tGoK Players and Mercantilism

Hi Lads,

just to chat a little. I was taking some consideration regarding the economic part of the game, and by my personal experience plus what I can see in the forum, many of us are more oriented toward a "free trade policy" rater than taking what I believe to be the historical mercantilistic approach. Upon that theory (aka Colbertism) the nation should become rich by acquiring gold at the expenses of others, and thus hight merchant taxes were levied to ban importation of goods. Furthermore, low internal economy for commoners was regarded as "good" since internal demand would have deprived exportation of needed goods which were source of foreign gold. Last element, privateers played a major role as the global trade value was believed to be finite, therefore weakening other nation's merchant fleets was considered key to substitute them with own nation fleet, who could in the end reach all kingdoms and exchange goods for gold.
In our games I can see ship losses figure seems to be always low, while the "set custom tax to 0% in treaties" is quite common practice. I have never seen somebody setting specific towns where foreigner are allowed to trade into, leaving merchandise able to reach all nation and its colonies at ease.

I would appreciate to hear the opinion of whom who had experience in major nations, to see if they had a different approach.

Nexus06 wrote:By my personal experience plus what I can see in the forum, many of us are more oriented toward a "free trade policy" rater than taking what I believe to be the historical mercantilistic approach. Upon that theory (aka Colbertism) the nation should become rich by acquiring gold at the expenses of others, and thus high merchant taxes were levied to ban importation of goods.

Thank you Nexus ... finally someone is prepared to question 'free trade' as being the norm!  Although, I don't quite agree with how you are framing the mercantalism vs free trade options, as I will explain after addressing your points.

Colbert's ideas were an extreme form and peculiar to France where the overall theory was that the state (as embodied by the King) was far more important than the people and the people should be grateful to be allowed to keep any of the money they had (the residual) after the state took what it needed.  Recast this way mercantilism is a very unattractive theory, but you can see why Louis XIV liked it.  I disagree with the suggestion that high taxes on foreign trade (not merchants per se) were levied to ban importation of goods.  Pushed to its extreme such a policy would be self-defeating since if the nation (France) became rich by acquiring gold from others, the others have to be able to trade profitably else the supply of gold from others dries up and all international trade stops.

Nexus06 wrote: Furthermore, low internal economy for commoners was regarded as "good" since internal demand would have deprived exportation of needed goods which were source of foreign gold.

I don't think at the time, this was how people thought.  The vast majority of the economy was rural subsistence at the local level and played no part in international trade.  Where goods were required was the larger towns and by the government (e.g. to equip armies or build ships).  From a very narrow perspective (again, based on the French idea that the state only allowed the people to keep the portion it didn't need for itself), the link as you described may have been the extreme result, but by the same logic the peasants would have their rations and wages cut until they died, then raised just enough to keep them alive, but in a permanent state of dependency.  That does not accurately reflect the situation in 1700.

Nexus06 wrote: Last element, privateers played a major role as the global trade value was believed to be finite, therefore weakening other nation's merchant fleets was considered key to substitute them with own nation fleet, who could in the end reach all kingdoms and exchange goods for gold.

Again, I struggle with this formulation.  It is correct that the value of trade globally was (erroneously) believed to be finite, but then nobody really explained how it was finite.  The science of probability was being developed at the time and this influenced the idea, so trade was considered to be a zero-sum game: abc wins because xyz loses.  It is curious how the notion that trade is a zero-sum game remains prevalent today (even from some quite well respected people), when it can be easily proved that trading as an activity is not.

Substituting shipping to other nations (who have lost ships to your privateers) presumes that those other nations are willing to trade with you.  That cannot be assumed.

Nexus06 wrote: In our games I can see ship losses figure seems to be always low, while the "set custom tax to 0% in treaties" is quite common practice. I have never seen somebody setting specific towns where foreigner are allowed to trade into, leaving merchandise able to reach all nation and its colonies at ease.

I would appreciate to hear the opinion of whom who had experience in major nations, to see if they had a different approach.

In G7 merchant shipping losses can be very high (see forum posts), whether as a result of official wars or the policies of factions which players hide behind.


Anyway, let me now explain how I view the mercantalism vs free trade debate in real life and how it tends to be applied in games where I agree that players seem to prefer 0% trade treaties.

Free trade is easy to understand: any tax across borders reduces the profit for the merchants (to the state) and therefore the volume of trade.  The idea of unrestricted trade is really more a 19th century idea (Ricardo), allowing each country to specialise in what it can produce efficiently.  So if Portugal can produce wine that England demands, it is pointless England trying to produce wine - it should instead export cloth to Portugal to pay for the wine.  The Portuguese wine industry booms as does the English cloth industry, so both countries do much better than they would otherwise.  Economies then become larger and ultimately people pay more tax to the state.  All this is fine until England and Portugal go to war or trade is disrupted.  0% trade also means there should be no problem with smugglers, no need for excise men, and other players tend to have a more positive opinion of you.

