- 1 . Ringrose, D. S., 1972 ; Madrazo, S., 1984.
1The aim of this study is to identify the reasons for regional differences in the variability of Spanish wheat prices. This problem is part of a larger one: determining the regional differences in price according to means, cycles, seasonality and variability. This topic has generated long debates between Spanish economic historians. For example, price differences between regions have often been explained as a consequence of the high costs of transport. This explanation could be applied to the seventeenth or eighteenth centuries but not to the nineteenth century1.
2There must be other relevant variables that explain the features of the series of prices. Generally speaking, coastal wheat prices were high and steady, whereas inland prices were low and unsteady. This situation is reminiscent of the wheat market in Europe in the nineteenth century regarding English and Prussian prices. However, Spain is not a continent, but a mountainous, medium-sized country with a rich variety of climates.
3There are two hypothetical explanations for the price differences. On the one hand, the variability of prices in Spain may have been due to the existence of regional differences in production and consumption. Thus, the single-crop farming of wheat in Inland Spain would explain the low price of wheat in this region; however, the failure of harvests would have also raised the price during the crises of subsistence. On the other hand, price variability may have depended on differences in personal incomes. The purchase of wheat by comparatively richer inhabitants of Coastal Spain would have reduced the consumption in Inland Spain.
- 2 . Connard, P. & Lovett, A., 1969, p. 412, made a similar distinction. The main difference is that t (...)
4From the point of view of agrarian goods consumption, it would be possible to distinguish three large Spanish regions2. The first one is Inland Spain: the « two » Castiles, Madrid, Extremadura, La Rioja, Aragón and the north of Andalusia. Paths leading to the coast were difficult to cross due to the existence of parallel ranges of mountains to the sea, the lack of navigable rivers and the political division of the peninsula. In this part of the country, there existed sheep livestock; but cattle were only important in the regions nearest to the Cantabrian Mountains and the north of the Portuguese frontier.
5Agricultural production in this wide region was based on the Mediterranean « triad »: vineyard, olives and wheat. Climate and soil conditions in Inland Spain did not permit the cultivation of other crops, such as corn. The cultivation of potato was possible, but it did not begin until the end of the eighteenth century for several reasons. Even halfway into the century, there was no evidence of its large-scale consumption by the popular classes. Data from the first agricultural inventories – Junta Central de Agricultura, 1857 – do not suggest that potatoes were consumed in significant amounts. This hypothesis is corroborated by fiscal evidence, such as the impuesto de puertas – municipal tax – of several cities. Indeed, its consumption seems to have been higher in some parts of the Duero Basin than in other inner regions.
Figure 1. Spanish Consumption regions
Source. The author; from el Censo de Manufacturas.
- 3 . As a source for the study of agricultural production, the Censo de Frutas y Manufacturas presents (...)
6In sharp contrast to Western European countries, only one species of cereal, wheat, provided most of the nutrients. Table 1 shows the share of main cereal productions in the three large Spanish regions according to the Censo de frutos y manufacturas (1799), an official registry. In Inland Spain, only wheat represented more than half of all cultivated cereals. Rye constituted one-fifth of all cereal production; it was farmed in the cold regions and highlands, such as the provinces of León and Soria. Corn, escanda (an inferior race of wheat) and millet were unknown. A little more than one-quarter of production was composed of cereals devoted to animal feed: oats and barley. The quota of the first was less than 4.0 per cent3.
Table 1. Share of each cereal in Spanish production (weight*) in 1800
Source. Censo de Frutos y manufacturas.
* Weight conversion rates are 780 g/l for wheat, rye and escanda;
750 g/l for corn and millet; 600 g/l for barley; and 550 g/l for oats.
** North region includes Galicia, Asturias, Biscay and Guipúzcoa. Mediterranean region includes Catalonia, Valencia, Murcia, Granada and the Balearic Islands.
The rest of the country is « Inland ». The Canary Islands are not included.
7In Spain, the correlations between series of wheat, rye and barley productions were higher. Figure 2 shows the tithes collected by the Archbishopric of Seville in the second half of the eighteenth century. The wheat and barley series are extremely similar. With an almost imperceptible trend, the coefficient of determination is 0.96. This strong relation is a consequence of the special climatic conditions of Western Andalusia. In this region, the main reasons why a harvest could fail were the lack of spring rains and the high temperatures in May-June. These problems were common to all cereals. In Castile, where the influence of other factors such as the spring frost or the lack of autumn rains weighed more heavily, this correlation was less intense. However, as we will discuss later, the strong similarity in the evolution of prices of different cereals in Rioseco is related to the fact that their production in Castile was highly correlated.
