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Polycentric States: The Spanish Reigns and the "Failures" of Mercantilism

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University Press Scholarship Online

Oxford Scholarship Online

Mercantilism Reimagined: Political Economy in Early Modern Britain and Its

Empire
Philip J. Stern and Carl Wennerlind

Print publication date: 2013

Print ISBN-13: 9780199988532
Published to Oxford Scholarship Online: January 2014
DOI: 10.1093/acprof:oso/9780199988532.001.0001

Polycentric States

The Spanish Reigns and the “Failures” of Mercantilism

Regina Grafe

DOI:10.1093/acprof:oso/9780199988532.003.0011

Abstract and Keywords

The set of policy priorities that emanated from the economic ideology that broadly defined as mercantilism, could not be
turned into mercantilist practices because it collided with Spanish notions of political representation and participation.
Mercantilist policies confronted the very real challenges in a polity, like the Spanish Empire, defined by composite forms
of sovereignty and power. Political practice in a polycentric polity was characterized by political participation through
municipal, local or regional institutions, and entirely irreconcilable with economic and political regulation at the
“national” level. Thus, what has tended to appear historiographically as a failure of particular policies or their
implementation can be seen instead more appropriately as an illustration of the incompatibility between the aspirations of
mercantilist theories and polycentric governance.

Keywords: Spain, monarchy, Castile, Atlantic, state

Spain’s history and historiography in what has come to be called the “Age of Mercantilism” has been peculiarly
contradictory. Thinkers of the mercantilist age viewed Spain as particularly unsuccessful at any of the policies regarding
trade, taxes, population, or strategic industries they advocated. Contemporary foreign pamphleteers and domestic
arbitristas (projectors) agreed that there was hardly a place in Europe that had failed so conspicuously at implementing
policies “to the advantage of the common wealth” (maybe the weakest working definition of mercantilism one could think
of). As Eli Heckscher pointed out in his classic treatment of mercantilism, the likes of Thomas Mun thought of Spain as a
deterrent, not an example to follow.1

From the mid-eighteenth century on, however, commentators on political economy identified Spain closely with

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everything that now seemed wrong with mercantilism. Spanish enlightened writers, such as Pedro Rodriguez de
Campomanes and Gaspar Melchor de Jovellanos, berated national guild structures and monopolies, trade regulations of
all kinds, and most of all the tasa, the price ceiling for bread. They preceded or echoed Adam Smith’s indictments of the
“absurd policy” of restrictions against the export of bullion, which only contributed to “discourage both agriculture and
manufactures.”2 Smith summed up this view when he stated that “industry is there [in Spain] neither free nor secure; and
the civil and ecclesiastical governments of both Spain and Portugal are such as would alone be sufficient to perpetuate
their present state of poverty, even though their regulations of commerce were as wise as the greatest part of them are
absurd and foolish.”3

The historiography in Spain and elsewhere has approached mercantilism through three quite distinct lenses: as part of a
history of thought about state and economy; as the actual history of political economy in a narrower sense; and as part of
the sociocultural and political transformation of European society in what we tend to label as European state-building. In
the Spanish case, most attention has been paid to the intellectual (p.242) history of mercantilism.4 The history of
political economy has by contrast said relatively little about mercantilism, beyond the statement that it either failed in
Spain or that Spain was never more than pseudo-mercantilist.5 Finally, the sociocultural historical context of the era of
mercantilism has received scant mention to this date. One purpose of this chapter is to suggest a rebalancing of these
perspectives. It will offer only a few very general comments on the better-known intellectual history of Spanish
mercantilism. Instead, the major focus is given to developing a sociopolitical framework for understanding the political
economy of the mercantilist period in Spain. It is arguably in this particular framework that the most interesting
comparative aspects emerge in relation to developments in the Britain and elsewhere in Europe.

The argument developed in this paper is as follows: The supposed failure of mercantilism in Spain was not rooted in a
failure to develop or assimilate a coherent set of ideas about the state and the economy, which could be labeled
“mercantilist.” Spanish commentators on political economy were probably ahead of their times by European comparison
in the sixteenth and early seventeenth centuries, and well in touch with debates elsewhere in the eighteenth century. Nor
were Spain’s economic woes mostly the result of a problem of implementation of good ideas, “a wealth of analysis [of
economic and political problems] and poverty of execution” as Stein and Stein have claimed.6 Instead, the problem of
applying new mercantilist policies was rooted in mercantilism’s role in state formation, that is, in the sociopolitical
framework that shaped, enabled, or obstructed the political economy of Spain.

The set of policy priorities that emanated from the economic ideology that we broadly define as “mercantilist” in this
volume could not be turned into mercantilist practices because it collided with Spanish notions of political representation
and participation. Mercantilist policies were perceived as a disenfranchisement and were resisted for sociopolitical reasons
because they interfered with where sovereignty and power were located, how they there legitimized, and the way in which
they were practiced. This view reflects recent research into the intellectual history of Spanish economic thought, but it
offers a fairly radical revision of the history of political economy and the relationship between state-building and political
economy south of the Pyrenees. Even more important, the characterization of mercantilism’s inbuilt incoherencies in
Spain opens up room for debate about mercantilism elsewhere in Europe.

In the 1970s, Spanish historians of economic thought began to analyze the rich body of literature on economic affairs
produced in the mercantilist era in Spain, and in 1978 Marjorie Grice-Hutchinson provided the first modern overview.7
The outcome of this literature is often a quite conservative intellectual history. Nevertheless it forms a thorough body of
research on the writings of the most influential writers, which suffices to locate the Spanish case in a comparative
European context.

(p.243) The central debate in this literature has evolved around the question of how to delimit the mercantilist era in
Spain. Thus, the boundaries between the late scholastics of the Salamanca School and early mercantilists are as
controversial as those between the late mercantilists and the early Spanish physiocrats and liberals.8 Beyond those labels,
however, we can now trace the development of the economic side of mercantilists’ thought at least in relation to commerce
and money. Much less is known about their thinking with regard to topics, which were central elsewhere, such as
population, including labor and migration. The famous attempts by Pablo de Olavide to attract skilled immigrants to
Andalusia have received some attention as have some of the early attempts to change commercial policy during the
Spanish War of Succession in Catalonia (1701–14).9 Yet there is for instance no study of how Spanish political economy
thought about the demographic catastrophe in the Americas of the sixteenth and early seventeenth century or of the rapid
population growth in the same regions in the eighteenth century.