Unfortunately there are a few problems with this rather utopian idealism.  Countries do not start in the same place!  The larger producer always benefits more from free trade than the smaller producer (this is why after the union with Scotland it took over 50 years for the Scottish economy to see any benefit - a main driver for Jacobite sentiment in Scotland).  When England adopted free trade it was not through altruism, but because someone had actually done the maths.  England also had the advantage of a large merchant navy and large Royal Navy to protect her ships, so she could carry more foreign trade on her ships and make money that way as well.  Free trade also made sense in the context of colonialism - the reason you have colonies is so they provide a secure supply of raw materials you need without having to rely on other large economies.  If you go for totally open trade and allow other countries to trade with your colonies then you are paying the expense of defending those colonies and giving the competition free access to the very materials you need yourself, undermining the competitive advantage you have by founding the colony.

Now there are those players (e.g. Stuart (Spain) in G7) who still believe that free trade is wonderful - Spain has opened up its colonies to everyone and tries to sign 0% trade treaties with anyone it can (usually also with clauses to allow military access for Spain).  Stuart is quite capable of explaining his reasons better than I can, but on balance as England I do not sign free trade treaties because:

1. The state needs the money from tariffs.  There is very little point in expanding trade unless the state gets some kind of return from it, and in the game this return is measured by the income from tariffs. I make the distinction here between money invested in 'trade' which hopefully brings a return on that investment, and the general expansion in the volume of trade flowing between countries (players, in my experience, often do not distinguish between the two). Investment in specific areas of trade can quickly turn unprofitable if that trade is attacked by war, subsidy or pirates, whereas general expansion in the volume of trade can increase EH and lead to greater overall prosperity and higher tax receipts.  I am not suggesting that tariffs should be set at punitive levels (except in times of war or to send a message to particularly obstinate players for political reasons), but a modest tariff gives an incentive to everyone and is expected.  It also ensures that the customs men are awake.

2. Navigation Acts require that all trade to/from the colonies is carried on English shipping.  The colonies exist for the benefit of England: to provide raw materials for English factories and a market for English exports.  If England researches improvements in sugar planting/refining then those improvements are restricted to English colonies which will make the English sugar industry more competitive globally.  Colonial economies therefore grow as demand from England increases.  It also means that it is usually easy to see where investments make returns.

3. For an economy which is largely dependent upon trade, if I did not keep tariffs at a low level (low enough to make smuggling unprofitable given the risk), then I would have to put direct taxes up instead, which would restrict growth from the larger part of the English economy which is not trade dependent.  Most large nations (Spain, France, Russia) have huge populations compared to the amount of trade they have in 1700, but England is the opposite - do the maths.

I do not consider the system as I set up as being Colbert's, but it is a form of Mercantalism (in the sense that it is not free trade).  It is a compromise which may irritate players who just think free trade is a no-brainer.  I do very rarely sign free trade agreements (or more commonly lower tariff agreements) with nations where I am in a long term alliance or which is required to open their markets to my traders, but that doesn't mean I won't increase tariffs after a few years when there is a trade to tax!  As you will, by now, have appreciated, I don't believe in the 'fixed lump of trade' idea or that trading is a zero-sum game; but I do believe that if you invest money in an activity you should get a return from it.  In that sense it continues to surprise me that players just assume it is normal to have 0% trade treaties.  By their logic they should also have 0% taxes and borrow whatever funds the state needs.  Now that would be an economic experiment!

A good question and very little I can answer!

On the "0%" question, could it be down to game mechanics? As an order it's easier for Agema to set up a constant tax rate across a whole position than it is to set up specific tax /trade arrangements for name towns (so costs us less in regards game orders)?

As the Hanseatic League in G8, I did set up special conditions for specific towns in other nations in regards trade conditions and it did cost more real-world money (so Agema work) than a blanket arrangement for a nation.

Think one of the major differences between revenue in Glori the game and the revenue of most C18 governments was that for most C18 government income from Customs and Excise duties (ie tax on goods both entering the country and leaving it) was one of their most important sources of revenue.

So for most historical C18 Governments the object was not so much maximium trade but how to extract "max revenue" from merchants both native and foreign via these sources of taxation. Though it should probably be noted that sometimes the right to collect said tax's were sold to tax farmers for a set fee rather than a percentage and the tax farmer took the extra profit if trade/tax income was good and the risk if revenue was less than original estimate due to war, famine, plague etc. Which gave the Government who were mostly landowners even less interest in trade than before.

In Glori I note that the opposite is true and unless you are running one of the Rhineland States revenue from tax on foreign trade hardly seems to matter at all. Indeed one of the standing jokes of G7 is Spanish customs which in theory include some of the major trade ports of the world, trade up and down the Rhine and the crossroads of Northern Italy comes out as such tiny amounts that Spanish customs is a honesty box on the end of the wharf and someone has covered it over with a fishing net!

Another source of Government revenue included profits from "Monopolies" on trade with a region sold to chartered companies like the English East India Company which had the monoploy on China tea imports into England and the VOIC which had a monopoly on Dutch Trade to Japan and the Far East or on a particular product. For example the tobacco monopoly was a major source of revenue for Russia, the Ottomans, Sweden, Spain and France with the French Crown going so far as to ban the growing of Tobacco in France to benefit the importers who had purchased the Tobacco monopoly.

Problem for a game is how to capture in a manageable manner such a huge span of economic and government activity which covers everything from Government/Royal profits from direct investments in companies such as Colbert building factories in France, through "Gifts/fee's" from companies like the Royal Africa to get their charters, payments for protection of merchant shipping by Royal ships too things like the Russian Tobacco Monopoly which was basically a tax farm by another name since the Monopoly did not import the tobacco let alone grow it. Rather it paid the Czar a nice up front fee to then collect fee's from merchants who imported tobacco into Russia taking their cut and passing on the rest to the Czar and the various Ministers who got them the job. Basically a tax but with extra opportunity for backhanders and kickbacks perfectly standard and normal for the C18.