Figure 2. Tithes in the Archbishopric of Sevilla (1757-1801)
Source. Martín, M., 1970, p. 168-169.
* 1 fanega (Spanish traditional unit) = 55,5 litres.
8The agricultural region of the north includes the provinces flanked by the Bay of Biscay, from Galicia to the Basque Country, the Pyrenees and other very humid regions. The distinguishing characteristic of these territories was the mixed farming. Generally, the main crop was corn (see Table 1). Its cultivation probably began at the end of the sixteenth century. According to the Catastro de Ensenada, 1749-1756 – a national fiscal inventory –, in the middle of the eighteenth century, all of the villages of Galicia and Asturias farmed corn. In some villages, corn was the only cereal harvested. Usually, however, wheat, rye and millet were also cultivated. In the eastern provinces of Bay of Biscay, Cantabria and Vasque Country, millet was unusual. Instead, wheat was more common, even exceeding the popularity of corn. Rye was likely more typical than corn or wheat in the highlands of this region.
9Moreover, there were other nutritional alternatives. Starting in the eighteenth century, potatoes were cultivated in some places in the north. Chestnuts had long been a common food in Asturias. There were more cattle in the Cantabrian regions than in the rest of the nation. Consequently, inhabitants had a regular supply of meat and milk products. Fish, especially cod, was eaten by people living along the coast, and of course, access to the sea allowed a regular supply of wheat from overseas.
10The third region was the Mediterranean coast. West Andalusia – the provinces of Seville, Cadiz and Huelva – could be assimilated to this region. However, some of the features of consumption in this region are more similar to those of Inland Spain. In the Mediterranean region, the products of the « triad » were dominant, though the production of wheat was lower than that in Castile, with high oil and vine productions. Indeed, these goods were exchanged for wheat and flour from Castile and Aragon.
11On the other hand, there were other crops to substitute wheat: rice and corn. The former was cultivated in two small regions, Ebro Delta and, mainly, La Albufera in Valencia. Corn was farmed in several humid regions in the province of Cádiz and, with irrigation, in Valencia. This method of cultivation was the basis of mixed farming in the Southeast of Spain, where frequently dry-farming grains was not possible or profitable. In the Mediterranean region, vineyard harvests alternated with several commercial products, though subsistence products – batatas or higos chumbos – were cultivated as well. Fishing activity was less popular than in the northern coast, but it had some importance. Of course, coastline cities could obtain wheat from overseas. In general, food variety was poorer than in the North, but better than in Inland Spain. Perhaps the most remarkable feature of food consumption in the Mediterranean coast was the dependence on Castilian and foreign wheat.
12Quantitative information about agricultural production prior to the end of the nineteenth century is scarce and fragmentary. We can recognise great cycles: growth in the sixteenth century, recession at the end of that century and in the first half of the seventeenth, new expansion in the second half of the seventeenth century and the eighteenth century, crisis between centuries, and new and strong growth in the nineteenth century. These cycles basically reflected the fluctuations in the wheat market. They were not regular or precise.
- 4 . For the eighteenth century or prior, there are studies about prices for Madrid (Reher & Ballester (...)
13However, there is a great deal of data regarding agricultural prices, especially the price of wheat. There are some monthly series of prices of wheat and other goods that cover two or three centuries. In Spain, as in the rest of Europe, there is an extensive literature concerning prices4. Today, all of the relevant information from mercuriales – municipality records of subsistence prices – has probably been extracted, although it would be possible to obtain new data from other sources (for example, periodical papers).
Table 2. Volatility of wheat prices (coefficients of variation)
Source. Mercuriales from cities.
- 5 . Traditionally, Spanish local authorities could regulate wheat prices through the tasa, an upper-l (...)
14One of the most remarkable features of Spanish wheat prices is the presence of large regional differences. Table 2 shows the average and coefficients of variation (standard deviation divided to the mean) for six series of prices during the period 1766-18655. Inland cities – Medina de Rioseco and Pamplona – have lower averages and higher coefficients of variation than coastal cities. The most expensive wheat was sold in Gerona, a northern Mediterranean city. Cheaper wheat was sold in Rioseco, at the centre of the Basin of Duero. Perhaps the less coherent result comes from Valencia, where wheat production was higher than in Inland cities but cheaper compared to that in Barcelona. In any case, proximity to the sea seems to be a strong determining factor of price conditions.
15Conventionally, the consumption of a good C is determined by its own price p, the price of substitute goods pS, the income of consumer Y and consumer preferences and tastes T. Usually, the last variable is ignored.
