The Conflict Between the Manila Galleon Trade and the Mercantilism Policy of Spain

Abstract

The purpose of this article is to delve into the rise and development of the Manila galleon trade between the 16th and 19th centuries and to focus on the deeper reasons for the limitations of Spanish control over this important trade route. The Manila galleon trade not only connected Manila in the Philippines with Acapulco, Mexico but also established economic ties between China and Spanish America, which used Manila as a transit point. In the entire trade, Spain, as a nominal trade monopolist, appears to be unable to effectively control this trade. Research suggests that this is mainly attributed to Spain's directional errors in implementing mercantilist policies in its colonies, which contradicted the principles of free trade that had developed in Manila's sailing trade during the first thirty years. Under the guidance of mercantilism, Spain excessively pursued gold and silver wealth while neglecting the overall development of the colonial economy, resulting in a serious mismatch between domestic and colonial production and actual demand. This policy orientation not only limited the growth potential of colonial economies but also weakened Spain's competitive position in global trade.