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It has become clear, however, that for most of the period under consideration, commentators on economic affairs were
evidently in communication with developments elsewhere in Europe in both their choice of themes and in their thinking.
The traditional narrative of Spain stuck in scholastic traditions, and left behind from the major intellectual development in
Europe as early as the seventeenth century, has clearly been debunked.10 This is most obvious in one of the core areas of
mercantilist theorizing: the question of the role of silver and gold in the economy. Although Spanish thinkers were
regularly accused of a belief in crude bullionism, this was rejected in Spain earlier than elsewhere in Europe.11 Martin de
Azpilcueta formulated a simplified version of the quantity theory of money twenty years before the publication of Jean
Bodin’s famous commentary on the same phenomenon.12 By the late sixteenth century, Spanish arbitristas as well as
moral philosophers commenting on the state of the polity understood perfectly well the impact on prices of the inflow of
American silver into the Spanish economy, and later that of the expansion of copper coinage.13

The common depiction of Spain as isolated from the intellectual advances in the rest of Europe was thus plain wrong for
the sixteenth century. But is was also vastly exaggerated for the eighteenth century. The “spirit of ambitious emulation”
that was raging across eighteenth-century Europe was certainly visible in Spain even before the Enlightenment had taken
roots.14 Gerónimo de Uztáriz (1670–1732), the internationally best known, though not most brilliant Spanish mercantilist,
used his Theory and Practice of Commerce and Maritime Affairs as an explicit tract of comparison with French, Dutch,
and English policies. The book first circulated in Spain in 1724 and, after 1742, went through various posthumous editions,
becoming popular in England and France as well.15 Indeed, it was part of this process of comparative inquiry that in Spain
as in France and elsewhere, the Balance of Trade doctrine survived the mercantilist age in (p.244) disguise and remained
still very much en vogue among such early thinkers of the liberal age as Pedro Rodríguez de Campomanes.16

This revisionist assessment in the history of economic thought, which places Spain more neatly in the European context,
has not been matched by the historiography of the political economy or the sociocultural context of mercantilism in Spain.
The North American historiography of the mid-twentieth century and its political embeddedness is partly to blame for
this. Armed with an ideologically powerful set of normative economic concepts, three US American economic historians,
Julius Klein, Earl Hamilton, and Robert Sidney Smith, published between the 1920s and the 1950s a series of monographs
to show how mercantilist government regulation of wool production (the famous Mesta), colonial silver trade and
currency manipulations, and guild-organized merchant activity respectively had doomed Spain’s economic prospects in
the early modern period.17

That their endeavors should coincide with the rise of neo-corporatism—and especially fascism—in Spain was hardly
happenstance; they echoed the frustration of many U.S. observers at the rise of government intervention in European
economies. Still, this early twentieth-century interpretation of Spain as the country that exhibited the “vices of incoherence
and excess [of mercantilism] most conspicuously” outlived even the painfully long-lasting Spanish dictatorship of the
twentieth century.18 The only study of mercantilism proper by a Spanish author, José Larraz López’s small volume from
the 1960s simply repeated what now had miraculously become received wisdom: Spain’s political economy had remained
encumbered by mercantilist thought long after other nations had understood their errors, and it had thus contributed to
Spain’s economic decline.19

A recent comprehensive attempt to integrate a discussion of the political economy and contemporary intellectual
developments in Spain still struggles with these contradictions. Stanley and Barbara Stein’s Silver, Trade and War returns
to a description of Spanish mercantilism as the worst of all possible worlds. Even as the principal trade networks that
articulated Spanish long-distance commerce expanded enormously over the sixteenth century, trade regulation was
neither unified nor rationalized. There was little effort to overcome the “micro-regional, even narrowly urban … outlook
and mentality.”20 The principle argument is that the Spanish state lacked a developmentalist orientation while it persisted
in imposing more and more regulatory mechanisms, which served only one purpose: the creation of rents for Spanish
intermediaries in the Indies trade at Seville and for corrupt bureaucrats. Reform attempts undertaken by the new Bourbon
monarchy after the War of Succession failed to break the influence of the powerful Seville merchants who had bribed the
bureaucracy and the Crown in equal measures.21

Spanish society, according to Stein and Stein, walked knowingly and willingly into disaster. The analyses of Spain’s
decadencia offered by arbitristas starting in the late (p.245) sixteenth century were largely perceptive and suggested the
sort of remedies that contemporary mercantilism demanded: less complex tax schedules, improved internal
communications, an abolition of internal tariffs and tolls, import restrictions and export subsidies, and the fostering of
agriculture and industry. Uztáriz for instance argued that Colbert’s success in France had proven that decline could be

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reversed, if only French mercantilist policies were adapted to Spanish circumstances, and his comments were widely read
in the early eighteenth century.22 Stein and Stein thus confirm the view of an intellectual history of Spanish political
economists who were read up on what happened elsewhere in Europe and in addition developed quite a few ideas of their
own. The issue was implementation.

Stein and Stein explain the large gulf between contemporary intellectual debates and practical political economy with both
political structures and sociocultural context. They track the persistence of urban and regional interests over national ones
back to Habsburg dynastic politics, which “failed to distinguish between the parts of the patrimonial empire.”23 The threat
to “national” policies came, on the one hand, from foreign merchant interests attracted by the rich American trades, which
acted as “multinational conglomerates.” On the other, Spain’s economic policy was hopelessly out of step with robustly
mercantilist strategies pursued by England, the Netherlands, and France, which succeeded in imposing highly prejudicial
commercial conditions on Spain at Westphalia. Spanish society colluded with these foreign interests because it was
supported by silver extraction from the colonies, which removed the pressure for structural reform. Institutional
involution was as much a consequence of political shortsightedness and a “pseudo-absolutism” as of this “deformed or
pseudo-mercantilism” that came into existence thanks to the “agency of a dependent pseudo-bourgeoisie.”24 In Spain
appearances were deceptive.

This assessment is convoluted but not entirely nonsensical. It simply reflects what happens when historians attempt to
press Spanish political economy into a set of theoretical concepts and heuristic devices that are, in this case, ill-suited.
Once we disassemble these concepts into their various parts, it is not so difficult to see where the paradox arises. The
fundamental piece missing in this traditional narrative is an understanding of the structure of governance in early modern
Spain. In this it ignores Eli Heckscher’s important comment that mercantilism was “primarily an agent of unification.”25
In other words, Heckscher’s notion of mercantilism was that of a set of ideas and practices, which were not principally
directed at international competition but inwardly at state formation and the creation of an integrated domestic market.

We should, then, read mercantilism as an attempt to transform the constitution of society, in the German sense of
Verfasstheit not Verfassung, (i.e., the way in which society is constituted rather than the Anglophone written or unwritten
constitution). In the Spanish context, however, historians of political economy have concentrated almost (p.246)
exclusively on outward oriented mercantilist trade policies. The strong historiographical tradition that identified the
regulation of the American trades and their role in international competition and in securing metropolitan rents with
monopoly and mercantilism has crowded out everything else.26 Curiously little has been said about mercantilism in Spain
in relation to the unification of the sources of political power and administrative structures. Was Spanish mercantilism a
program toward unification or a by-product of unification or neither of the two? And how was it embedded in political
structures and social habitus?

The perceived paradoxes of the political economy of the mercantilist age in Spain become clearer when we locate them in
the structure of governance. Governance itself, of course, is complex, involving not just political structures but also what
has been called the “philosophical matrix” underlying the contemporary understanding of rule and monarchy—and the
social structures that underpinned the inclusion and exclusion of ordinary Spaniards in political process—or to use a
slightly anachronistic term, their representation.27 Thus, the problem was not one of implementation. Instead three
reasons accounted for the poor fit between Spanish governance and mercantilist thought and practice. First, and most
obviously, Spain was not unified politically, socially, or culturally in the mercantilist period. Unification was a political and
economic priority of monarchy, councils, and validos (court favorites, effectively first ministers) for most of the sixteenth
to the eighteenth centuries, but reforms in this direction failed almost entirely. Second, the way in which power and rule
were conceptualized and legitimized in Spanish political and philosophical writing circumscribed attempts at increasing
unification. The intellectual foundations of governance in Spain were in conflict with unifying tendencies. Third, this
intellectual incompatibility was especially in Castile enshrined in long traditions of political representation through strong
municipal authority, which central “government” never overcame. Each of these issues can be illustrated in the following
through the fiscal system and its development between the mid-sixteenth and the mid-eighteenth centuries. It is here that
one can begin to understand the sociopolitical context into which mercantilist ideas entered.

