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The General Settlement of 1577: An Aspect of Spanish Finance in the Early Modern Period

Published online by Cambridge University Press:  11 February 2009

Albert Lovett
Albert Lovett
Affiliation:
University College, Dublin
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Extract

The states of sixteenth-century Europe fell into two financial groups. France and Spain, in a class of their own, enjoyed an apparently total freedom for much of the time from the normal constraints, and this in spite of their rapidly escalating debts. The other European states which made up the second category were compelled to observe far more stringent controls. The distinction between the two groups was further underlined by the question of credit. Although the Habsburg and Valois monarchs spent in a way that was both financially reckless and socially unpitying, the moneyed classes were only too eager to advance additional funds. Repeated, and sometimes spectacular, failures seemed rarely to have damped their enthusiasm. The smaller states seldom found such ease of access to credit. For most of the time they were obliged to maintain a semblance of order by sustained and sordid frugality - the bilking of minor creditors, the levying of dubious ‘loans’, or the dissipation of capital. While no strangers to these devices, France and Spain were able to operate for prolonged periods free from ordinary limitations. But even for these privileged beings the moment of truth eventually arrived. Resources were finite; and even an imperial state could exhaust the credit, if not the credulity, of its principal bankers. Such an intrusion of reality took the form of a public bankruptcy.

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Articles
Information
The Historical Journal , Volume 25 , Issue 1 , March 1982 , pp. 1 - 22
Copyright
Copyright © Cambridge University Press 1982

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References

1 Braudel, F.The Mediterranean and the Mediterranean world in the age of Philip II, 2 vols. (London, 1972, 1973), esp. 1, 500–17Google Scholar. Also Prada, V. Vázquez de, Historia económica y social de España: III, Los siglos XVI y XVII (Madrid, 1978), esp. chaps, XII & XVIIGoogle Scholar. Martin, Felipe Ruiz, Lettres marchandes échangées entre Florence et Medina del Campo, (Paris, 1965)Google Scholar. For references to other work by Ruiz Martín see my ‘The Castilian bankruptcy of 1575’, Historical Journal XXIII, 4 (1980), n. 3.Google Scholar

2 For an article of great value see Barkan, Ömer Lûfti, ‘L'empire ottoman face au monde Chrétien au lendemain de Lépante’, in (a cura di) Gino Benzoni, Il Mediterraneo nella seconda metà del ‘500 alia luce di Lepanto (Florence, 1974).Google Scholar

3 Genard, P., La Furie espagnole. Documents pour servir à I'histoire du sac d'Anvers en 1576 (Antwerp, 1876)Google Scholar; Genard, P., Les poursuites contre Its fauteurs de la furie espagnole ou du sac d'Anvers de 1576 (Académie d'Archéologie de Belgique: Annales, xxxv, Antwerp, 1879, 25–170)Google Scholar. For bibliography see Parker, G., The Dutch Revolt (London, 1977).Google Scholar

4 I(nstituto) V(alencia) deD(on) J(uan) envío 76, f0. 580r-582r… ‘la forma de los dos decretos passados fue q se hizo moderaction de los intereses de los asientos pendietes y q corrian sin hazer cuenta ni entrar en los q estauan ya cumplidos’. The ‘fator’ Hernan López de Campo claimed that he had ‘invented’ the device of a bankruptcy (envío 24 fo. 673, 1577).

5 Ibid., envío 24, fo. 469, 9 March 1584, for a summary of his career up to that time. Having served as a financial adviser to the crown, Juan Fernández secured the post of treasurer general for life, entering office on 5 March 1575. Almost immediately his position was undermined by the introduction, as from November 1575, of’ the chest of the three keys (arca de las tres llaves)’. Juan Fernández was replaced as treasurer general by Bartolomé Portillo de Solier, appointed on 8 May 1584 (fo. 470).

6 IVDJ envío 22, book B, fo. 51, 13 Aug. 1577. Envío 22 consists of two boxes containing, inter alia, much of Juan Fernández's correspondence relating to the general settlement.

