Lending to the Borrower from Hell: Debt, Taxes, and Default in the Age of Philip II (The Princeton Economic History of the Western World)
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Fugger, Hans, 95, 169–70
Fugger, Marx, 169
Galletto family, 183–86, 184t
Garnica, Francisco, 168n47
GDP: bonds indexed to, 213; effect of defaults on, 139, 213; estimates of for Castile, 117–18, 123–24; growth of and resource curse, 263–69, 264f, 265f, 266t; and IMF sustain-ability standard, 120–22; international comparisons, 43, 125, 248–52, 248t, 263–64, 264f; ratio of debt to (generally), 23, 32–33, 32t, 138–39, 213. See also debt-to-GDP ratio
Gelabert, Juan E., 101
Gennaioli, Nicola, 262
Genoese bankers: animosity against, 133; attempted transfer stop by, 37, 143, 151–59, 152t, 171, 274; attempts to undermine cohesion among, 167; co-lending among, 160–66, 166f, 240; control of the market for juros by, 92, 97; financial innovations by, 89, 96–98; intermarriage among, 165–66, 166f; network of, 36, 134–35, 160–66, 162f, 162t, 163f, 166f; profitability of lending to Philip II by, 183–86, 184–185t, 207; rates of return of, 188–90; and swapping of juros to increase return of asientos, 98. See also asientos; bankers; juros; lending to Philip II; network lending; transfer stop; individual families
Gentil family, 145–46, 161, 162f, 165
German bankers: and Charles V, 93, 182; and mercury mines at Almadén, 255; Philip II settling old debts with, 95, 181–82; rates of return earned by, 188–90; as repeat lenders, 149; and transfer of funds during suspension, 152–53. See also Fugger (Fucar) banking dynasty; Welser banking dynasty
Germany, 26–27, 137; military enrollment of (1914), 26; as nation-state, 30; princes of, 52, 52n18. See also Charles V (Charles of Habsburg, Carlos I); German bankers; Holy Roman Empire
Gersovitz, Mark, 139–40, 142, 144t
Ghent, Pacification of, 63, 102–3, 151, 159
Ghent, revolt of, 61–63
Gillard, Lucien, 96n35
Giráldez, Arturo, 267
gold, 53–56, 68, 85, 211, 266t
Golden Bull, 51–52
González de Cellorigo, Martín, 263
Gopinath, Gita, 138–39
Grafe, Regina, 68, 73n53, 259, 260n22, 280
Granada, 39, 76, 85, 91, 206
Grande y Felicísima Armada. See Armada, Invincible
Gravelines, Battle of, 58, 65
Great Britain. See Britain
Greece, 38n76, 135n4, 213
Grillo family, 146, 161, 162f
Grimaldo family, 164; and anticipation of default, 239; co-lending and network cooperation by, 161–66, 162f, 166f; as major lenders to Philip II, 146–47; and private negotiations with king, 167
Grossman, Herschel, 140, 142, 213n3, 231
Guipuzcoa, 258
gunpowder and warfare, 26. See also military revolution
Gustav Adolph of Sweden, 26
Gutiérrez de Cuéllar, Francisco, 239–40
Gutmann, Myron, 30n65
haircuts, 6–7, 32–33, 32t, 111, 182, 191. See also defaults of Philip II; medio general; renegotiation
Hamburg, 24
Hamilton, Earl, 87n24, 244–45, 278
Havana, Cuba, 54, 86–87
Heim, Carole E., 246n4
Henry II of France, 58, 60
Henry IV of Castile, 45–47
Henry IV of France, 66
Henry VIII of England, 28, 48, 265, 268
Henry “the Chaste” of Portugal, 69
hermandades, 47
Herrera, Juan de, 22
Heyn, Piet, 211
hidalgos, 79. See also nobility, Castilian
Hispaniola, 54
Hoffman, Philip, 246, 253n18
Holland (province of): attempts by Castile to conquer, 127; Rentmeisterbriefe issued by, 129n12; tax revenues collected in, 129, 129n12; value of peace with, 158. See also Netherlands
