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Finance And Economy Notes

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The Emergence of a Great Power? Spain 1492-1556 Section Two - Strengthening the state, 1500-16 Topic three - Finance and the Economy

Revenue and Taxation

Crucial to the survival of the Crown
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To fund policies

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To fund war

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To maintain the royal court and its officers

By 1504, Revenue had increased by 30 times the amount collected at the beginning of the reign

Ferdinand and Isabella have been described as surviving 'without major financial problems'

Suggests that the system was more effective - but maybe there were simply a demand for more revenue as a result of changing system of government, costs of war or rising prices

Main sources of income

Taxation
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The alcabala or Sales tax levied in Castile.

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Provided approximately ninety per cent of the income from the taxation.

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In 1504 alone, the alcabala brought in 283 million maravedis

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The income the alcabala provided shows that the Catholic Monarchs had secured financial stability in both Aragon and Castile, as they had a regular source of income paid by all.

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However the alcabala or sales tax became an agreed sum paid in one regular payment by some towns; making it difficult for the monarchs to increase the rates.

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Also, eventually the clergy were excused from the alcabala and later devolved to the nobles.

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Changes meant that the monarchs lost a regular flow of income which, in turn, meant that they were less able to regulate their finances in a systematic manner.

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Catholic Monarchs were not solvent despite the fact that revenue overall had doubled since the turn of the century.

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The monarch's expenses continued to increase especially as a result of the Granadan war in 1492. During this time household expenses grew as the monarchs developed their court to demonstrate their status. Kamen argues that the monarchs were in a condition of 'constant debt', inferring that the Catholic Monarchs have never been in a position of financial stability.

Tax Farming

Woodward believes the monarchs considered only the short term and did not anticipate the eventual outcome of some of their policies. View reliable and valid because in the majority of his works he stresses the financial and economic motivations of politics, suggesting that he has done an in depth study of the financial position of Spain in particular.

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Early in their reign, income did not meet expenditure.

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Part of the reason for this was the tax farming; a system whereby individuals bought the right to collect taxes.

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Tax farming provided opportunities for corruption and fraud amongst the collectors, meaning that both the crown and the tax payers were worse off, as tax collected would go readily to the royal coffers. Woodward suggests that the income for the crown in

It was noted that in 1497, 'the crown had lost twenty million maravedis by the deviation of officials in the treasury',

this period was increasing. The income of eleven million maravedis they received in 1474 was increased to two hundred and sixty nine million in 1496. This view is valuable as it was stated by a influential historian who has based most of his studies on finance and economy.

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However, the taxation system was a regressive one, this seems to signify a weakness; the monarch's reliance on the nobility and a desire not to antagonise them. Despite attempts to improve the situation, for example by keeping more detailed records. The nobles continued to collect mercedes (royal grants) even though they were not entitled to them, and many of the profits of other taxes still did not reach the treasury.

Extraordinary income
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The financial stability of the Peninsula was secured by extraordinary income

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Raised by via the Hermandad, Cortes and the Church, for example, servicios, which raised money for war. Woodward suggests that the tax on the Hermandad was the most reliable of these taxes usually amounting to about 18 million maravedis in any one year. However, this income was not always enough for the needs of the crown. Woodward pinpoints that the largest creditors were aristocrats such as Duke of Cadiz who, on one occasion, loaned money in return for a village.

Ferdinand had financed large projects with the help of the Mesta, Genoese merchants and Jewish financers to strengthen the financial stability.

Jews were except from imprisonment for debt as they were valuable as financers. In Fernandez-Armesto's view, the Genoese merchants were more important than the Jewish moneylenders

In

Aragon, Ferdinand renewed their contracts every few years, valuing their expertise and seeing it positively as 'an advantage of my service and to the increase of my rents, levies and dues... that they do stay in these my said kingdoms in order to trade in their goods'. This quote by Ferdinand is valuable as it is a primary source which can be seen as highly valid and shows that the Catholic monarchs did secure the financial stability.

Juros (loans)
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Remained an important means of raising money. Most of the loan came from the nobility, for example Duke of Cadiz loaned 10 million maravedis and was rewarded by being allowed to take a village in Granada as security.

By 1510
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Ordinary revenue from taxation had increased to 320 Maravedis

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There was a lesser, but still important increase in extraordinary revenue = due to increased efficiency in collection

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Central records were now being kept + audits of tax collectors were carried out every 2 years

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However, no formal reforms of the system + monarchs weary of asking from powerful landowners

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Tax farming continued = to did corruption

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Finances were however in reasonable shape by 1516

Growth in population

Problem with number - only estimates

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