Imperial Spain 1469-1716

by John H. Elliott

  Of the secular taxes received by the Spanish Crown, those paid by the States of the Crown of Aragon constituted a relatively small share. In his eastern kingdoms the Emperor was entirely dependent for taxes on the subsidies voted by the individual Cortes of Catalonia, Aragon, and Valencia, which he made it a practice to summon together simultaneously to the town of Monzón. There were six sessions at Monzón during the course of the reign 1528, 1533, 1537, 1542, 1547, 1552 – and the contributions varied from session to session, but they seem to have produced for the Emperor a total of only some 500,000 ducats for each five-year period. The Cortes were so powerful, and the conditions they imposed so stringent, that the chances of increasing the contributions were slight, and the Crown of Aragon was paying at the end of the reign no more than it was paying in the early years, in spite of the fact that prices had more than doubled in the intervening period.

  The Emperor's failure to extract larger contributions from the Crown of Aragon inevitably made him increasingly dependent on the fiscal resources of Castile, where the Cortes were far less powerful, and where there were a number of important sources of revenue outside the Cortes's control. These extra-parliamentary taxes were known as the rentas ordinarias, and included customs dues (both external and internal), the almojarifazgo on the American trade, the servicio and montazgo on the transit of sheep and cattle, a tax on the Granada silk industry, and, above all, the famous alcabala. The alcabala, a tax on sales, had been collected by the Crown throughout the fifteenth century as a regular royal tax for which the consent of the realm was not required, although Isabella does seem to have had some scruples about its legality at the end of her life. As a tax, however, it was far too valuable to be allowed to pass under the control of the Cortes for the sale of a few conscientious scruples: at the beginning of the sixteenth century it probably accounted – together with the clerical tercias reales, with which it was traditionally associated – for some 80 per cent to 90 per cent of the Crown's entire income. But the Cortes did manage to obtain a veto over any increase in the tax assessments, and since it became a regular practice from 1515 for the towns to compound for the alcabala, paying a fixed sum known as the encabezamiento, the relative value of the alcabala decreased in proportion as prices rose. As a result, the Emperor was compelled to search for other sources of revenue to supplement a tax which, by the end of his reign, accounted for only a quarter of his income.

  The only way of raising additional direct taxes was to secure them by parliamentary grant. For this reason the Castilian Cortes, after an erratic and undistinguished career in the later years of Isabella, recovered some of their former importance under Charles, and were summoned at least fifteen times in the course of the reign. The traditional grant voted by the Cortes was known as the servicio, and was regarded as a temporary subsidy granted for emergency purposes, as the Cortes were careful to remind Charles when he attempted in 1518 to continue the practice instituted by Ferdinand in 1504 of asking for a servicio every three years, whether or not there were an emergency. The decline in the value of the alcabala made it essential, however, that the servicio should become a regular tax. In spite of the defeat of the Comuneros, the Cortes summoned in 1523 were still sufficiently vigorous and independent to put up a strong resistance, but the procuradores were finally compelled to give way and vote a servicio of 400,000 ducats payable in three years. In the Cortes of Toledo of 1525 Charles attempted to sweeten the pill of defeat and simultaneously to free himself from dependence on corrupt and inefficient tax-farmers, by borrowing from the Crown of Aragon the idea of a permanent Diputación and allowing the procuradores of the Castilian Cortes to set up a permanent commission on the Aragonese model to supervise the collection of the tax and to see that the Emperor fulfilled his promises to the Cortes; but nothing could conceal the fact that the power of the Cortes had been broken, and that ordinary and extraordinary servicios would in future form a regular and essential part of the royal revenues.