C = f (p, pS, Y, T) 
16According to Euler’s theorem, if  is a homogeneous function of degree 0 (that is to say, if we multiply all of the independent variables by the same amount, the result does not change), then:
C = C0 · pb1 · pSb2· Yb3 
where b1, b2 and b3 are the price elasticity of demand, the cross-price elasticity and the income elasticity, respectively. If we take the logarithm, then:
log C = b1 · log p + b2 · log pS+ b3· log Y 
17From this equation, we can obtain the elasticities. For example, the price elasticity of demand would be:
- 6 . See L. Philips, 1974, p. 34-38 and W. G. Tomek & K. L. Robinson, 1990, p. 36-38. The proof is sim (...)
- 7 . For example, the elasticities of the consumption of beef in the United States between 1953 and 19 (...)
18There is an interesting implication called the « homogeneity condition » that states that for any good, the sum of its price elasticity of demand, the cross-price elasticities of its substitutes, and the income elasticity of consumers is equal to zero. This is not a probabilistic result or a derivation of the Consumer Theory, which depends on a large number of ceteris paribus conditions. It is simply an inevitable conclusion of the same assumption of that theory6. A full study of the elasticities of any good always offers such a result7. Therefore, if we could estimate some of those elasticities, it would be possible to estimate others. However, we need a starting point.
- 8 . Fogel, R., 1992, p. 184-255.
- 9 . Lehfeldt, R., 1914, p. 212-217.
- 10 . Parenti, G., 1942, p. 176-216.
19In 1991, Robert Fogel published a paper about famine and food before the Industrial Revolution8. Fogel reported a method to estimate wheat price elasticity with price and output data from different places and periods. This is an important matter because there are often no peer data for those variables. In fact, Fogel was not the first to use this procedure. Before him, Robert Lehfeldt used the same scheme to estimate a global wheat price elasticity9. Moreover, three decades later, Giuseppe Parenti, who did not know of Lehfeldt’s work, used the same method to estimate wheat price elasticity in Siena during the Premodern Age10. It seems that Fogel did not know of Lehfeldt’s or Parenti’s work either.
20The supporting idea is simple: a low elasticity of demand implies large fluctuations in prices with respect to consumption. Therefore, if we have two representative samples of prices and quantities for the same geographical area, even if they have been obtained from different times, we could estimate the elasticity of demand through the comparison of their oscillations. Thus, Fogel used the following relationship:
where δC is the standard deviation of the quantities of wheat consumed, δp is the standard deviation of wheat prices, and rCp is the correlation coefficient of both. The series of prices and quantities need not be contemporary; they must only be representative of the same region during the same period. Obviously, they could show different trends. For this reason, Fogel and others estimated the elasticity of demand through the relationship between standard deviations of de-trended series of quantities and prices.
21Of course, the crucial issue is the agreement between series of wheat production and prices. There are three factors that could break such agreement: first, the trade between regions with surplus and excess wheat; second, long-term wheat storage or « carry over »; third, the « seed factor » or the use of a fixed part of the harvest as seed. In each case, the effects on the estimation are different. Trade and storage would smooth the volatility of consumption in relation to production. Therefore, they would reduce the elasticity of demand. The seed factor would have the opposite effect.
22The incidence of trade, carry over and seed factor prevent an accurate estimate of elasticity. The importance of the biases depends on historical circumstances. An integrated market could balance regional deficit and surplus through trade. In this way, the main effect of the integration would be to obtain a wider market size. For this reason, a « selfish » granary or rather a granary that does not exchange grain out of its area of influence could experience a worse crisis of subsistence. In any case, it is clear that a crucial issue to resolve in the econometric problem estimating the elasticities is determining the frontiers of the market
- 11 . Persson, K. G. P., 1999, p. 52-54 ; Barquín, R., 2005.
- 12 . Barquín, R., 2005, p. 251.
23Europe between the sixteenth and eighteenth centuries is a suitable field of study because road transport and storage effects were not large, and seed factors were well known and few. Unfortunately, there are not many studies in this regard. For Sweden and Europe as a whole, Persson and Barquín, respectively, obtained almost the same result: a price elasticity of demand of –0.6511. The elasticity estimated by Fogel for Great Britain in the Premodern Age was higher, though it featured a numerical error. Once it is amended, the result is –0.3712. However, the elasticities calculated by Parenti in Sienna for the sixteenth and the seventeenth centuries ranged from –0.7 to –1.0. In short, –0.65 seems a reasonable estimate for Premodern Europe.