Holy League, 19, 57, 60, 62n34, 107
Holy Roman Emperor, 20, 25, 48, 51–53, 56, 57, 77. See also Charles V (Charles of Habsburg, Carlos I); Ferdinand I of Habsburg; Rudolph II
Holy Roman Empire, 25, 51
Horn, Count of, 38n75, 62, 133
Huascar, 55
Huayna Capac, 54, 55
Hundred Years’ War, 28
Iberian Union, 70–71
IMF sustainability standard, 35, 106, 120–22
imperial overstretch theory, 7, 42–43, 71–73, 280
Inca Empire, 54, 55–56, 85
income taxes, 28, 261
Indies: Council of, 68, 76; Crown revenues from (1555–96), 88f, 98, 102, 121, 272. See also Aztec Empire; conquistadores; fleets; Inca Empire; New World; royal fifth (tax); silver
Inquisition, 48, 81–82
institutionalist interpretation of history, 42, 246, 279
insurance, 137; contingent lending as a form of, 218, 234, 241; de facto 39, 140, 277; excusable defaults as a form of, 140; premiums, 220. See contingent lending to Philip II; default (generally): excusable; risk sharing
interest rates: before and after 1575 default, 234f; and contingency clauses, 217; of juros, 90, 92, 204, 268; and lack of penalties for default, 32t, 33, 279; modification of, 39, 95, 111, 241; and rolling over debt, 97; in sixteenth century, 207f; variation in, 187–88; warfare and, 245. See also asientos; IRR (internal rate of return); juros; MIRR (modified internal rate of return); profitability of lending to Philip II; rate of return
intermarriage among European royalty, 49, 69
intermediation services, 194–95, 206; cost of, 11, 96, 192–94, 203–4; Genoese quasi-monopoly over, 160
Irigoín, María Alejandra, 68, 73n53, 260n22
IRR (internal rate of return), 175–77. See also MIRR (modified internal rate of return)
Isabella of Castile, 45–49, 259, 263
Isabel of Valois (Isabel of the Peace), 60
Italian Wars, 19, 47, 58–60
Italy: disbursement of loans in, 147–48t; as nation-state, 30; republics in, 23; revenue from, 107; and Spanish Road, 19, 72. See also Genoese bankers
Jeanne, Olivier, 214
Jews, 48, 52, 132–33
Joanna of Castile (Joanna the Mad), 48, 51, 69
John of Austria, Don, 63, 156, 159
Johnson, Simon, 41n79, 50n13, 74n1
Judice family, 161
Junta del Decreto, 16–17
jurisdictional fragmentation, 253–54. See also market fragmentation; state capacity
juros, 22, 89–94, 92t, 95, 114t; in 1577 medio general, 110; archival records on, 91; as collateral (de resguardo), 98, 110–11, 145, 180, 217; as compensation for seized silver, 103–4; continuous servicing of, 22, 99, 272; de contratación, 95, 110–11; cost of servicing, 114t; forced conversions of, 159n32; in good standing swapped for others of lesser value, 98, 109; lifetime, 90n29, 111, 174–75, 197; origins of, 24n55; outstanding by year, 114t; redeemable, 111; secondary market for, 106, 225; swaps of as part of contingent clauses, 39, 220, 226; swaps of as part of settlements, 17, 111, 196, 204. See also collateral; debt instruments of Crown; debt service
Kamen, Henry, 72, 278
Kantorowicz, Ernst, 25
Karaman, K. Kivanc, 254
Karnehm, Charles, 169n49
Kehoe, Patrick, 142, 238
Kennedy, Paul, 42, 280
Kingdom, 76. See also Cortes
The King’s Two Bodies (Kantorowicz), 25
Kletzer, Kenneth, 140n12; and anarchic environment, 36, 159; and “cheat-the-cheater” mechanism, 36, 141–42, 144t, 170, 171; and intertemporal barter, 167, 213