7 Envío 22, bk. B, fo. 219V-28V, 7 May 1577.

8 Envío 31 (no foliation), 15 Sept. 1576, Dávalos to Mateo Vázquez de Leca (the king's private secretary).

9 Envío 76, fo. 606r, 14 March 1578, memorial to the king. The writer stated that, in the aftermath of the decree, the king had to pay the men of business 40 million maravedís (= 106,667 ducats) at 3% on the salt pans and a number of ‘vassals’. In the meantime additional revenue had been voted by the Cortes, and this had increased royal income by 1 1/2 million ducats ‘Agora con solo deshazerse v.md de quarenta qtos de renta al quitar de a XXX Uz el millar sobre salinas y con los vasallos q se han de dar a los hombres de negos esta v.md libre desta deuda [i.e. the unfunded debt] hauiendo proveido todo lo q ha sido necesario despues de la publicacion del decreto… y se halla con millon y medio de renta mas sobre alcaualas… q solo este crecimto monta mas que toda la renta de otros Reyes’.

10 Envío 22, bk. A, f0. 185. According to this account the king owed the ‘decretados’ in Flanders 2,217,000 ducats in August 1578. Tomás Miller, the agent of the Fugger, spoke of an original estimate of this debt which quoted the figure of 1,916,000 ducats. The Flemish merchants based their case for special treatment on the fact that they had advanced money to the Spanish governor when the latter already knew that the decree had been decided upon or even published. Envío 22, bk. B, fo. 168r-169r, 17 July 1577: ‘y por tenerse los de flandes por mas previlegiados [sic] q los demas assi por no hauer sido comprehendidos en el decreto como por q sus deudas fueron contrahidas despues que el Comor Mayor (= Requesens) sabia q el decreto estaua aca acordado o q estaua publicado’.

11 Envío 31 (n. fol.), 20 Jan. 1576, Dávalos to M.V.

12 Dávalos de Sotomayor had served for a number of years in the exchequer in Naples. He returned to Spain in 1575 with the intention of retiring. But he had so many children all unprovided for that he had been compelled to stay in service. He died on 27 Dec. 1576.

13 Francisco Gutiérrez had started life as a ‘procurador general’ of the order of Santiago. He had then entered the contaduría de cuentas (in 1560?) while retaining his first post. A protégé of Cardinal Espinosa, F.G.C. had been appointed to the council of finance in 1569. At the end of that year he was sent to Granada where he stayed for two years. For details of the career drawn up by F.G.C. himself see envío 72, fo. 281 r/v, 31 Jan. 1575.

14 On his own saying, Francisco Bravo had been an influence in royal circles before 1575. He maintained that he had advised the king to review all the ‘asientos’ (contracts) concluded since 1560. During the period between the decree and the settlement Bravo and his son had worked on the merchants’ accounts, his special responsibility being those of Lorenzo Spinola. As an auditor he, too, was insistent that no special favour be shown to any of the ‘asentistas’ and this applied with equal force to the Fugger and Lorenzo Spinola. Francisco Bravo died the day after his fellow auditor, Dávalos de Sotomayor, on 28 Dec. 1576-a serious loss to the crown.

15 IVDJ envío 76, fo. 614. The recommended pairing was Dávalos de Sotomayor and Francisco Bravo, Francisco Gutiérrez de Cuéllar and (Juan López de) Cubizarreta, Francisco de Salablanca and Juan Bernardo.

16 Twelve per cent had been chosen to allow 10% for legal interest and 2% for a brokerage fee. This is the explanation to be found in B(ritish) L(ibrary) Harleian 3315, fos. 182V-185V, ‘Relacion de las contrataciones y asientos entre Su Md y Genoveses y del decreto que Su Md dio sobre ellos el ano de 1575’.

17 A(rchivo) G(eneral) de S(imancas), estado I516, fo. 177, ‘Loque se puede scriuir desta corte a los 23 de dize 1575 es…’ Also envío 76, fo. 567 r/v, 31 Jan. 1576; Ibid., fo. 587r 2 Feb. 1576.

18 Envío 76, f0. ? Jan. 1576. It was suggested that the king should order the Asistente of Seville and the corregidores of Burgos and Medina del Campo to make inquiries amongst the merchant community to find out who would be capable of determining a ‘just’ price.

19 Envío 22, bk. B, fos. 545–7.

20 Envío 31, n. f0., 22 Jan. 1576, Baltasar de Molina to king. He claimed that the interest rate had shot up after 1570.

21 As note 18.

22 Garnica was the acknowledged expert in the matter of resguardos. The crown estimated (envío 22, bk. B, fos. 444–8, 23 June 1577) that interest payments on the resguardos amounted to 161,000,000 mrs (= 429,333 ducats) while the asentistas gave a lower figure of 150 million mrs ( = 400,000 ducats). But the bonds of Gerónimo de Salamanca had not been entered into (either of) the calculations; and there was the permanent possibility of error.