24According to the homogeneity condition and the regional division of Spain,
0 = b1n + b2n + b3n = b1m + b2m + b3m = b1i + b2i + b3i 
where b1, b2 and b3 are the elasticity of demand, the cross-price elasticity, and the income elasticity. The suffixes ‘i’, ‘n’ and ‘m’ refer to Inland, North and Mediterranean Spain. With signs, the function is written as follows:
0 = – b1n + b2n + b3n = – b1m + b2m + b3m = – b1i + b2i + b3i
- 13 . For example, C. Boutelou, 1818, p. 91, wrote : « The grain of bare barley is similar to wheat, an (...)
- 14 . One of the reasons of the success of mules in the nineteenth century Spain was that, unlike horse (...)
25Obviously, the implicit system cannot be solved. It is necessary to introduce some assumptions. First, the Inland cross-elasticity b2i should be considered equal to zero. There are three reasons to do so. First, as shown above, in this region, wheat played a dominant role in consumption. Corn, escanda and oat productions were negligible. Normally, rye, the closest cereal to wheat, was used to make several kinds of brown bread, with more or less amounts of wheat. Therefore, only barley could play a role in the stabilisation of consumption. Although a part of the production was eaten as soup or porridge, another part could shift from being used in brewing and fodder to being used as human food13. However, in many cases, this was not possible. It should be noted that some of the main consumers of barley were high nobility or the horses of the army14. As shown in Table 1, in Castile (and Spain) barley occupies only a fifth of total cereal production. In short, barley production was relatively small; part of this production was usually eaten, and only part of the barley « not used in the human feeding » could be used in this way.
26The second reason is that the prices of rye and barley followed the trend of wheat. Figure 2 shows the prices of cereals in Medina de Rioseco between 1814 and 1854. Table 3 shows their coefficients of determination. The correlation between wheat and rye and that between wheat and morcajo (as French meteil, a mix of rye and wheat) is higher, 0.83. The correlation between wheat and barley is good, 0.54. In all of the cases, the trends are null and the movements of prices are similar. We have seen before that the main cause of these movements is the common fluctuation in production. Now we can understand the meaning of this synchrony. During a bad harvest or crisis of subsistence, rye (or even barley) could only be a partial alternative to wheat. Bakers had to pay a high price for the cereals that they mixed with wheat because their harvests were also small. Obviously, the influence of this mix on the final price was reduced. It was probably for this reason that a more typical answer was to reduce the weight of every piece of bread.
Figure 3. Price of cereals in Rioseco (1814-1854)
27Source. Mercuriale of Medina de Rioseco.
Table 3. Coefficients of determination between prices of several cereals, 1814-1854
Source. Mercuriale of Medina de Rioseco.
28The third reason is the density. A litre of rye or wheat is heavier than a litre of barley. It is difficult to know exactly how much because the strains have changed. For example, the main Spanish strain of wheat in the nineteenth century, candeal-chamorro, is currently unknown to farmers. If it were assumed that nineteenth-century barley « commonly » weighed 600 g/l (today, it ranges from 500 to 600 g/l), the difference in weight between it and the candeal-chamorro (780 g/l) would be 23.1 per cent. Thus, the price of barley in terms of weight would be similar to that of rye. For example, in Medina de Rioseco between 1829 and 1833, the prices of barley and rye were 58.8 per cent and 59.5 per cent those of wheat, respectively.
29In short, there were few alternatives to wheat. The most obvious, rye, was also the least interesting because the movements of its production were similar to those of wheat. Barley, a cereal devoted to animal feeding, would be a secondary or extreme option. In both cases, the similarities in the movements of prices reduced their roles as wheat substitutes.
30A second assumption is that cross-elasticities in the northern region were higher than those of the Mediterranean (b2n > b2m). Above, we have discussed this issue. The basic argument is based on the different regional food alternatives.
31A third assumption is that income elasticities in the Mediterranean and Inland regions were similar and lower than those in the North region. For the first decades of the nineteenth century, it is possible to perceive some of the social and economic features of the twentieth century, such as the unequal regional distribution of income. Generally speaking, coastal regions were richer than inland ones due to the development of their industry and the existence of a market-oriented agriculture. However, there are several reasons to assume that these differences were not significant.
32First, we can find exceptions to the relationship between the coastal location and income. In relation to others, coastal regions such as Catalonia and Andalusia were rich. However, others such as the Southeast, Balearic Islands and Galicia, were not. Inland Spain, Castile and Extremadura were also poor regions; however, Madrid and the Valley of Ebro seem to have been rich regions. Indeed, regional inequality was smaller, in accordance with the larger rural population. Moreover, before 1850, more than 70 per cent or 80 per cent of Spanish people were peasants who lived in villages. The trade of agrarian products was very deficient due to the lack of means of transport or surpluses in agricultural production. A great majority of peasants worked in traditional farming. The only active exchange was the sale of a small part of their harvest in the nearby cities. Under these circumstances, there were probably no large differences in the standard of living among peasants between regions.