That Spain was at its origins a “composite state” is well known.28 It emerged as out of the dynastic conglomerate of Castile,
Aragon, and Navarre, adding Portugal, the Netherlands, Naples, Sicily, Sardinia, and Milan and the largest pre-eighteenth-
century empire in the Americas and the Philippines. In turn, neither Castile nor Aragon was unified: they comprised
historic territories that maintained their own political representations. In the old kingdom of Aragon, the Crown had to

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negotiate with separate Corts in Catalonia, Valencia, and Aragon, plus Mallorca; in Castile, the three Basque provinces
were largely independent and equally protected by their historic freedoms, the fueros, as was Navarre. To a lesser extent,
exceptions applied to the former kingdoms of Granada and Murcia.

(p.247) The legacy of this process of dynastic unification without political or territorial integration was nowhere more
obvious than in the fiscal system. The distinct rules of bargaining in each of the constituent territories survived the
dynastic union and created a degree of complexity that set the Hispanic monarchy apart from its European neighbors.
James Tracy has recently shown how different constitutional structures in Naples, the Low Countries, and Castile
produced vastly different outcomes in their fiscal negotiations with Charles V.29 In each territory some form of
representative assembly existed, but their role and interests were strikingly different. In the Netherlands, the large towns
and the provinces were both invested with authority to negotiate with the monarchy (or its representative in Brussels),
making it virtually impossible to extract revenue beyond those used within the territory. In Naples, the nobility was far
more powerful and could be co-opted by the monarchy against towns and territories. This ultimately meant that Naples,
like Castile, fiscally subsidized the monarchy’s policy outside its confines.30

There were several well-known attempts to achieve a more uniform tax burden between the various territories. The first
systematic attempt was undertaken by the valido of Philipp IV, the Conde Duque de Olivares.31 Under the increasing
financial pressure of the Thirty Years Wars (1618–48), Olivares tried to raise the fiscal contribution of the non-Castilian
territories, which was either nonexistent or minor.32 The Catalan and Portuguese representations in particular, however,
refused to vote any additional taxes. Olivares’s final plan, the Union of Arms, thus proceeded to allocate the costs of raising
troops directly to the historic territories, in an attempt to circumvent the thorny issue of raising taxes.

The outcome of Olivares’s policy is well known: both Portugal and Catalonia rose in revolt in the 1640s, Palermo and
Naples in 1647. Portugal was eventually lost entirely at the end of a long and costly struggle. The Masaniello Revolt in
Naples was “suppressed” only after it had run its course. Catalonia seceded for a time and became controlled by France but
returned to Spain in 1652 after a less-than-pleasant experience with domestic strife and French indirect rule, which turned
out to be considerably more meddlesome and serious than Spanish notionally direct rule. The Habsburg monarchy’s
reaction to the Catalonian experiment in secession was surprisingly mild and mirrored that in Naples. A few leaders were
punished severely, but for the second half of the seventeenth century the Habsburgs largely left Catalonia to its own
devices in what has been described the neo-foral period, in which the regions traditional freedoms, the fueros, were
reinforced. As John Elliott argued, paraphrasing González de Cellorigo, “such strength as it [the Spanish Monarchy]
possessed derived from its weakness.”33

Yet the problem had not been solved, of course. On the contrary, mercantilist thinkers continuously urged Spanish
monarchs and councils into increasing fiscal integration among the historic territories at least. In the late 1680s under the
direction of the (p.248) Conde de Oropesa, valido of Carlos II, a new attempt was made to remedy the situation. But the
emphasis had changed substantially, revealing the tensions between mercantilist fiscal ideas and Spanish constitutional
reality. The plans Olivares offered in the 1640s for tax unification had followed mercantilist logic in that they assumed that
unifying the tax schedule would increase the total tax take and thus strengthen the royal treasury. Oropesa’s thoughts
implied the opposite:

It seems to me against reason, Christianity, convenience, and politics that the poor Castilians are not free [from
over taxation] just as the Aragonese, Catalans, Valencians, Navarrese, and Biscayans, no matter how obedient they
are, how miserable and most rigorously [fiscally] oppressed, given that they preserved these kingdoms in far away
places fighting with their blood and contributing with their properties.34

De facto Oropesa had accepted the impossibility of increasing non-Castilian taxation and concluded that the only way to
achieve a degree of fiscal equality was to decrease Castilian taxation. Rarely had the contradiction between mercantilist
strategy and Spanish political economy been formulated more clearly. Mercantilists everywhere favored political and fiscal
unification as a means of increasing the fiscal revenues of the monarch by wrestling away taxes from towns, historic
territories, and other corporate bodies. The strong political rights of the historic territories in Spain, however, made it
impossible to unify and increase taxation. A degree of unification could be achieved only at the expense of lower overall
taxation, that is, unification at the lowest common denominator. Paradoxically, mercantilist policies threatened to make
the state fiscally weaker rather than stronger in Spain, and they thus were a practical impossibility in a time of extreme
fiscal distress—and that meant in Spain at least for the entire seventeenth century.

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The political changes of the early eighteenth century in Spain did little to alter the balance of power. The fact that the
Aragonese territories supported the losing Austrian side in the War of Spanish Succession gave the new Bourbon
monarchy the opportunity to finally restrict the power of at least some of the historic territories. The famous Nueva Planta
laws of 1707–14 ended Catalonia’s, Aragon’s and Valencia’s status as independent reinos, and customs between Aragon
and Castile were abolished.35 Spanish historiography often interprets these events as a decisive move toward absolutist
and centralist rule.36 Fiscally, though, the reform was an almost complete failure. The introduction of a tax meant to be
equivalent to that of Castile in these territories, the aptly named equivalente, resulted in anything but an approximation of
Valencian, Aragonese, Catalan, and Castilian tax incidence.37 At first the tax revenue rose substantially, but it was swiftly
eroded by inflation and population growth. Reform remained nominal rather than substantive. In addition, the Basque
provinces and Navarre, both (p.249) of which had supported the winning French side in the war, got guarantees that
their entirely autonomous fiscal system was not to be touched at all.38

The non-Castilian territories thus sheltered behind historic rights in order to actively scupper any tendency toward
integration, in some cases even after those had been officially abolished. However, in the heartland of the Spanish
possessions, León and Old and New Castile, the mercantilist drive for fiscal reform ran into equally insurmountable
problems. Earlier than elsewhere in Europe, power was territorially defined rather than through personal vassalage in the
Crown of Castile, likely as a consequence of the reconquista and demographic conditions in much of the Duero valley.39
Feudal structures were weak, and political power was located to an unusual degree in the towns that held strong rights
over their hinterlands. In Castile, towns controlled the rural areas, no matter if those towns in turn were part of the
realengo, the royal lands, or if they belonged to ecclesiastical institutions or noble houses or were free. Towns also
controlled the fiscal apparatus. As a consequence revenue collection relied throughout the early modern period almost
exclusively on typically urban indirect taxation,—taxes levied on consumption and trade, such as customs, excises, and
sales taxes.40

Mercantilist observers were cognizant of the link between indirect taxation and the fact that power was located in the
historic territories and urban governments. The general sales tax, the famous alcabala, was a common object of criticism.
Accused of being the ruin of agriculture, domestic trade, and manufacture, its effect was aggravated by additional taxes
such as the sisas, cientos, and millones falling on the very same transactions. Sancho de Moncada, for example, presented
in 1619 a project to abolish all sales taxes in favor of a single tax on bread and food grains.41 He reasoned that this “matters
so that trade can go freely, and all make use of their wealth on occasions, without fear of alcabalas and pains, so that all
would engage in trade.”42

The problem was that all of these sales taxes were collected at the town level, and more often than not it was also the towns
that decided how they were raised, what products were burdened, and at what rate. Although alcabalas and cientos were
supposed to be levied at a fixed ad valorem rate, the local administration meant that the effective rate could in fact differ
dramatically. As a consequence an arroba of wine paid 12 maravedís in taxes in Málaga, 25 in Cuenca, 51 in Ávila, and 152
in Jaén. Similar differences existed for other staple foodstuffs.43 Unification of these rules remained a distant dream of
Spanish mercantilists and with it any attempts to foster commerce.

