But if the reform of morals had to be postponed to a more propitious time, the reform of the finances could not afford to wait. The financial situation confronting Olivares resolved itself essentially into two separate but related problems. The Monarchy had run into trouble in the reign of Philip III primarily because of the exhaustion of Castile, which shouldered the principal burden of the Crown's finances. The exhaustion of Castile, in turn, was principally attributed to the weight of taxation that rested upon it, and bore specially hard on its most productive citizens. Therefore the aim of Olivares's financial policies must first of all be to redistribute more equitably the incidence of Castilian taxation, and then to induce the other provinces of the Monarchy to come to Castile's help, so that the disproportionate burden borne by Castile could itself be lightened.
At the heart of Olivares's plans for Castile was a project for establishing a national banking system – a scheme proposed to Philip II by a Fleming, Peter van Oudegherste as early as 1576, and then intermittently considered during the reign of Philip III. A chain of banks would, it was believed, assist the Crown to reduce its debts, relieve it of dependence on the foreign asentistas, and, by placing a ceiling of 5 per cent on returns, drive much of the money invested in loan funds into direct investments in a search for higher rewards. This scheme was outlined in a letter sent in October 1622 to the towns represented in the Castilian Cortes, and was coupled with another proposal dear to Olivares's heart – the abolition of the millones. Instead of this tax on essential articles of consumption, which hit the poor hardest, and was anyhow increasingly unremunerative and difficult to collect, Olivares proposed that the 15,000 towns and villages of Castile should contribute, in proportion to their size, to the upkeep of an army of 30,000 men.
These projects ran into strong opposition in the Castilian Cortes. The erarios, or banks, were generally mistrusted – not without reason – and although there was a general desire to see the last of the millones, it proved impossible to agree on an alternative form of taxation. As a result, the banking scheme was abandoned in 1626, and the irreplaceable millones survived – to be extended to other commodities, and collected at the rate of not 2,000,000 but 4,000,000 ducats a year. Although Olivares had not yet given up all hope, and indeed made another attempt to abolish the millones in 1631, it was clear that powerful vested interests stood in the way of the radical fiscal reforms which he longed to introduce.
The plans for reforms in Castile, however, were only one part of an infinitely more ambitious reform programme for the entire Spanish Monarchy. During recent years, financial ministers and arbitristas alike had insisted that it was the duty of the other parts of the Monarchy to come to the relief of an exhausted Castile. But it was difficult to see how this could be achieved so long as the existing constitutional structure of the Monarchy was preserved. The privileges of such kingdoms as Aragon and Valencia were so wide, and their Cortes so powerful, that the chances of introducing a regular system of taxation on a scale approaching that of Castile seemed remote. Fiscal necessity, therefore, now came to reinforce the traditional Castilian nationalist arguments that provincial laws and liberties should be abolished, and the constitutional and fiscal organization of other parts of the Monarchy be brought into conformity with that of Castile.
At a time when statesmen all over Europe were attempting to consolidate their hold over their peoples and exploit national resources more effectively in order to strengthen the power of the State, it was natural that Olivares should see in the ‘Castilianization’ of the Spanish Monarchy the solution to many of his problems. If uniform laws were introduced throughout the Monarchy, the ‘separation’ between the various kingdoms, of which he was always complaining, would disappear, and it would be possible to mobilize effectively the resources of an empire which was potentially the most powerful in the world, but which at present was gravely weakened by its total lack of unity. Olivares thus became a partisan of the traditional ‘Alba’ approach to the question of imperial organization. But at the same time he seems to have had a real understanding of the grievances of the non-Castilian kingdoms, which protested at having to pay heavier taxes to maintain an empire of benefit solely to Castile. It is significant that one of his closest friends and advisers was a political theorist called Álamos de Barrientos, who had also been a friend and disciple of Antonio Pérez. It was, perhaps, under the influence of Álamos and of the political theories of the Pérez school that what otherwise might have been no more than a policy of ‘Castilianization’ at its most crude, was modified in Olivares's thought into a more generous and liberal programme. In a famous memorandum which he presented to Philip IV at the end of 1624, he admitted the many grievances of kingdoms which scarcely ever saw their King and which felt themselves excluded from offices in the empire and in the royal households. He therefore proposed that, while the laws of the various kingdoms should be gradually reduced to conformity with those of Castile, the character of the Monarchy as a whole should be made less exclusively Castilian, by means of more frequent royal visits to the various provinces, and by the employment of more Aragonese, Portuguese or Italians in important offices. If Olivares's Monarchy was therefore to consist of ‘multa regna, sed una lex’, it would also be a truly universal Monarchy, in which the many walls of partition between the ‘multa regna’ would be broken down, while their nationals were employed – irrespective of province of origin – in a genuine co-operative venture, of benefit to all.