Agema has tended to lump all of this into one so the player seems to get all the "income" from a Nations foreign trade rather than just whatever chunk its can get via taxation and such taxation on merchants/trade is limited to that on foreign trade to their lands. This tends to make customs a lot less important source of revenue than they were historically (thus a lot easier to give away) and "Trade" a lot more important to players then it was historically to most C18 Governments. Note the Ottomans tended to have low customs not because they had a big theory of free trade but because they had a lot of craft guilds who needed raw materials to work and if these did not arrive (from anywhere, on any ship/camel etc) they tended to riot and torch the place.....think modern day French farmers in reverse but rather more violent.

Would also like to say that Papa Clement saying I am a hard core free trader is not really true. In G2 my treatment of my Venetian Trade rival was in tune with the very highest principals of Mercantalism. Not only did I build a better rival port at Trieste but I blocked up the rubbish too shallow port of Venice with its burning merchant fleet, had a 5 day sack and torched the whole place before having it sown with salt. Pity some git (Czar of Russia) then decided to rebuild it. Why do so many Czar what to build cities on a swamp?

Would also say that for positions like France, England, UDP which have the industrial base to supply all of their colonies needs without outside help keeping all of this trade to yourself via navigation acts and the like is a great way to extract max profit from your colonies. And if you are going for max Virginia tobacco profits etc you probably also want to keep taxes on alternative supplies high so they do not hurt your profits.

Historically Castille (not even the whole of Spain) tried to do the same thing but could never supply the goods on the ships needed to service the colonies resulting in massive smuggling winked at by local officials as the best way to keep things running. G7 Spain went this is impossible and switched too free trade for following reasons I) Historic economic failure of protectionism II) Gain political support in Milan/Aragon/Flanders/Colonies for Charles von Hapsburg by allowing them trade opportunity III) Figured that Spanish colonies are mature enough to stand tall and pround and boldly enter the markets of the world to live or die by the quality of their sugar, tobacco, cotton, coffee etc rather than cower behind protectionist walls.........though just to be on the safe side effectively banned the French and later English.......would probably have banned Dutch as well but still trying to remain friends with them and have always kept min 5% tax on foreigners which Spanish merchants pay 2% so keep slight advantage IV) Also figured in 1700 that if French were going to start bombarding Spanish ports it would be good if they could hit lots of other peoples trade posts and ships as well as me.

First one to admitt that G7 Hapsburg-Spanish Trade policy was dominated by political needs......though I would argue that being invaded by French Armies which political policy was trying to avoid is really bad for trade and Spain has not mindlessly abandoned to home markets to foreign traders. Only a large chunk of its carrying trade - but you try and figure out how to get Milanese silks to New Spain without using partners in Venice, Genoa or Savoy. Who can then come back with colonial products for the whole of Italy and into central Europe. This is the opposite approach to 100% of the pie its say 60% of a much bigger pie after paying Savoy/Swiss/Bavarian customs and Genoa shippers etc.

Oddity is that the French have now partly switched from attacking Spanish trade to direct attacks on close trade partners. Which may be 100% in line with the theory of Colbert (nasty bit of work - French for starters) but is probably not the best way to win friends and influence people.

However, where ever you stand on this debate think any policy which is followed in a consistant and logical manner over a period of time will work better than having none at all or flip-flopping. Though its generally better to follow historic economic policies for your position with certain obvious exceptions. People in Glori seem to get so unreasonable about Beys of Egypt who make investments in Barbary Privateering for instance.

Stuart Bailey wrote:Think one of the major differences between revenue in Glori the game and the revenue of most C18 governments was that for most C18 government income from Customs and Excise duties (ie tax on goods both entering the country and leaving it) was one of their most important sources of revenue.

So for most historical C18 Governments the object was not so much maximum trade but how to extract "max revenue" from merchants both native and foreign via these sources of taxation.  Though it should probably be noted that sometimes the right to collect said taxes were sold to tax farmers for a set fee rather than a percentage and the tax farmer took the extra profit if trade/tax income was good and the risk if revenue was less than original estimate due to war, famine, plague etc.  Which gave the Government who were mostly landowners even less interest in trade than before.

In Glori I note that the opposite is true and unless you are running one of the Rhineland States revenue from tax on foreign trade hardly seems to matter at all.

Another source of Government revenue included profits from "Monopolies" on trade with a region sold to chartered companies like the English East India Company which had the monopoly on China tea imports into England and the VOIC which had a monopoly on Dutch Trade to Japan and the Far East or on a particular product.

There is a limit to how the game reflects historical taxes which does make things more complicated.  Historically Stuart probably underestimates the role of customs duties.

