This is a study of the financial system that sustained the sixteenth-century empire of Philip II of Spain. Detailing the links between royal revenue sources, trade fairs, credit market, long-term debt, and contracts with Genoese bankers, it reveals how Philip's financial and military strategy complemented each other. Central to the narrative is Philip's struggle with the Cortes, which, under Castile's implicit constitution, imposed limits on public debt, forcing repeated renegotiations as military expenses and debt escalated. In this first analytical study of Philip's financial policies, Carlos Álvarez-Nogal and Christophe Chamley draw on extensive archival research and secondary sources to show that Philip's main challenge was not the bankers but the Cortes. He used temporary payment suspensions and financial crises as tools to pressure the Cortes for additional taxation. The book highlights the interplay between debt, political power, and state formation in early modern Europe.
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'Through creative use of primary sources and deep insights from both political economy and financial economics, Álvarez-Nogal and Chamley provide a fresh view of Philip II's struggles with his parliament and the way the outcomes affected the development of Philip's Empire and financial markets in both Spain and elsewhere.' Timothy W. Guinnane, Philip Golden Bartlett Professor of Economic History, Emeritus, Yale University 'Philip II of Spain and the Power of Money offers a rare blend of archival research, economic theory, and narrative synthesis. The result is a bold reassessment of a major chapter in the history of early modern European finance and state formation.' Francesca Trivellato, Institute for Advanced Study
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Studies the relationship between public debt, parliamentary representations and state power through the financial policies of Phillip II.
Introduction; Part I. Castile in the 16th Century: Markets, Banks and
Credit:
1. Castilian cities, Habsburgs, and bankers;
2. The fairs of Medina
del Campo;
3. The public banks of Castile;
4. The administration of the royal
finances;
5. Royal revenues in Castile;
6. The long-term debt: the juros;
7.
Crecimientos: reducing the yields of juros;
8. A model for the public
finances in Castile; Part II. The First Years: Triumphant Battles with the
Pope, France, the Bankers and the Cortes:
9. The young prince and the
financial weapon;
10. First test: the 1557 debt restructuring and the war;
11. The 1560 Cortes: a new relationship; Part III. The Sixties: Turning to
the South While the North was Brewing:
12. The bull of the crusade;
13.
Taxation in the low countries;
14. The short-term debt: the asientos before
1575;
15. Financing the construction of the Escorial with factorias; Part IV.
The Main Confrontation with the Cities and the Crisis of 157577:
16.
Obstruction in the Cortes (15721575);
17. Acceleration towards the crisis:
1575;
18. The Decreto of 1575;
19. The crisis in the credit market;
20. War
of attrition between the crown and the cities (157677);
21. Resolution; Part
V. The Latter Part of the Reign:
22. Financing in Flanders;
23. Exploiting
the Armada's disaster: the millones;
24. The Fiesco asiento: from fountains
in Castile to streams in Flanders;
25. Mesadas with an option to refinance in
juros: the maluenda asiento;
26. The renewal of the service of millones and
the decree of 1596;
27. The resolution of the last crisis; Acknowledgments ;
Archives; Bibliography; Index.
Carlos Álvarez-Nogal is Professor of Economic History at Universidad Carlos III de Madrid and Visiting Professor at Stanford University, Caltech and Paris School of Economics. Christophe Chamley is Professor of Economics at Boston University, Emeritus Professor EHESS at the Paris School of Economics, holder of a Cátedra de Excelencia in 2014 at Universidad Carlos III de Madrid, fellow of the Econometric Society and author of Rational Herds: Economic Models of Social Learning (2004).
