Philip II against the cortes and the credit freeze of 1575-1577 Articles uri icon

publication date

  • December 2016

start page

  • 351

end page

  • 382

issue

  • 3

volume

  • 34

International Standard Serial Number (ISSN)

  • 0212-6109

Electronic International Standard Serial Number (EISSN)

  • 2041-3335

abstract

  • Numerous archival documents show how the suspension of payments by Philip II, in September 1575, on the contracts with Genoese bankers (asientos) induced a freeze of the domestic credit market in Castile through the bankers' intermediation for asientos and the credit interconnections. Commercial fairs stopped, banks failed and trade suffered while the king granted legal protection to the Genoese bankers. The evidence strikingly confirms that by his strategy, Philip II was able to remove the de facto ceiling on the domestic debt (juros) imposed by the fixed revenue commitment of the Castilian cities in the Cortes. The agreement with the bankers was signed in December 1577 immediately after the cities had agreed to the doubling of their commitment.

keywords

  • debt funding; sovereign loan defaults; financial crises; commercial credit markets; war of attrition; spain; debt; contracts; castile