33For these reasons, the main factor that can explain the regional differences in the income elasticities is the consumption basket. According to economic theory, it is normally assumed that bread is a good with a low, even negative, income elasticity. However, in Premodern economies, this value was positive. Only in this way is it possible to explain how wheat consumption per capita in Europe grew during the first decades of the twentieth century. This behaviour was due to the different preferences of consumers for each type of bread. Unlike wheat, corn, rye and other cereals had lower, likely negative, income elasticities. During the nineteenth century, many Europeans were replacing the consumption of these cereals with that of bread. The process was similar in Spain, with one important difference: the lack of better alternatives made Spain a « pioneer » in Europe. At the end of the eighteenth century, most of the cereal grown in Central and South Spain was wheat. The replacement of corn consumption with that of wheat was limited to the North, and only after 1850.
- 15 . Lains, P., 1995, p. 172-174 and 195.
34At this point, the behaviour of the market beyond the frontier may be relevant. North and Central Portugal (where most of the Portuguese people lived) had an agrarian structure similar to the northwest of Spain. Corn was the main crop, but other cereals were also cultivated. According to Lains, Portugal’s income elasticity in 1850 was 1.4015. It is reasonable to suppose that this value could be a good estimate of the income elasticity in this part of Spain. In fact, the construction of the railway in this region (dated from 1860 in Basque country/Cantabria to 1880 in Galicia) led to the replacement of corn consumption by wheat consumption, especially in rural areas. These changes did not occur in the rest of Spain because these regions did not experience the relevant consumption of other cereals. The income elasticity in North Spain was necessarily higher than that of Central or South Spain.
35In short,  can be reduced to
0 = – b1n + b2n + b3n = – b1m + b2m + b3mi – b1i + b3mi 
where the suffix mi includes Mediterranean and Inland regions. Moreover, it is important to note that:
b3n > b3mi 
36To solve , the first step is to estimate the elasticities of demand. A first approximation could be obtained by data from Medina de Rioseco in the period 1765-1801. The series of yields could be compared with contemporary price series. If we assume that a production series is a good proxy for consumption series, we could estimate the elasticity of demand through the following regression:
Ln C = a + b·Ln p + c·Ln Y
where C is the consumption – production –, p is the price, Y is the income per capita and b and c are the elasticities for price and income, respectively. In fact,
- 16 . Moreno, J., 2001, p. 33-34.
[and the same reasoning is valid for c. We do not have an actual income per capita series, but we can use a proxy, the series of nominal salaries from Palencia, a small city near Medina de Rioseco16. The terms of the regression are:
Ln C = – 2.11 – 0.56 · Ln p + 1.04 · Ln Y
(– 0.90) (– 3.31)
R2 = 0.27
n = 36
- 17 . Escrivá, J. L. & Llopis, E., 1987, p. 126, define as « surprising » the intensity of « leadership (...)
37A price elasticity of –0.56 is a plausible result. However, an income elasticity close to unity implies a normal preference for wheat. This seems strange, though possible. In any case, the coefficient of determination is too low to allow for strong confidence in this regression. On the other hand, through this method, we can only estimate the value of the price elasticity of one city. Certainly, Medina de Rioseco is one of the most interesting markets in Spain due to its location in the centre of the main cereal region17. However, it is only one market.
- 18 . This information has been collected by Gehr, 1991.
38It would be useful to search for estimates in other cities through the Fogel method. For the period 1765-1850, we have several series of wheat prices from mercuriales. Additionally, since 1890, the Public Administration recorded agricultural production data for all of the Spanish provinces18. Thus, we can compare the volatility in different samples of production and prices to estimate the price elasticities. This requires taking two assumptions into consideration. First, the variability in cereal production at the end of the nineteenth century was similar to that of the eighteenth century. Second, the oscillations in consumption were similar to those in production.
- 19 . Fogel, R., 1992, p. 252.
39With respect to the first assumption, Fogel provides some evidence that in a dry-farming system modernisation involves an increase in production but not in volatility19. Spanish data suggest something similar. Figure 4 shows two series of yields and detrended yields (percent data) in the province of Valladolid from 1890 to 1935. The starting point coincides with the approval of protectionist Tariff Cánovas, which caused a strong increase in the internal prices in Spain and the modernisation of Spanish agriculture. For this reason, the original series show a gradual trend. During those decades, every harvest changed 19 per cent (up or down) with respect to a normal year. Nevertheless, there is nothing that involved changes in the variance (in econometric terms, heteroscedasticity). The volatility in the first years is similar to that of the last ones. In short, there is no evidence that modernisation increased the variance.
