PRICES AND WAGES IN NEW CASTILE: THE CONSTRUCTION OF AN INDEX OF REAL WAGES, 1501-1991*a DAVID S. REHER Universidad Complutense de Madrid and Grupo de Estudios Población y Sociedad [GEPS] ESMERALDA BALLESTEROS Universidad Complutense de Madrid Originally published in Spanish: Revista de Historia Económica. 11, 1, 1993, pp. 101-151 ABSTRACT Using published and unpublished data, mainly taken from central Spain and especially from Madrid, annual series of prices, wages and real wages between 1501 and 1991 have been constructed. A detailed explanation is given of the sources and procedures used in the construction of the series, and the reliability of the different adjustments is evaluated. The resulting time series clearly portray the medium and long-term trends of prices and wages in central Spain. When compared with English data, similar trends emerge. Keywords: Prices, Wages, Real wages, Spain JEL Codes: J30, E30, N13, N14 *a This work received support from the Autonomous Community of Madrid. The authors would like to thank Enriqueta Camps Cura and Jordi Maluquer de Motes for generously allowing us to use the data, often unpublished, for prices and wages in Catalonia, as well as Leandro Prados de la Escosura who contributed with very useful suggestions. Revista de Historia Económica/Journal of Iberian and Latin American Economic History (2020) 1 Virtual Special Issue 2020. HANDLE: http://hdl.handle.net/10016/31606 REHER AND BALLESTEROS RESUMEN A partir de datos publicados e inéditos, referidos en su mayor parte al centro de la península y en especial a Madrid, se propone la construcción de índices anuales de precios, salarios y salarios reales entre 1501 y 1991. Se ofrece una explicación detallada de la naturaleza de las fuentes y de los procedimientos utilizados en la construcción de los índices, evaluando la bondad de los ajustes introducidos. Las series resultantes delimitan con claridad la evolución cíclica a medio y largo plazo de precios y salarios en el centro de España. Al comparárselas con series temporales inglesas, destaca la similitud de tendencias en el conjunto del período estudiado. Palabras clave: Precios, Salarios, Salarios reales, España 1. GENERAL CONSIDERATIONS Series of prices and wages have always been a cornerstone for our understanding of European economic history. Many European countries have dedicated considerable effort to the construction of annual series of these variables providing, as they do, a kind of peephole into the past that allows us to get a glimpse, albeit in general terms, of the dynamics inherent in fluctuations and business cycles. In fact, citing a list of these works means mentioning some of the most distinguished names in economic history.1 Spain was also fortunate to be able to count on the pioneering work of Earl J. Hamilton, who produced series of prices and wages for New Castile, Old Castile, Valencia and Andalusia between 1500 and 1800.2 Although regional coverage was uneven, Hamilton’s work became a mandatory reference point for both Spanish economic historians and anyone interested in the history of prices. However, as is often the case, far from stimulating a boom in the study of Spain’s economic cycles, this outstanding effort seemed to pave the way for a general lack of interest in the history of prices and wages. In fact, for years after the appearance of his study, only criticisms and commentaries of it appeared.3 Later efforts have focused on the preparation of partial series, either geographically or chronologically, and have contributed, gradually, to the task of filling the gaps in Hamilton’s 1 The works of Braudel and Spooner (1967), Phelps Brown and Hopkins (1955, 1956, 1957 and 1959) and Romano (1965), among many others, should be mentioned here. 2 See Hamilton (1934, 1947). 3 See Vilar (1949) and Nadal (1959), for example. 2 Revista de Historia Económica / Journal of Iberian and Latin American Economic History (2020) PRICES AND WAGES IN NEW CASTILE series.4 The foundations for a completely new understanding of price dynamics only appeared in Catalonia, thanks largely to Gaspar Feliu’s recent study; this author managed to bring together scattered works by other researchers to reconstruct price and wage series in Catalonia throughout the early modern period.5 Despite these drawbacks, our understanding of the history of prices and wages during the Ancien Régime in Spain is much better in many ways than that of the period which followed. Proof of this is seen in the fact that, to date we do not have a single complete series of prices or wages for the period 1800-1990 that would allow us to link with the previous data of Hamilton or Feliu, in order to generate a truly long-term time series showing their evolution in Spain. For the 19th century, once again, a pioneering work, that of Sardá, which puts together a wholesale price index in the port of Barcelona for the period 1812-1890, is available.6 A good