The bi-annual fairs of Medina del Campo, near the center of Castile, were the epicenter of commercial and financial activities in an age of difficult communications and travel. Before 1575, the crown strongly supported the regular holding of these fairs which were essential for getting new loans from bankers, selling long-term annuities and tax collection contracts. The great crisis of 1575–1577 forced their suspension, after which they never regained their central role. The description of the fairs’ work provides important insights on the financial and fiscal context in which Philip operated.

The Monastery of San Lorenzo de El Escorial, the largest building in the world during the Renaissance, embodied all that was dear to Philip: the memory of the San Quentin on the feast of Saint Laurent, the hunting grounds of his youth, a basilica, a monastery, a library and the austere palace from which he would govern his worldwide empire. To ensure regular payments for this construction (from 1563 to 1584), he signed a series of contracts, factorias with mesadas.

In the last two decades of the reign, the asientos became more standardized and truly massive. The next two chapters provide a detailed analysis of two of them. In the first, the transformation of numerous small sources of royal revenue into substantial payment streams, mesadas, for military expenditures in Flanders or Portugal, and the delegation of revenue collection to the banker, thus functioning as a proxy for a royal agent, is the main objective. The details reveal numerous clauses protecting the bankers, since the sources of revenue, free of prior pledge, were not fully identified at the time of signing. The following chapter focuses on the conversion of short-term debt into long-term debt. These chapters are based on previously published articles and may also give a better idea of the archival research behind this book.

A new era began in 1578. Under the effective leadership of a new commander, Alexander Farnese, the war in Flanders consisted of retaking city after city through resource-intensive sieges. Farnese had more freedom than his predecessors to sign financial contracts in Flanders that were then validated in Madrid. One example is discussed here.

Early modern markets were characterized by a high level of uncertainty. Products were not standardized, their manufacturing or transforming generated wide ranges of qualities, made even broader by shipping and storage issues. The result was a complex universe of goods distributed along price/quality scales, associated with an equally diverse number of brands. Means of payment were as uncertain, with even the value of gold- and silver-based metallic currency in doubt, and few significant attempts at developing paper money. Most transactions were realized on credit anyway, with a significant risk of default; formalized commercial paper did circulate through endorsement, and traders massively used book credit, providing banking services through book transfers between their customers. Most of the monetary mass was made up of these book credits and commercial paper, with a constant risk of failure and credit crunches. Delayed payment was the norm, and the object of complex, partly socio-culturally constrained negotiations with debtors. Traders also had to negotiate with customers, faced with goods of unknown qualities, so that the latter would accept the proposed price/quality combination.

To make a profit, early modern merchants had to belong to a group dominating or at least operating collectively on a market segment. Merchants relied on their “credit,” both in the narrow sense of ability to borrow and in the broader sense of being allowed into the group. Within it, mutual trust was built through a continuous Maussian exchange of favors, most notably book credit allowing for deferred payment, often interest-free, and shared insider information underpinning lucrative ventures, including with friendly officials. Social, religious, and family links played a role in this process, with complicated rules governing the creation of new links with new partners. Disputes did develop, but relationships were broken up only for serious cause. Double-entry bookkeeping helped track the complex flows of credit created by these networks; its first goal was not to calculate profit, but to serve as a source of mutual security, as confirmed by textbooks teaching the technique. In this universe, “profit” meant primarily an improvement in one’s group position – profit on individual ventures was much less important than acceptance by the group and the prospects of future profit it opened.

This first chapter explores the legacy of colonial credit as antecedent of nineteenth-century finance. The traditional credit systems were the lifeblood of circulation and property during the 300 years of Spanish and Portuguese rule in the New World. They were highly segmented in both colonial Spanish America and Brazil, and are comparable to those of early modern Catholic Europe, preceding the modern integration of credit and monetary markets. The increasing use of bills of exchange during the colonial era reflected the development of interregional systems of mercantile credit. Also of great interest was the creation of mining banks in Peru and Mexico in the eighteenth century. At the same time, the credit transactions supplied by hundreds of ecclesiastical institutions were of great importance for urban real estate proprietors and rural landowners throughout both Portuguese Brazil and Spanish America. In sum, the principal objective of our first chapter is to identify key aspects of the role of credit and finance in the performance of the colonial economies of Spanish America and Brazil, and to suggest how loans and debts wove complex networks of relationships between many economic and social actors before the outbreak of the wars of independence.

This book focuses attention on the antecedents, birth and relatively late development of modern banking in Latin America. The novelty of the chapters that follow is to offer a panoramic overview of the trajectories of banks and credit markets across a significant number of nations in this extensive region over a long time period. The approach is chronological, but each chapter pays attention to a distinct theme that can allow the reader to grasp key problems that refer to the process of creation and expansion of banks in order to grasp the successes as well as the failures of different financial regimes and enterprises during successive phases from the end of the colonial regimes down to 1914. We maintain that the economic history of the nations of this vast region should not be viewed simply as a story of failure, but rather as an expression of a prolonged and sometimes unstable process of slow capitalism during what we describe as the long nineteenth century.

