final paper natalia gomez and federico trujillo

8/13/2019 FINAL PAPER Natalia Gomez and Federico Trujillo

1/7

1

Understanding Development in the New World; a Counterfactual Approach.

How Resources Availability Affected the Creation of Institutions Following the European Colonization of

North America.

Natalia Gmez Valencia & Federico Trujillo Posada

Universidad EAFIT


2/7

2

Part 1: The Resources Dilema

A hundred years after Columbus arrived to the Bahamas, the British settlers were starting the

colonization of the northern part of the continent. All that time the Spaniards had been creating

Extractive Institutionsin the south, and benefiting from the great amount of gold and silver of

their colonies. The Virginia Company also tried to impose this style of institutions in the north,

but with the absence of these valuable natural resources it proved to be impossible, because they

could not force the British settlers into gang labor and low wages (Acemoglu & Robinson, 2012).

In the following years, the Companies in the southern east coast did put up an extractive industry

based on agriculture and slavery, but at the same time Britain attempted to attract white settlers

by offering land and providing aid for those who produced export products. As a result, they

created another type of institutions -Inclusive Institutions- by which the government shared

power and gave those white settlers incentives to pursue. Professor Jared Diamond (2013, p. 3)

outlines the difference in his response to Acemonglu & Robinsons bookThe extractive

institutions retarded economic development, but incentivizing institutions promoted it.

As it was stated above, the civilizations that conquered America found very different

conditions on the same continent. For the purpose of this paper we will briefly explain how these

differences affected the colonization style and following creation of institutions in the region. We

believe that if the Spaniards would have continued their expansion to the north they probably

would have met similar conditions and standards to the ones that they found in the southern cone,

especially in La Plata Region, or to the ones the Portuguese found in the northern part of

Brazil. As Skidmore & Smith (2005) state in their bookModern Latin America, the Portuguese

new world incursion differed from Spains in two main reasons. First, there was no native


3/7

3

civilization in Brazil comparable to the Aztecs or the Incas, with an organized empire and the

ability and infrastructure of their neighbors. Second, there was no apparent trace of silver or

gold1, and consequently no easy path to fabulous wealth. The Spaniards that conquered the

southern cone of Argentina and Chile did found more organized civilizations2but no gold. We

believe that the institutions that were created subsequently in both regions differed mainly

because of the absence of that times most valuable resource.

The absence of gold is important because it forced the conquerors to look for another source

of wealth. In the Andes Region and Mexico the Spanish saw gold upon their arrival, so becoming

rich was apparently faster and easier. All they had to do was to extract that gold and then return

rich and powerful to Spain. The British settlers found a very different landscape. Only through

hard work, agriculture and trade they could become powerful. We see here two main social

mindsets that persist up to today; in the north there is the popular and known American Dream,

and in the south we can see another style that we dare to call the Spanish Dream. As everyone

knows, the American Dream is based under the belief that hard work and sacrifice will lead you

to have a wealthy life and better future for your sons and daughters. On the contrary, we find a

very different way of thinking in the southern countries in which the dream is basically to

become rich quickly and the means to do so are not important.

Analyzing this we came to the conclusion that there exists a resources dilemma in the

region: the countries and territories that used to be richer (because of the amount of natural

resources i.e. gold and silver) in the past now tend to be the poorest. The amount -or lack of- this

1Gold was only found in Brazil until the 1690s, in the regin of Minas Gerais (General Mines).

2Juan Daz de Sols colonizes the region of Rio de la Plata in 1516 and encounters much more organized

civilizations; the Charruas and the Querandi.


4/7

4

resources resulted in the creation of different institutions in both north and south that continued to

prosper and develop. In the north, the new citizens of the United States were able to overthrow

the elites that were created during the colonization period, giving the power to rule to the

American elite which did not answer to the British Empire and had a wider vision about the faith

of its country. On the other hand, in South America the extractive institutions led to the formation

of very distinguished and powerful elite groups that controlled the power between them and did

not share it with the people. This is why Latin America was once called a "living museum",

because archaic elites never quite disappeared from the scene (Cruz & Diamint, 1998).