Since the Middle Ages if not before, there was some form of land tax levied because it was accepted that the state had to pay for armies to protect the land; it was to gain exemptions (or reductions) from this which led to the development of Feudlism. There was no income tax, partly because the rural economy was not sophisticated enough to be based around money.  Peasants could pay their rent in eggs, chickens or other barter goods for want of ready cash.  Other than the owners of large estates (who engaged in some form of trade), merchants were the people likely to have access to coins.  So taxes on trade were very important.  In England the Medieval wool tax was normally sufficient to pay for all state expenditure, it was that important.  When rulers wanted more money they would simply tax another good or item, often arbitrarily which is when Parliaments started to object.  Attempts to introduce a head tax (or poll tax) which everyone paid caused the Peasants Revolt in 1370s-80s.  Another famous tax was the salt tax (or gabelle) in France which regularly led to riots and was a contributory factor in the French Revolution.

By the early 1600s (in England), the rights to collect the taxes on various goods were sold (or given) as monopolies to court favourites.  This was effectively a way of borrowing against future tax revenue, but was not a great success.  Eventually the principle became extended to trading companies as Stuart describes which were usually a combination of the right (or monopoly) to trade with a certain area/colony and/or to collect taxes on a particular product/people.  If the state miscalculated or the companies concerned made excessive profits, the charter could be revoked and the rights resold on more favourable terms to the state.  With the ever pressing need for money, government lawyers would continually look back in the records to see if they could find some justification for levying another tax, the obvious example being Ship Money under King Charles I, which again caused much resentment and contributed to the Civil War.

Immediately prior to 1700, William of Orange (desperate for money to fight his wars against France), remodeled the financial system of England:

In 1692 he instituted a new national land tax (which I suppose is equivalent to the LGDR tax on nobles)
In 1694 the Bank of England was founded to allow the state to borrow (or defraud) its subjects - the importance of this move in the context of taxation is often forgotten, but the 2 are related.
In 1694 he also introduced the Stamp Act which applied originally to legal documents, but was subsequently extended to playing cards, newspapers, insurance policies, etc.  It is possible that this is the inspiration behind the LGDR tax on trade which would also include other indirect taxes on moveables.  The Stamp Act was reissued in subsequent years with the tax increasing to the point that there were riots in 1815 when it was criticised as a tax on knowledge (or the freedom of the press).  
In 1696 he instituted a window tax (originally by stealth), which was formalised by Queen Anne in 1707.  The window tax was not just a tax on windows (which people could avoid by bricking them up), but also had a fixed element for each dwelling so it had some elements of the poll tax, but is closer in modern terms to today's Council Tax.  I suppose this could be the equivalent to LGDR tax on commoners.

The one obvious omission from this list is Capital Gains Tax which was not introduced into England until 1965.  In case anyone thinks it would be a good idea to introduce it in games, there are very good reasons why it took so long to be invented, not least the difficulty of establishing value and offsetting costs, whether some measure of inflation is allowed against the calculation, and whether the seller of the asset could find ways to avoid paying it (by, for example, simply not selling or entering into some kind of legal division of rights of use).  In 1700 it was probably covered by Stamp Duty since there would normally need to be some kind of paperwork to prove the transaction.

The various forms of excise tax continued to be reintroduced on whatever governments thought they could get away with (usually necessities like sugar, or luxuries), but I suspect that to try to mirror this within LGDR would be an administrative nightmare, so is all bundled in with either tariffs or trade taxes.

Income Tax was not introduced until the Napoleonic Wars (a temporary measure), after heavy opposition - people objecting on moral grounds to giving the state information about their personal business.  In typically sneaky fashion it was repealed, but then reintroduced as a tax on holders of government debt (basically the government trying to reduce the cost of debt by making up a new tax that people couldn't avoid); then when this was deemed unfair, they extended it to income from other sources.

There is a useful book called A Popular History of Taxation by James Coffield for those who are particularly interested, or these articles https://www.att.org.uk/technical/brief-history-taxation which cover more modern attempts by the state to steal from its subjects (Gladstone onwards).

Stuart Bailey wrote:Would also like to say that Papa Clement saying I am a hard core free trader is not really true.  In G2 my treatment of my Venetian Trade rival was in tune with the very highest principals of Mercantalism.  Not only did I build a better rival port at Trieste but I blocked up the rubbish too shallow port of Venice with its burning merchant fleet, had a 5 day sack and torched the whole place before having it sown with salt.  Pity some git (Czar of Russia) then decided to rebuild it.  Why do so many Czar what to build cities on a swamp?

Would also say that for positions like France, England, UDP which have the industrial base to supply all of their colonies needs without outside help keeping all of this trade to yourself via navigation acts and the like is a great way to extract max profit from your colonies.  And if you are going for max Virginia tobacco profits etc you probably also want to keep taxes on alternative supplies high so they do not hurt your profits.

Historically Castille (not even the whole of Spain) tried to do the same thing but could never supply the goods on the ships needed to service the colonies resulting in massive smuggling winked at by local officials as the best way to keep things running.  G7 Spain went this is impossible and switched too free trade for following reasons:
I) Historic economic failure of protectionism
II) Gain political support in Milan/Aragon/Flanders/Colonies for Charles von Hapsburg by allowing them trade opportunity
III) Figured that Spanish colonies are mature enough to stand tall and proud and boldly enter the markets of the world to live or die by the quality of their sugar, tobacco, cotton, coffee etc rather than cower behind protectionist walls.........though just to be on the safe side effectively banned the French and later English.......would probably have banned Dutch as well but still trying to remain friends with them and have always kept min 5% tax on foreigners which Spanish merchants pay 2% so keep slight advantage IV) Also figured in 1700 that if French were going to start bombarding Spanish ports it would be good if they could hit lots of other peoples trade posts and ships as well as me.

