spain's gold -- 2/13/15

Today's selection -- from War and Gold by Kwasi Kwarteng. Christopher Columbus's discovery of the new world brought Spain unprecedented riches in the form of gold and silver. But those riches had led to fiscal profligacy, especially in the spending by Emperor Charles V on war, and by 1556, upon ascending to the throne, Charles' son Philip was compelled to declare bankruptcy:

"From the moment of his election as Holy Roman Emperor in 1519, Charles [V] had been burdened by extraordinary commitments. His life as emperor had been marked by a seemingly endless succession of military campaigns against rival European monarchs, particularly the French King, Francis, against the Ottoman Turks and, latterly, against heresy and revolt in Germany. As head of the Habsburg imperial family, as the inheritor, through his mother, of the Spanish crown, Charles had undertaken military commitments that had caused a financial crisis.

Philip II

"Charles's son Philip, a slight man in his late twenties, with blond hair and the famous protruding jaw of the Habsburgs, faced enormous financial difficulties. He resorted to a drastic expedient. On his full accession in July 1556, the young monarch discovered that all the Spanish revenues had been pledged to repay loans and interest. Faced with this prospect, he simply suspended all payments to his bankers in January 1557. The device of declaring bankruptcy was a trick Philip played several times. On 1 September 1575, Philip announced the second bankruptcy of his reign. The suspension of payments to the bankers for a second time led to unrest among the Spanish troops in the Netherlands, their frustration stemming from their lack of pay. As the months went by, the soldiers grew increasingly wild. On 4 and 5 November they sacked the city of Antwerp. This event has been long remembered as the 'Spanish fury' at Antwerp of 1576.

The humiliating declarations of bankruptcy, the constant need for more money, had not been anticipated when the great discovery of New World treasure had been made. The windfall of the gold and silver from the Indies was a subject which the historians and court writers of the Spanish court celebrated in fulsome prose. Referring to Charles V, Pedro Mexia wrote in his Historia del emperador Carlos V (1545) that 'God kept for this prince the great favor and good fortune of discovering the provinces of Peru, where such a great treasure of gold and silver was hidden, the like of which past centuries have never seen, nor do I think that the coming ones will believe.' "



Kwasi Kwarteng


War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt




Copyright 2014 Kwasi Kwarteng


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