Figure 4. Yields in the province of Valladolid (1890-1935)
Source. gehr, 1991.
40In Table 4, there appears another piece of evidence. The table shows some statistical descriptors of three series of yields or tithes in the second half of the eighteenth century compared with others calculated with provincial data between 1890 and 1914. CV is the Coefficient of Variation of the original series. The other two columns show the standard deviation of detrended series through two methods: Ordinary Least Squares (OLS) and Mobile Average (MA). Note that any standard deviations in a village must be higher than those in a province because the territory is smaller. In fact, the volatility in the series of Rioseco and Aranjuez (MA) in the eighteenth century is higher than that of their provinces in 1890-1914. However, the volatility in Seville and Aranjuez (OLS) is smaller.
41It is possible that in Central and Southern Spain, the use of fertilisers strongly increased cereal production during the good (and wet) years. However, this did not occur during years of drought. In any case, there are no reasons to believe that volatility in the eighteenth century harvests was greater, or smaller, than in the beginning of the twentieth century. Agricultural modernisation did not cause a reduction in the production volatility.
Table 4. Production volatility in three cities
Source. Yun, B. 1987, Anes, G., 1970, Martín, M., 1990, and gehr, 1991.
42The second assumption is that the oscillations in consumption were similar to those in production. This is because the biases from long-term storage, trade and seed factor did not affect the result because they were low or they eliminated one another.
43The seed factor had a small and well-known effect. A part of the harvest was dedicated to seeds; therefore, the volatility of the consumption – rather, the farm production devoted to people and animals – was higher than that of production. Only at the end of the nineteenth century was this factor clearly reduced. Consequently, we can assume that the estimate of the elasticity of demand hides a small bias.
- 20 . Anes, G., 1969, p. 73-94.
- 21 . Nielsen, R., 1997.
- 22 . Piuz, A.-M., 1964 ; Revel, J., 1992.
44However, this bias may likely be compensated by the effect of the pósitos network and the carry-over storage. In the eighteenth century, Spain built the largest long-term wheat storage system in Europe, the system of Reales pósitos, which reached its peak during the last years of the century20. According to official data (which did not include municipal pósitos) in 1800, 5,151 silos were associated with the network and stored more than five million hectolitres of cereal, mostly wheat. This would have been a quarter of the national harvest in a normal year. It is interesting to note that the Spanish pósitos web was an anachronism in eighteenth century Europe21. Almost every country had abandoned these storage systems because their maintenance costs were high and did not avoid the large oscillations in prices. Only some small conservative (and theocratic) states, such as the Vatican and Geneva, supported them22.
- 23 . Castro, C., 1987 ; Escrivá, J. L. & Llopis, E., 1987, p. 122-123.
- 24 . Bernardos, J. U., 2003, p. 170-198.
45During the first decades of the nineteenth century, the pósitos system suffered a sharp crisis due to war – Independence (1808-1814) and Carlist (1833-1840) – and fiscal extractions. Regardless of these calamities, most Spanish economic historians argue that the pósitos system underlined another problem: the pósitos did not serve their principal aim. The system’s more brilliant years were the same years that featured the highest oscillations in wheat prices. It is true that Spain was not an exception in the stormy Europe of the Revolutionary and Napoleonic period. However, there are some reasons to believe that the pósitos slowed the wheat trade23. In another sense, José Bernardos believes that the pósito of Madrid, which was supported by the Royal Treasury, had a decreasing influence on the provisioning of the capital. In any case, it does not seem that they helped to stabilise markets and prices24.
46In the same way that the peak of the pósito system coincided with the crisis of subsistence, its decadence coincided with the stabilisation of prices. In 1850, the pósitos stored only two million hectolitres, perhaps a tenth of a normal national harvest. It is possible that they still played an important role in the rural credit of the south of Spain. However, during these years (or at any time), it does not seem that they had an influence on the construction of the national wheat market.
47It was likely that merchants and grain wholesalers played a more relevant role than the pósitos. Their activities were not permitted until the publication of the Código de Comercio of 1829 and the Real Decreto de Libertad de Comercio y Industria of 1834. However, the first specific norm that authorised the storage and the commercial speculation on wheat – with important restrictions was the Pragmatica de Libertad de Comercio of 1765. Between those years, there were seven decades of forward and backward steps and, above all, uncertainty.