The tension between attempts at unification, what we commonly refer to as the early phases of the creation of the
nation-state and local, regional, and corporate resistance against this tendency, was a general European feature of the
mercantilist period, no matter if we believe that mercantilist thought was instrumental in this process or was an outcome
of it. Heckscher saw mercantilism largely as struggling against the remnants of (p.250) medieval particularism and
Weberian patrimonialism, although this latter point was more implicit than explicit. The real question is why unification
was encumbered so severely in Spain compared to Europe’s most unified state, England, or even to less centralist France.
Why did a mercantilist bureaucrat like Oropesa come to the conclusion that unification could be “bought” only at the
expense of a fiscal weakening of the central treasury, which made it practically impossible time and again? A satisfactory
answer to these questions can hardly be achieved here, but a few elements toward explanation are given.

The most important element is the survival of strong contractual elements in Spanish understanding of the way rule and
governance were legitimized. The recent historiography has begun to explain much better the relationship between rulers
and ruled in both theory and practice. Spanish political philosophy never gave up the idea that monarchy had contractual
foundations.44 There were several reasons for this. Spanish kings never attained the degree of divine legitimization
commonly ascribed to English or French monarchs.45 Neither Castile nor Aragon and much less the Basque provinces or
Navarre developed a coronation ceremony. Indeed, in Castile the last leftovers of such a ritual, which was almost certainly

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of Moorish origin, were abandoned in the fifteenth century. The Monarch was the defender of the faith but not an
impersonation of the divine. Spanish Jesuits were adamant that “no king is absolute or independent or proprietary, but is
a lieutenant and minister of God.”46 While Spanish kings engaged in public acts of devotion, such as the foot-washing of
paupers, demonstrating that they were subject to a higher law, they were never thought of as having healing powers or
other sacred attributes.47 Thus, they could fail and if they did, tyrannicide was permissible. Just as Jean Bodin legitimated
the absolute power of French kings, Juan de Mariana argued that if hope were gone and religion in danger, only a fool
would argue that it was not just and according to law to kill the tyrant.48 As Henry Kamen pointed out, Mariana’s De rege
et regis institutione (1598) was publicly burned in London and Paris but raised little opposition in Madrid or Barcelona.49

Catalonia in the late sixteenth century saw the dissemination of the legendary myth of Sobrabe, a mountain region located
in today’s province of Huesca, said to be the origin of the establishment of a Christian polity, which would be the nucleus
for the kingdom of Aragon. Linked to this mythical origin of Aragon, the so-called Oath of the Aragonese appeared in four
independent publications in Italy, France, and Spain between 1565 and 1593, but it was also mentioned by Jean Bodin and
others.50 All alleged that since earliest times the kings of Aragon had had to swear the oath before their subjects would
swear them allegiance. Although important variations existed in the wording, the best-known version became the one
reported by Antonio Pérez, the fugitive secretary of Philipp II of 1593:51 (p.251)

Nos, que valemos tanto como vos

Os hazemos nuestro Rey y Señor
Con tal que nos guardeys nuestros fueros, y libertades
Y syno, No52
[We, who are worth as much as you
Make you our King and Lord
So that you guard our ancient freedoms and liberties
And if not, Not.]

This was mythmaking in practice. The story of Sobrabe was fused with the fueros (traditional liberties) of Navarre, and the
actual tradition of an oath being taken first by the heir to the throne and then by the king himself at accession. Yet, the very
fact is that the myth was propagated in defense of Aragonese rights vis-à-vis the Monarch. An Italian diplomat remarked
on it in reports to the Doge explaining how difficult it was for the Crown to influence affairs in Catalonia. He reflected the
view of uninterested contemporaries that Aragon enjoyed an unusual degree of independence by contemporary
standards.53

In Catalonia and Valencia the notion of a contractual monarchy was thus deeply embedded in the political culture, and
arguably the abolition of the territorial institutions simply served to reinforce the view that the king had overstepped his
rights, thus legitimizing resistance at all levels.54 This has long been recognized by historians but is usually contrasted with
an allegedly far more absolutist Castile.55 But there is historiographical myopia in this view, which zooms in on diversity
within the peninsula and thus loses sight of the larger comparison. The Catalan nobility and bourgeois elites might have
felt that Castile was indeed absolutist. Yet by European standards and in the absence of divine providence, the Spanish
Crown depended on a large degree of approval by their subjects in practically all of its territories. As Monod observed, it is
unlikely that Lope de Vega’s Fuenteovejuna (1619), one of the most important plays of the Spanish Golden Age, could have
taken place in France or England: As the villagers of Fuenteovejuna shout “Long live the king,” they kill their abusive
landlord and anticipate that the just kings will pardon them for taking justice into their own hands against the abuse of
power they suffered. And pardoned they were.56

The best-known expression of the limitations to any form of central authority, be it that of the Crown or its councils, was
the famous phrase “la ley se obedece pero no se cumple” (the law will be obeyed but not executed).57 What it meant can be
illustrated with a small incident that occurred when the Crown tried to introduce an unpopular new trade registration in
Bilbao in 1628 in an attempt to use a uniform customs and registration policy in its international competition, especially
with the Dutch and English. The representative of Bizkaia argued that (p.252)

In … the said fuero … it is said that any royal decree, which would be directly or indirectly against the fuero of
Vizcaya, should be obeyed but not complied with (sea obedecida y no cumplida). I, in the name of the said señorio
[Vizcaya], with due respect obey the said decree as our King and natural sovereign has sent. But inasmuch as this is
in any way against our fueros … I submit humbly before his royal person … and I refuse to execute and comply with

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the said royal decree in everything prejudicial.58

The pase foral, the special privilege contained in the fueros, amounted to a real veto. But the assumption that this
veto-right applied only in Vizcaya or the Basque Country is mistaken. The pase foral was simply the institutionalized
expression of a constitutional tradition in the Hispanic monarchy, which defined the relation between monarchy and
territories, towns, and corporate bodies more generally. The constitutional concept underpinning the role of the monarchy
in the Spanish composite kingdom meant that every official, corporation, or individual could invoke the famous phrase. It
was born out of what Colin MacLachlan calls a “philosophical matrix,” which argued that the king could not will anything
that would prejudice his subjects.59 Therefore, any royal decree perceived locally as prejudicial could be resisted perfectly
legally under the constitutional pretext that the king would not have issued it had he had full information about its
consequences. Especially in the Anglophone historiography on colonial Latin America, the phrase is often erroneously
seen as a sign of a lax attitude to legal compliance. Yet, as Alejandro Cañeque has pointed out, the veto-right was the
law.60

The possibility of a veto gave unparalleled powers not only to the political elites in the historic territories but also to town
oligarchies, who could use it against any policy that would restrict their regional decision-making powers. This tradition
was so powerful that it survived well into the eighteenth century and functioned even after the king had effectively been
removed with the Napoleonic invasion of 1808. When the Juntas Generales de Sevilla that governed “free” Spain ordered
Cuba to close its port to foreigners, the Cuban authorities obeyed and thus accepted the Juntas’ legitimacy, but they
“suspended the compliance with the decision” since the local situation did not allow its application.61