23 IVDJ envío 31, n. fo., 10 Jan. 1576, Dávalos de Sotomayor: ‘…los mas destos mercaderes no quieren asistir a sus quentas…’ And envío 76, fo. 642r, n.d., the commission for ‘the accounts of the decree’ complained of having made little progress because the parties had been unwilling to present themselves.

24 AGS Contadurías Generales 309, ‘El dho decreto q se dio en XV de julio de DLXXVI con declaracion de algos capos del dho decreto’.

25 Cf. envío 31, n. fo., 22 Oct. 1576: Dávalos de Sotomayor asserted that Lorenzo Spinola owed the treasury a million ducats and more, while the latter vehemently claimed that the exact reverse was the case (ut infra). On another occasion the Genoese ambassador maintained that the identity of different bankers had been confused (envío 22, bk. B, fo. 389 r/v: ‘…entre los otros errores q esta confuso la qts de Paulo de Grimaldo con la de Nicolao Grimaldo de Salerno’).

26 Envío 76, fos. 625r-626r, 12 Dec. 1576: ‘Relacion de los pareceres de la Junta de Ptes en lo del Mo Gnral.’

27 Ibid., for both views.

28 I follow the account of Baltasar de Molina, envío 22, bk. B, fos. 277–9, Nov. 1576.

29 IVDJ envío 22, bk. B, fos. 219V-228V, 7 May 1577; Ibid. fos. 127–33, 29July 1577.

30 Envío 22, bk. B, fo. 51, 13 Aug. 1577, or fos. 230r-235r.

31 Ibid. fos. 61r-63v, 16 Aug. 1577 for this inspired piece of economic thought.

32 Ibid. fos. 65r-66r, 24 Sept. 1577: ‘…la facultad del pagar en la misma moneda porque los q han de hazer las provisiones anteponen esta declaracion al encargarse dellas’ or Ibid. fos. 92r-97r, 12 Aug. 1577: ‘…y q se tratasse con ellos q a la rata de lo q se les pagare se obliguen al socorro de la rata de los 5 Ues (millones) y q se facilite lo del pagar ellos lo q deuen en la misma moneda’.

33 Cf. envío 22, bk. B, fo. 257 r/v, 19 July 1577, Gian Battista Lercaro to king: ‘II concierto conviene al suo Reale servitio per tutti li capi, che trattar si possuno… (the creditors of the crown had entrusted their fortunes to the king) hauendo fidato i loro denari a costoro per che pareua loro fidarle al credito di vmts il qual credito in piu necessita ha saluato piu volte li Regni, et la persona di vmts et delli Reali suoi antecessori quando si sono trouati fuori di questi suoi Regni di Spagna’.

34 Ibid., fos. 277r-279v, Nov. 1576, Baltasar de Molina to king.

35 BL Harleian 3315, fos. 160r-185v: ‘Memorial muy en particular que los Ginoveses dieron al Rey de Espana alegando de su derecho sobre el decreto que Su Md dio el ano de 1575 contra ellos’.

36 The case for the bankers can be found presented in the preceding citation and Ibid.fos. I51r-159v, ‘Memorial que los Ginoveses y otras psonas dieron al Rey de EspanaRespondiendo al decreto y orden q Su Md dio el ano de 1575 contra ellos/sobre los agravios que la hacienda Real hauia recibido en las contrataciones y asientos hechos con ellos’.

37 IVDJ envío 22, bk. B, fos. 371–3, 22 Dec. 1575.

38 Ibid. fos. 374–6, 30 Oct. 1575.

39 Ibid.: ‘… como vmd a visto por las relaciones q e dado vmd me deue un millon de ducados poco mas o menos por los asientos’.

40 As note 37:’… pues la viva ley es la palabra de vmd y me la dio de que esto (= the exemption of Spinola's loans from the terms of the decree) se haria assi comigo por mis muchos servicios hechos’.

41 IVDJ envío 31, n. fo., 12 Aug. 1576: Dávalos de Sotomayor spoke of the crown's debts to the Fugger and Spinola as being in the region of two million apiece. ‘ Su M’ tiene obligacion sin podella escusar…de pagar a los fucares que no entran en el decreto [sic] poco menos que dos/y otro tanto a Lorenco Espindola [sic]/y todo esto para luego y anadir sobre ellos casi otros dos millones desta deubda [sic] de los de flandes terrible cosa es.’