- 25 . Barquín, R., 2003, and Llopis, E., 2001.
48As we saw above, trade enlarges the size of a market. Thus, it reduced the oscillations in the prices because regional deficit and surpluses compensated each other. Market integration could be seen as a measure of the success of merchants in the exchange of goods. Studies regarding this topic note that eighteenth century cereal regional markets were partially integrated. However, at the end of the century and during the first decades of the nineteenth century, integration seemed to have deteriorated. It recovered in the middle of the 1820s, although the Carlist War disconnected northern markets. Nevertheless, during the 1830s and 1840s, the Spanish wheat market seemed increasingly integrated. According to Barquín and other economic historians, before the construction of railways, the wheat markets were integrated25. In short, during the period of study, the size of the wheat market changed from that of a regional to that of a national field though slowly and with backward steps.
- 26 . The prohibition of wheat imports was suspended several times between the Decree of 1820 and the c (...)
49The end of the process of building a national wheat market was contemporary with the establishment of a protectionist policy26. In practice, the Tariff of Trienio (1820) banned the import of wheat and flour. Until this year, Barcelona and the other cities in the Mediterranean Sea obtained part of their wheat provisioning from Russia, Italy and Algiers. On the other hand, from 1814 onward, it was a strong agricultural expansion that made it possible to establish some discrete exports. In the period 1830-1855, Spain exported wheat and flour to Cuba and Europe. Likewise, grain moved between Spanish regions. For example, wheat from Aragón, Castile and La Mancha was transported to Barcelona through the ports of Tortosa, Santander, Valencia and Alicante. Even small quantities of wheat were traded from Oviedo and La Coruña to Barcelona. It is logical to suppose that during these decades, the conditions of the local markets reflected the conditions of the national market.
50In short, we could suppose that eighteenthcentury prices reflect the conditions of production in the nearest provinces and that nineteenthcentury prices reflected the conditions of a national market. The effect of the seed factor could have been balanced by trade, especially during the nineteenth century. In other words, there is an important methodological implication. It is necessary to use different samples to estimate the volatility in production: for the eighteenth century, data from provinces close to each city; for the nineteenth century, data from « apparent » national consumption, or rather production plus commercial balance.
51Tables 5 and 6 show the estimates of the elasticities of demand drawn from two sets of sources: series of wheat prices for the period 1766-1808 and series of output during 1890-1914. I have used two methods to eliminate the trends: Ordinary Least Squares and Mobile Averages (five years).
Table 5. Estimates of elasticity of demand
Source. Mercuriales and Gehr (1991). See text.
Table 6. Estimates of elasticity of demand
Source. Mercuriales and Gehr (1991).
52In the eighteenth century, most of the elasticities reached « normal » values, ranging between –0.56 and –0.83. The more unusual results are the elasticities of Gerona and Barcelona. It does not seem credible that the curves of demand of wheat in Catalonia were elastic, but there is a very simple explanation: cereal imports were larger and improved supply, smoothing the oscillations in prices.
- 27 . Indeed, R. Congost, 1989, p. 161, support that between 1768 and 1862 Gerona transformed from a ce (...)
53However, this explanation has a serious problem: in the next period, between 1826 and 1854, the elasticities of demand in Gerona and Santander were lower than –1.0. In those years, imports were banned, so it would be necessary to find other reasons. In the case of Gerona, it is possible to make the conjecture that the location of the city on the frontier between the Mediterranean and North regions, and close to the coast, provided a regular provisioning27. Santander was a door to the trade of flour and wheat to Catalonia, Cuba and, sometimes, England and France. These movements could be the cause of high but stable prices. In short, they are anomalous cases, and for this reason, they have been excluded by the estimate.
54However, what can explain the value of Tolosa? The elasticity of demand in this city was very close to –1. Indeed, Tolosa was not a coastal city – it was 30 kilometres away from San Sebastian. It was not the door to wheat or flour export. It was not located in the cross junction of two consumption regions. Moreover, its surrounding region was a battleground during the Carlist War (1833-1839). In short, we only can suppose that wheat in Tolosa actually had a unitary curve of demand. In fact, in Guipúzcoa, bread made from wheat was a luxury good. Rich people ate bread made with wheat traded from Álava and Navarra (the mercuriale of Tolosa collects these grains separately). Poor people ate borona, a type of bread made from corn of the province. In the same way that wheat prices in Barcelona were higher and steadier than those in Castile, wheat prices in Tolosa were higher and steadier than those of corn, as shown in Table 7. If the standard deviation of the corn consumption series were similar to wheat, its elasticity of demand would range from –0.55 to –0.81. It would be similar to the wheat elasticity in Vitoria, a close and inland city.