Olivares himself realized that this grandiose vision of a unified and integrated Spanish Monarchy not could be achieved in a day, but he saw that it was important to ‘familiarize’ the various provinces with each other as quickly as possible, and to accustom them to the idea of thinking collectively instead of in purely individual terms. This meant, in effect, a reverse of the whole approach to the Monarchy that had been adopted by Charles V and Philip II, and had survived in default of any more positive vision. It seemed to Olivares that the process might start with the establishment of some form of military co-operation between the different provinces. This would not only have the merit of inducing the provinces to think of others beside themselves, but would also help to solve the problems of money and manpower which were at present threatening to overwhelm Castile. The long secret memorandum to the King of 1624 was therefore followed by a shorter memorandum, intended for publication, outlining a scheme to be known as the ‘Union of Arms’. The Union was to be achieved by the creation of a common reserve of 140,000 men to be supplied and maintained by all the States of the Monarchy in fixed proportions:
Paid men
Catalonia
16,000
Aragon
10,000
Valencia
6,000
Castile and the Indies
44,000
Portugal
16,000
Naples
16,000
Sicily
6,000
Milan
8,000
Flanders
12,000
Mediterranean and Atlantic islands
6,000
Any kingdom of the Monarchy which was attacked by the enemy would be immediately assisted by the seventh part of this reserve, or 20,000 infantry and 4,000 cavalry.
There were obvious practical difficulties in the way of this ingenious scheme. The States of the Crown of Aragon, for instance, had extremely rigid laws regulating the recruitment of troops and their use beyond the frontiers. It would not be easy to induce them to set aside these laws for the sake of helping a province like Milan, which was always liable to sudden attack. But the Conde Duque (as Olivares came to be known after being created Duque de Sanlúcar la Mayor in 1625) refused to be daunted. Determined to press forward with a scheme which offered real hope of relief for Castile, he and the king set out at the end of 1625 on a visit to the three States of the Crown of Aragon, whose Cortes were to be presented with the Union of Arms.
The Cortes of Aragon, Valencia and
Catalonia, held during the spring months of 1626, proved to be even more unenthusiastic about the Union of Arms than the Conde Duque had feared. It was twenty years or more since the last Cortes had been held, and in the intervening years grievances had accumulated. Both Valencians and Aragonese objected to the novelty of the subsidy demanded by the King, and were adamant in their refusal to conscript men for foreign service. But the most recalcitrant of the Cortes were those of Catalonia, opened by the King at Barcelona on 28 March. The Catalans at this moment were more than usually touchy and disgruntled. Since the visit of Philip III in 1599 they had suffered a number of experiences which had made them particularly sensitive about the intentions of Castile. During the first decade of the century, the viceroys had shown themselves increasingly incapable of dealing with the bandits who had long troubled the peace of the mountainous frontier region, and who had recently taken to committing daring raids on the outskirts of Barcelona itself. The Government of the Duke of Lerma had shown an almost total lack of interest in the problem of preserving public order in the Principality – so much so, that during the feeble vice-royalty of the Marquis of Almazán from 1611 to 1615, it had seemed for a moment as if Catalonia would succumb to total anarchy. The situation was saved by the arrival in 1616 of a vigorous new viceroy, the Duke of Alburquerque. But Alburquerque and his successor, the Duke of Alcalá, only restored order by contravening the Catalan constitutions. Banditry in its worst form had been suppressed, but national susceptibilities had been gravely hurt in the process. When Alcalá finally left office in 1622 he had alienated every section of the community including the towns – the natural allies of the viceregal administration in its struggle against aristocratic disorder – by his contemptuous attitude to everything Catalan, and his high-handed treatment of the Principality's laws and privileges.
