M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 Do Political Conditions Matter? Nineteenth-Century Lisbon: A Case Study Maria Eugénia Mata Faculdade de Economica, Universidade Nova de Lisboa, Portugal Abstract: Do political conditions matter for the prosperity of a capital city? The present study suggests that the French Napoleonic military occupation, Brazil’s independence, and domestic civil wars indeed helped to make the first half of the nineteenth century a gloomy period for Lisbon. The city’s demographic stagnation reflected a slow adaptation to the structural changes resulting from the political challenges. The demographic growth and prosperity that characterized the century's second half, as well as the early twentieth century, were related by contrast to the peaceful foreign and national environment Lisbon’s civil society was able to enjoy. They also reflected the development of centralized state government, and the rules regulating local urban growth. Lisbon’s role as the capital city of a new colonial empire seems to have been a less important factor. © 2002 Portuguese Studies Review. All rights reserved. y the end of the eighteenth century, Lisbon was a prosperous city of nearly B170,000 inhabitants.1 It was still recovering from the 1755 earthquake and the attendant massive material destruction and economic disruption. The plan for rebuilding the most affected areas, sponsored by the Prime Minister Pombal, provided a modern eighteenth-century architectural framework for the devastated historical zone at the city’s core.2 At the same time, “by destroying downtown Lisbon, the earthquake hurried the process of urban expansion to the flats along the river (Santos, Belém) and particularly towards the interior (Penha de França, Campo de Santa Clara, Rato, Campolide and Santa Clara).”3 Public works and private investment in the building sector encouraged urban employment and spread economic links backward and forward to other sectors and activities in the city and its surroundings. This expansion was fostered by an increase of economic activity mainly based on colonial trade, in particular Brazilian products such as sugar, cotton, tobacco, hides, gold and diamonds. In the late eighteenth century, monopolies supported by 1 M. I. Baganha and M. M. Marques, “Social Differentiation and the Formation of Labor Markets,” in Pedro Telhado Pereira and Maria Eugénia Mata, eds., Urban Dominance and Labour Market Differentiation of a European Capital City—Lisbon 1890-1990 (Norwell, Mass.: Kluwer Academic Press, 1996), 76, according to the 1801 counting. 2 J. A. França, Lisboa Pombalina e o Iluminismo (Lisbon: Bertrand, 1977). 3 L. Baptista and T. Rodrigues, “Population and Urban Density: Lisbon in the Nineteenth and Twentieth Centuries,” in Pereira and Mata, eds., Urban Dominance, 55. M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 13 the state were abolished in Portuguese colonial trade. However, the colonial pact, which required all colonial trade to call on Portuguese ports, was still in force. Lisbon was by far the most important of the Portuguese ports. It acted as a pivot between Brazil and its European customers. Late eighteenth-century prosperity soon disappeared as the new century began. Natural disasters cannot be blamed for this stagnation. Early nineteenth-century political shocks did have strong consequences. Economic analysis usually stresses the dynamic effects of belligerency on the economic situation, because of larger public expenditure for wars. However, institutional economics may help us to understand how wars may be detrimental for urban economic activities. They may be responsible for stagnation in general, as a result of economic disruption and social turmoil. This paper examines nineteenth-century Lisbon as a case study. It seeks to illustrate how French military occupation, Brazilian independence and civil wars triggered a new depressed phase in the life of Lisbon. Following an analysis of the political conditions, the paper describes the detrimental effects on Lisbon’s economic activity of inefficient allocation of economic resources, brought about by institutional disruption caused by political conditions. Lack of prosperity is posited as the explanation for urban stagnation. Contrasting this picture is the growth and embellishment of Lisbon during the second half of the century, outlined in the latter half of the paper. A peaceful globalization process brought to the Portuguese capital-city modern urban economic activities and larger literate job market opportunities. The demographic and economic stagnation of Lisbon during the first half of the nineteenth-century It may be safely argued that French military occupation and Brazilian independence triggered a gloomy phase