded on to the Galleon, there would have been no room for crews, stores, or arms, and even so she would have sunk at her Acapulco moorings under the sheer weight. ‘The Philippines cost Spain, in the palmy days [à la belle époque], some 10 to 15 per cent of what she might have received from the Indies’—this in public finance; but altogether the Orient took two-thirds or perhaps three-quarters as much as New Spain sent to Europe.^[89]

This would include of course the silver sent or brought to Acapulco by Peruvian merchants buying into the Manila trade, in which they were denied direct participation. Having more silver at command, they could outbid the Mexicans, and to a large extent Acapulco became an entrepôt for re-export to Peru: in 1602 the Cabildo of Mexico City claimed, tendentiously, that Peruvian money accounted for three-fifths of an estimated flow to Manila, and ultimately China, of 5,000,000 pesos a year.^[90] We shall discuss this trade in the next chapter; it was an index of increasing colonial autonomy, so striking an index in fact that it called forth the extreme counter-measure of complete official suppression. Finally we must add the silver, in its origin Spanish but passing through other than Spanish hands, which went to Asia by way of the Cape: Chaunu's final- 202 -estimate is that perhaps a little over one-third of American production eventually reached the Orient.

All this indicates by no means a break-up of the Spanish Empire, but at least a weakening of the bonds of Seville. It must be seen against a background of increasing diversification of the Spanish American economy (despite ‘New Spain's century of depression’) and of increased internal investment, at least in part due to merchants leaving their returns in America to avoid the risk of sequestration at Seville. Lynch puts it forcibly: ‘The crisis in the carrera de Indias occurred not because the American economies were collapsing but because they were developing and disengaging themselves from their primitive dependence on the mother country. This was the first emancipation of Spanish America.’^[91] Or perhaps more accurately a first stage in a transfer of dependency from an enfeebled Spain to new and aggressive commercial imperialisms, in the eighteenth and much of the nineteenth centuries, in our own day most notably North American. Initially by smuggling on a vast scale, after the gaining of political independence by more normal forms of economic infiltration and domination, external suppliers, investors, and monopsony customers continued to call the tune, as indeed they often still do. ‘The New World returned to dependence on the Old with indecent haste.’^[92] The truth probably lies between these two extreme statements by Lynch and MacLeod.