Knights Templar, 132–34
Kovrijnykh, Natalia, 167, 172, 214
Krugman, Paul, 264
Lahiri, Amartya, 264
Landes, David, 279n5
Lane, Phillip, 138
Laredo-Antwerp sea route, 96n35
Leicester, Earl of, 63
lending moratoriums, 134–37, 141, 166–71, 230; attempts to ship money to Flanders during, 155–58. See also defaults of Philip II; network lending; transfer stop
lending to Philip II, 9–10, 206–10, 207f, 209f; asiento data on, 144–48, 146
t, 147f, 148t; compared to alternative borrowers, 207–8; contingent and noncontingent, 98–99, 214–20, 216f, 219t; excess returns of compared to 1850–2001, 208, 209f; flexibility of contracts in, 38; by Genoese network, 161–72; history of scholarship regarding, 3–4; knowledge of fiscal position and, 213–14; by multiple lenders, 22, 134, 161–72, 274f; overall profitability of, 37–38, 180–83, 192–94, 274f; profitability of, by family, 183–86, 184t–185t; profitability of compared with other sixteenth-century interest rates, 207f; profitability over time, 190–92, 191f, 192t; retail financing for, 96, 194–206; sustainability of and incentives, 35–37, 161–72. See also asientos; “cheat the cheater” strategy; contingent lending to Philip II; default: excusable; defaults of Philip II; Genoese bankers; German bankers; insurance; juros; Portuguese bankers; profitability of lending to Philip II; Spanish bankers
Lepanto, Battle of, 15, 19, 60, 117, 126, 243
Lercaro family, 161, 186
leverage, risks of, 3
Levy-Yeyati, Eduardo, 139n11
liberties (fueros), 258–59
Lindert, Peter, 33, 136
linguistic fragmentation, 261–62
liquidity shocks, 152–54, 157, 204, 213, 220, 225–27, 239, 273
Lombards, 132–33
Lomelín family, 145, 161, 164
London, 64, 253, 260
long-term debt service. See debt service: of juros
lordships, sales of, 78n13
Louis XI of France, 45
Louis XII of France, 11n8
Louis XIV of France, 27n59, 74, 257
Lovett, A. W., 151, 239n30
Low Countries: debt-service-to-revenue ratio of, 247; and Duchy of Burgundy, 53, 61; expulsion of Spanish troops from, 151–52; Fugger funds transfer to, 157, 168, 170, 171; Spanish Road to, 19, 72; traditional resistance of to outside rule, 61–63; value of victory in, 126–29. See also Dutch Rebellion/Revolt/War (Eighty Years’ War); Flanders; Ghent, Pacification of; Holland (province of); Netherlands; Zeeland
Macaulay, Thomas Babington, 254
maestrazgos (military orders), 95
Magellan, Ferdinand, 68
Maluenda family, 161, 164, 173–80, 179t, 193
Manila, 68
Margaret of Parma, 62
Marín family, 161, 164
market fragmentation, 23, 59, 65, 258–61; and growth, 23, 258–61, 280. See also jurisdictional fragmentation; state capacity
market power, of lenders, 159–60, 170–72
Mary of Burgundy, 61
Maurice of Nassau, 63
Medina, Bartolomé de, 86
Medina-Sidonia, Duke of, 13, 65, 262. See also Armada, Invincible
medio general, 6, 32, 110–11, 124–25, 161, 167. See also Compañía del Medio General
The Mediterranean and the Mediterranean World (Braudel), 3–4, 34n72, 79, 105, 143, 144t, 148, 171, 205, 253, 279
Mehlum, Halvor, 265
Mendoza, Bernardino de, 31n67
Mendoza, Pedro González de, 45
mercury, 53, 86, 95, 182. See also Almadén, mines of
Mexico/New Spain, 54–55; 1994–95 crisis in, 238; local administration of, 68; silver extraction in, 86. See also Aztec Empire; Cortés, Hernán; New World
