Charles - Financial and Economic Developments
- Created by: emmamitchell14
- Created on: 02-06-16 15:23
Overview
'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
Role of Castile as Financial Centre
Trade
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)
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
Church
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
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'
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'
Economic Problems
Revenue
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%+
Debt
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%
Economic Problems cont
Taxation
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
Inflation
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
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'
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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