16th-Century Iberian Trade and Finance
C. Foreign and Domestic Trade
1. Local and Regional Trade (“Dry Ports”)
Customs documentation (dry ports) reveals details about inland trade. Tax proceeds indicate that trade between Castile and Aragon thrived in the latter half of the 16th century.
The busiest customs posts between Navarre and Castile were in Vitoria, Logroño, Alfaro, and Cervera. Key routes between Aragon and Castile included Molina de Aragón (to Madrid and Toledo) and Agreda, Candelas, and Deza (to Medina del Campo). Between Valencia and Castile, Moya, Requena, Almansa, and Yecla were important.
Trade between Valencia and Castile typically involved agricultural goods, raw silk, and dyes from France and Holland. Aragon and Castile exchanged Catalan cloth, coral, and other imported goods. Wine was the primary commodity between Navarre and Castile.
Trade between Portugal and Castile flowed through the Valladolid/Medina del Campo district, the Badajoz/Valverde de Leganes district in Andalusia, and the Puebla de Sanabria/Verín district in Galicia. Portugal exported spices, sugar, salt, exotic fabrics, and British goods. Castile exported wool, wheat, livestock, and Catalan cloth.
2. Interregional Trade
Mediterranean Trade
Mainland Mediterranean ports like Cartagena, Alicante, Valencia, and Barcelona experienced trade growth. However, privileges granted to Genoa in 1528 by Charles V negatively impacted Catalan and Valencian interests, as Genoese merchants gained control of trade. The Turkish-French alliance disrupted Barcelona’s eastern routes, benefiting Marseille. Ottoman corsairs and pirates further hindered non-Castilian trade with the Americas.
In the first third of the century, Catalans returned to Sicilian and Sardinian markets due to those islands’ inability to provide goods like wheat. Trade with the Iberian Peninsula also intensified. Barcelona’s “periatge” (tax) collection shows steady growth, booming in the late 1570s, reaching nearly 650,000 pounds by 1606. Factors contributing to this boom include the Flanders wars, disrupted northern European trade, and the Barcelona-Genoa axis becoming a primary route for precious metals.
Barcelona exported money, cloth, iron, coral objects, saffron, glass, ceramics, leather, and colonial goods from Seville, Cádiz, and Almería. Catalan ships sailed to Sicily, Sardinia, Naples, Ragusa, and Alexandria, reviving the spice trade.
Valencian trade saw stagnation in the first half of the century, followed by expansion peaking in 1602–1605. As Castilian trade with the north declined in the 1570s, Mediterranean ports became more active. Valencia exported silk, rush fiber, sugar, rice, and nuts, while importing textiles, weapons, paper, wheat, and goods from France and Italy. Genoese and French traders dominated this traffic, monopolizing Castilian wool from Alicante and Cartagena, hindering the development of a local merchant class and related industries.
Aragon also experienced trade growth, with an initial boom until 1567–1569, followed by stagnation due to plague, crime, and declining French trade. A final boom occurred at the century’s end, coinciding with stability and good harvests. Aragon primarily exported agricultural surpluses to France and imported manufactured goods.
Wool Route North
Castile’s northern European trade had two main routes: northwest via Asturias and Galicia (to England) and northeast via Santander and the Basque Country (to France and the Netherlands). Wool, currency, precious metals, and Basque iron were key exports. Manufactured goods, metals, food, wax, and wood were imported, resulting in a negative trade balance.
Wool exports to northern Europe were subject to a fee administered separately from the Castile Sea tithes, collected in Santander, Bilbao, Laredo, etc. This new tax, implemented in 1558, restored tithes to the Royal Treasury. Castilian merchants, supplying Genoese and Milanese rulers, dominated the wool trade.
Wool exports to the Netherlands, though unreliable before 1558, rose from around 13,000 sacks annually in the early 1500s to 18,000 in 1554. Exports remained around 15,000 sacks until the Flanders wars. The war initially boosted exports beyond 20,000 sacks in 1567–1568, but a crisis followed in 1569, with exports plummeting below 2,000 sacks. A brief rebound to 24,000 sacks occurred in 1570, but exports remained below 10,000 thereafter. France absorbed some production, reaching 11,000 sacks in 1579. By the late 1580s, the crisis deepened, with Flanders receiving only 289 sacks in 1589 and France no longer a significant buyer. Only Seville remained stable, exporting over 4,000 sacks in 1593.
The wool trade shifted to Italy, which replaced Flanders between 1573 and 1582, receiving over 20,000 sacks semi-annually from Alicante and Cartagena.
3. International Trade: Seville
Seville became a hub for trade between Europe and the Americas. European merchants established themselves there, trading manufactured goods, hardware, haberdashery, textiles, fabrics, and drapes for American agricultural products and metals. Seville exported agricultural goods, wine, oil, sugar, nuts, salt, wool, silk, and American silver to Europe.