First one to admit that G7 Hapsburg-Spanish Trade policy was dominated by political needs......though I would argue that being invaded by French Armies which political policy was trying to avoid is really bad for trade and Spain has not mindlessly abandoned to home markets to foreign traders.  Only a large chunk of its carrying trade - but you try and figure out how to get Milanese silks to New Spain without using partners in Venice, Genoa or Savoy.  Who can then come back with colonial products for the whole of Italy and into central Europe.  This is the opposite approach to 100% of the pie its say 60% of a much bigger pie after paying Savoy/Swiss/Bavarian customs and Genoa shippers etc.

Oddity is that the French have now partly switched from attacking Spanish trade to direct attacks on close trade partners.  Which may be 100% in line with the theory of Colbert (nasty bit of work - French for starters) but is probably not the best way to win friends and influence people.

However, where ever you stand on this debate think any policy which is followed in a consistent and logical manner over a period of time will work better than having none at all or flip-flopping.  Though its generally better to follow historic economic policies for your position with certain obvious exceptions.  People in Glori seem to get so unreasonable about Beys of Egypt who make investments in Barbary Privateering for instance.  

Up to a point, William probably did England a favour historically by his tax reforms, making them relatively much more efficient than many other countries that had not undergone so much constitutional upheaval.  In general the more centralised the state, the easier it was to enforce changes in taxation and deny the nobility their various historical exemptions.  It didn't always work, even in France where King Louis had some success, the example of the salt tax is worth studying.  It was the failure of later Bourbon monarchs to reform the tax system which was another cause of the French Revolution.  One of the historic problems of Spain was that the various regions and colonies refused to pay centralised taxes, but all had their own variations.  LGDR does not reflect this difficulty, but assumes that if a player orders a certain tax rate it can and will be implemented and the tax collected (unless other factors are exploited by spies or equivalents).

If Spain (in G7) had to contend with the historic Cortez's then perhaps Stuart would not have been able to build up such an advantage in trade which now dominates the game.  For those who are unaware, there are very few regions in the game where Spanish trade is not at least ten times larger than the nearest competitor, rising to up to 50 times larger in the Americas.  Some of this is down to investment over 16 years of game play which is a credit to Stuart, but if Spain did not sign free trade treaties then where would it sell its extra sugar, coffee, tobacco, etc, to?  We have this discussion (in a friendly way) between us in game letters and after nearly 20 real world years of debating it, we have yet to reach a conclusion.

Jason2's approach is a bit like the modern free ports idea, but historically was adopted by various towns within the HRE and/or Hanseatic League.  Does this result in more trade?  In theory, yes, but does the state benefit directly, probably no (not in the game).  If an individual city pursued a policy which made it much more prosperous than its neighbours the chances are that some larger foreign government would come along and try to put a stop to it.  I know Jason2 has played some micro positions so his experience may have yielded some interesting results, but I doubt these can be adopted by larger countries with similar results.

Hi Lads,

I am particularly appreciating the exchange of informations that is happening here. I beg Papa Clements and all contributors pardon for not being an active part of the conversation yet, but work issues are taking its time-toll. I'll be back as soon as possible.

Kind Regards
Luca

Do not underestimate the historic importance of customs revenue to governmets of the early modern period but my above comments probably do not really stress how important they were. Using the example of the Crown of Spain in 1741 its major sources of revenue were split as follows:

- rentas generales (customs) 22%
- Tobacco monopoly 20%
- Crown of Aragon (Kingdom of Aragon which kept included lands outside Iberia and its own tax system) 14%
- rentas provinciales (not really sure what this is - general taxation?) 12%
- Cruzada (Originally a middle ages Crusade tax on the Church which somehow never got dropped) 9%
- Salt monopoly 6%
- Tax on wool 3%

- Another 14% of revenue in that year came from variable "other" sources such as profits from Crown Lands, wardships, Profits from the Law in terms of fines etc and the Crowns share of mined American silver and gold (The Royal fifth).

Apart from the fact that Government revenue is dominated by customs and tobacco which is pretty common for this period what is the perhaps a little bit of a surprise is how after 30 years of the Bourbon new broom how much had not changed and the Crown of Spain still operated much as the Crown of Castille did in the Middle Ages. The tax levelled on the great movements of Sheep has declined in relative importance from over a third to a mere 3% of revenue but the Cruzada (Crusade tax on Church) has remained a key Royal revenue source.

However, it probably should be noted that "Customs" in game is a tax levied on foreign trade with your position. When historically "Customs" income would include tax on native merchants taking goods both in and out of the country as well. Plus many states like France had internal customs barriers between provinces while Spain levelled customs on movement between its constituent Kingdoms (Note Aragon might be one Crown but it is actually three seperate Kingdoms which had internal tax on movements between each other). Naturally such internal barriers to trade were not good for merchants but that was not really the point. The point being that most C18 Governments were faced with ever growing military costs and we basically after any source of revenue they could lay their hands on and as Papa Clement has said no one was getting away with 0% customs! Not unless they were a really, really good friend of the Minister and generous with the gifts of cases of vintage wines etc.