military revolution, 26–31, and importance of money in winning wars, 31, 262; and use of cannon, 26
millones. See servicio de los ocho millones (tax)
mineral-rich countries. See resource curse
Mirowski, Philip, 246n4
MIRR (modified internal rate of return), 125, 175–80; by banking family (1566–1600), 183–86, 184t–85t; by contingency type, 187f, 224t; correlates of, 186–89, 187f, 188f, 189t, 236. See also debt service; IRR (internal rate of return); profitability of lending to Philip II; rate of return
“misma moneda” principle, 3, 16, 204
mita (forced labor), 89
Moctezuma, 54
Moene, Karl, 265
Mommsen, Theodor, 133n2
monarchs: comparative powers of European, 257–61; “consensually strong” position of, 257, 269–70; demesne income of, 24, 28, 74–75, 78, 133; and fate of empires, 245; limits on absolute power of, 74–75; opportunistic defaults by, 36; personal debt of, 24–25; and predation, 253, 278–79; and putting of enemies to death, 38n75, 78, 132–33, 133n2; refusal of to pay back debts, 35–36, 132. See also absolutism; property rights; state capacity
monasteries, 28, 74, 80
Monroe Doctrine, 138. See also Roosevelt Corollary
Mook, Battle of, 127–28
Morineau, Michel, 67n43, 87n25
Morisco rebellion, 39, 85n22, 91
Morton, Peter, 33, 136
Moura, Cristóbal de, 13–15
Mousnier, Roland, 74, 257
Mühlberg, Battle of, 52, 57
mutinies in Flanders: and attempted transfer stop, 37, 143, 151–59, 152t, 171, 274; death of Requesens and, 37, 62, 156; determinants of, 154t; frequency of in the Army of Flanders 153, 155; loss of life during, 155; Sack of Aalst, 159; Sack of Antwerp, 37, 63, 151, 155–56, 156f, 159; start of 1575 mutiny after siege of Zierikzee, 155; as a form of wage bargaining, 153. See also Conklin, James; Council: of State of Flanders; transfer stop
Naples, 53, 258
Napoléon, 28, 43
national accounting, 21, 112–13. See also fiscal position of Philip II
Neri, Enrica, 111
Netherlands: and Armada, 64, 108; comparative fiscal indicators of, 247–49, 248t, 279; counterfactual of victory in, 128–29; and “Dutch disease,” 264; as merchant empire, 70; withdrawal of Spanish troops from, 62. See also Dutch Rebellion/Revolt/War (Eighty Years’ War); Holland (province of); Low Countries; Zeeland
network lending, 36, 160–66, 162f, 163f, 166f, 171; and sustainability of debt, 161–65. See also bankers; “cheat-the-cheater” strategy; lending to Philip II
New Granada, 56, 68
New Spain. See Mexico/New Spain
New World: early exploration of, 53–56, 66; intercolonial transfers in, 73n53; rise of bureaucracy in, 66–69; salaries in, 68; and silver trade, 20, 63, 85–88, 229, 263; and treaty of Tordesillas, 46. See also Aztec Empire; conquistadores; Inca Empire; Indies; Portugal; silver
nobility, Castilian, 47, 51–52, 70, 78–79, 81. See also hidalgos
noche triste, 54. See also Cortés, Hernán
Nonsuch, Treaty of, 63
Non sufficit orbis, 243
North, Douglass, 41n79, 278–79
O’Brien, Patrick, 30n66, 246, 249
Oestrich, Gerhard, 257
Olivares, Count-Duke of, 257–58
opportunistic defaults. See defaults: opportunistic
Ottoman Empire: and government debt, 23; response to westward push of, 72–73; tax revenue of, 28; and War of the Holy League, 19, 60. See also Lepanto, Battle of
Palencia, Alonso de, 45
Pamuk, Sevket, 254
Panizza, Ugo, 138, 139n11, 280n6