42 Envío 22, bk. B, fos. 340–1, 20 July 1576.

43 IVDJ envío 42, n. fo., 1592(?), Auñón to K. His two enemies (enemigos capitales) were Hernán López de Campo and Pero Luis de Torregrosa.

44 IVDJ envío 69, fo. 315, 21 Feb. 1580, Antonio de Padilla to king.

45 Ibid. fo. 340, 12 March 1580, Antonio de Padilla to king. Philip's comment is of significance: ‘No ay duda sino q a lo menos dixo Juo de Ovando de mi parte a Juo Fernandez q se tendria quenta con el en lo del decreto y con esto parece q segun lo q aqui decis q Fray Dio de Chaves se allana a q la fuerza deste negocio consistia en esto/y siendo esto asi como lo creo bien se puede concluir con Juo Fernandez en la forma q ultimamente esta apuntado/y decirvos asi en la junta de psidentes pa q se concluya y hagan los despachos necesarios dandole los DC U dos en seis anos’. In another letter Antonio de Padilla, the President of the Orders, stated that the crown owed Juan Fernández 1,764,000 ducats (fo. 242, 12 July 1578).

46 IVDJ envío 22, bk. B, fos. 277r-279V, Nov. 1576, Baltasar de Molina for what follows.

47 Ibid. fos. 536–7: ‘…los 150 Uos los quales vienen a consumir quasi los 200 Uos de flandes por ser la una moneda differente de la otra y los cambios se han de contar como corrieren las placas. See also Ibid. fo. 570 Ron de consultas de Juo Vazq de XII de Juno 1577: ‘…el asiento que Escovedo tomo en flandes con los Malvendas para sacar los espanoles de alli.’

48 Ibid. fos. 558V-562V. J.F.E. blamed the mishandling of the asiento on the ignorance of Juan de Escovedo.

49 Envío 31, n. fo., April 1577: ‘… y en las provisiones de Italia para Flandes viene a ser maior la perdida porque despues de auer fecho costas imponer el dinero en Italia se cambia de alli para flandes con el mesmo dano de veinte por ciento y mas a causa de auerse variado la moneda de flandes.’

50 Attempts were made to secure funds on all the likely markets. Auñón spoke of sending money to Flanders from Lisbon. The transaction, if it were to take place, would have to be concluded before the Indies fleet weighed anchor for the Far East (envío 22, bk. B, fos. 271–2, marqués of Auñón to king).

51 Envío 31, n. fo., 22 Jan. 1576, B de Molina to king; and Ibid., n. fo., April 1577: ‘“Adverta para q no se hagan asientos”…y si para solo este effecto se viessen las cuentas del duque de Alba se conoscera q en las provisiones no corro tanto dano…’

52 As first citation in n. 51.

53 BL. Add. MS 28, 366, fos. 108–11, 12 Feb. 1577 for a copy.

54 IVDJ envío 22, bk. B, fo. 570, 12 June 1577, Juan Fernández de Espinosa.

55 Ibid. fos. 230r-235r, fos. 208r-213r, 15 July 1577, fos. 127–33, 29 July 1577.

56 Envío 31, n. fo., 7 March 1578, Francisco de Salablanca to M.V. In 1578 J.F.E. claimed that the king owed him 521,508,918 mrs (= 1,390,690 ducats) while his own debts to the king stood at 353,639,364 mrs (= 943,038 ducats). As to how he proposed the debt should be settled, envío 62, fo. 547, March 1580. The case continued well into the eighties. Hernando de Vega, when president of finance, pleaded, as did others, for J.F.E.'s services to be recognized (envío 24, fo. 203, 16 March 1580).

57 Envío 22, bk. B, fos. 545r-547v.

58 Ibid. fos. 32r-35r, 24 Aug. 1577; and envío 76, fo. 642r, F.G.G. to king.

59 On the general point envío 22, bk. B, fos. 620r-623r:‘…despuesq se publico (sc the decree) de tal manera ha faltado el credito de todos los tratantes y quasi del todo ha cessado y esta perdido el trato de todos los negocios que ha mas de dos anos que no se haze ni ay orden para q se puede hauer feria alguna ni de un lugar a otro assi destos Reynos como de fuera dellos se puede proveer partida grande ni pequena de dinero sino se embia de contado con mucha costa y riesgo.’