In addition, this practical right to resistance was applied across the board. Ruth MacKay has shown how Castilian towns,
but also humble individuals, refused and renegotiated the terms of being called into the army in the sixteenth and
seventeenth century. What puzzled her was that the most humble and miserable subject of Philip IV (1621–65) “wrote to
the king as if they expected to be listened to, and their confidence was often rewarded.”62 Spaniards were equally notorious
for their habit of litigation. While this might have been the result of the poor enforcement of contracts and/or the level of
social conflict, it also reveals very clearly that Spaniards of all walks of life felt entitled to be heard before the law. Indeed,
higher appellate courts in Spain (p.253) were surprisingly willing to defend villages against the aristocracy or poor
peasants against urban oligarchs.63

Corruption and favoritism was obviously endemic. Yet the existence of such institutions as the defensores de pobres (ex
officio lawyers for those too poor to pay a lawyer) illustrates a legal notion of equal access to the law though not equality
before the law. Equally, the remarkable number of cases brought against the Crown as a seigniorial lord bears witness to
the fact that the Crown in most of its activities was not perceived as standing above the law. Richard Kagan wrote that the
high level of litigation was a sign of an increasingly absolutist Habsburg monarchy, which was eager to exercise the role of
rey justiciero. This seems somehow problematic in the face of recent research that has revisited the understanding of
absolutism.64 More convincing is Helen Nader’s interpretation that “the Castilian’s famed litigiousness might be seen as a
sign of their confidence in their capacity for self-administration and their essential faith that the monarch or lord was not
their enemy.”65 The king was more an “ultimate arbiter” of interests in the peninsula and the “stakeholder empire” he
ruled in the Americas than anything approaching the classical definition of an absolutist ruler.66

The conflict over unification of rule was not particular to Spain. But the relatively weak seignorial rights of the Castilian
aristocracy meant that it took a particular shape. If we accept the basic notion that mercantilism was the political economy
side of a struggle to overcome the multiple allegiances of early modern subjects to their seigneur, their monarch, the
Church, their religious fraternity, their guild, and their town, we should also embrace the idea that it fostered the drive
toward an emergent “state” represented by a much more powerful impersonal ruler, be it a monarch or a parliament. The
literature about the role of the ruler in unifying what would become European nation-states concentrates on the conflict
between Crown and aristocracy or gentry and the multiple allegiances of subjects to king and seigneur that had to be
overcome. In Spain, however, the contest was largely between monarch and territorial units rather than about personal
bonds between monarch, aristocracy, and vassals.

Marxist historians of the 1970s concluded that the Castilian Crown’s winning of the upper hand over the aristocracy was a
sign for an early shift toward absolute rule.67 What they failed to notice was that the strength of the fueros of the historic
territories and the central position of urban corporations in the sociopolitical makeup of the Hispanic realms
circumscribed royal prerogative more effectively than the aristocracy could have. Their representatives, namely the

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assemblies of the territories or the town oligarchies represented in the councils, were much more heterogeneous than the
aristocracy or even the noble estate as a whole, and therefore much harder to co-opt.68 The limitations imposed on the
Crown and councils as an expression of a central government were not primarily incompetence or even corruption, but
were structural and deeply ingrained in the Verfasstheit of Hispanic societies.

(p.254) The heterogeneity of the opposition toward unification was but one problem for Spanish mercantilist reformers.
The idea of a contractual relationship between Crown and subjects remained strong. In the non-Castilian territories,
traditional rights were jealously guarded vis-à-vis Madrid even after the abolition of the Aragonese institutions. In Castile,
the towns played a special role. Since towns controlled most of the taxes, the Crown began in the sixteenth century to raise
its debts via the towns. This was an obvious step because creditors asked for specific taxes to be earmarked for repayment,
something only towns could do efficiently. By the late seventeenth century, much of the Castilian “public” debt was in fact
hidden in urban treasuries. One means to raise money to withstand the military pressure of increasing European
competition was the sale of town charters practiced by the Spanish Crown from the sixteenth through the eighteenth
centuries.

Towns, large, small, and tiny, were the legal, social, administrative, and cultural backbone of Castilian society; the
proliferation of new towns, established out of villages or new settlements, was equivalent to a substantial devolution of
power because it created an ever-increasing number of self-administering towns. Nader raised a fundamental issue when
she pointed out that most male adults in Spain, outside the very large cities, would at some point have held some kind of
public office simply because most towns were so small but they still required a substantial number of officeholders: mayor,
council-members, treasurer, and the like. Hence they would have been part of a tradition of political organization at the
lowest level that was fundamental for their understanding of their role in society and the constitutional nature of rule.69

The overwhelming majority of Castilians felt “represented,” a somewhat anachronistic term used here in the absence of a
better alternative, through their participation in urban cultural, social, economic, and political life. The point is not that
there was anything particularly urban in the sociological sense about Castilian life. In the sixteenth century 60 percent of
the population lived in places of more than one thousand inhabitants, the majority of which might sociologically,
culturally, and economically at most qualify for the label “village.” Politically, though, they were towns. They might have a
noble or ecclesiastical seigneur with rights to payments or who controlled part of the taxes due. They would negotiate
and/or litigate with or against the seigneur or the regional representative of the Crown, the Corregidor. But beyond that,
there was little intermediate authority between the estimated fifteen thousand municipalities and the Crown.70 In the
meantime, they would have decisive influence on how taxes were raised, how land was used, if commons were sold to
finance taxation that had been apportioned as an encabezamiento (effectively a lump sum) on the entire town. Small
wonder the representative of the most humble little place felt entitled to raise its concerns with the king or sue the
neighboring town in the Chancilleria’s appellate court.

(p.255) Attempts to reform and unify the tax system not surprisingly stumbled time and again over these municipal
forms of representation. Mercantilists abhorred the indirect consumption and sales taxes that dominated the treasury
revenue, but they were nonetheless deeply embedded in the constitutional structure. It is true that the great majority of
Spanish towns were so indebted in the seventeenth century that their de facto choices were at best between raising the
wine tax and raising the fish tax.71 Yet, their town privileges did indeed entitle town councils to those basic decisions and
they could never be overruled. When the Conde Duque de Olivares contemplated unifying the tax system, abolishing the
odious alcabalas and sisas, and replacing them with a direct tax levied on each town and village in Castile, he quickly
retreated after having estimated that royal officials would have had to negotiate the exact amount and terms with each and
every one of those fifteen thousand municipalities.72 Even in the mid-eighteenth century, reforms aimed at simplifying
and unifying the Castilian tax system collapsed in the face of concerted resistance from town oligarchies.73

The Castilian experience thus fits well with Heckscher’s classic treatment of mercantilism as an era in economic policy,
which pointed out that the most formidable obstacle toward unification were neither the estates nor the remnants of
medieval universalism represented by the Church, but the towns themselves.74 The relative strength of towns shaped the
penetration of mercantilist thought into political reality, or the absence thereof, decisively. There were those polities like
England, where towns mattered least according to Heckscher, and where unification could proceed—not unopposed but
ultimately successfully.75 But elsewhere the strongly urban character of governance in polities like Spain stood against the
tide, a fact that has only recently become fully appreciated.