The Conde Duque's schemes therefore seemed to the Catalans to mark a further stage in a long-standing Castilian conspiracy to abolish their liberties, and their behaviour became increasingly uncooperative as the Cortes continued. At a moment when a trade recession in the Mediterranean had sapped the credit and confidence of their merchants, they were not to be tempted by Olivares's plans for the establishment of trading companies, including a Levant Company with its headquarters at Barcelona; and the Conde Duque's pleas for a generous co-operation in the military ventures of the Monarchy fell on deaf ears. The Catalans' prime concern was to secure redress for past grievances and security for the future, and rumours that Olivares's ultimate aim was the establishment of a Monarchy with un rey, una ley, y una moneda – one king, one law, one coinage – merely stiffened their determination to resist. Moreover, Olivares was in too much of a hurry, and made the mistake of trying to force the pace in an assembly whose procedural methods made it an infinitely slow-moving body at the best of times. As a result, one obstruction followed another, until the Conde Duque decided that further attempts to extract a subsidy were for the moment doomed to failure. On 4 May, before the Catalans realized what was happening, the King and his party were gone from Barcelona, leaving the Cortes still in session.
On arriving back in Madrid, Olivares professed himself pleased with the result of the King's visit to the Crown of Aragon. He had, it is true, obtained a subsidy of 1,080,000 ducats from the Valencians, which the King accepted as sufficient to maintain 1,000 infantrymen for fifteen years. The Aragonese, for their part, had voted double this sum. This meant that, for the first time since the end of Charles V's reign, Aragon and Valencia would be making a regular annual contribution to the Crown's finances. On the other hand, both States had stubbornly refused to allow the conscription of troops for foreign service, so that the Conde Duque's plans for securing military co-operation between the provinces had been frustrated; and Catalonia, the wealthiest of the three States, had voted neither men nor money.
Undeterred by these setbacks, the Conde Duque published in Castile on 24 July 1626 a decree proclaiming the official inauguration of the Union of Arms. This explained that the King had undertaken his arduous journey to the Crown of Aragon in order to secure assistance for Castile, and that, as an earnest of the many benefits to come, the Crown itself would pay one third of Castile's contribution out of its own revenues. On 8 May, two months before the publication of this decree, the Government had suspended all further minting of vellón coins for Castile – a somewhat belated action, in view of the fact that, in a country flooded with vellón coins, the premium on silverver in terms of vellón had reached nearly 50 per cent. These two measures – the inauguration of the Union of Arms and the suspension of vellón minting – seemed to symbolize between them the completion of the first stage of the Conde Duque's reform programme, and to hold out hope of relief for Castile and the restoration of the Castilian economy. They were followed on 31 January 1627, twenty years after the Duke of Lerma's bankruptcy, by a suspension of all payments to the bankers. Olivares hoped by this device to end the Crown's expensive dependence on a small group of Italian financiers a move for which the times seemed propitious, since he had found a group of Portuguese businessmen both able and willing to undertake some of the Crown's asientos at lower rates of interest. With these measures successfully achieved, the King was able to announce to the Council of State in 1627 a long list of successes obtained by his ministry during the first six years of the reign: victories abroad, reforms at home, and a dramatic change for the better in the Monarchy's fortunes. If many of the achievements were illusory, and some of Olivares's most cherished projects had been frustrated, this was not revealed to the world. At least in the Conde Duque's eyes, the reform programme was slowly gathering momentum, and under his leadership the shape of the Monarchy would eventually be transformed.