Parker, Geoffrey: on Armada, 64, 126–27; on Army of Flanders’s mutinies, 153–55; on costs of Battle of Lepanto, 60n31; on domino theory of Spanish imperial policy, 72, 209; on military revolution in Europe, 26–31; on Philip’s erratic behavior, 62n34; and Philip’s military strategy, 232; on Sir Francis Drake’s raid on Santo Domingo, 243
Parma, Duke of, 63–65, 128, 212. See also Armada, Invincible; Dutch Rebellion/Revolt/War (Eighty Years’ War)
patio process, 86
payment stops. See defaults of Philip II
peace dividend, 117, 126–29
pechos (tax), 82
Peri, Giovanni Domenico, 16n27, 205
prelados y cabildos (tax), 217
perpetuities. See juros
Persson, Torsten, 256. See also state capacity
Peru, 20, 54, 55, 68, 86
Peruzzi family, 24
Philip I of Castile (Philip the Handsome), 48, 69
Philip II, 59f; accession of to Castilian crown, 57–60, 95; accession of to Portuguese throne, 49, 69–70; aims of in Low Count
ries, 155–59; bureaucracy under, 21–23; and the Catholic Church, 48; common views of, 143, 148, 271–72; and Cortes of 1575, 77; debt/default of compared to general pattern, 31–34, 32t; documents and data of, 21–23; European conflicts under, 56–66; financial sophistication of, 40–41, 57; historical reputation of, 3–4, 155n29, 278–79; as king consort of England, 65; management of Armada by, 13n16, 65–66; military expenditures of, 11, 19–20, 66, 106–8, 108f; military strategy of, 58–60, 71–73; no defaults on long-term debt by, 22; nonmilitary expenditures of, 115; as “the Prudent King,” 19, 57; reassessment of, 272–77; territories and possessions of, 19–20, 56, 66–71; treatment of bankers by, 105, 133, 143, 173–210; victories of, 19; work habits of, 13, 57. See also contingent lending to Philip II; lending to Philip II; sustainability of debt of Philip II
Philip III of Spain, 66, 99
Philip IV of France, 132–34, 148
Philip IV of Spain, 22n49, 73, 101
Philip V of Spain, 49
Philippines, 68–69
Pichenotti Brothers (Lazaro and Benedetto), 11–12, 18, 194, 203–5, 208. See also Di Negro-Pichenotti partnership
Pinto, Brian, 120
Pitt, William, 261
Pizarro, Francisco, 54, 55. See also conquistadores
playing card monopoly, 255
Poland, 30, 253, 255–56f
poll taxes, 82. See also state capacity; taxes
population losses from war, 30
Portes, Richard, 136
Portugal: decline of Asian trade of, 70–71; and the “Invincible Armada,” 13, 70; Philip II’s invasion of, 19, 49, 70, 243; rebellion and independence of, 244, 258, 260; royal succession in, 45–46, 49, 69–70; and treaty of Tordesillas (1494), 67; union of Castile with, 45–46, 70–71, 259. See also Armada, Invincible; Iberian Union; Philip II; Portuguese bankers
Portuguese bankers, 148, 196, 208, 280
Posa, (Marquis of): as fictional character in Friedrich Schiller’s Don Carlos, 14n18
Potosí, 56, 86, 263
Poza (Marquis of), 12, 14; and debt from Cádiz defeat, 14; pressure placed on bankers by, 12; as an example of the importance of access to the ruler, 14n18; on the Genoese bankers, 133; initial plans of for stopping payments, 14–15; overestimation of debt by, 17, 21; relationship of with bankers, 14–15, 133
Prados de la Escosura, Leandro, 7, 123–24, 124t, 280
Prebisch, Raúl, 263
primary surplus, 113, 117–19, 119f, 120–22, 249–52, 251f
principal reductions, effect on profitability, 124–25, 180–83. See also profitability of lending to Philip II; renegotiation