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Seen from the bottom up rather than the top down, it is evident that fiscal regulation of any kind in Spain, or indeed in its
constituent parts—Castile, the Crown of Aragon, Navarre, the Basque territories, and the American territories—was rarely
unified, let alone “national” in any way. The admittedly anecdotal evidence on the fiscal constitution of the Hispanic
monarchy illustrates that. Most European territorial states were from their inception composite states. But some, notably
Spain and the Netherlands, remained what I have elsewhere called “polycentric” states.76 In Spain, nothing approaching a
“national” policy could have been adopted in fiscal matters or in the regulation and fostering of certain industries
considered crucial by mercantilists.

Stein and Stein are absolutely right that the Spanish Habsburgs failed to distinguish between the various historic
territories, and that the interests of Castilian wool producers were not given preference over Flemish cloth makers or
American suppliers of dyestuffs.77 They could also have cited another even more striking example, that of shipbuilding.
This was a central concern of mercantilist strategy in a polity, which was kept together through maritime trade across the
Mediterranean and the Atlantic, and (p.256) thus the lack of Spanish “national” policy has always puzzled historians.78
The problem was not a consequence of patrimonial empire but rather a deep seated understanding of the contractual
nature of governance, which was protected from royal encroachment through an effective right to a veto over any initiative
emanating from the king’s councils in Madrid. Although mercantilist thinkers and modern historians regularly compare
the Spanish political economy to that of France, Spain was really facing problems that were more similar to those that
afflicted the Dutch Republic. The latter found it equally hard to pursue any mercantilist strategy against the objections of
its powerful towns once the external threat of war with Spain was removed.

The lack of implementation of mercantilist “national” projects in the Hispanic reigns was not an outcome of a lack of
administrative capability. Instead, it reflected a fundamental tension between the sociopolitical realities in the Iberian
Peninsula and a shift in political economic thought. At the same time, both the fiscal history of Spain and the short
example of shipbuilding also show that the Crown could use the constitutional structure quite effectively as long as it did
not try to impose mercantilist considerations. This explains why Spain managed its public finances so successfully when
compared to, say, France in the eighteenth century.79 It is also the reason why Spain effectively maintained maritime
communications by pragmatically purchasing and producing shipping resources in public-private partnership in whatever
territory offered the best cost/benefit ratio.80 That made for poor industrial policy in the mercantilist sense, but it
respected the Spanish sociopolitical reality and created even a limited amount of competition between regions.

Yet, Spain’s fiscal policies as well as its “industrial” policies, such as shipbuilding, came at a cost that contemporaries could
hardly have conceptualized. Letting locals run the tax system and take care of the debt in return while simply purchasing
ships for the navy wherever the best offer could be had, was an inexpensive way of running a state and a navy. But the push
for “national” taxation, regulations, and industries in England or France created clusters of knowledge and agglomeration
economies, which began to feed a virtuous cycle of industrial development. Spanish commentators noticed this toward the
mid- and later eighteenth century, but like their English and French colleagues they found it hard to understand its
functioning. A basic theory of the economics of agglomeration would first be formulated by Alfred Marshall in his famous
Principles of Economics more than a hundred years later.81

In Spain, political and economic thinking that aimed at fostering a “national” economy threatened the traditional channels
of representation within the Spanish monarchy that were strongly based on regional and urban structures. Therefore,
powerful regional elites found themselves in a difficult situation. To use Hirschman’s classic terminology: in ancien régime
Spain’s decentralized, negotiation-based decision-making process, voice was exercised through the implicit veto that
regional groups derived from the (p.257) survival of traditional political freedoms.82 The monarchy and its councils had
to negotiate with their subjects because the traditional regions could legally resist the implementation of policies under
that famous phrase that a law they objected to was going to be “obeyed but not complied with.” This form of exercising
voice channeled political representation through regionally organized institutions rather than national ones and often
transgressed social stratification, adding to the weakness of centralizing attempts. Conflict continued to take to a large
extent an interregional shape. The very real threat of territorial dismemberment, that is, the exit strategy in Hirschman’s
terms, presented the Crown with an almost insurmountable opportunity cost of implementation of reforms, fiscal or
otherwise, that were aimed at unification.83

This structure tended to empower commercially successful elites, especially in the coastal regions, which could rely on
broad support in their region against the center. At the same time it converted the attempt to implement any “national”
economic regulation into an attack on political and cultural representation, generally fiercely—and successfully resisted by

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the regions. Commercial elites, in principle the prime potential beneficiaries of many mercantilist policies, found
themselves lobbying against these policies, in order to maintain their regional representation and power base. In the
Spanish context, the notions of economic nation-building and social, cultural, and political representation and
participation became incompatible.

Spanish thinkers participated actively in the development of what could be called a mercantilist body of theory; they
probably even originated quite a lot of it. But this intellectual mercantilism stood no chance in Spain of becoming a real life
economic and political mercantilism. The constitution (Verfasstheit) of Spain was entirely incompatible with economic
and political mercantilism. In a polycentric polity characterized by political participation through municipal, local, or
regional institutions, mercantilist economic measures implied a disenfranchisement of important political groups. In
England, the lines between corporate groups and the state were blurred for much of the era of mercantilism. Yet their
outlook was nevertheless essentially “national” or “imperial” rather than local or regional. Territorially, unification had
progressed much farther long before the era of mercantilism. In France, the opposition to unification was primarily a
conflict between Crown and aristocracy, thus strategies of co-optation, enlargement of the nobility, and a little power play
were likely to render a reasonable result: the elite could be cajoled into becoming a part of that new more unified state and
its mercantilist policies; after all there was no “exit option” for the aristocracy.

Where the monarchy had to face territorial representation with a strong intellectual and cultural backing, as in Spain,
unification was impossible. Mercantilist ideas could take root, but mercantilist practices were repulsed. When we place the
intellectual history of mercantilism into the sociopolitical and cultural context of Spain’s conflict-ridden state and nation-
building process in the sixteenth to eighteenth century, it (p.258) becomes apparent that the notion of mercantilism as
the Urform of economic nationalism simply reveals that Spanish governance in the early modern period was a poor basis
for either political or economic nation-state building. Spain was not supposed to be mercantilist.

Notes

Notes:
(1) Eli F. Heckscher and Mendel Shapiro, Mercantilism (London: G. Allen and Unwin ltd., 1935), 1:344; Thomas Mun,
England’s Treasure by Forraign Trade, Or, the Ballance of Our Forraign Trade Is the Rule of Our Treasure (London:
Printed by J. Flesher for R. Horne, 1669), ch. 6.

(2) Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Oxford: Clarendon Press, repr. 1979),
Book IV, Chapter 5, 541.

(3) Smith, Wealth of Nations.

(4) Andres V Castillo, Spanish Mercantilism: Geronimo de Uztariz, Economist (New York: 1930); Marjorie Grice-
Hutchinson, Early Economic Thought in Spain 1177–1740 (London: George Allen and Unwin, 1978); Earl J. Hamilton,
“Spanish Mercantilism before 1700,” in Facts and Factors in Economic History. Articles by Former Students of Edwin
Francis Gay (Cambridge, MA: Harvard University Press, 1932); José Larraz López, La Época Del Mercantilismo En
Castilla (1500–1700), (Madrid: 1963, repr. Asociación Española de Historia Moderna, 2000); Ernest Lluch, El Pensament
Econòmic a Catalunya (1760–1840): Els Orígens Ideológics del Proteccionisme i la Presa de Conscíencia de la Burgesia
catalana, vol. 22 (Barcelona: Ediciones 62, 1973); Stanley J. Stein and Barbara H. Stein, Silver, Trade, and War: Spain
and America in the Making of Early Modern Europe (Baltimore: Johns Hopkins University Press, 2000); José Luis
Sureda Carrión, La Hacienda Castellana Y Los Economistas Del Siglo Xvii (Madrid: Instituto de Economía “Sancho de
Moncada,” 1949).