2. THE STRAIN OF WAR
In spite of the vaunted success of the new régime, the fact remained that unless really effective measures could be introduced to relieve Castile, the Monarchy as a whole would be confronted with disaster. The Union of Arms in its early stages was not likely to make any very significant contribution to the problem of imperial defence; and although, as a result of remedial measures in America, the treasure fleets were again bringing some 1,500,000 ducats a year, the principal cost of the Crown's expensive policies was still being borne by Castile. In 1627–8 the condition of the Castilian economy suddenly deteriorated. The country found itself faced with a startling rise of prices in vellón currency, and the Government was assailed with complaints about the high cost of living. It is probable that the inflation of these years was caused primarily by bad harvests and by the scarcity of foreign goods arising from the partial closing of the frontiers since 1624; but it was exacerbated by the recent monetary policies of the Crown, which between 1621 and 1626 alone had minted nearly 20,000,000 ducats' worth of vellón coins. Olivares had hoped to deal with the problem of inflation by relatively painless methods. But drastic action became essential after the failure of an attempt at price-fixing and of an ingenious scheme for the withdrawal of the vellón coins in circulation, and on 7 August 1628 the Crown reduced the tale of vellón by 50 per cent.
The great deflation of 1628 brought heavy losses to private individuals, but instant relief to the royal treasury. Taken in conjunction with the suspension of payments to the asentistas in the previous year, it might have served as the starting-point for a sounder financial and economic policy, aimed at clearing the Crown of some of its debts and reducing its annual budgets. In terms of the international situation, the moment was particularly favourable. Hostilities with England had petered out since the failure of the ludicrous English attack on Cadiz in 1625; Habsburg arms were victorious in Germany, and Richelieu was fully occupied with the Huguenots in France. The years 1627–8 probably offered the last real chance for a programme of retrenchment and reform in the Spanish Monarchy.
The chance was tragically missed as the result of a series of unfortunate events in Italy. In December 1627 the Duke of Mantua died. The candidate with the best claim to succeed him was a Frenchman, the Duke of Nev
ers. A French-controlled Mantua might endanger Spain's hold over north Italy and Milan, and the Spanish governor of Milan, Don Gonzalo de Córdoba, sent his troops into Montferrat in March 1628. Without publicly committing himself, Olivares gave the Governor tacit encouragement by sending him supplies; and, almost before he realized what was happening, he found himself engaged in war with the French in Italy.
The Mantuan War of 1628–31 seems in retrospect the gravest blunder made by Olivares in the field of foreign policy. It re-aroused all the old European fears of Spanish aggression, and brought French troops across the Alps in support of their candidate's claim. It failed in its object of keeping a Frenchman off the ducal throne of Mantua, and made it virtually certain that sooner or later France and Spain would again be involved in open war. From this moment, the chances of European peace were sensibly diminished. Although France did not declare war on Spain until 1635, the years between 1628 and 1635 were passed under the lengthening shadow of Franco-Spanish conflict as Richelieu consolidated his system of European alliances and laid his plans to free France from the long-standing threat of Habsburg encirclement.
The Conde Duque therefore found himself committed to heavy expenditure in Italy, and to further large subsidies to the Emperor, who was shortly to see all his victories of the early 1620s rendered nugatory by the advance of the Swedes. The immediate resources on which Spain could draw for the struggle in Italy and Germany were now slender. The Council of Finance reported in August 1628 that it was 2,000,000 ducats short on the year's provisions, and in the next month disaster came with the capture by Piet Heyn of the Nueva España treasure fleet – the first time that the American silver had fallen into enemy hands. These emergencies made it vital to discover and exploit new sources of revenue, and to mobilize the Monarchy more effectively for war.
Imperial Spain 1469-1716 Page 39