Part two: Spanish North America

Spanish attempts to conquer and colonize the Americas were not limited to the exploration

and settlement of lands in South and Central America. Their expeditions to the southern coast

lines of La Florida led the Spanish conquerors to a series of missions which allowed them to

explore and settle the lands of North America. The most successful mission was the one of Pedro

Menndez de Avils, who was the founder of St. Augustine and Santa Elena in 1565 (Lyon,

1981). Unlike the civilizations found in Central America, and most part of South America, North

America was populated by multiple and dispersed Indians tribes. This made the colonization and

expansion of Spaniards throughout the continent difficult. In order to imagine the formation of a

Spanish North America beyond La Florida and the western colonies it is necessary to change the

course of history. Instead of the ill relationship between the colonizers and the Indians, which had

several ups and downs of friendship and violence, let us imagine that Menndez successors, after

his death in 1574, continued his efforts of negotiating peace with the Indian tribes and kept the

tradition of barter with the Indians and the peaceful treating of those. These efforts were


5/7

5

combined with the death of the French refugees of Fort Caroline, and the assurance that most of

the tribes would remain allied to the Spanish colonizers (Johnson, 1931). Because the need of

populating the new towns founded in North America and in an effort to repel the still rebellious

Indians, the Spanish crown encouraged the Iberian population to settle this part of the New World

with the promise of giving them their own land. Thus, the settlements and fronts built along the

southern coast, from the Spanish Florida to Maryland, received more settlers, avoiding the loss of

these new founded towns to the Indian tribes who still remained in sporadic wars with the

Spanish.

Besides, in the late sixteenth century after the failed attempts of the Jesuits to evangelize the

Indians in Florida, the Franciscan order finally succeeded (Lyon, 1981). This allowed the

integration of the recently converted Indians and the further expansion of the Spanish settlements.

If the Spaniards would have taken advantage of these new alliances and the increasing

population, they could have overpower the French and British colonizers, taking into account the

Spanish Empire had time in its favor since its colonizing efforts in the United States started in

with the firstAylln asientoin 1520 while the first French settlement was Charlesfort in 1562

(Lyon, 1981) and the first successful British settlement was Jamestown in 1607. Therefore, the

French and British expansion could have been limited to what is now Canada, allowing the

expansion of the Spanish settlers along the east coast and the interior across the Appalachians,

crossing from Florida and South Carolina to Louisiana, Arkansas, Texas, New Mexico and

California, thus linking the settlements in the east with the ones in the west.

The Spaniards in the North would have had a colonial institution development similar to the

one the British had. If the Spanish settlements would have succeeded in the North, defeating the


6/7

6

Indian tribes and increasing the population under the policy of land for the settlers and their heirs,

the lack of resources could have allowed a development similar to the one in theRio de la Plata

Viceroyalty or even similar to the one already had in the Spanish Florida before it was taken by

the British Empire. The east coast colonies could have been used as a commercial port (New

Orleans), like the one in Buenos Aires, for the resources extracted in Mexico. And since there

was a promise of land, and in fact the Spanish Florida did have agriculture activity, the settlers

could have harvested and exported some kinds of crops, like wheat (Lyon, 1981). All this

commercial activity would have been similar to the one of the British North America.

Although the creation of a Spanish North America would have had some similarities to the

Rio de la PlataViceroyalty, and the British North America, this change of facts made us wonder

about what other possible implications could have had the creation of a Spanish North America

along the east coast and across the Appalachians. When could have been the independence of this

Spanish North America? Would it have been along the ones in the South, encouraged by the

French Revolution? If so, would the creation of a confederation of States of Spanish America like

the one dreamed by Bolivar have been possible? Or would have the Spanish North America

developed a federal nation just like Argentina or Mexico? Would this Spanish North America

have given birth to a single federal nation or to multiple ones; one within Mexico, one in the east

coast and one in the interior? A Spanish North America could have had multiple consequences,

though the development of institutions linked to resources would have had a similar outcome to

the one already known in the British North America.


7/7

7

References

Acemoglu, D. & Robinson, J. (2012). Why Nations Fail: The Origins of Power,

Prosperity and Poverty. New York: Crown Business.

Corden, W. (1984). Booming Sector and Dutch Disease Economics: Survey and

Consolidation. Oxford Economic Papers, 359-380.

Cruz, C., & Diamint, R. (1998). The New Military Autonomy in Latin America.Journal

of Democracy, 115-127.

Diamond, J. (2013). What Makes Countries Rich or Poor.

Johnson, J.G. (1931). The Founding of Spanish Colonies in Georgia and South Carolina.

The Georgia Historical Quarterly, 15, 301-312.

Lyon, E. (1981). Spains Sixteenth-Century North American Settlement Attempts: A

Neglected Aspect. The Florida Historical Quarterly, 59, 275-291.

Skidmore, T., & Smith, P. (2005).Modern Latin America. Oxford: Oxford University

Press.

final paper natalia gomez and federico trujillo

Documents