(5) Jacob van Klaveren, “Fiscalism, Mercantilism and Corruption,” in Revisions in Mercantilism, ed. D. C. Coleman
(London: Methuen, 1969).

(6) Barbara H. Stein and Stanley J. Stein, Edge of Crisis: War and Trade in the Spanish Atlantic, 1789–1808 (Baltimore:
Johns Hopkins University Press, 2009), 3.

(7) Grice-Hutchinson, Early Economic Thought.

(8) Grice-Hutchinson has argued that the drawing of a strict separation would be artificial. Early Economic Thought, 122.

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(9) Joaquim Albareda i Salvadó, La Guerra De Sucesión De España (1700–1714) (Barcelona: Crítica editorial, 2010).

(10) See, for example, Sureda Carrión, La Hacienda Castellana. (Madrid: CSIC 1949).

(11) Most recently, the Steins come close to accusing even Uztáriz of it. Stein and Stein, Silver, 164ff.

(12) Martín de Azpilcueta (alias Navarrus), Comentario Resolutorio De Cambios (Madrid: Consejo Superior de
Investigaciones Científicas, 1556 [1965]). That this was generally accepted thought becomes clear from Tomás de
Mercado’s Tratos y contratos de mercaderes (1569) as shown by Grice-Hutchinson, Early Economic Thought, 124ff.

(13) See, for example, Francisco Martínez de Mata and Gonzalo Anes Alvarez, Memoriales y Discursos (Madrid: [Moneda
y Crédito], 1971); or Martín González de Cellorigo, Memorial de la Politica necessaria y util Restauracion a la Republica
de España y Estados de ella y del Desempeño uniuersal de estos Reynos (Por Iuan de Bostillo, 1600).

(14) . J. Huizinga, Homo Ludens: A Study of the Play-Element in Culture (Boston: Beacon Press 1970), 187. This was
recently pointed out by Gabriel Paquette, “Enlightened Narratives and Imperial Rivalry in Bourbon Spain: The Case of
Almodóvar’s Historia Política de los Establecimientos Ultramarinos de las Naciones europeas (1784–1790),” Eighteenth
Century 48, no. 1 (2007): 63.

(15) Gerónimo de Uztáriz, Theorica Y Práctica De Comercio Y Marina, 2nd ed. (Madrid: 1757).

(16) Pedro Rodríguez Campomanes, Discurso Sobre La Educacion Popular De Los Artesanos, Y Su Fomento (Madrid: En
la imprenta de D. Antonio de Sancha, 1775), App. 4, 86.

(17) Earl J. Hamilton, American Treasure and the Price Revolution in Spain 1501–1650 (Cambridge, MA: Harvard
University Press, 1934); Earl J. Hamilton, War and Prices in Spain, 1651–1800 (Cambridge, MA: Harvard University
Press, 1947, repr. New York: Russel and Russell, 1969), J. Klein, The Mesta: A Study in Spanish Economic History,
1273–1836 (Cambridge, MA: Harvard University Press, 1920); Robert Sidney Smith, The Spanish Guild Merchant: A
History of the Consulado, 1250–1700 (Durham, NC: Duke University Press, 1940). For a more detailed discussion, see
Regina Grafe, Distant Tyranny: Markets, Power and Backwardness in Spain 1650–1800 (Princeton, NJ: Princeton
University Press, 2012).

(18) John Wesley Horrocks, A Short History of Mercantilism (London: Methuen and Co. Ltd., 1924), 99.

(19) Larraz López, Mercantilismo.

(20) Stein and Stein, Silver, 19.

(21) Stein and Stein, Silver, 16–19, 86–103, 157–79.

(22) Uztáriz, Theorica.

(23) Stein and Stein, Silver, 87.

(24) Stein and Stein, Silver, 103.

(25) Heckscher and Shapiro, Mercantilism, 22.

(26) Note that the Carrera de Indias took place within the organizational form of a regulated company but was in fact no
monopoly. See Grafe, Distant Tyranny, 228–29.

(27) Colin M. MacLachlan, Spain’s Empire in the New World. The Role of Ideas in Institutional and Social Change
(Berkeley: University of California Press, 1988), ch 1.

(28) John H. Elliott, “A Europe of Composite Monarchies,” Past and Present 137 (1992), 48–71.

(29) James D. Tracy, Emperor Charles V, Impresario of War: Campaign Strategy, International Finance, and Domestic
Politics (Cambridge: Cambridge University Press, 2002).

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(30) Tracy, Emperor Charles V.

(31) John H. Elliott, The Revolt of the Catalans: A Study in the Decline of Spain, 1598–1640 (Cambridge: Cambridge
University Press, 1963); John H. Elliott, The Count-Duke of Olivares (New Haven, CT: Yale University Press, 1986); Rafael
Valladares, Felipe IV y la Restauración de Portugal (Malaga: Editorial Algazara, 1994).

(32) Juan E. Gelabert, La Bolsa del Rey: Rey, Reino y Fisco en Castilla (1598–1648) (Barcelona: Critica, 1997).

(33) John H. Elliott, Imperial Spain, (Harmondsworth: Penguin, 1963; repr.1976), 352.

(34) Cited in Miguel Artola, La Hacienda del Antiguo Régimen (Madrid: Alianza, 1982), 216–17, n. 211, my translation.

(35) The reality was in fact not quite as straightforward, see Grafe, Distant Tyranny.

(36) Albareda i Salvadó, Guerra De Sucesión.

(37) Artola, La Hacienda.

(38) Alberto Angulo Morales, Las Puertas de la Vida y La Muerte: La Administración Aduanera en las Provincias Vascas
(1690–1780) (Bilbao: Servicio Editorial Universidad del País Vasco, 1995); Sergio Solbes Ferri, Rentas Reales de Navarra:
Proyectos Reformistas y Evolución Económica (1701–1765) (Pamplona: Gobierno de Navarra, 1999); Grafe, Distant
Tyranny.

(39) . Wolfgang Reinhard, Geschichte der Staatsgewalt: Eine vergleichende Verfassungsgeschichte Europas von den
Anfängen bis zur Gegenwart (München: Beck, 1999). The classic text on the demographic explanation is Claudio Sánchez-
Albornoz, Despoblación y Repoblación del Valle Duero (Buenos Aires: Instituto de Historia de España, 1966). See also for
the señorio colectivo controlled by towns, Pablo Sánchez León, Absolutismo y Comunidad: os Orígenes sociales de la
Guerra de los Comuneros de Castilla (Madrid: Siglo XXI Editores, 1998), 7–17. The notable but minor exception to this
was Galicia.

(40) Carmen García García, La Crisis De Las Haciendas Locales: De la Reforma Administrativa a la Reforma Fiscal
(1743–1845) (Valladolid: Junta de Castilla y León, 1996).

(41) Sancho de Moncada, La Restauración Política de España, [1619]. (Madrid: Instituto de Estudios Fiscales, 1974).

(42) Cited in Valentin Edo Hernández, “La Propuesta tributaria de un Impuesto Único de Sancho de Moncada,” Revista de
Historia Económica 7, no. 2 Suplemento (1989): 32, my translation.

(43) Carmen María Cremades Griñán, Borbones, Hacienda y Súbditos en el Siglo XVIII (Murcia: Universidad de Murcia,
Secretariado de Publicaciones, 1993), 147, cuadro 141. For a comparison of bacalao prices, see Grafe, Distant Tyranny.