number of studies followed, some of great value, but almost always employing relatively short time series.7 Only recently have there been some efforts to fill this gap.8 In the present study our objective is to develop uniform indicators of wages and prices for Madrid and the rest of New Castile, in order to generate a single series covering nearly five centuries of Spain’s history. Until 1800, our efforts will be based on data published previously by Hamilton regarding New Castile, although some modifications to the original series are proposed. For the period 1800-1991, new series of prices and wages will be presented based mainly on data for the city of Madrid. Both will be complemented with official data in order to extend the series until 1991. Together they will offer us an overview of the evolution of prices and wages in the central area of Spain between 1500 and 1991. 4 It is worth mentioning, among the most significant contributions by a long list of authors, the works of Anes and Le Flem (1965), Anes (1970), Castro (1987), Caro López (1985, 1987), Palop Ramos (1975), Vaquer Bennassar (1987), and Arizcun Cela (1989). 5 Feliu (1992) used previous series published by Giralt Raventós (1958), Vilar (1962), and Serra (1988), along with several which were his own work. 6 Sardá (1948). This work was continued until 1928 by the Bank of Spain, “Dictamen de la Comisión nombrada por Real Orden de 9 de enero de 1929, para el estudio de la implantación del patrón oro” (Annex A, pp. 201-203). 7 Those of Sánchez-Albornoz and Carnero Arbat (1981) and Peña Sánchez de Rivera and Sánchez-Albornoz (1983), among others, should be mentioned. 8 The recent work of Garrabou, Pujol and Colomé (1991), above all, referring mainly to rural areas of Catalonia warrant mention. Their series span the period 1818 to 1935. For a good overview of the situation during this period, see Maluquer de Motes (1989). For the 20th century in particular, see also Ojeda Eiseley (1988). Revista de Historia Económica / Journal of Iberian and Latin American Economic History (2020) 3 REHER AND BALLESTEROS 2. PRICES AND WAGES IN NEW CASTILE, 1500-1800 For this period we used the basic data provided by Earl J. Hamilton.9 In so doing, we have followed the work of Pablo Martín Aceña, who estimated the components of a "basket of consumables " based on the criteria established by Phelps Brown and Hopkins in a series of articles on this subject, first in England and then in various European regions.10 Martín Aceña had a dual goal: firstly to approximate the actual cost of living and, secondly, to verify, as far as possible, the general time series of prices for Spanish regions with other research based on similar criteria in other European countries. While his success regarding the latter gives undoubted value to his series, as far as the former is concerned, his premises (like those of Phelps Brown and Hopkins) are more debatable. The composition of the diet and the fact that an item reflecting housing expenditures is missing constitute the main points of debate.11 Despite these problems, the work of Martín Aceña is very useful given that, in any case, his weighting of prices is more refined than that of Hamilton, consisting simply of an arithmetic mean of the different series he collected. A potential critique of his approach is that fundamental changes may have occurred in structure of family expenditures between the 17th and 18th centuries and, indeed at least in principle, that may have been the case. However, there is a lack of studies in this area and, in very general terms and except for very specific cases where, for example, a region preferred to specialize in the cultivation of corn or potatoes, the structure of production, focused mainly on cereals, was probably quite similar throughout this entire period. For these reasons, his criteria are adopted without changes.12 Figure 1 shows a comparison between the weighted global series and Hamilton’s series. As expected, both series (ours and Hamilton's) show many similarities. However, certain disagreements between the both series should be noted. Perhaps the most notable difference is the fact that the weighted series shows a faster price increase during the 16th century and, especially, between 1760 and 1800. Furthermore, in short periods of time there are some noteworthy nuances (around 1560-1580, between 1625 and 9 The gaps for various products were few and were filled using a simple linear interpolation procedure. 10 Martin Aceña (1989); Phelps Brown and Hopkins (1956) 297; 1957; 1959. 11 See Nadal Oller (1959) 506-507. 12 The weights assigned to the different products are: flour, 48% (wheat, 30%; barley, 18%); meat and fish, 23.5% (beef, 7.5%; lamb, 7.5%; chicken, 3.5%; sardines, 2.5%; dried fish, 2.5%); cheese, 3%; wine, 14%; fuel and lighting, 7.5% (oil, 2%; charcoal, 3.5%; tallow candles, 2%), and textiles, 4% (twine, 2%; canvas, 2%) (see Table 2).