  As the yield of the alcabala declined, therefore, that of the servicios increased; and during the course of a reign in which prices doubled, the monetary yield of the servicio nearly quadrupled. While servicios of some 400,000 ducats a year helped to compensate the Emperor for the losses incurred through accepting the encabezamiento, and consequently meant no more for him than the partial replacement of one source of income by another, the effect of the change on Castilian society and the Castilian economy was very marked. The alcabala, defective as it was in many ways, had the great advantage of being a universal tax paid by members of every social order (except in certain circumstances, the clergy), in that it was a tax on everything bought and sold. The payment of the servicio, on the other hand, was customarily limited to one section of society, the pecheros or tax-payers, while all those enjoying privileges of nobility were exempt. Unfortunately, the figures for pecheros and hidalgos in the Castile of Charles V are extremely uncertain. One estimate suggests 781,582 pechero householders and 108,358 hidalgo householders, which would mean that some 13 per cent of the population was exempt from paying the servicios. In practice, the social distribution of the population varied enormously from province to province. In the province of León, for instance, there were as many hidalgos as pecheros; in Burgos, the hidalgos represented a quarter of the population; in Valladolid, an eighth; and the number of hidalgos decreased the further south one moved. As a result the incidence of the servicios was extremely unequal, both geographically and socially, but the general effect was everywhere to place the burden of taxation on the shoulders of those least able to bear it. Moreover, the procuradores who voted the tax were themselves drawn from the closed municipal oligarchies, most of whose members enjoyed, or were quick to acquire, privileges of hidalguía, and they consequently showed no great compunction in voting a tax which they themselves would not be called upon to pay.

  The increase in the rate of the servicios therefore had extremely important social effects, in that it tended to widen the gulf between the exempt rich and the overburdened poor, and at the same time induced wealthy merchants and businessmen to abandon their businesses and buy privileges of hidalguía in order to escape the burden of taxation. Anxious to introduce a fairer system which would also enable him to draw upon the wealth of the rich, the Emperor attempted in the Cortes of 1538 to establish a tax on foodstuffs, known as the sisa, which would yield 800,000 ducats a year and would be paid by everyone, irrespective of social condition. Besides the representatives of the eighteen towns, Charles had summoned to these Cortes twenty-five archbishops and bishops, and ninety-five members of the aristocracy to advise him on methods of dealing with the acute financial emergency. The aristocratic estate, whose support was indispensable for the imposition of the sisa, showed itself bitterly opposed to a tax which would remove its traditional privilege of exemption. The Count of Benavente spoke for a class which already felt itself slighted and imperilled by the Emperor's habit of appointing the low-born to high secular and ecclesiastical office, when he said: ‘The real need is to secure liberties and to recover those we have lost– not to give away those that we have.’ The strength of the opposition finally compelled the Emperor to capitulate, and the procuradores responded to his appeals for assistance by falling back on traditional money-raising methods and voting an extraordinary servicio.

  The outcome of the Cortes of 1538 was thus a victory for privilege – but a victory gained at what was finally to prove an immensely high price. The tax exemption of nobles and hidalgos had been preserved at the cost of destroying the last hopes of constitutionalism in Castile. After 1538 nobles and clergy were no longer summoned to meetings of the Castilian Cortes, where the representatives of the towns were compelled to fight single-handed a losing battle against the increasingly arbitrary demands of the Crown. While the Cortes continued to complain and remonstrate, they had sacrificed their last opportunity to make the grant of subsidies conditional on the redress of grievances, and in future the Crown was largely able to ignore complaints which
threatened to encroach on its prerogative. At the same time, the refusal of the Cortes either to increase the encabezamientos or to sanction the imposition of new taxes like the sisa, compelled the Crown to look for alternative sources of income over which the Cortes had no control, and this naturally reduced the influence of the Cortes in the one field where it still enjoyed some power – that of finance. If the Castilian Cortes was from now on to be little more than a rubber stamp, this was primarily because of the shortsightedness and egoism of nobles and towns in the Cortes of 1538, where they threw away their last chance of exercising a veto over Governmental policies.