(44) Rowen calls this the “office theory of monarchy” as opposed to proprietory kingship. See Herbert H. Rowen, The
King’s State: Proprietary Dynasticism in Early Modern France (New Brunswick, NJ: Rutgers University Press, 1980).

(45) Reinhard, Geschichte der Staatsgewalt.

(46) Cited in Paul Kléber Monod, The Power of Kings: Monarchy and Religion in Europe, 1589–1715 (New Haven, CT:
Yale University Press, 1999), 42–43. Monod argues that this was indeed an Islamic heritage, since Islam would have
interpreted personal divinity as blasphemous.

(47) This contrast sharply with English and French kings. See Marc Léopold Benjamin Bloch, The Royal Touch: Sacred
Monarchy and Scrofula in England and France (London: Routledge and Kegan Paul, 1973).

(48) Juan de Mariana, De Rege Et Regis Institutione (Toledo: 1598), book 6.

(49) Henry Kamen, Imagining Spain: Historical Myth and National Identity (New Haven, CT: Yale University Press,
2008), 41.

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(50) Ralph Giesey, If Not, Not: The Oath of the Aragonese and the Legendary Laws of Sobrabe (Princeton, NJ: Princeton
University Press, 1968).

(51) Antonio Pérez was an interested party in celebrating Aragonese political independence. Following political intrigues in
Madrid and having ordered the murder of Juan de Escobedo (he alleged with the assent of Philipp II), the king eventually
had him and his accomplices put under arrest and a judicial process begun. Pérez escaped to his native Aragon, where he
was legally protected, even though he had been convicted to death in absentia in Madrid. Attempts to have him arrested by
the Inquisition caused an uprising in Aragon, and Pérez eventually fled to France and England. Gregorio Marañón,
Antonio Pérez (El Hombre, el Drama, la Época) (Buenos Aires: Espasa-Calpe Argentina, 1947).

(52) Giesey, If Not, app. 1.

(53) Giovanni Soranzo, “Relazione Di Spagna Di Giovanni Soranzo, 1565,” in Relazioni Degli Ambazciatore Veneti Al
Senato, ed. Eugenio Albéri (Florence, 1861).

(54) James S. Amelang, Honored Citizens of Barcelona: Patrician Culture and Class Relations, 1490–1714 (Princeton,
NJ: Princeton University Press, 1986). 18ff; Albareda i Salvadó, Guerra De Sucesión.

(55) Albareda i Salvadó, Guerra De Sucesión; Elliott, Imperial Spain.

(56) . The play was first published in Madrid in 1619. Monod, Power of Kings, 131.

(57) John Leddy Phelan, “Authority and Flexibility in the Spanish Imperial Bureaucracy,” Adminstrative Science
Quarterly 5, no. 1 (1960): 47–65

(58) Archivo Foral Bizkaia, CB, Libro 65/59 Antonio de Landaverde 1628.

(59) MacLachlan, Spain’s Empire, ch. 1.

(60) Alejandro Cañeque, The King’s Living Image: The Culture and Politics of Viceregal Power in Colonial Mexico (New
York: Routledge, 2004).

(61) Ramon de la Sagra, Historia Económica, Política Y Estadística De La Isla De Cuba O Sea De Sus Progresos en la
Población, la Agricultura, el Comercio y las Rentas (Habana: Imprenta de las Viudas de Arazoza y Soler, impresoras del
gobierno y capitania general, de la Real Hacienda y de la Real Sociedad Patriotica por S.M., 1831), 144, 366–468. See also
Alejandra Irigoin and Regina Grafe, “Bargaining for Absolutism: A Spanish Path to Empire and Nation Building,”
Hispanic American Historical Review 88, no. 2 (2008): 200.

(62) Ruth MacKay, “Lazy, Improvident People.” Myth and Reality in the Writing of Spanish History (Ithaca, NY: Cornell
University Press, 2006), 2.

(63) Richard Kagan, Law Suits and Litigants in Castile, 1500–1700 (Chapel Hill: University of North Carolina Press,
1981), 102–4.

(64) Kagan, Law Suits, 156.

(65) Helen Nader, Liberty in Absolutist Spain: The Habsburg Sale of Towns, 1516–1700 (Baltimore: Johns Hopkins
University Press, 1990), 9.

(66) Regina Grafe and Alejandra Irigoin, “A Stakeholder Empire: The Political Economy of Spanish Imperial Rule in
America,” Economic History Review 65, no. 2 (2012); Tulio Halperin Donghi, “Backward Looks and Forward Glimpses
from a Quincentennial Vantage Point,” Journal of Latin American Studies, Supplement, (1992): 222.

(67) Perry Anderson, Lineages of the Absolutist State (London: N.L.B., 1974).

(68) This is a crucial difference between the French and Spanish cases. In the case of the French, Glete’s thesis of the
co-optation of the aristocracy is much more appropriate than in that of the Spanish. Though the Spanish aristocracy was
certainly co-opted by the crown, it had never been the most fundamental adversary. Jan Glete, War and the State in Early

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Modern Europe: Spain, the Dutch Republic and Sweden as Fiscal-Military States, 1500–1660, Warfare and History
(London: Routledge, 2002).

(69) Nader, Liberty.

(70) Nader, Liberty, 129.

(71) José Ignacio Andrés Ucendo, “Una Herencia de los Austrias: Las Relaciones entre la Fiscalidad Municipal y Fiscalidad
Real en Castilla en los Siglos Xvii Y Xviii,” mimeo (2006). There was one very important exception: towns were not
allowed to tax bread. Benedict R. Anderson, Imagined Communities: Reflections on the Origin and Spread of
Nationalism, rev. ed. (London: Verso, 2006).

(72) Nader, Liberty, 4.

(73) For an overview, see Artola, La Hacienda; and García García, Crisis.

(74) Heckscher and Shapiro, Mercantilism, 34–40.

(75) Heckscher and Shapiro, Mercantilism, 40.

(76) Regina Grafe, “Polycentric State-Building and Fiscal Systems in Spain 1650–1800,” in Ressources Publiques et
Construction Étatique en Europe: Fiscalité et Dette Publique, Xiiie-Xviiie Siècle, ed. Katia Beguin (Paris: Ministère de
l’Economie et des Finances, forthcoming).

(77) Stein and Stein, Silver, 87.

(78) Regina Grafe, “The Strange Tale of the Decline of Spanish Shipping,” in Shipping and Economic Growth, 1350–1800,
ed. Richard Unger (Leiden: Brill, 2011), 81–116.

(79) . Grafe, Distant Tyranny, 12–19.

(80) Grafe, “Spanish Shipping.”

(81) Alfred Marshall, Principles of Economics: An Introductory Volume (London: Macmillan and Co., 1890). Marshall’s
discussion of “industrial districts” is generally considered the origin of modern studies on geographical economics.
Notably, only in the 1990s the study of increasing returns to scale fundamental for understanding agglomeration became a
standard part of economic models on trade and industrial location owing much to the work of Paul Krugman. Krugman,
“Increasing Returns and Economic Geography,” Journal of Political Economy 99 (1991).

(82) Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States
(Cambridge, MA: Harvard University Press, 1970).

(83) Adelman has recently applied Hirschman’s concept to Spanish American independence but seems to have overlooked
the obvious link to the constitutional structure of Spanish rule. Jeremy Adelman, “An Age of Imperial Revolutions,”
American Historical Review 113, no. 2 (2008): 332.

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