Trade with America involved exporting raw materials and importing manufactured goods, leading to an outflow of American gold and silver. Re-exporting European manufactures within America was uncommon, exacerbating the trade imbalance and draining precious metals.
In the 1570s, according to Alberto Marcos Martín’s History of Spain: XVI, XVII, XVIII, half the silver arriving in Seville covered freight costs to America. The royal fifth further contributed to a surplus of imported products.
The 16th century, a period of expansion, saw two phases: 1504–1550 and 1562–1592, separated by a decade of recession. The first phase saw increased shipping and trade due to American conquests and initial precious metal shipments. Agricultural and animal products, manufactured goods, and mining/sugar mill equipment were sent, culminating in a peak between 1554 and 1550, followed by recession.
This recession resulted from rising freight costs, lower returns, and falling prices, discouraging investment. This coincided with the end of American territorial expansion, predatory conqueror economies, and French privateering, necessitating the convoy system, which delayed trade. Charles V’s economic and military efforts in Germany, leading to the 1557 bankruptcy, further contributed.
Hispanic trade recovered from 1559 onward due to the Treaty of Cateau-Cambresis and French religious wars, reducing Huguenot piracy in the Atlantic. The convoy system improved route security. Silver production increased in New Spain and Peru, colonies stabilized, new European merchants settled in Seville, and Basque shipbuilding developed.
However, currency outflow, credit pressure on Iberian banking, the 1575 bankruptcy, the Ottoman war, the Flanders war, Francis Drake’s piracy, and the 1576 New Spain epidemic severely impacted Seville’s business community. Increased Royal Treasury demands, diverted ships, reduced American route security, and lower silver remittances from New Spain added to the difficulties.
Despite these challenges, American trade continued, peaking with Portugal’s union with the Castilian crown, providing a new Azores base. A downturn began in 1587 when Drake’s Cádiz attack destroyed the New Spain fleet, creating insecurity and discouraging investment. The Spanish Armada’s defeat halted American voyages until 1589 due to shipping and labor shortages, increasing freight and crew costs. By 1592, the upward trend reversed, ushering in a 17th-century depression.
4. Finance During the 16th Century
Financial Needs of the State
Two factors marked 16th-century monarchy finances: growing cash needs due to expensive imperial policies and dramatically increased but insufficient revenues. The Crown relied on loans to bridge the gap. Lenders acted as intermediaries, distributing American silver, converted to gold coins, to imperial war fronts.
Impact of the Castilian Fiscal System
Royal fiscal policy increased revenue through extraordinary resources. Ordinary resources, like sales taxes and tithes, were “petrified,” meaning their burden was frozen, particularly with the encabezamiento imposed in 1536. The Cortes distributed the fixed amount among provinces, parties, and locations. This benefited established taxpayers but reduced long-term sales tax and thirds yields for the Crown.
Lost sales tax and thirds income was offset by increased ordinary and extraordinary servicios levied on the common population. The Cortes approved these new servicios, increasing their average annual amount from 37 million maravedíes in Charles V’s first 18 years to 136 million in his final years.
Philip II inherited a 15 million ducat debt, 19.5 million of which comprised long-term juros. He created new fixed incomes by imposing tariffs on Portuguese borders and taxes on Portuguese wool exports and dry ports. In 1559, he annexed the Castile Sea tithes and increased Seville’s import tax.
At the 1560 Toledo Cortes, Philip II secured an encabezamiento increase to 480 million in 1562. In 1573, the Cortes granted further increases: 1,159 million for 1575 and 1,393 million for 1576–1584.
Millones
The millones tax resulted from the Armada’s defeat and aggressive foreign policy. After two years of negotiations, the Cortes granted eight million ducats over six years. Cities secured its establishment as a universal contribution affecting nobility and clergy, not just commoners. This excise tax on consumer goods impacted employees and consumers more than privileged groups.
Consolidated and Floating Debt
Increased taxes and Royal Treasury income couldn’t cover imperial costs. Consolidated debt, comprising juros with no fixed repayment date, grew throughout the century, particularly after bankruptcies. Bankruptcies removed appropriations and converted floating debt (with fixed terms) into consolidated debt, increasing juros.
Juros arose not only from renegotiating bankers’ debts but also through grants of mercy (hereditary), direct Crown sales, and surety for advances (replacing fidelity annuities for securing trading seats). Juro holders sought liquidity to meet financial obligations.
Floating debt (asientos) had short-term repayment guaranteed by state revenues. Large financial houses acted as intermediaries for circulating money within the empire, lending to the Crown and recovering funds by investing in and selling traded goods, ensuring loan repayment in real money.