  In spite of the Emperor's success in obtaining a regular tax from the Cortes in the form of the servicio, he only managed to raise the Government's revenues by 50 per cent during the course of his reign, whereas there was a 100 per cent rise in prices during the same period. With the population of Castile increasing, this meant in theory that the burden of taxation per head was decreasing, but in practice the re-distribution of taxes, as a result of the new importance of the servicio in relation to the alcabala, left the pechero in a worse position at the end of the reign than at the beginning. But this was not the only unfortunate result of the Emperor's fiscal policies. The relatively small increase in Castilian taxation under Charles V in fact gives a highly misleading impression of the economic consequences of his policies, since it diverts attention from one source of revenue that rose steeply throughout the reign – the revenue from loans.

  It proved from the first quite impossible to meet the Government's rapidly increasing expenses out of the ordinary sources of revenue. The Crown's net income for 1534, for example, was estimated at some 420,000 ducats, whereas its anticipated expenditure was 1,000,000; and expenses had an unpleasant way of increasing, while income, no less unpleasantly, usually turned out to be less than expected. In order to meet the deficit the Emperor was compelled to resort to a number of expedients, such as appropriating the remittances of American silver to private individuals – as happened on no less than nine occasions during his reign – and ‘compensating’ the victims with juros, or Government bonds. But confiscations of silver remittances, or the sale of privileges of nobility, were emergency measures which might fill a sudden immediate need, but which were quite inadequate for dealing with the problem of a permanent deficit.

  A regular system of deficit financing had somehow to be evolved, and this was achieved by the employment of bankers and by the sale of juros. Over a period of thirty-seven years, Charles V, whose normal annual revenue as King of Spain was about 1,000,000 ducats a year, rising to 1,500,000 after 1542, was able to borrow 39,000,000 ducats on the strength of the credit of Castile. Until the disastrous years after 1552, when the Emperor's credit was fatally shaken, a variety of bankers, German, Genoese, Flemish, and Spanish, were prepared to advance him money on the understanding that they would receive payment from the next treasure-fleet or from future Castilian tax revenues. This understanding took the form of a written contract, known as the asiento, which was prepared by the Council of Finance. The purpose of an asiento was to stipulate the times and places for the bankers to deposit their loans, together with the terms of interest and the methods of repayment. As the asiento system became regularized and the Emperor's needs increased, one after another of the Crown's sources of income came to be alienated to the bankers, and a larger and larger share of its annual revenues was diverted to debt financing.

  The sale of juros had similar consequences. Juros were originally annuities granted by the Crown out of State revenues as a special token of favour, but considerable numbers were sold by Ferdinand and Isabella to help finance the Granada war. Charles V continued and extended this practice on such a scale that it reached mammoth proportions. Juros, which yielded an interest of up to 7 per cent, depending upon the type of juro bought, were assigned in turn to each of the rentas ordinarias, with the result that by 1543 65 per cent of these ordinary revenues were devoted to the payment of annuities. Apart from the fact that the Crown was steadily mortgaging away its future revenues, so that annual estimates of income from ordinary sources lost all real meaning, the enormous increase in the number of juros during the reign of Charles V had incidental economic and social consequences of very great importance. Juros were bought by foreign and native bankers, by merchants and nobles, and by anyone with a little money to spare. The result was the growth of a powerful rentier class in Castile, investing its money not in trade or industry but in profitable Government bonds, and living contentedly on its annuities. If ever a suggestion was made, as it was in 1552, that the Government should undertake a gradual redemption of the juros, there was an immediate outcry from all the holders of juros, who saw no safe alternative for their investments except in the purchase of land, the price of which would rise sharply if the juros were redeemed.

  Charles V's fantastically expensive foreign policies and his dependence on credit to finance them therefore had disastrous consequences for Castile. The country's resources were mortgaged for an indefinite number of years ahead in order to meet the Emperor's expenses, a large proportion of which had been incurred outside Spain. His reliance on credit contributed sharply to the prevailing inflationary trends. Above all, the lack of provision in the Crown's financial policies - its inability to devise any coherent financial programme – meant that such resources as did exist were squandered, while the methods used to extract them might almost have been deliberately designed to stunt the economic growth of Castile. The reign of Charles V, in fact, saw three dangerous developments that were to be of incalculable importance for sixteenth- and seventeenth-century Spain. In the first place, it established the dominance of foreign bankers over the country's sources of wealth. Secondly, it determined that Castile would bear the main weight of the fiscal burden within Spain. In the third place, it ensured that within Castile the brunt of the burden was borne by those classes which were least capable of bearing it.

