Prospero | Quick Study

Robert Goodwin on 16th-century Spain

The world’s first sovereign debt crisis and the true birth of globalisation

By A.C.B.

ROBERT GOODWIN is research fellow at University College London and author of “Crossing the Continent 1527-1540” (2009) and “Spain: The Centre of the World, 1519-1682” (2015)

"Centre of the World"? Really?

Yes. I’m going to quote my book here: “On Halloween, 1519, a lone carrack reached the shores of southern Spain and sailed up the Guadalquivir, the Great River of the Moors, to Seville, capital of Andalusia, a region known to medieval Arab poets as paradise on earth. The first ship to reach Europe from the newly conquered coast of Mexico, the little Santa María had 'so much gold on board that there was no other ballast than gold,' or so it was reported to King Charles. At that moment, the modern Western world was born and globalization began.”

An element of hyperbole, of course. There is a strong claim to be made for Columbus’s return to Europe in 1493 as the point when the Old World and the New were conjoined. The great thing about Columbus was not so much that he reached America, but that he came home with the news.

So why 1519 and not 1493, then?

The Mexican gold. In fact it wasn’t just gold, but a gorgeous consignment of Aztec treasures accompanied by a handful of Totonac "aristocrats"—all proof that Spaniards had discovered a rich civilisation. In the first instance Charles of Ghent, a Habsburg and newly crowned king of Spain, was able to show off the treasure and give the impression that he was unimaginably rich. He had just spent a fortune bribing the electors of the Holy Roman Empire to vote him Emperor, making him ruler of what is today, very roughly, modern Germany; so it was a timely moment to be apparently wealthy.

From 1519 onwards, gold and silver remitted to Spain from her growing empire gave the Spanish Habsburgs unprecedented levels of financial liquidity. For the next century and a quarter, the Habsburgs were forever fighting wars against France, the Ottomans, Protestants, or their rebellious Dutch subjects, and to pay their armies they needed to both borrow money. Overnight, previously conservative bankers, who were then little more than sophisticated medieval money-changers, rushed to become masters of international finance. They dreamed up new ways of borrowing money from anyone who could lend it to them: the Church, landowners, traders, artisans. Most of those lines of credit are recognisable as the ancestors of most modern forms of lending. Just as the Conquistadors were the cutting edge of European geographic experience, so the German and later Genoese bankers were adventurers at the limits of finance.

Sounds familiar.

No, and yes. In 1575, Charles V’s son, Philip II—he of the Armada—presided over the first major sovereign default in history. A slowdown in silver production in the Americas and overspending on armies in the Netherlands left the Spanish Crown unable to service the debts Philip had accumulated. No one had a clue as to how massive debt worked and the bankers turned off the taps. But not for long.

If any institution has ever been too big to fail it was the Spanish Crown in the 16th century. Over two panic-ridden years they worked out how to consolidate much of the debt, write down anything they could get away with and agree a new programme of repayment—they had restructured sovereign debt for the first time in history. Miraculously, at the same time, new silver deposits were discovered and new technology—the invention of which was attributed to the Madonna—made extraction of metal from the ore more efficient. And so the borrowing went on and on. It was not really until the 1630s that the Spanish Crown began to struggle irrevocably and that was because by then it had lost its grip on the Atlantic trade and its own colonies in the Americas. The English and the Dutch were taking over, the world was becoming globalised.

So your book is about Spain as the centre of this globalising world. How were Spaniards affected by all this money?

During the 1500s Spain was held together by a relatively strong crown and perhaps the most fascinating consequence of that combination of grass-roots chaos and an overall sense of order is that Spaniards became one of the most litigious societies in history. They trusted their courts because of the strong crown, despite some cases lasting for generations (Columbus v. the Crown, begun in 1510, was eventually settled in the 18th century) and levels of corruption that seem astonishing to us. (An advocate was struck off in the 1550s after he was discovered to have accepted instruction from both the aristocratic plaintiff and the powerful municipal defendant.) But illiterate peasants and even slaves also went to court and they did not just sue each other, they also took on their lords.

Another massive structural social consequence was the growth of education and universities, the institutions needed to train so many lawyers and the officials who administered the empire abroad and the government of Spain at home. This led to considerable social mobility. Where there is education, there is also intellectualisation. So in a world we usually associate with the Inquisition, there is perhaps no better example of independence of thought than the School of Salamanca, a group of theologians and jurists who sowed the seeds of modern international law and human rights on the fertile soil of Catholic faith.

The Inquisition still happened, of course.

Yes. But there was enlightenment too. The Habsburgs were deeply troubled by the rise of Protestantism and Spaniards came to dominate the Counter-Reformation. On the one hand it encouraged religious intolerance generally and specifically gave the Inquisition raison d’être after it had run out of steam in the 1520s. On the other, it gave impetus and focus in art, both high religious art like that of El Greco or Murillo, but also popular art, most obviously manifest in the fluoresence of Holy Week, Semana Santa, which survives today.

So all that money was partly invested in culture?

So far as Spanish culture goes, this was the period known as the Golden Age. There is a fascinating intersection of the twin influences of religious devotion and the kind of moral and existential self-questioning displayed by the Salamancans and their monarchs, that produced some of the most brilliant poetry, theatre and literature to sit alongside the beautiful paintings of Diego Velázquez. The great dramatist Lope de Vega is thought to have written nearly 2,000 plays, while Góngora and Quevedo did the most untranslatable things to their over-sophisticated verse.

But unquestionably the greatest figure of this world of belles lettres was Miguel de Cervantes, who drew on his experience travelling the length and breadth of Andalusia as a tax-gatherer to write "Don Quixote". It was not simply the first modern novel, repeatedly lauded by modern writers from Nabokov to Harold Bloom, and Paul Auster to Ben Okri, but the very rise of the novel to its supreme form in 18th-century Britain is unimaginable without Cervantes showing Defoe, Swift, Sterne and Fielding the way. Mark Twain as much as admitted that there could have been no Moby Dick without Quixote and Sancho.

The intersection of novel experience and religion led Spaniards to question every aspect of reality itself. They had a name for this phenomenon, this strange crisis of faith; they called it desengaño or disillusionment and they sought the experience of a sudden revelation of the real beneath the imaginary at every opportunity. And desengaño could be divine. The great art critic, Antonio Palomino, wrote in the early 1700s that Martínez Montañés had created the breathtaking image of the Christ for the leading Seville Confraternity of the Passion, “with such an anguished expression that it excited the devotion of even the most lukewarm heart and it is said that when they carried this sacred image in procession during Holy Week, the artist himself exclaimed it was impossible that he should have made something so wondrous and realistic.”

Recommended reading: “Cervantes” by William Byron (1978); “Rivers of Gold”, “Golden Age” and “World Without End” by Hugh Thomas (2014); “Imperial Spain: 1469-1716” by John Elliott (2002); “Lawsuits and Litigants in Castile 1500-1700” by Richard Kagan (1981); “All Mankind Is One: A Study of the Disputation Between Bartolome De Las Casas and Juan Gines De Sepulveda in 1550 on the Religious and Intellectual Capacity of the American Indians” by Lewis Hanke (1994)

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