60 As n. 59.

61 AGS Contadurias Generales, N0 309.

62 Cf. envío 22, bk. B, fos. 602r-603r, 4 May 1577, Busto de Villegas.

63 Ibid. fos. 30r-31r, 1 Sept. 1577: ‘Sobre las nuevas formas para el M0 Gnral.’

64 The merchants’ delegates concluded the accord of 27 March 1577 on behalf of Nicolao de Grimaldo, the marqués de Auñón (Melchor de Herrera), Pablo de Grimaldo (brother of Nicolao), Domingo and Simón Lercaro, Carlo Espinosa, Vicenzio and Lorenzo Gentiles [sic], Esteuan and Gerónimo Grillo (brothers), Nicolao Intiriano, Nicolao and Vizconte Catano (brothers), Juan de Curiel de la Torre, Baltasar Catano, Bernaue Centurión, Esteuan Lomelín, Lucian Centurión, Agustín Espinola [sic], Doña María Gentil on behalf of her late husband, Costantín [sic] Gentil, and her son Julio Lomelín.

65 Envío 22, bk. B, fos. 363r-364r, 13 March 1577, G. to king.

66 Ibid. fos. 533r-552r, 13 June 1577, and fos. 455r-457r, 3 July 1577.

67 AGS Contadurías Generates, N0 309.

68 For general studies of the city see Grendi, Edoardo, Introduzione alia storia modema delta Repubblica di Genova (Genoa, 1973)Google Scholar and (a wider treatment), Benvenuti, Gino, Storia della Repubblica di Genova (Milan, 1977)Google Scholar. For the particular problems of the republic in the 1570s, including the attempted revolution, see Doria, Giorgio, ‘Un quadriennio critico, 1575–1578. Contrasti e nuovi orientamenti nella società genovese nel quadro della crisi finanziaria spagnola’, in Bruno Dini el al. (eds.), Fatti e idee di storia economica nei secoli XII-XX. Studi dedicati a Franco Borlandi (Bologna, 1977).Google Scholar

69 Dickson, P. G. M., The financial revolution in England. A study in the development of public credit, 1688–1756 (London, 1967).Google Scholar

70 Lüthy, H., La Banque Protestante en France de la révocation de l'edit de Nantes à la Révolution, 2 vols. (Paris, 1971 reprint).Google Scholar

71 On the role of the fairs see Braudel, F., Afterthoughts on material civilisation and capitalism (Baltimore, 1977), esp. chap. 2.Google Scholar The theme has received fuller treatment from the same hand in Braudel, F., Civilisation matérielle, économic et capitalisme XVe-XVIIIe siècles, 3 vols. (Paris, 1979), esp. vol. 2, Les jeux de l'échange.Google Scholar

72 Oller, George Nadal, La Población española, siglos XVI-XX (Barcelona, 1966, reprinted 1973)Google Scholar; Bennassar, B., Valladolid au siècle d'or (Paris/The Hague, 1967)Google Scholar. Some recent Spanish works on the subject have been discussed in my review article ‘The Golden Age of Spain: new work on an old theme’, Historical Journal, XXIV, 3 (1981).Google Scholar

73 On 22 Feb. 1575 the Cortes of Castille voted an additional 2 1/2 million ducats to the crown by increasing the (composition of) the sales tax. Eventually the sum had to be reduced to 1 1\2 million ducats (Actas de las Cortes de Castilla, [Madrid, 1861–1915] vol. v, tomo adicional, p. 211). The dislocation caused by the size and the speed of the tax vote of 1575 (and subsequent years) is well brought out in Perez, J. I. Fortea, Córdoba en el sigh XVI: Las bases demográficas y económicas de una expansión urbana (Córdoba, 1981), esp. pp. 414–44Google Scholar, ‘La presión impositiva, factor de contractión económical la crisis de los encabezamientos cordobeses.’

74 Cf. Martín, Felipe Ruiz, ‘Gastos ocasionados por el sostenimiento de la guerra: repercusiones económicas que se experimentaron en España’, in Domanda e consumi. Livele e strutture (nei secoli XIII-XVIIl)Google Scholar, della, Atti ‘Sesta Settimanadi Studio’, Istituto Internazionale di Storia Economica, F. Datini: Prato (Firenze, 1978)Google Scholar. I am grateful to J. F. de la Peña for the reference and for a photocopy of the article.