for Lisbon. Between 1807 and 1811, France attempted to occupy Portugal to enforce the so- called Continental Blockade on British trade.4 The combined efforts of the Portuguese army and a British expeditionary force led by Arthur Wellesley (later Duke of Wellington) forced the French troops to withdraw and to proceed to Spain and Southern France between 1812 and 1814. These were the last of the campaigns against the first French Empire. The Portuguese mainland was devastated by this so- called “Peninsular War.” Lisbon was subjected to a period of occupation (autumn 1807 to spring 1808) and to siege lasting from the summer of 1810 to the following summer. Both of these periods profoundly disrupted civilian economic activity in the Portuguese capital. These might be considered transitory damages. One could argue that the return of peace would have certainly restored the old patterns of Portuguese economic activity, in the absence of other disturbing factors.5 As in the case of the earthquake, 4 Jorge Borges Macedo, O Bloqueio Continental: Economia e Guerra Peninsular (Lisbon, 1962). 5 For the recovery of a particular rural area, the Douro valley region, see N. R. Bennett, “The Vineyards of the Douro and the Peninsular War,” Journal of European Economic History 21 (1) (1992). 14 M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 Lisbon could recover. Based on available studies, the French wars appear to have had short-term direct effects on Lisbon’s development, even though J. B.Macedo has qualified them as deeply injurious for manufacturing activities in the regions affected by military action.6 Another disturbing factor was Brazilian independence. As the French troops advanced on Lisbon in 1807, the royal family took refuge in the Portuguese colony of Brazil, to avoid political capitulation to Napoleon. This option transformed, for a while, the Brazilian capital, Rio de Janeiro, into the capital of the Portuguese kingdom, depriving Lisbon of this traditional role. Moreover, the city lost the demand related to the conspicuous consumption associated with the residence of the royal family and the higher Portuguese nobility. It also lost the associated benefits in terms of employment and prosperity, so typical for capital cities of Europe’s traditional society. In the wake of the French defeat in Europe, and given the British assistance to Portugal in driving away Napoleon’s troops, it might have been possible to overcome the effects of the foreign military presence within a few years, since rural areas could recover from agricultural disruption and especially from local plundering. Furthermore, the royal family returned to Lisbon a few years later (1821), and the Portuguese Court was re-established in Lisbon. This meant the recovery of political and administrative functions for the city, as it required the presence of the diplomatic and bureaucratic staff associated with central state government. Political functions, however, are not enough to ensure the demographic growth or prosperity of a capital city. Urban expansion requires healthy economic activities as a base. Economically, recovery was much slower and more difficult. The real problem was that the French occupation of mainland Portugal implied that the colonial pact rule that had forced Brazilian trade to call on Portuguese ports lost its justification. The French would seize Portuguese commercial vessels. Thus, the Portuguese government in Brazil authorized direct trade with all friendly nations, mainly Britain and the United States at the time. From 1808 onward, Brazilian ports were open to foreign ships, and it was now possible to export goods and import staples without going through Portugal. This meant that the colony was free from its traditional role. Once Portuguese ports in Europe had been definitively delivered from the French threat, it would have been possible to return to the colonial pact rule. However, British pressure and Brazilian reaction made this impossible. Britain even profited from the Portuguese difficulties during the period of 1807-1811 to negotiate, in 1810, a very favorable trade treaty that ensured permanent British access to Brazilian ports and a significant reduction of Portuguese protectionist duties. Brazilian economic independence, to all practical intents and purposes, was achieved in 1808. The formal end of the country’s colonial status followed soon afterwards, in 1815. A total rupture of political ties with Portugal took place in 1822, and Portugal’s acceptance in 1825 sealed the separation. 6 J. B. Macedo, Problemas de história da indústria Portuguesa no século XVIII (Lisbon, 1963). M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 15 These Brazilian events may be considered to a certain extent as indirect