For info in G7 Hapsburg Spain has tried to play along with some of these themes:

1) We do have lots of seperate Cotez for Valencia, Castille, Barcelona etc, etc who meet on a regular basis for a jolly good party and for the Nobles to make speaches and act their men of affairs. They also act as final court in the Kingdom after which you need a Royal Pardon and have right to veto tax rises. In actual fact the Crown often does not bother to collect many of the tax's like the salt tax it already has authority to collect which means while it has authority to collect 5% on Church and Nobles and 10% on the Commons the actual rate collected is more like 2%.

When the need arose to ask for authority to increase taxes on horrid foreign types being mean to our merchants did indeed go too the numerous Cortez and they said "yes" being good and loyal subjects of the King.

Agree having all of these Cortez with rights etc costs more and is probably less effective that Bourbon Style absolutism but I play it (backed with a fair bit of historic evidence) that the Spanish like their traditional Faros (Freedoms) and middle ages ways of doing things and if the French cross the border to do away with them they are going to find a Miquelet behind every rock.

2) For same reason the Crown declines to ask questions about why at least 50% of its customs revenue (as in tax paid on foreign trade) never gets to the treasury. Do I want to know who agreed such generous contracts with tax farmers or who benefits - In a word NO

3) As for the decline in the great Sheep droves of central Spain - partly its down to enclosure. Also the Duke of Modina Sidona greatest noble of Spain and heir of the Merino Wool Barons of days gone by has long ago left for the Americas were he wed a heiress of Cortez Indian Mistress and has gone a bit native. On average he is using 50m tons of grain for winter feed and is investing millions every year in herds of sheep, lama's, and Texas Longhorns who are now across the Rio Grande and are not going to stop.

Basically G7 Spain works on trade volume - so Moldovian, Savoy, Dutch, Venetian and anyone who is vaguely friendly to Spain and sail into its colonial harbours can buy Spanish colonial goods for a good price and sale their own and make £60 or even £70 to Spain £40 or £30. But even if Spain gets the worst of the deal provided it does enough deals it still comes out ahead and ahead of its nasty French rivals on their tiny Sugar Islands.

Do wonder how profitable it is growing Sugar when food for the colony has to come from France or North America and your labour supply is getting smashed up by Persian corsairs and converted to Shia Islam? While your King scares half the customers back in Europe half to death. Wonder if I can claim that being scared by the actions of the French leads to increased sales of Tobacco?

Stuart Bailey wrote:Do not underestimate the historic importance of customs revenue to governmets of the early modern period but my above comments probably do not really stress how important they were.  Using the example of the Crown of Spain in 1741 its major sources of revenue were split as follows:

- rentas generales (customs) 22%
- Tobacco monopoly 20%
- Crown of Aragon (Kingdom of Aragon which kept included lands outside Iberia and its own tax system) 14%
- rentas provinciales (not really sure what this is - general taxation?) 12%
- Cruzada (Originally a middle ages Crusade tax on the Church which somehow never got dropped) 9%
- Salt monopoly 6%
- Tax on wool 3%

- Another 14% of revenue in that year came from variable "other" sources such as profits from Crown Lands, wardships, Profits from the Law in terms of fines etc and the Crowns share of mined American silver and gold (The Royal fifth).

Apart from the fact that Government revenue is dominated by customs and tobacco which is pretty common for this period what is the perhaps a little bit of a surprise is how after 30 years of the Bourbon new broom how much had not changed and the Crown of Spain still operated much as the Crown of Castille did in the Middle Ages.  The tax leveled on the great movements of Sheep has declined in relative importance from over a third to a mere 3% of revenue but the Cruzada (Crusade tax on Church) has remained a key Royal revenue source.

However, it probably should be noted that "Customs" in game is a tax levied on foreign trade with your position.  When historically "Customs" income would include tax on native merchants taking goods both in and out of the country as well.  Plus many states like France had internal customs barriers between provinces while Spain leveled customs on movement between its constituent Kingdoms (Note Aragon might be one Crown but it is actually three separate Kingdoms which had internal tax on movements between each other).  Naturally such internal barriers to trade were not good for merchants but that was not really the point.  The point being that most C18 Governments were faced with ever growing military costs and we basically after any source of revenue they could lay their hands on and as Papa Clement has said no one was getting away with 0% customs!  Not unless they were a really, really good friend of the Minister and generous with the gifts of cases of vintage wines etc.

I have some later figures for England showing the breakdown of government revenue, but it would not be much use when comparing them to Spain.

I find it interesting that Bourbon Spain failed to eliminate charges on movements between Spanish kingdoms or make any fundamental reforms.  I suspect that Rentas Provincales was a tax on Spanish colonial property (plantations?) owned by Spaniards normally resident in Spain.

I think the Cruzada was a special tax originally levied by the Pope on the Spanish church, but which Ferdinand and Isabella convinced the Pope could then be used for the conquest of America.  Of course once that tax had become established, nobody thought to remove it.

Which does leave one obvious omission to my list of taxes in England by 1700 - that of taxes on the church.  I think in-game church taxes result from the Registration (or Marriages) Tax from 1695 which as it states was a tax on marriage; there were other taxes (fixed charges) attached to other sacraments, so I suspect that in addition to the ordinary property taxes this forms the inspiration for 'church' tax in the game.