The political independence of the Latin American nations did not usher in modern capitalism since economic stagnation and the repressed nature of financial markets were evident from the 1820s and 1830s in most countries. This chapter focuses on the role of credit and finance during the first half of the nineteenth century in the new states. Liberal constitutions and laws were put in place but did not produce the desired economic results since fiscal reforms did not prove successful. Attention is directed to the experience of the earliest banking entities. We begin with Brazil, where a first bank in Latin America began to operate in 1808, followed by a brief summary of history of the first commercial bank in Argentina and of an early investment bank in Mexico. Nonetheless, the collapse of imperial rule, the wars of independence and extensive civil conflicts created persistent fiscal and monetary difficulties. So much uncertainty affected decision-making by both economic and political actors, reducing the availability of credit, making it more expensive and risky. Political stability and institutional transparency were required to spur early capitalism but economic and political instability created many obstacles in postcolonial Latin America during the first half of the century.

This chapter analyzes the different banking models that were debated and adopted by the elites of the various Latin American nations after midcentury. The examples of the financial and monetary institutions of Europe were influential, but they were not simply replicated. In fact, there was a creative process of adaptation of foreign models of banking organization and regulation that were adjusted to local and regional situations in each country in a prolonged process of trial and error. In Chile and Colombia the advocates of the free banking model tended to gain the upper hand, whereas in Argentina and Brazil the supporters of a single bank of issue tended to dominate. The intense political and financial discussions in each country revealed strong differences between orthodox theorists, in favor of a strict gold standard, and pragmatists, who preferred the flexibility of inconvertibility. These confrontations remained characteristic of many later episodes in Latin American financial history and resonate down to the present day.

Debtors’ prisons played a vital – albeit seemingly paradoxical – role in early modern society. In many cases, those incarcerated could not or would not pay their debts. Instead, they languished in prison and racked up new debts to their gaolers. Chapter 2 addresses this seemingly self-contradictory system by showing that, even when it prevented the repayment of debts, imprisonment helped to protect wider social and economic interests, balancing those of landed wealth and emergent capital. It analyses the social, economic, legal and ideological shifts that underwrote this convoluted system, excavating emergent carceral ideologies. In turn, it considers the array of measures taken to alleviate the pressure that growing numbers of insolvent debtors placed on England’s prisons, mitigating the worst effects of the structural weakness of debt incarceration. These attempts to relieve an overburdened system – which ultimately stabilised the debtors’ prison into the eighteenth century – were essential because prisons had developed disciplinary purposes that proved vital to early modern social relations, even when its coercive functions failed.

Between 1560 and 1700, England became an increasingly carceral society; that is, a society in which the prison became a dominant tool of order, permeated by a disciplinary logic that began to shape social relations well beyond the prison walls. Imprisonment posed an ever greater threat to men and women across the social spectrum thanks to the quickening activity of the criminal justice system, growing political and religious conflict and a precipitous rise in civil litigation. This Introduction outlines the significance of these developments, before explaining their significance to wider historiographies of credit and debt, legal practice, state formation and political conflict in early modern England. It suggests that a focus on growing levels of debt imprisonment (which served particular class interests) helps explain how rapid socioeconomic change and social stratification forced many people into often involuntary and negative participation in state institutions and the law. In turn, this conditioned an emergent politics of prison abolition that became increasingly important to the radical politics of the English Revolution, helping to explain interactions of social change and political conflict. Finally, this Introduction outlines the source base for this study and summarises the chapters that follow.

Chapter 2 SKILLS in ACTION argues that skills are keys to understanding crucial notions in action theory, such as intentional action. The idea that intentional actions are constitutively the employment of skills is an attractive thought, and yet, the view has fallen in disrepute. This chapter resuscitates it: I argue that no other capacity—from instincts to habits or talents, to innate general-purpose faculties—can figure as centrally in action theory.

Machiavelli assigns a complicated role in his political theory to the concept of the beneficium (or benefizio in Machiavelli’s Italian) in order to describe the benefits that the power of the state can bring; and this chapter focuses on one philosophical language which is used throughout the Italian Renaissance to discuss this idea and which comes to shape Machiavelli’s own thinking decisively. That language is classical in origin; and it is intimately associated with one text in particular: Seneca’s On Benefits. In the first section of the chapter, Seneca’s thinking about generosity and gratitude is explicated within the wider context of his social philosophy to show how it forms part of a theory of moral obligation, informed by a firmly Stoic notion of natural human sociability. The second section shows how Seneca’s contentions are subsequently retrieved and put to work in pre-humanist and humanist political thought to discuss the moral relationships between members of civil associations and to underline the perils of the vice of ingratitude in political society. Once the place of Seneca’s theory in Renaissance discourse is elucidated, it becomes easier to see how Machiavelli manipulates its contentions into a theory of political obligation within his account of the state.