The Castilian wool industry at a crossroad: prices, cost, and profits, 1550-1650

The textile industry was a very important part of the economic growth in Early Modern Europe. In Castile also at least during the sixteenth century thanks to the mobilization of rural and urban labor by merchant capital. However, at the end of the century there were signs of stagnation that soon became a clear decline in the first decades of the seventeenth century. In order to better understand the causes of this trajectory, this article analyzes the behavior of the prices of three types of fabrics –paños veintidosenos and diociochenos and estameñas– and the costs of the main factors of production –wool and labour–, from which an indicator can be deduced of the changes experienced in profit margins between the decade of 1551-1560 and that of 1641-1650. The result shows a virtual stagnation in the final decades of the sixteenth century and a subsequent fall, more pronounced in higher quality fabrics than in estameñas, barely perceptible. The causes that explain this behaviour lie first in the growth of wages –basically due to the stagnation and subsequent decline of the population, aggravated by the plague of 1596-1599 and the agrarian crisis of 1628-1632–, the commercial, fiscal and financial policy of the Crown and, last but not least, the rise in wool prices driven by the recovery of foreign demand.