Stuart's comments also remind me of the difference between customs and excise.  Customs duty was applied to imports/exports so was a tax across borders.  Excise (or New Impost) was a tax on items in the process of manufacture or before their sale to consumers.  It was introduced in 1643 by the Puritan leader, Pym, during the civil war and was hated by the people because it was a tax upon the necessities of life which was particularly unfair on the poor.  William, of course, extended it to houses (1696), hackney coaches (1694), Hawkers (1697), burials, births and marriages (1695 ... could have been an early instance of double taxation, my sources are unclear), legal deeds (1694).  The hearth tax had been present since 1662, and there were still the usual taxes on wines, spirits, tea and tobacco.  During the 1700s and 1800s governments just kept trying to tax everything including the dog tax (1796-1882), clocks/watches tax (from 1797), hair powder duty (from 1795, although exemptions included the royal family and their immediate servants, army officers, clergymen, dissenting ministers, and any person in holy orders not possessing an annual income of £100. Wigs quickly went out of fashion in the early 19th century, although the tax was not abolished until 1861), Female Servants Tax (from 1785-1792 ... this proved very unpopular at 1 guinea per female servant, which could have been more than many were paid in wages).

There is no evidence that these taxes were levied in order to change behaviour (as many modern taxes are), simply because they were fashionable or considered part of normal life.  There was also no consideration of whether the taxes were fair or of their impact on society.  Clearly the imposition of Hair Powder Duty did hasten the demise of wigs not least because the political significance of wearing a wig implied support for the tax and by implication the government.  The Female Servants tax did lead to serious disruption in the labour market.  It is hard to argue against income tax on the grounds of privacy if the government is already assessing tax on every item a household may purchase, but it is less defensible that many of these excise duties continued after the introduction of income tax.

Stuart Bailey wrote:For info in G7 Hapsburg Spain has tried to play along with some of these themes:

1) We do have lots of separate Cotez for Valencia, Castille, Barcelona etc, etc who meet on a regular basis for a jolly good party and for the Nobles to make speeches and act their men of affairs.  They also act as final court in the Kingdom after which you need a Royal Pardon and have right to veto tax rises.  In actual fact the Crown often does not bother to collect many of the taxes like the salt tax it already has authority to collect which means while it has authority to collect 5% on Church and Nobles and 10% on the Commons the actual rate collected is more like 2%.

When the need arose to ask for authority to increase taxes on horrid foreign types being mean to our merchants did indeed go to the numerous Cortez and they said "yes" being good and loyal subjects of the King.

Agree having all of these Cortez with rights etc costs more and is probably less effective that Bourbon Style absolutism but I play it (backed with a fair bit of historic evidence) that the Spanish like their traditional Faros (Freedoms) and middle ages ways of doing things and if the French cross the border to do away with them they are going to find a Miquelet behind every rock.

2) For same reason the Crown declines to ask questions about why at least 50% of its customs revenue (as in tax paid on foreign trade) never gets to the treasury.  Do I want to know who agreed such generous contracts with tax farmers or who benefits - In a word NO

3) As for the decline in the great Sheep droves of central Spain - partly its down to enclosure.  Also the Duke of Modina Sidona greatest noble of Spain and heir of the Merino Wool Barons of days gone by has long ago left for the Americas were he wed a heiress of Cortez Indian Mistress and has gone a bit native.  On average he is using 50m tons of grain for winter feed and is investing millions every year in herds of sheep, lama's, and Texas Longhorns who are now across the Rio Grande and are not going to stop.

Basically G7 Spain works on trade volume - so Moldovian, Savoy, Dutch, Venetian and anyone who is vaguely friendly to Spain and sail into its colonial harbours can buy Spanish colonial goods for a good price and sale their own and make £60 or even £70 to Spain £40 or £30.  But even if Spain gets the worst of the deal provided it does enough deals it still comes out ahead and ahead of its nasty French rivals on their tiny Sugar Islands.

Do wonder how profitable it is growing Sugar when food for the colony has to come from France or North America and your labour supply is getting smashed up by Persian corsairs and converted to Shia Islam?  While your King scares half the customers back in Europe half to death.  Wonder if I can claim that being scared by the actions of the French leads to increased sales of Tobacco?

At the risk of being controversial, I suspect the reason Spanish tax officials fail to collect anything like the amount they expect (point 1) could well be because of confusion over the different rates of tax applied to a particular good in each province, or possibly some kind of double taxation agreement between provinces?  As to why 50% of the customs revenue goes missing (point 2), Stuart will not be surprised that my answer is Roderigo Martello.  For point 3, surely the Spanish tax system allows relief for business reinvestment which is all the duke of Medina Sidonia is doing with the profits from his grain harvest?  Even in Spain the principle must surely apply that tax avoidance (through legal means, taking advantage of the allowances the law provides) is good practice by individuals to preserve their wealth and sanity?

Were sugar plantations profitable?   I don't have the figures, but from the viewpoint of the state, each colony would have grown its own food for its slaves; the state would have taxed the slaves when bought in the African slave markets, then taxed them again when they arrived at the colony; the sugar grown would be taxed as an intermediate good, then again when exported back to France at a French port, then taxed again when used to make rum or other alcohol which would then be taxed at an even higher rate when bought by the consumer.  At each step of the process the taxman takes his cut.  Of course the Navigation Acts ensured that all cargo on a ship had a stamp attached which proved they had paid the tax and also that taxes at earlier stages could be traced back.  Smuggling not only broke the taxation chain, but allowed for leakage right the way across the system.