Table 7. Volatility of corn and wheat prices in Tolosa
Source. Mercuriale of Tolosa.
55Some of the samples – Gerona, Rioseco, Pamplona and Tolosa – cover both the eighteenth and nineteenth centuries. In all of these cases, the elasticities of demand in the first period are a bit higher than those in the second. This was probably due to a better exchange between regional surplus (inland) and deficits (coast). The rest of the estimates confirm the predictable results. In the north region, which featured many food alternatives and sea access, the demand for wheat had a price elasticity close to –1. The curve of demand in Inland Spain was relatively rigid. In the Mediterranean region, the values were halfway marks.
56It is interesting to note that the estimates of the elasticity of demand in the eighteenth century in Rioseco were almost equal to those obtained by the « direct » procedure described in the section 4.2: –0.58/–0.60 and –0.56. Thus, it seems we are walking on solid ground.
57From now on, I will assume that the estimates of the elasticity obtained by detrended series with OLS are the best proxies for the « actual » values. As shown in the previous tables, these values normally represent most rigid curves of demand. By applying the condition of homogeneity to the two set of results (1766-1808 and 1826-1854), we obtain the following equations:
1st period 0 = –0.91 + b2n + b3n= –0.70 + b2m + b3mi = –0.58 + b3mi [6a]
2nd period 0 = –0.91 + b2n + b3n= –0.83 + b2m + b3mi= –0.67 + b3mi [6b]
58Their solution then produces:
Table 8. Spanish estimates of elasticities
Source. Mercuriales and Gehr, 1991. See text.
59A long historical tradition has explained the crisis of subsistence in Premodern Europe by supposing that the curve of demand in the wheat market was very rigid. The extreme dependence and sensitivity of consumers to changes in the food supply may explain the large oscillations in prices. The never-proven « Law » of King-Davenant provides theoretical support for this hypothesis.
60On the other hand, another long economic tradition has marked the inability of agrarian economies to achieve sharp economic growth. They could not base their economic growth on wheat or other cereals because their income elasticities were too low.
61In the nineteenth century, Spain, as other European countries, « jumped » into modernity. However, there is no evidence that agricultural systems were particularly successful. What is more interesting is that there is no evidence of large changes in the shape of the curves of demand. In fact, one of the most remarkable features of the elasticities of income, price and cross-prices is the stability. Basically, between the eighteenth and nineteenth century, income elasticities grew by 0.10/0.25, cross-price elasticities grew by less than 0.05, and price elasticities decreased by 0.10/0.20 and no more.
62In Premodern Spain, the wheat curve of demand was rigid, but not extremely so. Indeed, it was not more rigid than the curves of other European countries. This conclusion is valid not only for coastal regions but for inland regions too, the most wheat-dependent part of Spain. In fact, in Castile, the elasticity of demand was –0.58, a value not very different from the values of coastal regions (between –0.69 and –0.91). Moreover, it was nearest to the value estimated for Europe as a whole (–0.65). Of course, prices oscillations in Spain were larger than those in across the rest of Europe. However, the oscillations in the production were also larger. The higher elasticity of demand in the coastal regions was a consequence of these regions’ proximity to the sea, with a better supply and more nutritional alternatives. On the contrary, the fewer alternatives and the difficulties in gaining access to the sea explain the severity of crises of subsistence in Inland Spain between 1788 and 1812.
63In any case, the crisis of subsistence was not a consequence of an extreme preference or need for wheat. Under normal conditions, people could afford a moderate increase in the price of bread. When harvests failed, they reduced their consumption or preferred other cereals, even barley. During those periods, the lack of alternatives to wheat in Castile may have seriously worsened the alimentary situation. Nevertheless, the essential parameters of wheat consumption were similar across the entire country.
64Cross-price elasticities were one-quarter or one-fifth of the income elasticities This means that wheat substitutes did not play a relevant role in consumption. However, we cannot forget our initial assumptions. It is probable that a large increase in wheat prices would shift part of the consumption to the inferior cereals.
65Finally, it could be interesting to observe the income elasticities. These values ranged from 0.58 to 0.84, which do not seem excessively low. Note that these elasticities were higher in the North and that they grew during the period of the study, probably as a consequence of the improvements in transportation and the increase in personal incomes. These estimates suggest neither a dynamic nor a stagnant market. Therefore nation’s backwardness should be explained by reasons other than cereal agriculture development. However, of course, this would also depend on other factors.