  5. THE LIQUIDATION OP CHARLES'S IMPERIALISM

  The Emperor's ministers in Spain were perfectly well aware of the grave effects of his policies on the country's life. During the 1530s the correspondence of the Empress had repeatedly urged Charles to return home for the good of the realm, and in the 1540s Cobos and Prince Philip did their best to impress upon Charles in their letters to him the terrible straits in which Castile now found itself. ‘With what they pay in other ordinary and extraordinary dues,’ wrote Philip to the Emperor in May 1545, ‘the common people, who have to pay these servicios, are reduced to such utter misery that many of them walk naked. And the misery is so universal that it is even greater among the vassals of nobles than it is among Your Majesty's vassals, for they are unable to pay their rents, lacking the wherewithal, and the prisons are full.’7

  Cobos's despairing letters urging peace on the Emperor and protesting at the impossibility of raising new funds make it clear that ultimately it was not the financial ministers but the Emperor himself who was to blame. Cobos seems to have managed the royal finances as well as was possible in the circumstances. He successfully put an end to the raiding of the treasury by the great Spanish nobles, and he and his colleagues did their best to prepare estimates of income and expenditure as a basis for future policy. But the Emperor recklessly disregarded their advice, spending money on a lavish scale wherever he went, and urgently demanding large new remittances which Cobos could only raise by loans, often at very unfavourable rates of interest. If Cobos failed as a financial minister, this was largely because the Emperor demanded the impossible of him.

  Cobos's constant financial preoccupations seem to have undermined his health, and he died in 1547, having driven himself hard to the end. His death removed one of the last of the Spanish ministers who had served Charles since the start of his reign and had helped to prepare Prince Philip to take up his inheritance. Cardinal Tavera had died in 1545; Charles's confessor Garcia de Loaisa, Archbishop of Seville, in 1546, and Juan de Zúñiga, Philip's tutor and personal adviser, in the s
ame year. The years 1545–7 thus saw the passing of a generation of ministers, and the emancipation of Philip from his tutelage. He had already married in 1543 his cousin, the Infanta Maria of Portugal, who died two years later in giving birth to a son, Don Carlos. In 1548, a widower of twenty-one, this prematurely aged young man was summoned by his father to join him in Brussels, leaving his sister Maria as regent in his place. The experience he had gained in the government of Spain was to be supplemented for the first time by some knowledge of the outside world.

  Philip's journey to the Netherlands was intended to acquaint him with his Flemish subjects, but it was also to prove the first step in the gradual process by which the ageing Emperor divested himself of his crushing inheritance. Any hopes that Charles may still have entertained of placing Philip on the Imperial throne were to founder on the intransigence of his brother Ferdinand, who – together with his son Maximilian – was determined that both the Austrian lands of the Habsburgs and the Imperial title should remain in his own branch of the family. But the course of events in Germany, as much as Habsburg family squabbles, made an eventual division of Charles's inheritance unavoidable. In 1547 Charles won his great victory over the German Protestants at the battle of Mühlberg, and it seemed that Germany at last lay prostrate before him. But the very completeness of the Emperor's victory aroused deep anxiety among those German princes, like Maurice of Saxony, who had supported him at Mühhlberg, and who now feared a consolidation of Imperial power in Germany at their own expense. In March 1552 Maurice broke with the Emperor and marched with his troops on Innsbruck, where Charles and Ferdinand were engaged in their consultations on the ultimate fate of the Empire. As Maurice entered the city by one gate Charles fled from it by another. Carried in a litter, and accompanied by only a small group of retainers, the ailing and gout-ridden Emperor continued his flight, over the Brenner, to reach safety in the Carinthian town of Villach. His German policy had collapsed in ruins about him, and heresy and rebellion had prevailed.