Although it is out of period, few people are aware that the East India Company was partly responsible for the American Revolution.  In 1772 (partly due to the proliferation of excessive duties on everything), the East India Company was in serious financial difficulty.  Many excise duties were abolished except that on tea which was retained by 1 vote (the Tea Act of 1773).  The EiC had £17M of tea in its warehouses and negotiated a concession such that it was allowed to export tea to America direct (or through English ports without having to pay the normal duty).  This concession allowed the EiC to undercut colonial smugglers, so the American smugglers (who obtained most of their tea from the Dutch free from the 1765 tax on tea and various other goods imported from England) objected and branded the whole business an 'illegal monopoly' granted to the EiC.  (It was a monopoly certainly, but legal in that it was provided for in statute). Thus the English tea which was dumped into the sea at the Boston Tea Party was not really a tax rebellion against England as such, but a protest by American smugglers against the EiC.  They would have been quite happy had the previous system continued and the smugglers been able to get round what by then was seen as a despised tax.  The inevitable reaction by the English tax authorities allowed events to be recast as a struggle for independence, "no taxation without representation", etc, and the rest is history.  It does seem to be a constant throughout history that those who dream up taxes not only fail to appreciate their impact, but are inevitably surprised when people object to paying them.  Perhaps Agema has it right by simplifying taxes, although I can't remember any examples in games of tax riots?

In the middle ages in area's were the Church was free of normal tax the various "Crusade (Cruzada)" taxes were normally one off levies on Church property agreed by the Church/Pope in order to fund a one off campaign of religious importance such as the main Crusades to the Holy Land. However, they continued into the modern period and helped fund the Polish and Bavarian Armies which marched to save Vienna in 1683 and the Holy League Navy which fought Leopanto.

The Cruzada granted to Ferdinand and Isabella for the protection of Christian lands against the Muslims was slightly unusual in that it was wider in spread than just church property and it was also open ended, originally being intended to last just for the duration of the war against Granada. It was then kept going to fund the coastal and Naval defence of Spain, Sicily and Southern Italy against Barbary Corsair raids. Though I have read that one of the reasons why the Spanish Crown mounted the massive operation to recover Oran in the 1730's and countinued with Spanish bases in North Africa unlike the English who abandoned Tangiers was that without a land frontier with Islam they would have lost the legal right to collect the Cruzada.

Typical of Spanish policy really, which taxed Spain dry to build and support a Empire and a miliatary effort which it in turn asked very little from apart from a share of the gold and silver (a request often evaded) it produced. Certainly from the C16 to C18 the colonies esp in the America's but also Manila had low taxes and stable money (The Spanish $ so stable it became the trade currency of China) while at home taxation was brutally high for those who paid it even though many managed to avoid it. Leading to a flight of productive capital and people to both the colonies and to unproductive and untaxed occupations like the civil service and the Church while debasement, inflation and defaulted government debts broke currency stability. Oh and the Dutch revolt and a disasterous 80 years war when the Duke of Alba tried to bring in some of the same taxes in Flanders.

Philip V and his mostly French and Italian advisors and later Bourbon Kings did bring in many changes which helped Spain recover through most of the C18 and mostly used a French model. Though many things did not change and esp with regards to Aragon some things which changed got changed back to humour local feeling (something which continues to this day since the Catalans still not really that keen on being told what to do and how to do it my Madrid).

In game the only way I would say G7 Spain is much like the Historic model is that I seem to spend a lot of time exporting recruits including by best educated out too the colonies and Iberia can feel a bit of an economic backwater. Anyone interested in a really nice sherry? some Olives? some nice wool cloth from Valencia? Not really in the same league as the Gnomes of Lima plotting to corner the World Market in Tobacco, Cotton, Sugar etc.

Do not even get any gold or silver shipped home as that which does not end up as silver spurs for the Duke of Modina Sidona Gaucho's gets turned into silver dollars to pay the Hongs for their tea, silks, mercury, porcelain etc. Colbert would be turning in his coffin at the thought of all that bullion going to China so the Emperor can pay all of his Mongol and Manchu bully boys. But on the bright side silver worth more in China than it is outside and with porelain etc its the other around. So G7 economically set up so the Ladies of Spain (even the ones in Lima, Havana etc) can drink tea out of fine china while dressed in the finest silks. While Chinese potters earn enough silver to pay Lord Fong to pay their tax and keep all of their bits.

Which I would argue is a couple of economic theories past the French ones like "Mercantilism".

Finally ref the Sugar Islands and how profitable they were. Ever wondered why almost the National dish of Jamacia is salt cod and peas? When Cod is a cold water fish from the North Atlantic and peas are not really tropical either? This actually reflects the fact that the Islands used most of their agricultural land and workforce both free and unfree to grow cash crops like Sugar and imported much of their food from the mainland of the America's both South and North America. Meaning all of those French Sugar islands now banned from trade with Spain or its colonies either need to grow a lot loss sugar or have a long sail to say Canada and back to pick up dinner. Plus as the black flags of the Shah start to show up in western waters I suspect insurance rates will go up as well.

Does my enemies, enemey = Possible trade partner a version of Neo-Mercantilism ? (sorry for the rambling lads but I have caught COVID - only a cold effect but still in isolation and bored).