Charles - Financial and Economic Developments

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'Misery is so universal' - Philip

Isabella asked Charles to return to Spain to help resolve issues

Charles response largely negative despite fears for ordinary people. Charles' reputation and country's stability

More anxious to deal with religous and political issues - rapidly overwhelming Germany at this point

1523 Charles: debts 'amount to far more than I recieve in revenue'

Cortes rarely rejected a request for finance

Needed 1 million ducats each year to break even

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Role of Castile as Financial Centre


Exclusive right of C to trade with America - relaxed 1520s and reasserted next decade

C and port of Seville held monopoly of trade with Americas until C17th - didnt want full competition

Over the years, private indivduals gained the most precious metal

Crown could collext 20% tax (royal fifth) on all precious metals mined in America

Silver also mined in EU - in decline after 1520

Contraband and taxes on private bullion raised around 3.5 million ducats

C gained most of wealth from America (only reached height post 1530)

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Role of Castile as Financial Centre cont

Tax (C&A)

C alcabala still most lucrative tax. Collected without reference to Cortes. 1524 fixed sum (value eroded over time)

1523 Cortes of Valladolid special tax of 400,000 ducats paid over 3 years directly by tax payers. Servicios yielded 130,000 ducats 1524

1/10 population classed as noble rank - limited obligations to pay tax

1550s raising 400,000 ducats each year

State of A (constitutional) meant limited revenue as well as the weak economy


Clergy expected to pay normal taxes as well as some extraordinary/additional taxes

Taxes paid by Church include: Tercias Reales (2/9), crizada (regularly paid after 1508), maestrazgos (directly for HRE campaign), subsidio (irregular tax)

Pope agreed property and income of military orders should go to the crown

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Role of Castile as Financial Centre cont

Kamen: Spain (mainly C) paid debts of HRE. Debt never fully reduced as relied on noble loyalty (why exempt)

Ofiicals took bribes for favours. Offices sold to people who could afford them rather than skill

Certificates of nobility sold and rediced the number of tax payers overall

Possible that if Charles had stopped fighting war (mainly empire) could've been solvent

Historians argue: inability to balance books led to bakruptcy of Spain in 1557 (under Philip)

Kamen: 'the Spanish monarchy never shook off the lagacy of the debt bequeathed to it by the emperor'

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Council of Finance

Body set up 1522 to 1523 - oversee acocounts and recieve all state income

Cobos = first secretary

Daily meetings held - scrutiny over income and expenditure to inform financial decisions

Kept track of expenditure and credit transactions

Financial paperwork still often incomplete - amounts paid often passed directly to creditors

1/10 of royal expenses still went on Charles attempt to demonstrate his authority through 'show'

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Economic Problems


1523 all of the following years revenue had already been spent (remained throughout rest of reign)

1527 summoned the nobles and clergy to Cortes of Valladolid to provide funds. Refused

Populace lived on fixed incomes - couldnt afford more tax

Rise in prices of sometimes 100%+


Borrowing through juro became major source for Charles

Occured through war, upkeep of royal household

Money loaned mainly came indirectly from German bankers (Fuggers)

1520 to 1532 101 transactions took place with 5,379,053 ducats borrowed

Interest charges - rose from 17.6%

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Economic Problems cont


Several sources although not consistently reliable

Cortes chose carefully which projects they were prepared to support. A consistently refused to make grants while C generally cooperative

Charles asked 3 times for grants 1523-5

After Battle of Pavia (1525) agreed to 15-year moratorium (repayment of debt to the Castilian Cortes postponed) to deal with inflation effects


Sig issue throughout EU. Development linked to exploration voyages, discovery of America & growth of overseas empires

1513: 'today a pound of mutton costs as much as a whole sheep used to'

Still oppurtunities for entrepreneurs to make money & production of most goods continued

Fluctuations - Seville faced heavy competition as international port while Burgos & Barcelona stronger

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Economic Problems cont

Spanish influence

Bonney: 'total debts to foreign financiers roughly approximated the entire recipients from Spanish America during his reign'

Nadal: 2.8% overall price rise in Spain 1501 to 1562 (seemed astronmic to contemporaries)

Rose at different rates in different places - Andalucia 109% (1511-1559)

Elliott: rise in proces due to juros (credit bonds), increased spending by aristocracy, demand from a growing population for food and goods

Charles not successful in imposing more taxes on rich

Repayment of loans took approx 36% of income

Price Rise

Not a normal even in Spain or throughout EU. Contemporaries struggled with concept and how it happened. Azpilcueta: 'money is worth more when and where it is scarce than when it is abundant'

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Economic Problems cont

Poverty, Vagrancy and Emigration

The Hamilton Thesis: after 1530 20% less goods could be purchased for the dame amount of money spent before 1530s

Inflation meant wages only rose by 30-40% while prices risen by 100%

Gypsies accused of crimes

Emigration to NW became attractive proposition - 1/2 emigrants came from 30 Spanish cities

Las Casas: reported meeting individuals who wanted sons 'to grow up in a free world'

Tide of immigrants=negative effect on American natives - slave labourers, unwilling converts, victims of diseases brought by settlers

Led to creation of Council of Indies

1516 expedition reported impossible for Indians to live as free people

Distance between Spain and NW = administrative delays and misunderstandings, prejudice and slavery grew. Slavery only truly disappeared in 1560s

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