Nogal, Carlos Álvarez (2006) “La transferencia de dinero a Flandes en el siglo XVII” in Banca, Crédito y Captial. La Monarquía Hispánica y los antiguos Países Bajos (1505-1700), eds. Carmen Sanz Ayán and Bernardo J. García García, Madrid: Fundación Carlos de Amberes, 204-231.
From 1567 to 1586, the Spanish Crown sent some 1.5m. ducats annually to Flanders; by 1608 this figure was reaching 3.5m. To do that, the king had to rely on Genoese intermediaries that could provide credit in Antwerp while being paid in Spain. But how exactly did the bankers manage to transfer that much money around war-torn Europe? (p.205) Financiers have often been accused to unduly charge the monarchy enormous fees for their service, but how much exactly did this service cost the bankers themselves?
The army needs money
In 1633, the Spaniards in the Southern Netherlands were going through a very tensed and difficult situation from both the military and financial point of view. Short of an inflow of fresh cash, the Real Hacienda would have to stop paying its bills by October (p.206). The king finally managed to secure some 10 asientos worth nearly 6m. escudos. This money instantly yielded significant results: the strategic fortress of Breisach was re-conquered on October 20th.
One of bankers involved, Bartolomé Spínola, signed a settlement for the provision of some 1.4m escudos (p.207) including on November 1st the first of twelve monthly payments in Antwerp amounting to 840,000 escudos (p.208).
Spínola endeavoured to transfer the silver he had been entrusted with at the arrival of the fleet in Cadiz mostly by bill of exchange via Genoa (p.210). To do so, he could rely on his brother, himself banker in the city (p.211), who would use the fair of Novi to find founds that would be paid in cash in Antwerp. To do so he had to pay interest rates of 6.5% and himself levied a percentage for his service (p.214). Noticeably, he had to send cash to the fair thrice, in his words, “to regulate the money and bring the interest down” (p.216).
The Genoese company gave Spínola access to other firms which could deliver the money wherever it was needed from Venice to Antwerp (p.217).
The silver fleet
Spínola also used the armada sailing to Dunkirk to transport bullion. This decision arose from three rationales: it was faster, avoided to overextend his brother’s credit, and was particularly beneficial at a time when silver was scarce in the Southern Netherlands. It was also the cheapest option as it solely took 1.56% of the value of the silver to transport it to Antwerp (p.218).
Some bullion was also send from Sevilla to Genoa via Madrid and Barcelona to be marketed by the Spínola firm. This operation cost 3.28% of the bullion’s value (p.221). Another option was also used, bills of exchange from Madrid to Antwerp, but this technique cost a full 13.4% of the money’s value (p.223).
Even though to transport the bullion, the Genoese route was not the most economical, it was by far cheaper to use that centre for the transfer via bills of exchange (up to 55% cheaper than using the direct transfer from Madrid to Antwerp; p.225). Spínola was no outlier, and the other bankers practiced very similar prices (p.227) and it does not seem they overcharged particularly the Crown for their services (p.228).
“Genoa and its exchange fairs were the guarantee to obtain credit, not only in Antwerp but in many other places where the Crown might need it. […] The Crown paid to benefit from a financial system which allowed regularity in its payments in Flanders. Moreover, the transfer of bullion – however more economical – was also less secure. This extra cost can be interpreted as the added value of the international financial organization” (p.228).
Disclaimer: this summary is written by the contributors of the blog and not by the author of the article. Any mistake is Manuel’s fault (and he shall be punished).